Can Any Country Dethrone Qatar As Top LNG Exporter?
By now it should be clear that Qatar has no intention of giving up its slot as the world’s top LNG player, both in terms of exports and liquefaction capacity. While Australia did pass the middle eastern gas producer briefly a few months ago, Qatar will ramp up its liquefaction capacity from 77 million tons per annum (mtpa) to 110 mtpa within five years, making it difficult for both Australia and the U.S. to catch up. Now, Qatar is also talking up its LNG game in Asia, which represents 72 percent of global LNG demand, with that demand projected to increase to at least 75 percent amid increased usage of the super-cooled fuel from China. China’s historic increase in both piped natural gas and LNG comes as the country fulfills a government mandate that natural gas makes up at least 10 percent of its country’s energy mix by 2020 to offset record air pollution levels, particularly in its major urban centers. Further earmarks are in place to 2030 as well. “Asia is the biggest market for LNG, or fuels in general because that is where [economies are growing], and that is where the need is,” al-Kaabi said. “For us, the Asian market is a fundamental market and we have great relationships politically with all the Asian countries,” Qatar’s Energy Minister Saad Sherida al-Kaabi said in an interview with Nikkei Asian Review on Thursday. He also mentioned Japan, which is currently the world’s largest LNG importer, followed by China and South Korea. “Japan, in particular, has a very special place in our heart, and we are looking to extend our contracts with Japanese companies,” al-Kaabi said. al-Kaabi said that in the aftermath of the Fukushima nuclear disaster, Qatar canceled LNG shipments to other destinations, diverting them instead to Japan and selling them at contract prices, despite gas prices being “very high” at the time, the report added. “We wanted to show the people of Japan our respect,” he said. However, what he failed to address was that much of that supply was still attached to restrictive long-term contracts that eventuality forced Japan to turn to India and others to try at the time to bring more control over contractual LNG deals. Japan also saw the formation of what is now the world’s largest buyer of LNG when Tokyo Electric Power and Chubu Electric Power formed JERA to have more buying power in LNG markets as well as integrating the value chain from upstream fuel investment and procurement through power generation. Due to increased LNG usage in Asia, particularly Japan after Fukushima, spot LNG in Asia breached the $20 per million British thermal units (MMBtu) mark in February 2014. Since then, amid more supply coming from new projects in Australia and the U.S., markets have been in a multi-year supply overhang with a corresponding downward trajectory in prices. In fact, LNG spot prices in Asia have hit a 17-month low, an unusual development for this time of year. Spot prices for March delivery to Asia LNG-AS fell to $6.50/MMBtu last week, down 20 cents from the previous week to their lowest since Sept. 8, 2017, trade sources said. Lower prices come amid tepid demand in North Asia and warmer than usual temperatures for this time of year. Going forward, al-Kaabi said that by the end of 2019 Qatar will likely raise the bar again, developing natural gas fields in Africa and North America to maintain its top spot and keep up with Asian demand. Not only will more demand be coming from China, but also from Pakistan as that country develops its LNG import sector to offset record energy supply shortages that have caused persistent blackouts, the Philippines too as it tries to put in place its first working LNG import terminal before its main source of natural gas in its offshore natural gas field runs out in less than five years, from India, Bangladesh, Thailand and in time Vietnam.
