Bulgaria to seek binding bids for new gas link by January 16
Bulgaria’s state gas network operator Bulgartransgaz plans to seek binding bids from shippers by Jan 16 for a new gas link to transport mainly Russian gas from the TurkStream pipeline to central Europe, company documents showed on Thursday. Bulgartransgaz plans to take a final investment decision and spend 1.4 billion euros ($1.59 billion) on a new 484-km gas pipeline from its border with Turkey to Serbia by 2020, pending the outcome of the open season. Potential shippers will be invited to register for the bidding from Dec 21 and should file their offers to book capacity for 15 years by January 16, the documents, pending approval by the energy regulator, showed. Bulgartransgaz plans to hold two more rounds of the economic test by the end of January in case it is unable to secure enough interest to make the project viable. Five companies have expressed interest in shipping gas through Bulgaria’s network and sources said Russia’s Gazprom was interested in using most of the capacity. Gazprom said on Nov 30 it was considering whether to book capacity in the Bulgarian gas system. Bulgaria saw that as an intention to ship its gas from TurkStream to Serbia, Hungary and Austria through Bulgaria. Moscow has also suggested that the option for an extension of TurkStream via Greece to Italy is also possible. Gazprom is building TurkStream to bypass Ukraine on the south amid strong political tensions with the West over Russia’s actions against Ukraine in the Kerch Strait. Its two lines will each have an annual capacity of 15.75 billion cubic meters. The first line, which runs from Russia to Turkey under the Black Sea, is intended for Turkish consumption. The United States has said that an extended TurkStream, along with Nord Stream 2 pipeline that aims to bring Russian gas to Western Europe via the Baltic Sea will deepen EU dependence on Russia and increase Moscow’s grip over Ukraine. Brussels has also said that Bulgaria, currently fully dependent on Russian gas, needs to sell Russian gas through its planned gas hub in Varna along with gas from other sources rather than just building transit pipelines. Sofia has vowed to fully comply with EU rules and seek ways to transit some of the gas and sell part of it via its planned Varna hub.
LPG Consumption In India Drops For First Time In Five Years
India’s monthly petroleum products consumption dropped 1.7 per cent to 17,273 in November primarily due to a decline in usage of Liquefied Petroleum Gas (LPG), Diesel, Kerosene and Petcoke, fresh data released by the oil ministry’s statistical arm showed. LPG consumption, which had been recording growth for 62 straight months, declined for the first time in November. It dropped 7.34 per cent to 1,842 tonne during the month as compared to 1,988 tonne recorded in November 2017, data from Petroleum Planning and Analysis Cell (PPAC) showed. Consumption of cooking gas has been buoyant over the past few years mainly due to increased LPG penetration under Pradhan Mantri Ujjwala Yojana (PMUY). According to the latest figures available on the PMUY website, state-owned Oil Marketing Companies (OMCs) have distributed 58.4 million LPG connections under the scheme. LPG penetration in the country has gone up to 88.5 per cent in 2018 as compared to 56.2 per cent in 2015, according to oil ministry data. A senior executive at one of the Oil Marketing Company (OMC) told ETEnergyWorld that LPG penetration has almost reached a saturation point and consumption of LPG may from now be flat or witness decline in the coming future. Petrol consumption grew at 8.72 per cent to 2,318 tonnes during the month on the back of robust growth in the sale of two-wheelers, which account for around 60 per cent of the country’s petrol demand. Data sourced from the Society of Indian Automobile Manufacturers (SIAM) shows that domestic two-wheeler sales in November grew 7.15 per cent to 16,45,791 units aiding the consumption of petrol. Consumption of diesel declined 4.80 per cent to 6,921 tonnes in November despite a robust growth in sales of commercial vehicles, a driver of diesel consumption. Domestic sales of commercial vehicles grew 5.71 per cent to 72,812 units during the month. Consumption of Aviation Turbine Fuel (ATF) grew 5.07 per cent to 683 tonnes in November as compared to the corresponding month a year ago, on the back of growth in domestic air traffic. Also, the consumption of pet-coke, a polluting fuel primarily used in the cement and power industries, witnessed a decline of 2.26 per cent to 1,856 tonnes. However, according to PPAC, the consumption of pet-coke by the cement industry is on the rise after the Supreme Court order of December 2017 allowed its use as a feedstock. The Directorate General of Foreign Trade under the commerce ministry has also banned import of pet-coke for use as fuel. It has allowed its import only for use as feedstock in a few select industries such as cement, lime kiln, calcium carbide and gasification industries.
