Qatar energy minister says plans to order 60 new LNG carriers: South Korea
South Korea’s presidential office said on Monday that Qatar’s energy minister outlined plans during a bilateral summit for Doha to order 60 new liquefied natural gas (LNG) carriers. The energy minister, Saad Sherida Al-Kaabi, who also serves as deputy chairman of Qatar Petroleum, said he expects cooperation with experienced Korean shipbuilders on constructing the LNG carriers, according to a statement issued by South Korea’s presidential office. Financial details of the plan weren’t disclosed. Speaking during a luncheon after the summit, the chief executive of South Korea’s Daewoo Shipbuilding & Marine Engineering Co said most of the LNG carriers owned by Qatar were built by Korea’s top three shipbuilders. He said he hoped South Korean would be considered a primary option for building new LNG carriers for Qatar.
Kochi to get India’s largest public sector refinery
Prime Minister Narendra Modi Sunday dedicated to the nation an integrated refinery expansion complex of the public sector Bharat Petroleum Corporation Limited at the Kochi Refinery here. He also laid the foundation stone for a petrochemical complex at the refinery and a skill development institute at Ettumanoor besides inaugurating a mounded storage vessel at the LPG bottling plant of the Indian Oil Corporation Limited here. The integrated refinery is a modern expansion complex and would transform the Kochi Refinery as the largest PSU refinery in the country with world class standards. It is equipped for production of cleaner fuels. It will double the production of LPG and diesel and commence production of feedstock for petrochemical projects in the plant. Mounded Storage Vessel, IOCL LPG Bottling Plant, inaugurated by Modi has a total storage capacity of 4350 MT. Storage capacity at the plant was enhanced to meet the LPG requirement of nearly six days bottling capacity of the plant. It is considered the safest storage vessel ensuring highest level of safety for plant and adjacent areas. LPG receipt through pipeline will bring down movement of LPG tankers on roads. Petrochemical complex, BPCL Kochi refinery is a Make in India initiative aimed at reducing dependence on imports. The skill development institute at Ettumanoor backed by the Ministry of Petrochemical and Natural Gas will provide vocational training and enhance employability and entrepreneurship for deserving youth both in oil & gas and other industries. This world class institute was being set up at an eight acre campus allocated by the state government and would have a capacity to skill around 1,000 youths annually in 20 different skills.
Saudi Aramco doubles down on South Korea with $1.6 bn bet on Hyundai Oilbank
State-owned Saudi Aramco plans to invest up to $1.6 billion for a nearly 20 per cent stake in South Korean refiner Hyundai Oilbank, expanding its foothold in one of its biggest Asian buyers of crude oil. Saudi Aramco is already the biggest shareholder in South Korea’s No.3 refiner, S-Oil, with a 63.41 per cent stake, and the latest deal should help Aramco boost crude oil sales to Hyundai Oilbank, the South’s smallest refiner by capacity. Saudi Arabia is the top crude oil supplier to South Korea, the world’s fifth-biggest importer. In 2018, South Korea imported 323.17 million barrels of crude from the kingdom, or 885,408 barrels per day (bpd), according to data from Korea National Oil. Saudi Aramco’s chief executive told Reuters in November that it planned to expand its market share in Asia — including China, India, Malaysia and Indonesia — and Africa. Saudi Aramco said it plans to buy a stake of up to 19.9 per cent of Hyundai Oilbank from Hyundai Heavy Industries Holdings, which now owns 91.13 per cent of Hyundai Oilbank. “Saudi Aramco seems to be boosting investments in downstream projects ahead of an initial public offering,” said Lee Dong-wook, an analyst at Kiwoom Securities. Saudi Energy Minister Khalid al-Falih said in early January that the state oil giant will be listed by 2021. Aramco, the world’s largest crude producer, plans to increase investment in refining and petrochemicals in a bid to cut its reliance on crude as demand for oil slows. Hyundai Oilbank has a total of 650,000 barrels per day of refining capacity in the southwestern city of Daesan and also aims to expand its petrochemical business. In May last