Petroleum regulator rejects HPCL review petition on ATF pipeline
Oil regulator PNGRB has rejected HPCL’s objections to consultations it had initiated to break stranglehold of PSUs on lucrative pipeline supplying jet fuel to Mumbai airport, saying the refiner will get a formal opportunity to make its case against the move. In a February 21 order, the Petroleum and Natural Gas Regulatory Board (PNGRB) said it had on November 7, 2016, received a request from Reliance Industries seeking declaration of two pipelines emanating from Hindustan Petroleum (HPCL) and Bharat Petroleum’s (BPLC) refinery and terminating at Mumbai International Airport as a common carrier so that the same can be shared by any third-party on open access and non-discriminatory basis. PNGRB wrote to both HPCL and BPCL seeking certain clarifications. After repeated reminders, HPCL opposed the move stating that the PNGRB Act provides for only city and local distribution networks for gas to be used as common carriers. Subsequently, PNGRB initiated public consultation on Reliance’s request. HPCL then filed a review petition with PNGRB stating that “the Board has formed its opinion without consulting the entity owing ATF pipelines.” PNGRB in its order said HPCL had given written objections in the consultation process. On HPCL’s contention that it was not given an opportunity of being heard, PNGRB said the law provides that “after closing of public consultation process, an opportunity of being heard is to be given to the concerned entity within a minimum notice period of 21 days”. “As the views and comments have been received and those have been web-hosted, the PNGRB now gives an opportunity to HPCL for a formal hearing as per provisions under Section 20(2) and Regulation 10(1)(b). HPCL may submit a comprehensive representation to the Board and appear for a hearing on April 5, 2019,” the order said. BPCL and HPCL built and operate two separate pipelines from their Mahul refineries in Mumbai to supply jet fuel (ATF) to airlines at the Chhatrapati Shivaji International Airport at Santacruz in the city. Reliance, which produces a fourth of India’s aviation turbine fuel (ATF), wants access to these pipelines to be able to get a pie of Rs 10,000 crore fuel trade that happens at one of Asia’s busiest airports. During the consultations, Reliance and private airlines felt competition among fuel suppliers would bring down costs, but HPCL and BPCL said the pipelines are their “captive” infrastructure to take products out of the refineries and giving third party access to them would hurt their operations and profits. If implemented, it would allow an airline to import fuel and use the infrastructure at the refineries situated on the coast to transport it to the airport. A company like Reliance can ship the fuel from its refineries at Jamnagar in Gujarat to Mumbai and use pipelines to take it into the airport. In its comments, Reliance said the present ATF demand at Chhatrapati Shivaji International Airport is 1.4 million tonne per annum and it is “absolutely essential” that access to the BPCL and HPCL ATF pipelines is available to other jet fuel marketing oil companies to service this demand. “Non-availability of access to the pipeline would deny to the ultimate consumers the benefit of competition,” it had written to PNGRB. Stating that at least two-thirds of the capacity in the twin pipeline is spare, it said alternative of laying the third pipeline will create environment and safety hazard besides resulting in infructuous investments. Bringing ATF by road tankers is also not an option as 400 road tankers would be required to ply on the already clogged Mumbai roads, it had said. PNGRB has not yet given a final view on the issue.
Saudi Arabia to make India regional hub for oil supply: Saudi FM
Saudi Arabia is looking at making India a regional hub for supply of crude oil and will invest billions of dollars in the country to build storage facilities and strengthen refineries, Saudi Foreign Minister Adel bin Ahmed Al-Jubeir has said. Saudi Arabia, the world’s biggest oil exporter, will also invest in downstream assets in India besides helping the country boost its infrastructure in the petrochemical sector, Al-Jubeir said. The foreign minister, who was part of Saudi Crown Prince Mohammed Bin Salman’s delegation here, said his country looked at India as a rising economic power and was very bullish about its potential to grow further. “We are looking to make India a hub (for crude oil supply) in the region. We are looking to build storage facilities in India, we are looking at refineries and downstream assets in India. “We are investing in infrastructure that will help India boost its ability to import and export of petroleum products,” Al-Jubeir told in an interview last week. Reflecting growing energy ties, it was announced recently that Saudi Aramco, the world’s top oil exporter, will be part of a joint venture project to set up a refinery in Maharashtra at a cost of USD 44 bn. It will be the largest greenfield refinery in the world to be implemented in one phase. “We are building the largest refinery complex in the world with India’s participation at a cost of USD 44 billion,” Al-Jubeir said. “We are looking at India as a rising economic power and as a country of stability and a opportunity. So we want to have best and strongest possible ties with India,” he said. The Saudi foreign minister said his country was committed to meeting India’s oil demand and ready to sell more crude oil to India. “We are ready to sell more crude oil to India. The difference between Saudi Arabia and Iran is India’s relationship with Iran is that of a buyer-seller while India-Saudi Arabia energy relationship is of strategic nature,” he said. India is expected to increase import of oil from countries such as Saudi Arabia and the United Arab Emirates if the US does not extend the six-month-long waiver it granted to New Delhi and several other countries to buy oil from Iran. Saudi Arabia is also a key pillar of India’s energy security, being a source of 17 per cent or more of crude oil and 32 per cent of LPG requirements of India. The energy ties between the two countries are on an upswing in the last few year.