bangalore Exxon, BHP to develop Australian natural gas project
Exxon Mobil and the world’s top miner BHP Billiton said on Thursday they approved development of the West Barracouta gas field in the Gippsland Basin in Australia, to bring fresh gas to Australian domestic markets. Exxon said the project, located off the shore of the state of Victoria, is part of its continuing investment in the Gippsland Basin, an area rich in oil and gas. BHP will invest about A$200 million ($144.36 million) in the gas field, the miner said in a separate statement. Rising natural gas prices has become a political issue in Australia as households and manufacturers complain of higher costs, especially in the country’s more populous east coast. The Gippsland Basin joint venture continues to supply about 40 percent of east coast Australian domestic gas demand, Exxon said, adding that front-end engineering design work for the project was completed and key contracts awarded. “The West Barracouta project is an important investment, underpinned by strong economics and rates of return, that will unlock a high quality, new gas resource and will help offset Bass Strait production decline at a vital time for the east coast market,” said Graham Salmond, General Manager of BHP Petroleum Australia. “BHP is actively engaging with a diverse range of customers for future Bass Strait gas supply,” he said. The West Barracouta development is expected to achieve first gas from 2021. Exxon’s unit Esso Australia Pty operates the Gippsland joint venture on behalf of a 50-50 joint venture with BHP Billiton Petroleum (Bass Strait) Pty.
Despite rising oil imports, energy security plan on track: Dharmendra Pradhan
Oil minister Dharmendra Pradhan has said the increasing dependency on imported fuel should not be seen as a challenge to the energy security programme that the country is building on. Pradhan said government has taken many initiatives to increase the capacities of alternative sources of energy like solar, wind, biogas, among others. The country imports more than 82 per cent of its daily oil demand, making crude imports the biggest drain on the nation’s foreign exchange, as domestic production has either been stagnant or even declining for long but demand has been on a steady rise, clipping at 4-6 per cent per annum. “The rise in oil imports and the dependency on the imported fuel are not going to be hurdles in our energy security programme. Even large economies like Japan and Korea are also net importers of oil. On the contrary, because of our energy diplomacy, we have been able to, for the first time, get a say in oil production in the GCC,” he said. Addressing an economic summit organised by the Times group, Pradhan said government has taken initiatives to create a gas-based economy considering the easy and cheaper availability of natural gas. “To increase domestic gas production, we have undertaken many reforms and made a lot of amendments in ease of doing business in the oil sector. Besides, we have also increased our ethanol production and now we are experimenting with converting coal into synthetic gas,” he said. Reiterating his call to oil producers to take into consideration the interest of their large consumers like India, Pradhan said that “we have been stressing that our consuming capacity should be recognised by the oil cartel Opec. They cannot continue to determine both the quantity and price and that there has to be space for consumers as well.” He also claimed that because of the efforts taken by New Delhi, other large Asian oil importers like China, Japan and Korea will also be beneficiaries. “Why should Europe get oil at a lower rate while we we pay higher prices to the same quality crude?. This is what we have been telling the Opec and finally they are now revisiting their strategies,” he added.
CNOOC gas supply hits new record as northern China shivers
CNOOC Gas & Power, a unit of China National Offshore Oil Corp , said on Wednesday its daily supply of natural gas had surpassed 200 million cubic meters for the first time as temperatures in northern China plummet. * CNOOC sent 205 million cubic meters of gas to the Chinese market on Dec. 10, 18.5 percent more than the daily high of 173 million cubic meters recorded in 2017, CNOOC Gas & Power says on its website. * CNOOC plans to supply 48 billion cubic meters (bcm) of gas this year, including 46.5 bcm of base supply and 1.5 bcm of incremental supply, the statement says. * State-run news agency Xinhua reported last month that CNOOC would raise gas supply by 20 percent during the winter heating season. * Temperatures in northern China have dropped since Dec. 4 and various regions have seen an increase in demand, CNOOC Gas & Power says. * China Meteorological Association data put temperatures in Beijing as low as -8 degrees Celsius on Wednesday.
