Bangladesh’s second LNG terminal to start in March; supply faces hiccups
Bangladesh’s second liquefied natural gas (LNG) terminal is expected to start operations in mid-March though domestic pipeline constraints means it will be unable to fully supply gas demand to the country’s capital Dhaka. Summit Corp, a subsidiary of Bangladesh’s Summit Holdings, and partner Mitsubishi Corp are expected to start operations at their floating storage and regasification unit (FSRU) off the country’s coast by the middle of March and ahead of schedule, a source familiar with the matter told Reuters on Tuesday. A Summit Corp spokeswoman confirmed in an emailed response that the Summit LNG terminal is on schedule, but did not elaborate. However, construction delays on a pipeline that will carry regasifed gas from the coastal city of Chattogram, near where the FSRU will be anchored, to Dhaka means that the vessel will not be fully utilised, the source said. Until the pipeline is fully connected, the FSRU will handle about 300 million cubic feet per day (mmcfd) of gas which will be supplied to the Chattogram area, the source said. The ship can regasify up to 500 mmcfd of LNG, according Summit’s website. Once the pipeline is completed, state-owned energy company Petrobangla will be able to send up to 1,000 mmcfd from both the Summit FSRU and a vessel operated by U.S. company Excelerate that started up in August, the source said. “Our target is to complete all the connecting gas transmission pipelines by April,” Ali Al-Mamun, managing director of the Gas Transmission Company Limited, a subsidiary of state-owned Petrobangla, told Reuters. He added that the company has awarded a contract to Chinese oil and gas major CNOOC to build a 7-km (4.2 mile)pipeline that connects the Summit FSRU to the shore. Other pipelines that will connect the offshore pipeline to the country’s main gas grid near the city of Bakhrabad are still being built, he said. Summit LNG’s FSRU will anchor 6 km off the island of Moheshkali in the Cox’s Bazar district of the Chattogram division, where it will regasify LNG procured by Petrobangla. The planned LNG import volume of the project is about 3.5 million tonnes a year, which will double the country’s LNG import capacity to 7.5 mmtpa once fully operational. Bangladesh has scrapped plans to build additional floating LNG terminals in favour of land-based stations after the start-up of Excelerate’s vessel was delayed by several months due to technical problems and bad weather.
Ophir Energy’s newly bought Asian assets boost annual output
Oil and gas company Ophir Energy Plc said on Tuesday full-year production exceeded its own forecast, a day after it rejected Indonesian oil and gas group Medco Energi Internasional Tbk PT’s potential buyout offer. Daily production averaged 29,700 barrels of oil equivalent per day (boepd) in 2018, 8 percent ahead of its own forecast, boosted by output from some newly acquired Southeast Asian assets. Ophir forecast daily production for 2019 to be in line with previous outlook of 25,000 boepd.
Abu Dhabi’s National Energy Company investments at $30 bn in 2018
Abu Dhabi’s National Energy Company (TAQA) said its total investments had reached $30 billion held across 11 countries by the end of 2018, Emirates state news agency (WAM) reported on Monday. The company said it had coped with declining oil prices by reducing expenditures in 2018 by $750 million, WAM reported. It said it was currently considering development of a wind farm project in Morocco with a capacity of 100-200 megawatts.
Pakistan to seek gas payment deal with Qatar: Media report
Pakistan will seek a credit facility for liquefied natural gas payments from Qatar as part of efforts to ease its severe balance of payments crisis, the Tribune newspaper said on Tuesday, quoting Petroleum Minister Ghulam Sarwar Khan. The paper quoted the minister as saying Prime Minister Imran Khan would seek a price cut on Pakistan’s existing LNG deal with Qatar as well as a one-year credit facility, enabling it to defer payments for vital gas supplies. Pakistan faces a severe strain on its balance of payments, with a current account deficit of around 5.9 percent of gross domestic product and foreign exchange reserves sufficient only to cover around two months’ of import payments. The government has been talking to the International Monetary Fund about a possible bailout and has stepped up efforts to raise funds from friendly Arab nations as well as China. At the same time, Pakistan is facing a serious energy crisis with repeated blackouts and gas supply outages that led to the sacking of the heads of two of the country’s main gas distribution utilities last week. If agreed, an LNG credit facility with Qatar would follow similar agreements enabling deferred payments on oil supplies from Saudi Arabia and the United Arab Emirates, which have both agreed $3 billion facilities with Pakistan. On Sunday, Saudi Energy Minister Khalid al-Falih announced plans for a $10 billion oil refinery in the port city of Gwadar, to be signed next month during a visit to Pakistan by Prince Mohammad bin Salman. The Tribune also quoted the petroleum minister as saying the government was considering offering tax incentives to onshore drilling to match similar incentives for offshore drilling under a new package of measures to be announced in March.
