ONGC refuses to share documents about buried pipelines at Surat airport
Oil and Natural Gas Corporation (ONGC) has refused to share documents relating to sour gas pipelines passing beneath the Surat airport’s surface under section 8 (1)(d) of Right to Information (RTI) Act. Replying to an application filed under RTI by an activist for inspection of the documents relating to sour gas pipelines’ shifting, culverting or encasing to enable Airports Authority of India (AAI) to extend the runway at Surat airport, the ONGC authorities stated that they cannot be revealed. Last year, a meeting was held by district administration with officials of pipeline division of ONGC Hazira to discuss critical issue of the sour gas pipelines beneath Surat airport surface following state government and AAI’s decision to take ONGC on-board to work out a solution for rerouting them. ONGC had invited expression of interest (EoI) for safe operation of the buried pipelines six months ago, but things are moving at a snail’s pace. There are two 36 inches and 42 inches diameter South Bassein Hazira Trunk (SBHT) pipelines passing beneath the airport surface. These pipelines were laid in the year 1985 and 1996, respectively to transport sour dry natural gas from Bassein Platform A (BPA) and Bassein Platform B (BPB) offshore process platforms to onshore gas processing plant located at Hazira in Surat. As on date, the volume of gas being transported is around 36 million metric standard cubic meter per day (MMSCMD) and 3000 cubic metres per day (m3/day) of condensate at an operating pressure of 60-80 kilograms per square centimetre (kg/cm2). ONGC raised concerns over the safe operation of both the pipelines due to proximity of the runway of Surat airport located at Magdalla, which has undergone extension from 1,400 metres to 2,250 metres towards route of 42 inches diameter pipeline in south east direction in 2007 and from 2,250 metres to 2,905 metres towards route of 36 inches diameter pipeline in north west direction in the year 2015-16. At present, the 36 inches diameter pipeline is 250 metres away from the runway and 42 inches pipeline 350 metres away. Further, the proposed extension from 2,905 metres to 3,705 metres towards route of 36 inches diameter pipeline will cross it and create safety issues. The existing runway of 2,905 metres has permissible usage length of 2,290 metres-615 metres of the runway portion from Vesu side of the airport has been displaced due to building height obstructing flight path. The existing runway is capable of handling only Airbus (AB-321) type aircraft only. A senior officer in district collector’s office said, “The buried gas pipelines of ONGC could pose a danger to airport operations. The extension of the runway has been halted due to the underground pipelines. The ONGC has been asked to carry out survey of the pipelines and suggest solution for rerouting or covering them.”
Kuwait Petroleum Corporation appoints new CEOs for subsidiaries
Kuwait Petroleum Corporation appointed Walid Khalid al-Badr on Sunday as the new chief executive for its subsidiary Kuwait National Petroleum Company (KNPC) and Emad Mahmoud Sultan as chief executive of subsidiary Kuwait Oil Company. The two executives were named to the board of directors to replace members whose terms had expired. Other new directors include Sheikh Nwaf Saud Al-Sabah, assigned as the managing CEO for the Kuwait Foreign Petroleum Exploration Company, and Abd al-Nasser Youssef AL-Faleej as the managing director for international marketing for Kuwait Petroleum Corporation.
BP to expand emissions disclosure on oil investments
BP has agreed to broaden its disclosure on greenhouse gas emissions to show how it thinks future investments in oil and gas align with UN-backed climate goals, it said on Friday. Following talks with a large group of investors, BP also agreed to back a shareholder resolution on the measures at its annual general meeting (AGM), further evidence of the way the energy industry and investors are engaging on climate issues. The agreement with a group of investors with $32 trillion under management, known as Climate Action 100+, comes weeks after rival Royal Dutch Shell agreed to introduce broad carbon emissions targets linked to executive pay. Unlike other companies, BP has agreed to detail how major future investments in fossil fuels will be consistent with the 2015 Paris agreement to reduce carbon emissions to net zero by the end of the century by phasing out fossil fuels. It will set out new metrics to measure greenhouse gas emissions from its operations. BP said in a statement it would link carbon targets to the remuneration of 36,000 of its employees, including executive directors. If the resolution is approved at the AGM, BP will introduce these changes into its reporting for 2019 onwards. But the joint agreement revealed a fundamental rift with investors over BP’s statement that its strategy today was in line with the Paris agreement. “Investors remain concerned that the company has not yet demonstrated that its strategy, which includes growth in oil and gas as well as pursuing low carbon businesses, is consistent with the Paris goals,” Climate Action 100+ said in statement. BP plans to rapidly grow oil and gas production over the next five years thanks to more than a dozen new projects launched in recent years, as well as the $10.5 billion acquisition of BHP’s U.S. shale portfolio last year. “We will be open and transparent about our ambitions and targets as well as our progress against them,” BP Chairman Helge Lund said in a statement. BP Chief Executive Officer Bob Dudley has repeatedly said that while the oil and gas sector needs to play a role in the transition to low carbon energy, it still needs to meet growing demand for fossil fuels, particularly in emerging economies. “BP is committed to helping solve the dual challenge of providing more energy with fewer emissions. We are determined to advance the energy transition while also growing shareholder value,” Lund said. Investors and analysts have said many oil and gas projects, such as complex and expensive investments in Canada or some deepwater basins, will not be needed in the transition to a low carbon energy. While BP agreed to increase its disclosure around climate, it also rejected another resolution tabled by climate activist group Follow This calling for emission reduction targets for all its operations, including emissions from products it sells to customers, known as Scope 3. BP announced in April plans to keep carbon emissions flat over the decade to 2025 even as its oil and gas output was set to grow. It also plans to invest up to $500 million per year on renewable energies such as solar, wind and power storage.
