Gas shortage in China’s Zhejiang province to deepen until 2020: Official
China’s eastern Zhejiang province will have a natural gas supply deficit of 2 billion cubic meters (bcm) in 2018 and 4.5 bcm in 2019 as consumption rises, Fan Xiaoning, president of Zhejiang Provincial Petroleum said on Thursday * Fan was speaking at the International Petroleum and Natural Gas Enterprise conference at Zhoushan, near Shanghai * Fan expects the gas shortage to widen until 2020, accounting for 30 per cent of total consumption by that year * Zhejiang Provincial Petroleum Co is part of Zhejiang Energy Group
Exxon Mobil looks to sign LNG supply deal with Zhejiang Energy: Executive
Exxon Mobil is looking to sign a long-term liquefied natural gas (LNG) supply deal with Zhejiang Provincial Energy Group, a senior executive said on Thursday, which would be Zhejiang Energy’s first long-term supply deal. Peter Clarke, president of Exxon Mobil gas and power marketing, was speaking at the International Petroleum and Natural Gas Enterprise conference at Zhoushan, near Shanghai. Exxon Mobil is stepping up its efforts to meet soaring LNG demand, coupling multi-billion dollar production projects around the world with its first mainland storage and distribution outlet.
Shell gas project in Canada gets greener amid LNG climate worry
At a massive natural gas field in northern British Columbia, Royal Dutch Shell is using new technologies and processes to cut emissions to address public and environmental group concerns that Canada’s nascent liquefied natural gas export industry could be a climate time bomb. The Groundbirch project, perched above Canada’s richest shale gas deposit some 1,110 kilometers (684 miles) northeast of Vancouver, includes four gas plants and 500 wells dotted over an area the size of New York City. Shell has already slashed project emissions by moving its newest gas plant to hydro-electric power and replacing diesel with natural gas in drilling, and is now tackling methane with new electric components and a fuel cell trial. There is a considerable body of research showing natural gas is far cleaner than coal, but only so long as methane emissions are contained. Methane is many times more potent than carbon dioxide, though the industry produces far less of it. Groundbirch will eventually send gas hundreds of miles west to the Shell-led LNG Canada export terminal approved this month, where it will be cooled for exporting. LNG Canada is being touted as the world’s cleanest major LNG plant. LNG demand is booming, as countries like China swap out coal plants for gas in the battle against choking pollution. But environmental groups say exports will boost carbon emissions in Canada, both through gas extraction and the liquefaction process. They warn that this could derail British Columbia’s pledge to cut greenhouse gases by 40 percent by 2030 and test Canada’s vow to cut emissions nationwide by 30 percent from 2005 levels by 2030. “There’s no way to produce energy using gas without emissions,” said Jens Wieting, a campaigner with Sierra Club BC. “Considering methane leakage, it’s very difficult to make any statement that gas is any better than coal.” Methane, the main component in natural gas, is released into the atmosphere mostly from the venting of unburned gas and through leaks in gas infrastructure like wells or pipelines. Estimates of the carbon impact of LNG Canada from wellhead to port vary; the British Columbia government pegs it at 3.45 million tonnes (Mt) per year, while environmental groups say it could be as high as 12 Mt. The province expects to cut emissions to about 40 Mt by 2030 and 13 Mt by 2050 from 61.6 Mt in 2015. Gas from several Canadian producers will eventually feed LNG Canada, with roughly 40 percent coming from Shell’s Groundbirch project. Shell last month announced a plan to limit methane emissions at its assets around the world and is implementing a global methane monitoring program. Last year it set a goal of halving its global carbon emissions by 2050. In Canada, Groundbirch’s methane intensity, a measure of methane emitted compared to total volume of product produced, is 0.1 percent, already half the new 0.2 percent by 2025 target set by the Anglo-Dutch company. MAKING CHANGES At one of Groundbirch’s newest well pads, two hulking trailers hold thermal electric generators that power the batteries that run the pad’s equipment. “They are efficient, but they do produce combustion emissions. So what we’re looking at is finding new technology to replace that,” said Chang Liu, a facilities engineer-in-training at Groundbirch. The company is testing whether methanol fuel cells, which have no carbon emissions, could be used in the next generation of well pads, eliminating vented methane. For now, the latest generation of well pads use electric valve actuators, cutting methane emissions. Such actions are a “fantastic” first step, said Duncan Kenyon of the Pembina Institute, an energy policy think-tank, but he said not all Canadian producers are following through on pledges to reduce emissions. “What we need is regulations that lock some of these volunteer commitments in place,” he said.