year, it announced plans to build a 2.7 trillion won petrochemical plant with South Korea’s Lotte Chemical. “RECONSIDER” HYUNDAI OILBANK IPO Saudi Aramco plans to value Hyundai Oilbank at 10 trillion won, or 36,000 won per share, Hyundai Heavy Industries Holdings said in a statement. A person familiar with the matter said the company plans to offer a discount of 10 per cent to Saudi Aramco in a block deal that will require board approval from both firms. News of the stake sale drove up shares of the parent company by as much 6.6 per cent. Hyundai Heavy Industries Holdings also said it planned to “reconsider” the stock market listing of the refinery arm after completing the stake sale, possibly this year. Hyundai Oilbank, which had aimed to list on South Korea’s stock exchange in 2018, delayed the plan until this year due to regulatory scrutiny of its balance sheet. The holding company, which also includes shipbuilder Hyundai Heavy Industries, said it would use the funds from the Oilbank deal to invest in new businesses and improve its financial health. The shipbuilding firm is part of a joint venture with Saudi Aramco and others to build a shipyard on Saudi Arabia’s eastern coast.
India must manufacture petrochemicals domestically: PM Modi
Prime Minister Narendra Modi on Sunday said most of the petrochemicals being used in India are sourced through imports and it will be the government’s endeavour to ensure they are manufactured domestically. He was dedicating a refinery expansion project by Bharat Petroleum Corporation (BPCL) in Kochi. Modi also laid the foundation stone of BPCL’s planned petrochemical complex. “Petrochemicals are a grade of chemicals which we do not speak much about, but they exist invisibly and touch many aspects of our daily life. This includes building materials, plastics and paints, foot-wear, clothing and other fabrics or auto-motive parts, cosmetics and medicines. However, most of these chemicals are imported from other countries. It is our endeavor to see that these petro-chemicals are manufactured in India itself,” he said. The PM said India is the second-largest oil refiner in Asia and is emerging as refinery hub in the region, refining more than its demand. According to BPCL, the new integrated refinery expansion complex of Kochi Refinery was implemented at a cost Rs 16,504 crores. After expansion, the refining capacity has increased to 15.5 Million Tonnes Per Annum, from the earlier 12.4 MTPA, making it the largest public sector oil refinery project. BPCL’s upcoming petrochemical complex is expected to go on stream by the end of 2022. Modi also said government has taken decisive steps to reduce crude oil imports and save foreign exchange, adding that this involves establishing 12 second-generation ethanol plants in 11 states and six Memorandum of Understandings (MoUs) have already been signed in this direction.
Nepal-India oil pipeline moving ahead with forest clearance okayed
The stalled Nepal-India petroleum pipeline has been expedited with the Nepal government okaying forest clearance for the project, which is now expected to be completed by April-end, said a Nepal Oil Corporation (NOC) official. The state-owned NOC received the Cabinet’s go-ahead to cut trees that lie along the nine kilometre Pathlaiya-Amlekhgunj section of the project. A Cabinet meeting on January 17 decided to allow the project to cut down around 80,000 trees in the section of Pathlaiya-Amlekhgunj forest route. Of the trees set to be cut down, 6,533 are big trees, an official of the corporation told Kathmandu Post. The Timber Corporation of Nepal, which has been assigned the task of cutting the trees, was issued a 30-day notice last Tuesday. The 69 km-long pipeline stretches from Amlekhgunj in Nepal to Motihari in India. Pipe laying works on a nine-km stretch in Nepal had stalled due to the forest clearance issue. “If the project is expedited, it can be completed within two months,” said the Nepal Oil Corporation official. Initially, NOC had aimed to begin commercial operations of the pipeline by March. “However, due to the delay in forest clearance, it has been pushed back by a month to April-end.” The pipeline project started on March 9 last year. The ground-breaking of the pipeline project took place more than two decades after the first discussion on the project was held between Nepal and India. Indian Oil Corporation had