OMCs signal worry on pricing freedom in run-up to polls
Staterun oil marketing companies IOC, BPCL and HPCL are building a buffer to cushion uncertainty on pricing freedom of retail fuel in the run-up to the general elections. This is evident from the record gross marketing margins — the difference between retail selling prices and refinery transfer prices after deducting dealer commission and taxes — on petrol and diesel hitting Rs 8.2 by end-December 2018, Kotak Institutional Equities said. Typically, gross marketing margins are in the range of Rs 1.5-2.5 on the normalised level and marketing divisions of OMC’s account for 60-70 per cent of total operating profit. Interestingly, OMCs have removed refinery transfer price from price build-up of petrol and diesel, disabling them from determining the gross marketing margins on a regular basis. The record marketing margins of the companies show that a drop in crude prices has been absorbed, though the only partial benefit of this has been passed on to the consumer. Indian crude basket dropped 28 percent from the October 4 high of $85.1 per barrel, while the fuel prices were slashed by 18 percent in the same time period. Consequently, the gross marketing margin inched to Rs 8.2 per litre from nearly Rs 1litre at the beginning of October 2018. OMC stocks also suffered after the government asked the companies to absorb approximately Rs 1 per litre hike in prices by lowering their marketing margins. OMC stocks were downgraded by brokerages after the cut in marketing margins, seen as price intervention. However, the surge in gross marketing margins boosted investor confidence and average price to book of OMCs improved to 1.65 times from 1.87 times before marketing margin cut. OMCs signal worry on pricing freedom in run-up to polls Historically, prices of retail fuel remain unchanged before key state elections. Oil marketing companies are ramping up inventory to cushion static prices in case crude oil prices turn volatile. Iran’s crude import waiver will expire in May 2019 and the largest Opec exporter Saudi Arabia has reduced its export by 8 lakh barrels.
First LNG shipment arrives in Gibraltar for new power plant
The first liquefied natural gas (LNG) shipment has arrived in Gibraltar for use in the British territory’s new LNG-fuelled power station, a government statement said. Gibraltar already supplies the most marine fuel of any port in the Mediterranean and aims to develop LNG bunkering facilities, using some of the infrastructure that has been set up for the new power station, officials have said. The tanker Coral Methane, with a capacity of around 7,000 cubic metres, arrived at the port on the evening of Jan. 9, Refinitiv Eikon data shows. “Over the weeks ahead, we will continue to test and evaluate all the systems in both the terminal and the power station,” Jon Cortes, Minister for the Environment, Energy and Climate Change, said in a statement. Tough new rules on marine fuel are forcing shipowners to explore liquefied natural gas as a cleaner alternative and ports such as Gibraltar are preparing to offer upgraded refuelling facilities in the shipping industry’s biggest shake-up in decades.
Equinor says LNG deliveries unaffected by plant shutdown
Norway’s oil and gas firm Equinor said liquefied natural gas (LNG) deliveries to customers have not been affected so far by a shutdown of its Melkoeya LNG plant in northern Norway. The plant, which liquefies natural gas from the Arctic Snoehvit gas field for transportation by tankers, has been shut since January 4 due to a compressor failure. “We are currently working to start up again. As of now, this stop does not affect Equinor’s deliveries to our customers,” spokeswoman Elin Isaksen said in an email on Friday. Equinor said on its website it expected the outage to end on Jan. 14. Refinitiv Eikon data shows only one LNG cargo has left Melkoeya so far this month versus seven cargoes in December and six in January 2018. The LNG tends to be sent to Europe and further afield to Mediterranean ports in Turkey, Egypt and Jordan. The company declined to comment on the arrangements with its customers.