Rs 1.40 lakh crore of oil & gas investments likely in Odisha: Pradhan
Union Petroleum Minister Dharmendra Pradhan on Sunday said Odisha is going to be the epicentre of petroleum and gas sector, with around Rs 1.40 lakh crore investments proposed under various oil and gas projects in the state. “Around Rs 1.40 lakh crore of investments have been proposed under various oil and gas projects in Odisha. While Rs 43,000 crore has been invested in the Paradip Refinery alone, creating a need for skilling youth for the future jobs in the sector,” said Pradhan. He said refinery expansion, raw material for textiles, petrochemicals, polymers, pet coke gasification, LNG terminal, LPG terminals and several other projects are underway. Pradhan, also the Skill Development and Entrepreneurship Minister, on Sunday inaugurated the main campus of the Skill Development Institute (SDI), Bhubaneswar. “As promised, I have met my timelines of ensuring that the campus gets ready in 2019. Odisha got the Petroleum Ministry’s first SDI in the state capital with Indian Oil as the anchor investor and managing company,” said Pradhan. The institute through its dual education system combining apprenticeships in industries and vocational education will pave the path for the youths in the country and Odisha, he said. The institute will impart skill training to over 50,000 students in 25 regular trades pertaining to the hydrocarbons sector, local industry needs including future skills for the next 10 years apart from other employment-oriented training.
UAE’s ADNOC seals $4 bln pipeline infrastructure deal with KKR, BlackRock
Abu Dhabi National Oil Company (ADNOC) has sealed a $4 billion midstream pipeline infrastructure deal with U.S. investment firms KKR and BlackRock, the government-owned company said on Sunday. ADNOC has been expanding through strategic partnerships since 2017. Last month it won a combined $5.8 billion investment from Italy’s Eni and Austria’s OMV for a stake in its refining business to establish a new trading operation owned by the three partners. The latest deal follows ADNOC’s capital markets debut with its Abu Dhabi Crude Oil Pipeline bond, the IPO of ADNOC Distribution and other initiatives. A new entity called ADNOC Oil Pipelines will lease the oil company’s interest in 18 pipelines, transporting crude oil and condensates across ADNOC’s upstream concessions for a 23-year period, ADNOC said in a statement. The 18 pipelines have a total length of over 750 km and capacity of 13 million barrels per day. Funds managed by KKR and BlackRock will form a consortium to hold a 40 percent stake in the entity, with ADNOC owning the rest. ADNOC will have sovereignty over the pipelines and management of pipeline operations. The deal, expected to close in the third quarter of 2019, will result in upfront proceeds of some $4 billion to ADNOC. The statement cited Sultan al-Jaber, ADNOC group CEO, as saying the deal validated ADNOC’s approach of “unlocking value from its portfolio of assets while retaining control over their ownership and operation”. BlackRock is investing through its Global Energy & Power Infrastructure Fund series while KKR’s investment is through its third Global Infrastructure Investors Fund, the statement said. “We believe that today’s agreement among ADNOC, BlackRock and KKR will be followed by many more such partnerships to invest in the future growth of the region,” said BlackRock CEO Laurence Fink. This is KKR’s first direct investment in the region, co-CEO Henry Kravis said, adding that there is substantial potential for more. ADNOC has undergone major changes since al-Jaber’s appointment in 2016, embarking on privatisation, oil trading and expanded partnerships with strategic investors. “I think the approach taken here by ADNOC reflects a desire to monetise assets they have under their control,” said Edward Bell, director of commodities research at Emirates NBD. “So I think it reflects an attempt to realise the value of the infrastructure they have in place more than a strategic shift into midstream oil and gas.” ADNOC produces about 3 million barrels of oil and 10.5 billion cubic feet of raw gas a day.