proposed construction of a cross-border pipeline in 1995 and signed a memorandum of understanding with NOC at the junior executive level a year later. In 2004, the two sides upgraded the agreement to the chief executive level. However, due to a number of legal hurdles, the project failed to take off. Indian construction company Likhiya Infrastructures has been awarded the pipeline construction project with the completion deadline of 15 months. Simlesh Limited of Maharashtra, India, is manufacturing the steel pipes being used in the project. Moti Prabha Infra Tech, another Indian company based in Faridabad, has been upgrading four vertical fuel storage tanks at the Amlekhgunj depot of NOC. These tanks have a combined storage capacity of 13,400 kilolitres. Two of the tanks can hold 3,900 kilolitres each and the other two tanks can hold 1,500 kilolitres and 4,100 kilolitres respectively, said the daily. Around 200,000-litre diesel can be imported in an hour upon completion of the project. This would also reduce the transportation and leakage costs, which total over Rs 1 billion. Almost 70 per cent of pipe-laying works of the cross-border pipeline have been completed along the Nepal side, but the pipe-laying works along almost 10-km area that falls within the Parsa Wildlife Reserve and a few other community forests had been halted due to lack of government permission to cut down trees. The fuel pumping facilities will be located in Motihari, India. NOC plans to conduct a trial of the project by supplying diesel in the first phase. Nepal and India have invested Indian Rs 2.75 billion for the project of which the Indian Government is investing Rs 2 billion while the remaining amount will be invested by Nepal.
GAIL’s tariff proposal for KG-basin natural gas pipeline faces resistant from stakeholders
A proposal by state-owned natural gas utility, GAIL, for transportation tariff for a major KG-basin natural gas pipeline has faced opposition from stakeholders including GMR group, H-Energy, and Gujarat State Petronet Limited (GSPL). Stakeholders who commented on the tariff proposal hosted on Petroleum and Natural Gas Regulatory Board (PNGRB) website have resisted the transportation tariff submitted by GAIL citing multiple reasons including uncertainty of economic life extension, Capex outgo, volume divisor, number of working days among others. PNGRB is going to hold an open house today to discuss the comments of all the stakeholders. According to the public consultation document hosted by PNGRB, the regulator had in its tariff order dated March 2016, issued final natural gas pipeline tariff for the KG-basin natural gas pipeline applicable till the end of the economic life, which ended in February 2017. PNGRB has said the then tariff order issued was without considering any extension in the life of the pipeline beyond February 2017 and the extension of economic life beyond February 2017 is still under consideration of the board. The KG-basin natural gas pipeline is a 877.86-km pipeline network with a provisional capacity to transport 15.99 million standard cubic meter per day (MMSCMD) of gas, including common carrier capacity of 4 MMSCMD. The regulator had determined a transportation tariff of Rs 5.56 per Million British Thermal Units (MMBTU) for the gas pipeline on Gross Calorific Value (GCV) basis for the period between 2008-09 and 2014-15; Rs 5.56 per MMBTU for 2015-2016 and Rs 45.32 per MMBTU for financial year 2016-2017. Subsequently, in a letter dated 25 September 2018, PNGRB asked GAIL to make an updated tariff filing with actual data up to 2017-2018. GAIL has proposed a transportation tariff of Rs 45.32 per MMBTU for period between 2016-17 to 2018-19 and a tariff of Rs 47.20 per MMBTU for the period between 2019-20 up to 11 February 2027. H-Energy, Mumbai-based oil and gas arm of Hiranandani Group, in its comments stated that as the board is yet to decide on granting extension of economic life beyond 11 February 2017, PNGRB should first notify the extension of economic life at first stage before finalising the tariff. H-Energy said that according to the PNGRB order of 15 July 2015 with regard to Tatipaka incident at KG, any extension in economic life is subject to satisfactory compliance of the service obligations under PNGRB regulations. “Accordingly, PNGRB is requested to notify final tariff beyond February 2017 only after