Auction of 25 oil and gas fields deferred by a month, says DGH
The government has deferred the auction of 25 oil and gas fields by one month that hold resources worth an estimated Rs 1 lakh crore, upstream regulator Directorate General of Hydrocarbons (DGH) said. The second round of Discovered Small Fields (DSF) auction opened in August and December 18 was the last date for submission of bids. “Due to consistent demand of investors, the last date for submission of bids for India DSF Bid Round-II is now extended till 1200 hrs January 18, 2019,” the DGH said in a tweet. Bids will be opened on the same day, it added. In 2016, the government brought in a new DSF policy wherein ‘idle’ small discovered fields of state-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) were taken away from the companies and auctioned to private players on liberalised terms including marketing and pricing freedom and lower taxes. ONGC and OIL say they have not been able to develop the fields due to their small size and current capped prices making their development unviable. Private companies will, however, get full pricing and marketing freedom. When the DSF-II bid round was launched in August this year, Oil Minister Dharmendra Pradhan said the fields hold resources worth Rs 1 lakh crore. Some of these resources would translate into higher revenue for the government by way of increased royalty paid on production, taxes and profit petroleum. Pradhan had said that the government is expecting as much as Rs 45,000 crore in royalty, taxes and profit petroleum over the life of the fields. In DSF-II, 59 discoveries have been clubbed into 25 contract areas spread over 3,042 square km and eight sedimentary basins. In the DSF-I round, Rs 34,600 crore of resources were bid out. A total of 134 bids were received for 34 blocks out of 46 on offer. The government is expecting a revenue of Rs 9,000 crore from fields bid out in DSF-I, with first oil expected in 2020. The government had planned to offer 60 discoveries clubbed into 26 contract areas spread over 3,100 sq km in DSF-II but curtailed the offer to 25 areas comprising 59 discoveries due to some unexplained technical difficulty. The fields are being offered in Rajasthan, Gujarat, Kutch & Cambay shallow waters, Mumbai offshore, Assam and Tripura, Mahanadi shallow water, Andhra Pradesh onland and KG offshore. DGH officials said the main features of DSF-II include a single licence for exploitation of both conventional and unconventional hydrocarbon, prior technical experience not a pre-qualification criterion, no upfront signature bonus and full pricing and marketing freedom. Royalty rates have been reduced to 7.5 per cent from 10 per cent for offshore blocks. In DSF-II, the fields on offer hold 190 million tonne or 1.39 billion barrels of oil and oil equivalent in place gas reserves. On offer are 15 onland fields and 10 shallow water areas. Of the 60 fields that were identified for DSF-II, 22 belong to ONGC, five to OIL and 12 are relinquished discovered fields from the New Exploration and Licensing Policy (NELP) blocks. In DSF-I, 46 contract areas consisting of 67 discovered fields spread across nine sedimentary basins were put on auction.
Who really influences the price of oil?
Opec, the Organization of the Petroleum Exporting Countries, has certainly had its share of criticism over many years. President Trump recently accused the group of “ripping off the rest of the world” and keeping oil prices “artificially high”. It has sometimes been charged with holding the world to ransom – notably in the mid-1970s when it cut supplies and the price tripled. But as Opec energy ministers meet in Vienna, does the group really wield that much influence any more? Controlling production They are being joined by some non-member oil-producing countries, notably Russia. The group wants to stabilise or increase crude oil prices, which turned sharply downwards in early October. The main tool it has is to manage its own production levels – either by cutting if it wants prices to rise or increasing supplies if it wants them to fall, at least to a point that would not cause prices to collapse. Opec’s presence in the market is certainly big enough to make an impact. It accounts for more than 40% of global crude oil production. It was higher – more than half in the early 1970s – but the current figure is still a substantial share. But the other 60% of the industry also matters. Two non-Opec countries are especially important in different ways: Russia and the United States. Russia’s influence Russia has contributed to Opec’s current effort to move prices higher. It began in 2016 with an Opec decision “to implement a production adjustment”, which means a cut of 1.2 million barrels a day. Crucially, Russia and a number of other non-Opec members joined in the effort with their own commitments to restrain production. Following that, prices did gain with the main international price, Brent Crude, reaching $86 (£67) a barrel in early October – it was below $50 a barrel in the period before that decision. That is not to say the decision by Opec and partners was the only factor. Political turmoil in Opec countries Venezuela, Libya and Nigeria has made it impossible for them to produce the amount of oil that in theory they could. Iran sanctions Iran has been hit by the reimposition of US sanctions over its nuclear programme. The possibility that Iran’s oil might be unavailable to the global market – or that there would be less of it – has been an important factor pushing prices higher this year. But some of Iran’s biggest customers – China, India and Japan – have been given temporary exemptions and can continue to buy Iranian oil for now without being hit by US action. As a result, prices actually turned down as there was less demand for oil from other producers than had been expected. That said, the rise in prices since late 2016 did owe something to the agreement between Opec, Russia and others. Within Opec, Saudi Arabia has been key. According to estimates from the International Energy Agency, Saudi Arabia accounts for more than a third of Opec’s total production capacity and more than half of the group’s spare capacity. That is an indicator of the extent to which production is being restrained. Important though Saudi Arabia is, it was reluctant to act alone over prices. So it expected, as it generally does, other Opec members to make some sacrifice, but it also wanted Russia involved. US largest producer There is a third very large player in the global business; the United States, currently the biggest producer of all. The US is a very different beast from the others. Oil is produced by private industry making decisions on the basis of what is profitable. Russia’s big oil companies are close to the government and the dominant firm in Saudi Arabia – Saudi Aramco – is state-owned. American oil producers do not co-operate with Opec to manage prices, because that would be illegal under US anti-trust or competition law. But something has happened in the US in the last decade or so that has transformed the global industry – the rise of shale oil. There are two important aspects to this. Shale oil impact The exploitation of a relatively new type of resource has reversed a long-term decline in US oil output. The country still has to import oil. But now it can meet two-thirds of its own needs whereas just over a decade ago, it was one-third. Also shale can respond more quickly to a changing market. It does not need such large-scale investment as conventional oil. The investor can get their money back much more quickly, so shale output can be boosted more rapidly when prices start to rise. Shale was one of the reasons that oil prices fell sharply after mid-2014. One possible reason Opec did not respond sooner than it did was a desire on the part of some members, notably Saudi Arabia, to see US shale producers squeezed by lower prices. Opec does still matter, but it is far from being fully in charge of the global oil market. And in the longer term, if global efforts to address climate change mean we become less reliant on oil – a big if perhaps – then Opec will matter a great deal less.