Indonesia offers five oil and gas blocks, including three greenfields
* Indonesia is offering five oil and gas blocks, three greenfield and two already producing blocks, in its first round of tenders in 2019, Deputy Energy Minister Arcandra Tahar told reporters on Thursday * The three exploration blocks being offered are Anambas Block in offshore Natuna, West Ganal Block in offshore Makassar Strait and West Kaimana Block onshore and offshore West Papua * The other two blocks are Selat Panjang Block and West Kampar, which have been offered in the previous tender, but there was no winning bid * “We offer them again with (a) more attractive clause. There are costs from previous contractors that we no longer include as costs that must be borne by the tender winner,” Tahar said * All of the oil and gas blocks will use gross split contracts. The government expects $29 million of signature bonus from these offered blocks and bidding documents must be submitted on April 25th at the latest
Energy Transfer expands Bakken oil pipeline capacity to 570,000 bpd
Energy Transfer LP said on Thursday it boosted capacity on the Dakota Access pipeline system to 570,000 barrels per day (bpd) as production in the Bakken shale basin has climbed to record highs. Flows on the pipeline averaged above 500,000 bpd in the fourth quarter and nominations for space on the line exceeded available capacity during the quarter, a company executive said on its earnings call. Energy Transfer said it is considering more expansions on the system due to the surge in demand, adding it would be able to add capacity by increasing horsepower to boost throughput. In North Dakota’s Bakken region, shale production is estimated to rise about 13,000 bpd to a record 1.45 million bpd in March. A shale revolution has helped propel the United States to the position of world’s biggest crude oil producer, ahead of Saudi Arabia and Russia. Total crude production has climbed to a weekly record of 11.9 million bpd. Energy Transfer also said it has enough commitments to move forward on a proposed a 600-mile pipeline from the Permian Basin, the biggest oilpatch in the country, to the Gulf Coast that would add at least 1 million bpd of capacity. However, the company said it is now in talks with Exxon Mobil Corp and Plains All American Pipeline LP to possibly combine the two projects. Exxon, Plains and Lotus Midstream said last month they will build a pipeline that can carry over 1 million bpd of oil and condensates from the Permian. That line is expected to begin operations in the first half of 2021. Energy Transfer’s Permian-to-Gulf-Coast (PGC) pipeline was expected to be in service in mid-2020, but it is now more likely to startup in 2021, if a Final Investment Decision (FID) can be made in the next 30 days. “We’re in serious discussions with Exxon and Plains, if it makes more sense to join their project and have fewer projects built that are full on day one, that is certainly a possible direction we’ll go,” a company executive said. Flows on all three lines of the company’s existing Permian Express pipelines are running at full capacity. Energy Transfer also said it is nearing completion of the construction on the Bayou Bridge system’s segment from Lake Charles to St. James, Louisiana. Commercial operations are expected to begin in March. When completed, Bayou Bridge is expected to be capable of moving up to 480,000 bpd of crude from different sources to the St. James hub, which is home to refineries located in the Gulf Coast region.
Uzbekistan seeks $300 mln loan from Russia’s Gazprombank for gas complex
Uzbekistan is seeking a $300 million loan from Russia’s Gazprombank as it wants to increase output at its state-run Shurtan gas and chemical complex, the president’s office said on Thursday. The complex, which produces polyethylene, is operated by Uzbekistan’s state oil and gas company Uzbekneftegaz, a strategic partner of Russian state gas company Gazprom which is a major shareholder in Gazprombank. Uzbekistan’s President Shavkat Mirziyoyev sent a request to officials at the energy and finance ministries to seek a $300 million loan from the Russian bank, according to a statement on Mirziyoyev’s website. Gazprom has been operating energy projects in Uzbekistan since 2002. Gazprombank, Russia’s third biggest lender by assets, said in a statement that it aimed for further development of mutually beneficial relations with Uzbekistan in various areas including energy and was considering the $300 million loan as part of cooperation with Uzbekneftegaz.