completing the due diligence process for the extension of the economic life,” H-Energy submitted. GAIL in its response said: “In respect of the Tatipaka incident, a committee, as constituted by the board, undertook a site visit and perused all the relevant records. The committee recommended that since 06.11.2014, the natural gas being transported in GAIL’s pipeline to Lanco Power Plant is meeting the requirements of PNGRB Access Code Regulations. The said committee’s recommendations were also accepted by the Board.” H-Energy further pointed out that if the extension of economic life beyond 11 February 2017 is still under consideration, why has GAIL proposed the transportation tariff assuming economic life up to 11 February 2027. Gail said in its reply it was done “keeping in view that there is satisfactory compliance to relevant regulatory provisions”. GMR Energy pointed out in its comments that PNGRB should determine the capacity of KG basin pipeline network and arrive at volume divisor for tariff determination. It said PNGRB should consider 355 days as operating days as per regulations instead of 345 days proposed by GAIL. GAIL said in its response that the pipeline is used for transportation of gas to various customers and more than 80 per cent of supplies cater to the needs of fertilizer plants, power plants, refineries, LPG plants, petrochemical plants and other Industrial units. “Such plants and industries undertake planned maintenance in a range of 20 to 55 days and IOCL can also verify the same based on its own experience being a transporter and plant operator,” the utility said. GAIL also added that in order to take care of the requirements of the downstream sector at least 20 days of planned maintenance may be considered while determining the tariff for natural gas pipelines and, accordingly, the number of working days in a year may be considered as 345.
Japan’s Iran oil loading likely to continue through March
Japanese refiners will continue to lift oil from Iran through March after receiving a waiver from U.S. sanctions on crude imports in November, Takashi Tsukioka, president of the Petroleum Association of Japan (PAJ) said on Thursday * Japan resumed oil liftings from Iran this month after refiners Fuji Oil Co Ltd and Showa Shell Sekiyu KK loaded cargoes onto a tanker that is expected to arrive in Japan on Feb. 9 * Japan’s oil refining industry will continue to ask its government to seek an extension of the U.S. sanctions waivers after the initial 180-day exemption is over in May, he said * Japanese refiners will likely be able to secure alternative supplies from other Middle Eastern countries, given their friendly relationships, even if the exemption is not extended, he said * Japan’s Idemitsu Kosan Co Ltd plans to buy the remainder of its contractual volumes of Iranian oil between February and March, said Tsukioka, who also serves as Idemitsu’s chairman * Idemitsu is likely to renew its term contracts for Iranian oil although details have not been decided, he said
Indian Oil to invest Rs 16,641 crore in Tamil Nadu
Indian Oil Corporation Ltd (IOC) on Wednesday said it would invest Rs. 16,641 crore in Tamil Nadu for expanding its retail outlet network, upgrading its infrastructure and laying of gas distribution pipelines. The company signed a Memorandum of Understanding (MoU) with the Tamil Nadu government. According to IOC, it would invest Rs. 7,941 crore over the next five years. The company said Rs. 5,100 crore will be invested in expanding its petrol bunk network; Rs. 1,824 crore in upgrading the storage infrastructure and fuel handling facilities; Rs. 214 crore towards liquified petroleum gas (LPG) infrastructure augmentation; and Rs. 803 crore in modernisation and capacity enhancement of its Ennore Lube Complex here. The company also signed a MoU with the Tamil Nadu government for an investment of Rs. 8,700 crore in two mega gas distribution projects – (a) Ennore-Thiruvallur-Bengaluru-Puducherry-Nagapattinam-Madurai-Trichy involving an outlay of Rs. 4,500 crore and (b) City Gas Distribution project in the Salem and Coimbatore geographical areas at an outlay of Rs. 4,200 crore. “With a contribution of around Rs. 6,800 crore to the state exchequer per annum, the Indian Oil in Tamil Nadu would like to play a stellar role in the State’s growth,” R. Sitharthan, Executive Director – Tamil Nadu and Puducherry – said.