Budget 2019: Petroleum subsidy hiked 51% to Rs 37,478 crore for 2019-20
The government is budgeting for a mammoth 51 per cent jump in overall petroleum subsidy expenditure at Rs 37,458 crore next financial year (2019-20), the Budget documents tabled in Parliament today show. The revised estimate of petroleum subsidy, mainly meant for cooking gas and Kerosene, for the current fiscal stands at Rs 24,833 crore as against the budgeted estimate of Rs 24,933 crore, leading experts to raise concerns over the balance shortfall. “As per our estimate, there may be a shortfall of around Rs 17,000 crore in fuel subsidy provided for 2018-19 versus the subsidy provided of Rs 24,833 Cr (RE). Depreciation of the Rupee against the Dollar and the rise in crude prices in Year-to-Date, have contributed to the shortfall,” said K Ravichandran, Senior Vice President at research and ratings agency ICRA. He added that the under provision of subsidy will be marginally credit negative for state-owned oil marketing and Exploration and Production companies (E&P). “Options available to the government will be to either defer the subsidy payments to oil companies to the next fiscal, with appropriation from 2019-20 budgetary allocation or ask the downstream or upstream companies to bear part of the subsidy,” Ravichandran said. Interestingly, the oil ministry’s statistical arm Petroleum Planning and Analysis Cell (PPAC) said in its monthly summary report for December the under recoveries of oil firms are expected to reach Rs 45,781 crore in 2018-19. “The expected under recoveries/subsidy for 2018-19 in respect of PDS Kerosene and Domestic LPG (Under DBTL) is Rs 6,919 crore and Rs 38,862 crore respectively,” the report said. The adequacy of the government’s allocation of petroleum subsidy for 2019-2020 will depend on crude oil prices and the Rupee’s exchange rate against the dollar. “For 2019-20, the shortfall in subsidy could be around Rs 7,000 crore if the crude price and INR/USD were to be $70/bbl and 72 respectively. There could be a surplus if the crude was to be below $67 per barrel at a similar exchange rate,” Ravichandran said. He added that the budget announcement on the impending changes in bidding framework for new Oil & Gas blocks in order to boost domestic production will be a positive development for the sector. Also, the continued emphasis on providing free LPG connections under Ujjwala Yojana will be a positive event for the government-owned OMCs as the same will lead to faster growth in LPG sales.
Gail India sells US LNG cargoes
India’s state-owned gas distribution company Gail has flooded the liquefied natural gas (LNG) market this month with offers to sell cargoes from the US Gulf due to a shortage of tankers available to ferry to fuel to India. The Indian importer has 20-year deals to buy 5.8 million tonnes a year of US LNG, split between Dominion Energy’s Cove Point plant and Cheniere Energy’s Sabine Pass site. On Wednesday, Gail issued two tenders to sell US volumes, trade sources said. In one tender, Gail has offered to sell a cargo from the Cove Point plant on Apr. 27-29 and buy a cargo for delivery in India on Feb. 20-22 or March 1-7. In another tender, it has offered two cargoes for loading from Sabine Pass, one cargo for lifting in July and another in November. The tender closes on Feb. 1. “(Gail is) inherently short (on shipping)… They are certainly not able to lift all the cargoes they have from the US on the tonnage they have,” a shipbroker said. The two tenders came less than two weeks after Gail offered cargoes from Cove Point and three from Sabine Pass for loading in 2020. There was strong demand for these cargoes, with winners including Glencore, sources said. UK-based BP could also be one of the winners as it is long on shipping and may use the volumes to optimise the use of its fleet, sources said. Last year, Gail also made several swap deals with US volumes.