India’s H-Energy says to delay start of LNG terminal until 2019
India’s H-Energy on Wednesday said it expected to delay the start-up of a liquefied natural gas (LNG) terminal in the west of the country until the first quarter of next year. The terminal had been slated to start full commercial operations by the final quarter of 2018, but that was likely to be pushed back after heavy monsoon rains affected the laying of a pipeline, said Rahul Tiwari, senior LNG trader at the company. The 60-km (37-mile) pipeline connects the 4 million metric tonnes per annum (mmtpa) terminal at the port of Jaigarh to the national gas grid at Dabhol. The terminal is a floating storage and regasification unit (FSRU). H-Energy, a unit of real estate group Hiranandani, is also expected to make a final investment decision on a separate 4 mmtpa LNG terminal in the east coast of India next April, Tiwari said on the sidelines of an LNG conference in Singapore. Regasified LNG from that terminal, which would be capable of expanding to 7 mmtpa, could eventually be supplied to customers in Bangladesh through a natural gas pipeline from Kanai Chatta to Shrirampur, he added.
Total S A, Adani group to jointly develop LNG regasification terminals in Odisha
Will also build a retail network of 1,500 service stations over a period of 10 years French energy giant Total S A and Adani Group will jointly develop liquefied natural gas (LNG) regasification terminals at Dhamra in Odisha and fuel the retail network of 1,500 service stations over 10 years. Both the companies have signed an agreement, but terms of the deal were not disclosed. Total is the world’s second largest LNG private player. The partnership has set a target of developing various regasification terminals, including Dhamra LNG, on the east coast of India. Most essentially it would be a big stride towards India’s vision of achieving a healthier energy mix through promotion of LNG. Total and Adani will create a joint venture to build a retail network of 1,500 service stations over a period of 10 years, on the main roads of the country, such as highways and intercity connections. The joint venture will strive to take advantage of a market growing at 4 per cent per year driven by the development of road infrastructure and the emergence of middle class. The planned service stations, in line with international standards, will offer Indian customers Total’s full line-up of fuels, lubricants, as well as a broad range of other products and services. Patrick Pouyanné, Chairman and CEO, Total, said: “India’s energy consumption will grow fastest among all major economies in the world over the next decade. The partnership between Total and the Adani Group illustrates our joint commitment to assisting India to diversify its energy mix and to ensure a supply of reliable, affordable and clean energy to consumers. We are thrilled to build this broad partnership with the Adani Group, benefiting from its in-depth knowledge of the Indian infrastructure and energy market, as well as its access to infrastructure through a significant footprint in several of the country’s key ports.”
Dharmendra Pradhan urges Rosneft to enhance presence in fuel retail sector
Union Minister for Petroleum and Natural Gas Dharmendra Pradhan on Tuesday urged Russian energy company Rosneft to enhance its presence in the Indian fuel retailing sector. “Met Global Head of Downstream and Member of Management Board @RosneftEN, Didier Casimiro on the sidelines of #IndiaEnergyForum. Urged Rosneft to enhance their presence in the Indian fuel retailing sector. Last year Russia had made its largest FDI in Oil and Gas sector in India,” Pradhan wrote on Twitter. “Rosneft is also partnering with Indian OMCs in Russian projects such as Sakhalin-1, Vankorneft and Taas-Yuryakh. Explored further enhancing Indian presence in Russian Oil and Gas fields, also invited them to invest in India’s Gas infrastructure,” he added. Pradhan, meanwhile, also met Neil Saunders, president and Chief Executive Officer of oilfield equipment for Baker Hughes, a GE company (BHGE), on the sidelines of second India Energy Forum. During the meet, he urged Saunders to take advantage of the investor-friendly regime, policy reforms and the ‘Make In India’ initiative to further increase their presence in India’s hydrocarbon market. Pradhan also asked the company to invest and partner in India’s skill development ecosystem. “Met Neil Saunders, President & CEO, Oilfield Equipment of @BHGECO on the sidelines of 2nd #IndiaEnergyForum. GE Oil & Gas is already deeply involved in all the three segments-Upstream, Midstream & Downstream segments of Oil & Gas in India,” Pradhan tweeted. “Urged Saunders to take advantage of the investor-friendly regime, policy reforms & the #MakeInIndia initiative to further increase their presence in India’s hydrocarbon market. Also urged them to invest & partner in India’s skill development ecosystem,” he wrote.