U.S. LNG export capacity to more than double by end of 2019
The United States will be able to export more than double the amount of liquefied natural gas by the end of next year, a new report from the Energy Information Administration shows. LNG producers currently have the ability to export 3.6 billion cubic feet of natural gas per day. But with at least 18 LNG production units coming expected to come into service over the next 12 months, export capacity is expected to grow to 8.9 billion cubic feet per day by the end of 2019. At that level, the U.S. will be the third-largest LNG exporter in the world behind Australia and Qatar. The United States began exporting LNG from the Lower 48 states in early 2016 when Houston-based Cheniere Energy shipped its first cargo from its Sabine Pass LNG terminal in Louisiana. Virginia-based Dominion Resources became the the second company to do so after shipping its first cargo from the company’s Cove Point LNG export terminal in Maryland in March. Four companies are expected to bring at least 18 LNG production units known as trains into service over the next 12 months. Cheniere accounts for three of them. The first train at the company’s Corpus Christi LNG facility reported its first shipment on Tuesday morning, while the fifth train at its Sabine Pass facility is expected send its first shipment by month’s end. The second train at the company’s Corpus Christi facility is expected to come into service during 2019’s second quarter. LNG DEAL: Tellurian scores first LNG customer for $15B export terminal Meanwhile, all three trains at Sempra Energy’s Cameron LNG in Louisiana are expected to be in service by the end of next year. Houston-based Kinder Morgan is expected to bring 10 small and modular production units at its Elba Island LNG facility near Savannah, Ga., into service over the next 12 months. The first two trains at the Freeport LNG facility near Houston are expected to be in service by the end of next year. And there are still more projects in the pipeline. Freeport LNG and Corpus Christi LNG are expected to have their third trains in production by 2020 and 2021 respectively. There are also several LNG export terminal projects moving through the federal approval process.
Iraq lifts oil production at Halfaya oilfield to 370,000 bpd
Iraq has increased production at its southern Halfaya oilfield by 100,000 barrels per day (bpd) to a total of 370,000 bpd, an oil official told Reuters on Wednesday. Halfaya, operated by PetroChina, is Maysan province’s largest field. Production rose after the completion of a new oil processing facility, Adnan Noshi, head of Maysan Oil Co which oversees oilfields in Maysan province, told Reuters on the sidelines of a ceremony to launch a new installation in Halfaya. Noshi said increasing production from Halfaya had raised the company’s overall output to around 510,000 bpd. The new crude facility, which has a capacity to process 200,000 bpd of crude oil, will help further boost output from Halfaya to reach 470,000 bpd in the first quarter of 2019, Noshi said. The expansion at Halfaya also includes launching a gas project to process around 300 million standard cubic feet of natural gas extracted alongside crude oil at the field. Iraq’s oil ministry is studying offers submitted by several foreign energy companies for the Halfaya gas project, including China Petroleum Engineering & Construction Corporation (CPECC) which is the frontrunner to win the deal, Noshi said. “CPECC submitted the best offer comparing to other companies,” said Noshi “We will pick up the best offer in two months and the work at the Halfaya gas project should start in April 2019,”. Iraq said last year it planned to increase its oil output capacity to 5 million bpd. The country is the second largest producer in the Organization of the Petroleum Exporting Countries (OPEC), after Saudi Arabia, with a total output of about 4.55 million bpd.
India’s falling oil and gas production is a concern: Minister Pradhan
India’s falling oil and gas production is a matter of concern, Oil Minister Dharmendra Pradhan said, adding the government will soon set up a gas trading hub. India’s crude oil production in October dropped 5 percent from a year earlier to about 2.89 million tonnes, while natural gas output was down 0.4 percent at 2.80 billion cubic metres, provisional data issued by the government showed last month. The government also plans to invest $300 billion in the oil and gas sector in the coming decade, Pradhan added.