Budget 2019: Oil and gas sector fears being left behind on GST reforms
With the Interim Budget for 2019-20 failing to address the issue of bringing petroleum products and gas under the ambit of GST, the oil and gas sector fears being left behind on GST reforms, said accounting and consultancy firm PwC. “The Budget speech did not mention any plan about bringing petroleum products and gas into classical goods and services tax (GST). The sector feared being left behind in benefit of GST reform for a few years now,” said Deepak Mahurkar – partner and leader India oil & gas at PwC on Budget announcements. He added that the government has acknowledged the need for reforms in the oil and gas upstream industry. “The government has acknowledged need for reforms in upstream industry to overcome the issue of significant energy import dependence. Pure exploration contracts are appearing to be issued, which will be new dimension to India’s exploration and production,” he said. K Ravichandran, senior vice-president, group head – corporate ratings, ICRA said, “As per ICRA’s estimates, there may be a shortfall of around Rs 17,000 crore in fuel subsidy for FY19 versus the subsidy provided of Rs 24,833 crore (RE), which includes other non-fuel subsidies.” He added that depreciation of INR vs USD and rise in crude prices in year-to-date, have contributed to the shortfall. He said that the options available to the government would be to: Defer the subsidy payments to oil companies to the next fiscal, with appropriation from 2019-20 budgetary allocation; and ask downstream and/or upstream companies to bear part of the subsidy. Hence, the under provision of subsidy would be a marginal credit negative for the public sector undertakings (PSUs) oil-marketing companies (OMCs) and exploration & production companies. Ravichandran added that as regards to 2019-20, the shortfall in subsidy could be around Rs 7,000 crore if the crude price and INR/USD were to be $70/bbl and 72, respectively. “There could be a surplus of the crude were to be below $67/bbl at a similar exchange rate. Apart from the above, announcement on the impending changes in bidding framework for new oil & gas blocks in order to boost domestic production, will be a positive development for the sector,” he said. He added that the continued emphasis on free liquid petroleum gas (LPG) connections under the “Ujjwala Yojana” would be a positive for the PSU OMCs as the same would lead to faster growth in LPG sales. Adequate subsidy provided for Phulpur-Dhamra gas pipeline would be a positive for GAIL, as the same would improve the viability of the project, Ravichandran said.
Vedanta, ONGC, 37 others put in 145 bids in oilfield auction
Vedanta and many little-known private players emerged the dominant bidders in the second round of auction for discovered small fields in which 39 companies bid for 24 oil and gas contract areas. The government received 145 bids, including 103 for onland contract areas and 42 for offshore, according to an official statement. One of the total 25 contract areas on offer received no bid in the auction whose deadline was extended twice to attract more investors. Vedanta, controlled by billionaire Anil Agarwal, has submitted the maximum 21 bids. Vedanta was the highest bidder in the last year’s auction for major fields, in which it placed bids for all 55 blocks on offer and won exploration licenses for 41. With 15 bids, little-known Arch Softwares Pvt Ltd was the second-highest bidder. ONGC and Oil India have also bid for 10 contract areas each. A consortium of Shanti GD Ispat and Power Pvt Ltd, Bagadiya Brothers Pvt Ltd and Shanno Business India Pvt Ltd vying for 10 contract areas. Ganges Geo Resources Pvt Ltd has also placed bids for 10 contract areas. Bids for six contract areas have come each from Invenire Energy Pvt Ltd, Gem Petro E&P Pvt Ltd, and Oilmax Energy Pvt Ltd. A total of 28 domestic private companies, six foreign companies and five state firms participated in the auction. “This bid round saw more than anticipated participation from new entrants from India and foreign countries like USA, UK, Australia, Singapore and UAE,” said the official statement. Goodview Trading, HBA Offshore, Keerthi Industries, Dravida Petroleum DMCC, and Nippon Power were among other bidders. “The government endeavours to award the contract areas by end of February 2019, so as to expedite the monetization of the hydrocarbon production from these fields,” said the statement.