Newcomers pile into race for Qatar LNG
Qatar is preparing to issue a tender for energy firms seeking a stake in its gas expansion project, drawing interest from long-standing partners as well as newcomers Chevron, Norway’s Equinor and Italy’s Eni, industry sources said. Plans to expand Qatar’s liquefied natural gas (LNG) facilities, already the world’s largest, by more than a third in the next five years are considered one of the most lucrative investments in the rapidly growing global gas market. Competition is expected to be fierce. The huge interest underscores how successfully the small Gulf country positioned itself in the face of a boycott imposed in 2017 by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt, which accuse Doha of supporting terrorism and their enemy Iran. Qatar denies the charge. Qatar’s state-run oil and gas company has in recent weeks held talks with several foreign energy firms that want to help build the new LNG facilities, four sources close to the discussions said. Qatar Petroleum (QP) is preparing to issue a tender seeking partners to invest in the construction of a fourth LNG train, or production line, that will see its capacity grow to 110 million tonnes a year (mtpa) from the current 78 mtpa. The four companies that hold stakes in Qatar’s existing LNG facilities – Exxon Mobil, Royal Dutch Shell, France’s Total and ConocoPhillips – are widely expected to bid, according to the sources. Exxon, Shell, Total and Conoco declined to comment. Total and Conoco have said in the past that they hope to play a role in the expansion. A number of newcomers are also set to join the race. Officials from Chevron, the second-largest U.S. oil company, have held talks in Doha in recent weeks and are considering bidding for a stake in the expansion, the sources said. A Chevron spokeswoman declined to comment. Norway’s national oil company Equinor is considering submitting an offer as it seeks to expand its global LNG operations, which have lagged those of rivals, sources close to the company said. An Equinor spokesman said: “We continue to assess business development opportunities globally, but we don’t have any comments on specific regions.” Italy’s Eni plans to play a role in the project, Chief Executive Claudio Descalzi recently said. Eni and QP bolstered ties in recent years after QP acquired from Eni stakes in three offshore blocks in Mexico. One Chinese state-owned company is also in the process, the sources said. Brazilian oil and gas company Petrobras considered bidding but in recent weeks decided against it, the sources said. Petrobras did not respond to a request for comment. “Qatar’s planned LNG expansion is one of the global standout opportunities in 2019,” consultancy WoodMackenzie said. “Partner selection is ongoing, and we expect awards to be made in advance of FID (final investment decision) in 2020 … The upstream segment alone is a world-class asset and operators will struggle to find other low-cost opportunities of this scale,” it added. “QP is unlikely to sole risk the development and will seek partners. However, suitors will need to prove they can add value to win a stake. We expect to see all the incumbents, primarily the majors, jostling for position.”