Equinor sets up office in New Delhi to support oil marketing, trading
Norway’s Equinor said on Friday it is setting up an office in India’s capital New Delhi partly to support its oil marketing and trading activities. The company expects to appoint a country manager for the office soon, Equinor’s spokesman said in an e-mail to Reuters. “It will not be a dedicated trading office as such but the office will also support our marketing and trading activities for crude, LPG (liquefied petroleum gas) and other products towards the Indian market,” he said. India is the world’s third largest crude oil importer and it overtook Japan as the world’s second largest LPG importer in 2017. Equinor’s Senior Vice President for trading and marketing, Tor Martin Anfinnsen, said in Singapore last year that the company was opening an office in Tokyo and its first office in India by early 2019 as it expands its presence in Asia. Besides marketing its equity oil from Europe, Africa and the Americas to Asian customers, Equinor also trades oil from Russia and the Middle East. In November, Equinor struck a deal to build and operate an LPG terminal at Port Klang, Malaysia. The terminal could start operating in mid-2021, enabling Equinor to sell LPG to south and southeast Asian countries.
Philippines’ Phoenix gets green light for $2 billion LNG terminal
Philippines firm Phoenix Petroleum said on Friday it has won government approval to build the nation’s first liquefied natural gas (LNG) import terminal for $2 billion, in partnership with China National Offshore Oil Corp (CNOOC). Phoenix, a fuel retailer, said it plans to break ground this year for the LNG regasification and receiving terminal south of the capital Manila, in a country that still relies heavily on coal as a fuel source. The company said its Tanglawan Philippine LNG Inc unit, which will undertake the project, is partnering with CNOOC Gas and Power Group Co Ltd, a unit of CNOOC and China’s largest LNG importer and terminal operator. The LNG facility is expected to have a capacity of 2.2 million tonnes per year, with commercial operations targeted to start by 2023, Phoenix said in a regulatory filing. The Philippines has been looking to start importing LNG to feed gas-fired power plants in Batangas, south of the capital, as domestic gas supplies from its Malampaya field are set to run out in 2024 at the earliest. Phoenix, owned by local businessman Dennis Uy who helped bankroll Philippine President Rodrigo Duterte’s 2016 election campaign, also plans to build a 2,000-megawatt gas-fired power plant as part of the integrated project in Batangas province. Raymond Zorilla, Phoenix vice-president for external affairs, said investments will reach $686 million for the regasification terminal and $1.3 billion for the power plant. Dozens of domestic and foreign companies had expressed interest in the LNG project, but only three groups, including the Phoenix-CNOOC group, were short-listed. The other two were state-owned Philippine National Oil Company and power producer First Gen Corp with Tokyo Gas. Whether the two other groups would be allowed to build their own facilities would depend on the viability of their project proposals, DOE Assistant Secretary Leonido Pulido told Reuters. First Gen operates four power plants in Batangas with a combined capacity of about 2,000 MW, all running on Malampaya natural gas. The Malampaya gas field, which lies near the disputed South China Sea waters and is operated by a unit of Royal Dutch Shell Plc, fuels plants that supply about 40 percent of the power for the main Luzon island.
How India Inc. plans to become LNG friendly nation driving overall demand?