Iraq Indian Oil looking for annual deal to buy US oil
Indian Oil (IOC), the country’s top refiner, is looking for an annual deal to buy U.S. crude as it seeks to broaden its oil purchasing options, its chairman said on Wednesday, amid uncertainties over imports from Iran. Washington in November granted a six-month waiver to New Delhi from sanctions against Tehran and restricted India’s monthly intake of Iranian oil to 1.25 million tonnes or 300,000 barrels per day. Sanjiv Singh told reporters IOC has not yet finalised from which company it would buy U.S. oil. “When we go for term, it should have price advantage for us and strategic advantage for us apart from supply sureties. So considering these three we will work out volumes also,” he said. India Oil had previously purchased U.S. oil from spot markets and signed a mini-term deal in August to buy 6 million barrels of U.S. oil between November to January. IOC is the top Indian buyer of Iranian oil with an annual contract for 180,000 bpd in the fiscal year ending March 2019. Singh said his firm buys Iranian oil because of competitive prices and attractive terms and conditions. Iran offers extended credit periods and almost free shipping on oil sales to India. He said IOC was in talks to renew an annual oil contract with Iran but a new any deal would depend on conditions attached to a subsequent waiver from the U.S. sanctions. “The earlier waiver was for the existing contract, (for a new contract) we will have to work it out,” he said. Meanwhile, the refiner has signed a deal with Iraq to buy 360,000 bpd of oil, including up to 500,000 bpd of Basra Heavy, in 2019 compared with 356,000 bpd last year.
Shell’s 2018 profits soar to four-year high
Royal Dutch Shell reported a 36 per cent rise in 2018 profits on Thursday to $21.4 billion, the highest since 2014, beating forecasts as cost savings kicked in. For the fourth quarter of 2018, the Anglo-Dutch company’s net income attributable to shareholders, based on a current cost of supplies (CCS) and excluding identified items, rose 32 per cent on the year to $5.688 billion as deep cost cuts introduced after the 2014 market downturn filtered through. That compared with a company-provided forecast of $5.28 billion for the quarter and $20.98 billion for the full year.
US natural gas demand to hit record high during freeze
US homes and businesses will likely use record amounts of natural gas for heating on Wednesday as an Arctic-like freeze blankets the eastern half of the country, according to energy analysts. Harsh winds brought record-low temperatures across much of the Midwest, unnerving even residents accustomed to brutal winters and keeping them huddled indoors as offices closed and mail carriers halted their rounds. That brutal cold could also temporarily reduce gas production by causing freeze-offs in the Marcellus and Utica shale, the nation’s biggest gas producing region, in Pennsylvania, Ohio and West Virginia, the analysts warned. Freeze-offs occur when water and other liquids in gathering lines freeze, blocking the flow of gas. Overnight lows on Wednesday-Friday will drop to -20 Fahrenheit (-29 Celsius) in Chicago and the single digits along the East Coast from New York to Boston, according to AccuWeather, a weather forecaster. The cold, however, will be short lived with high temperatures in New York and Chicago expected to rise into the 40s F this weekend. The normal high at this time of year is 32 in Chicago and 39 in New York. Financial data provider Refinitiv predicted gas demand in the Lower 48 U.S. states would hit a daily record of 145.2 billion cubic feet per day (bcfd) on Wednesday as consumers crank up their heaters to escape the bitter cold. That would top the current all-time high of 144.6 bcfd set on Jan. 1, 2018. One billion cubic feet is enough gas to supply about five million U.S. homes for a day. In early estimates, gas production in the Lower 48 states will slip about 0.9 bcfd to 85.8 bcfd on Wednesday, according to Refinitiv. That is the lowest daily output since Enbridge Inc started to restore flows through some gas pipes in Ohio following a pipeline explosion there on Jan. 21. “Based on our analysis of historical freeze-offs, temperature conditions forecasted for Jan. 30-31 pose a risk of a freeze-off occurring in the Marcellus/Utica…in the ballpark of 1 bcfd,” said Rishi Iyengar, senior analyst natural gas markets at IHS Markit’s OPIS PointLogic. In early estimates, Marcellus/Utica production was down about 0.7 bcfd to 29.6 bcfd on Wednesday, according to Refinitiv. Iyengar said current forecasts were not cold enough to impact production in the Bakken shale in North Dakota because drillers there have invested in equipment needed to handle extremely low temperatures. In the spot market, next-day prices for Wednesday for power at PJM West in western Pennsylvania and gas in Chicago both rose to their highest in a year as demand for heating spiked. PJM, the electric grid operator for all or parts of 13 states from New Jersey to Illinois, forecast power demand would reach about 142,000 megawatts (MW) on Thursday, approaching the region’s all-time winter peak of 143,295 MW on Feb. 20, 2015. PJM said it has “robust reserves and does not expect to have any capacity issues” in meeting demand. One megawatt can power about 1,000 homes.