Natural gas fields give Israel a regional political boost
A decade after discovering natural gas fields off its Mediterranean coast, Israel is starting to feel the geopolitical boost. Its newfound riches have fostered economic bonds with its neighbors, tightening relations with Arab allies, and built new bridges in a historically hostile region – even without significant progress being made toward peace with the Palestinians. Last week’s inclusion of Israel into the Eastern Mediterranean Gas Forum in Cairo – a consortium aiming to cut infrastructure costs and lower prices – marked the first time Arab countries accepted Israel into such a regional alliance, sparking excitement in the country that its long-held hope of finally also making “economic peace” with Egypt and Jordan was fast approaching. “I think this is the most significant economic cooperation between Egypt and Israel since the signing of the peace treaty 40 years ago,” Israeli Energy Minister Yuval Steinitz told The Associated Press during his visit. “The discovery of significant gas fields in the eastern Mediterranean has also political value because it brings all of us … together to cooperate with each other.” The forum, which also includes Cyprus, Greece, Italy and the Palestinian Authority, aims to emerge as a mini-OPEC of sorts and highlights how Israel has been leveraging its newfound gas reserves into a powerful tool to expand its immersion into a region that has increasingly come to see Iran and Turkey, rather than Israel, as their greatest rivals. With the expected gas boon, Israel plans to wean itself off coal and emerge as an unlikely energy exporter – providing both an economic and political lift. In the coming months, Israel will begin exporting gas to Egypt as part of a $15 billion deal signed last year to provide 64 billion cubic meters of gas over a 10-year period that will help turn Egypt into a regional energy hub. The first batches will come from the operational Tamar field and later from the far larger Leviathan field, set to go online later this year. Israel already delivers gas to the Palestinians and to Jordan, with whom Israel’s Delek Drilling and its U.S. partner, Noble Energy, signed their first export agreement in 2016 – a $10 billion, 15-year deal to provide 45 billion cubic meters of gas. “This gives Israel an additional element to its relations with its neighboring countries. When you add an economic facet to the security cooperation it strengthens the bond and gives it stability,” said Oded Eran, a former Israeli ambassador to Jordan and to the European Union, and a senior researcher at Tel Aviv’s Institute of National Security Studies. Still, he said economic interests alone aren’t enough to fully integrate Israel into the Middle East. Arab nations without formal peace accords with Israel would need to see at least some progress on the Palestinian front before normalizing relations, he said. Israel has peace agreements with only two Arab countries – Egypt and Jordan. But warming ties with Israel remain unpopular on much of the Arab street, and the gas exports have sparked sporadic protests in Jordan. The Palestinians, pleased at being invited into the consortium, hope to develop their own gas fields off the coast of Gaza but for now are required by international agreements to acquire their fuel from Israel. Sameer Abdallah, a former Palestinian economy minister, said they import from Israel “because we have no alternative but once we can change that, of course we will.” The gas appears to have helped Israel grow closer to Arab governments and other Mediterranean countries that share its concern over what they perceive as the rising power of Iran and Turkey in the region. Just as Noble Energy was discovering the massive gas fields in Israeli and Cypriot waters, Cyprus in 2010 suddenly banned Turkish flotillas seeking to break the Israeli naval blockade of Gaza from using its shores – a stunning about-face after months of turning a blind eye to ships that were creating a diplomatic nightmare for Israel. Cypriot officials said at the time that Gaza-bound vessels were prohibited from leaving because of “vital national interests.” Relations have since soared. Israel now holds annual trilateral summits with Greece and Cyprus, which have become its geographical conduits to the West. The two also conduct joint military operations with Israel, and just a short flight away, have replaced Turkey as the Israelis’ preferred holiday destinations. The countries recently said they would sign an agreement for a $7 billion project to build a pipeline to carry natural gas from the eastern Mediterranean to Europe. Cyprus Foreign Minister Nikos Christodoulides has said he believes “hydrocarbons in the Eastern Mediterranean can become what the coal and steel was for the European community” – a reference to how in the 1950s, coal and steel brought European countries together economically and politically. Eran, the former Israeli diplomat, cautioned against investing so heavily in what he called “an economic adventure.” Even with the recent discoveries, he said the joint reserves were still not enough to create a strong enough economic lever to challenge global energy providers. Still, the upside of finally having natural resources of its own has been so appealing that the Israeli government has pushed forward even against stiff domestic opposition from environmental and social welfare activists. Critics, including prominent opposition lawmakers, say a controversial 2016 agreement over royalties is skewed in favor of the energy tycoons. More recently, local activists have been urging Noble Energy to move its proposed shoreline gas rig farther out to sea for fear of what they call catastrophic consequences of spreading toxic water and air pollution toward their homes. Noble and the Israeli government say it’s an irresponsible scare campaign and have countered with an aggressive ad campaign extolling the virtues of Leviathan, which it has dubbed “the national project.”