Globally LNG market dynamics are changing fast as the industry is still at the evolution stage and right mature sustainable business models are yet to be realised among the players. Commoditization or consolidation in the trade activities is still under contemplation within the industry. 2018 was yet another year showing a consistent increase in global LNG demand reaching to abt 310 MMTPA. Most of the growth as compared to 2017 came from China, Japan, South Korea, and India, with China contributing almost half of the growth. On the supply side, US is on the full throttle with the advent of shale gas, to lead the world as a major exporting hub with capacity ramping up fast. New FIDs are going to take shape in coming years and competitive pricing offered for US gas will play the major pivotal role in LNG supply chain transformation resulting in several SPAs across the globe. India is currently ranked 4th globally for driving LNG demand behind established gas driven economies China, Japan, and South Korea. Top demand drivers from Asia (China, Japan, South Korea, and India) are all in their own time zones of following their own gas driven economic strategies. Japan will restart its nuclear plant in 2020 and China will start getting its gas supplies through Russian pipelines by 2020-21. These two major developments will put the pressure on the demand side of the global LNG supply chain resulting in dampening of growth rate in China & Japan. Meanwhile, India is sitting on a plethora of opportunities to become a gas driven economy and change the face of the game. Here’s how India has prepared itself for bigger LNG game : 1) India’s position as a founder in global LNG trade: India’s LNG growth can be compared to any typical startup with a huge TAM(Total Addressable Market) and high growth business potential on its plate. Such a business model comes with its own risks such as industry technicalities, financial, geopolitical and many others which cannot be easily controlled. In such cases, it is advisable to take baby steps first in the best possible beachhead market and make all efforts to make the model successful in that market. Once the feasibility is tested from all angles in this market, it is now possible to apply the repeatability model to replicate success in other markets with easy and fast execution. To Start this journey, India Inc. selected this beachhead market as the State of Gujarat. 2) Gujarat State as Beachhead : Gujarat is the most vibrant maritime state on the west coast of India and is the leader in gas-fuelled energy diversification. Gujarat’s gas story began in 1972 and today natural gas comprises 25% of the energy mix in the state which is higher than the world’s average of 24%. Several gas companies are operating and cover approximately 85% of the state through 469 CNG stations, catering to 1 Million NGVs daily. India’s average energy mix is 6.2% with a national total of 1491 CNG stations and 3.2 million NGVs. Gujrat alone operates more than 30% of these CNG stations and NGVs in the country. To tap International gas, India inc. set up India’s first RLNG terminal at Dahej in 2004 and Immediately just in 2005, second LNG terminal was commissioned in Hazira. With this security in gas supplies, Govt of Gujarat (GoG) revised the legislation to make CNG as compulsory fuel for vehicles and became the first in India to do so. The year 2018 was remarkable again adding the 3rd RLNG terminal in Gujarat state at Mundra port. Hence, Gujarat has been prepared as a model state prototype by India Inc. to lead in NGV, Gas and RLNG distribution in India. 3)Petronet LNG as a Chief LNG architect for the country: Petronet LNG Ltd (PLL) backed by GAIL, ONGC, BPCL, IOC , was the pioneer of LNG import in India from Gujarat state and leads the country in fulfilling LNG requirements of the country with current capacity of 20 MMTPA and 7.5 MMTPA as further proposed expansion making total of 27.5 MMTPA. This will enable PLL to fulfill country’s gas hunger from all directions West (Dahej), South (Kochi) and East(Gangavaram). 4) Role of other players as key market enablers: India inc. backed by key oil and gas players such as GAIL, ONGC, BPCL, and IOC have been committed to making India clean energy and pollution free country. In the past decade, private players have increasingly come forward to contribute and capitalize on country’s plan towards gas driven strategy. Shell(Hazira), HEnergy (Jaigarh /Kolkata), Adani (Mundra/Dhamra), Swan(Jafrabad), Shapoorji Pallonji (Charra), KRPEL/LNG Bharat(Krishnapatnam), are the few players who are already active in the market. These companies are not only applying new innovative ideas & business models to reduce the LNG cost for the end consumers but also contributing to establishing distribution network across the country along with Govt agencies to develop India as a gas friendly nation by taking gas access to every corner of the country. With a strong team in action at all levels in the country, Here’s how India will play the key pivotal role in driving LNG demand in the years to come: (1) LNG for power generation & combating pollution: Long time usage of dirty fuels like coal and fuel oil have resulted in severe pollution and depleted the air quality to dangerous levels in various cities across India. The same situation was faced by China sometime back forcing them to switch to LNG as cleaner fuel option to combat pollution, giving rise to LNG import in the country in the past few years. Air quality index is at dangerous levels for most of the major cities in India and strict measures to fight air pollution is the number one agenda for Indian Govt. The only solution India has is to follow China’s path and reduce the dependency on coal & oil and increase the usage of LNG as a fuel for power generation. The Indian government is keen