Hydrocarbon project: Movement to hold rally in Thanjavur
Movement Against Destruction will be staging a massive rally against all the ongoing and proposed projects, which pose a threat to environment and humanity. The protest is scheduled to be held on March 2, in Thanjavur, founder and president of the movement KK R Lenin said. Speaking to reporters here on Thursday, he said that they vehemently oppose hydrocarbon extraction project, thermal power project, Kudankulam nuclear power plant, and the proposed Sagarmala project and Neutrino project. All these projects are purposely implemented in Tamil Nadu with an ulterior motive of the destruction of Tamilians. It is total genocide of Tamils, he alleged. “The entire area starting from Karaikal to Nagapattinam should be announced as a protected agriculture zone, instead of the present status of a protected petrochemical zone. Once thermal power plants would come, all the trees will be chopped, which will lead to an acute shortage of rain,” he said. Once the Neutrino project would be implemented, the area would be utilized to stock nuclear waste, he alleged. During the process of oil and gas extraction, the rocks are being pierced or broken using a hydraulic and fracturing method. The process involves drilling of exploratory wells in the chosen places to release natural gas and oil from deep beneath the surface of the Earth. To extract gases they inject high-pressure fracturing fluid into the sedimentary rocks which crack the rocks. The high-pressure fluid is ultimately water, sand and a massive amount of chemicals, Lenin said. “The water pumped inside could be recycled using waste water treatment. However, more than 90% of water never returns to the surface. The water is just removed from the natural cycle and this will automatically lead to drought. The main risk associated with this extraction process is the potential contamination of drinking water with chemicals used in the process and when the Earth develops huge holes, it would lead to an artificial quake,” he added. So, all the destructive projects should be revoked. Moreover, the proposed projects which are ruining nature should be stopped, he added.
Senior level exits in Gujarat Gas as pvt players stoke competition
Public sector Gujarat Gas Limited (GGL), India’s largest gas distribution player, is facing a clear challenge from rising competition in city gas distribution (CGD). In the last twelve weeks, the CGD arm of the State-run Gujarat State Petroleum Corporation (GSPC) has witnessed at least a dozen top-level exits in favour of new CGD players. With a number of such ‘start-ups’ getting active in the space, the demand for skilled manpower has shot up sending shock-waves through the HR in established players such as GGL. Some of the exits at the levels of vice presidents, assistant VPs and heads of some key functions has forced GGL to rethink its HR policy and put in place measures to contain attrition. The destinations included players like Adani, Torrent, Think Gas, AG&P, Maharashtra Natural Gas, Green Gas among others. Head hunt Sources revealed that the newly-set up CGD entities have been on an aggressive head-hunt to run the highly-specialised business of gas. “In this fight for experienced talent, private companies are offering up to 50 per cent higher salaries and designations many levels up from the current role.” said a source from the sector, requesting anonymity. Admitting the concerns, GSPC Managing Director, T Natarajan told BusinessLine, “This had to happen following a sudden rise in CGDs. Now that this is a reality as demand for trained manpower has shot up, certain people are interested in moving out. But this is completely based on new opportunities and growth prospects.We are working on and taking up other HR initiatives to retain talent.” Following the Centre’s push for gas-based economy and focus on penetration of piped gas for households and commercial establishments, a spurt was seen in the number of CGD players. It is evident from the CGD bidding rounds by the sector regulator, Petroleum and Natural Gas Regulatory Board (PNGRB) gained momentum post 2015.The tenth round is underway at present. GGL, which was taken over by the GSPC Group in 2013 from British Gas Group (BG), is seen as a repository of rich talent – in technical and managerial areas. One of the oldest gas players, GGL has over 22,000 km of gas pipeline network covering over 1.3 million households. A former employee of the company said, “The fabric of the Gujarat Gas culture has never been like a PSU. Even after the GSPC takeover, the company managed to keep its independent fabric intact. However, because of bureaucratic intervention, it could have fuelled the attrition of top executives.” Natrajan clarified that the exits will not affect GGL’s operations, “As a GSPC Group, we are able to take care of immediate problems. We have manpower at other group companies and have kept some cushion also.