India says OPEC members not meeting June decision to raise output
India on Tuesday said that some members of the Organization of Petroleum Exporting Countries (OPEC) have not made good their June decision to increase output by one million barrels per day (bpd) or about 1% of global supply. “OPEC promised something in June—there will be an additional production of one million barrels per day after their decision of capping output. But according to our information, though Russia and Saudi (Arabia) have increased their production, some countries are still lagging behind,” oil minister Dharmendra Pradhan said at the India Energy Forum on Tuesday. Opec accounts for about 40% of global production and the grouping’s June decision came against the backdrop of calls from the US, China and India to help moderate prices. India has also been reminding Saudi Arabia of OPEC’s promise. Pradhan added that the issue was not of ‘shortfall’, but of ‘sentiment.’ “With that also, there is no issue of availability of crude oil today. But due to some geo-political uncertainty in different parts of world, not only in Iran, there is a sentimental issue. So that’s the primary challenge. We are confident from Day One, I am of this opinion, there is no problem in the sourcing of crude. There is plenty of crude available in different parts of the world,” Pradhan said. He also clarified the National Democratic Alliance (NDA) government’s decision earlier this month to effect a Rs 2.50 per litre cut in the prices of petrol and diesel to ease inflationary pressure and boost consumer confidence. Out of the Rs 2.50 cut, the Centre reduced excise duty by Rs 1.50 per litre, while state-run fuel retailers will take a hit of Re 1 for every litre sold. “The government has no business to interfere in the pricing mechanism of petroleum products. This is a day-to-day price mechanism developed by respective companies. So the government has a role in the tax, what we have done last week—10 days back,” according to Pradhan. OPEC on Tuesday forecast an imbalance in 2019 due to a larger supply growth. Also Khalid A. Al-Falih, Saudi Arabia’s energy, industry and mineral resources minister and chairman of the world’s biggest oil producer, Saudi Arabian Oil Co. (Saudi Aramco) at the India Energy Forum, on Monday said the fundamentals of the current oil market were ‘quite balanced.’ “Non-fundamental factors, beyond the control of any individual stakeholder, can have a particularly strong influence on our industry. Geopolitical events, natural catastrophes, technological breakthroughs or other critical uncertainties — we are all only too aware of the impact they can have. This has been particularly apparent in recent months,” said Mohammad Sanusi Barkindo, secretary general, Opec. Growing tensions between the US and Venezuela, with the US demanding a global end to the import of Iranian oil by early November, and the rupee’s performance as Asia’s worst performing currency, have exacerbated the situation, putting India, the world’s third-largest oil importer, in a spot. India has called for a global consensus on “responsible pricing” against the backdrop of rising oil prices after supply reductions by Russia and OPEC. Also, India has been consistently pitching for a price and terms correction on the so-called Asian premium crude. With most Asian countries being primarily dependent on West Asia to meet their energy needs, customers from the Continent are seen paying the Asian premium owing to this dependence, against prices paid by the US or the European Union. “The interconnectivity of our world means that the only way we can overcome common challenges is through international cooperation and teamwork,” Barkindo added. “OPEC is right. Everybody has to ensure market stability. This is beneficial for consuming countries. This is equally beneficial for producing countries,” Pradhan said. This also comes at a time of impending sanctions on Iran. India plans to continue its energy imports from Iran even in the wake of the US government’s 4th November deadline. India is a top buyer of Iranian oil. Of the 220.4 million metric tons (million MT) of oil imported by India in 2017-18, about 9.4% was from Iran. In response to a query regarding India’s preparation in the wake of Iran sanctions, Pradhan said: “I don’t want to add anything new. I have already given my opinion (about) India’s approach towards our requirement and we have done something. There is nothing new to repeat.” Global demand for oil is expected to increase by 33%, or 91 million barrels oil equivalent per day (mboed), between 2015 and 2040, according to OPEC. “A massive 24% of this anticipated increase, 22 mboe/d, will be from India,” Barkindo said. “World oil demand is expected to increase by 14.5 mb/d (million barrels per day) — from 97.2 mb/d in 2017 to 111.7 mb/d in 2040. India will account for an oil demand growth of 5.8 mb/d, representing astonishing 40% of the overall increase.” Also, this will involve a global oil sector investment of around $11 trillion till 2040. In a separate development, PTI reported that French energy giant Total SA was in discussions with multiple Indian companies to acquire a stake in LNG import terminals and city gas distribution projects, and also interested in setting up petrol pumps in India. India on Monday sought a review of payment terms with major oil producers as part of the government’s strategy to help counter a depreciating rupee and rising global crude oil prices. The pitch was made by Prime Minister Narendra Modi during his third meeting with top executives of global oil companies and experts from the energy sector.
Bob Dudley says delay in gas pricing clarity delayed investment decisions
BP’s group chief executive officer Bob Dudley on Monday expressed confidence that there won’t be a return of state control on fuel pricing in India and said that issues such as delay in gas pricing clarity delayed investment decisions. In response to a Mint’s query about the Indian government’s plan to challenge the decision of an international tribunal that has ruled in favour of Mukesh Ambani-controlled Reliance Industries Ltd (RIL), and its partners BP Plc and Niko Resources Ltd, in a gas migration dispute, Dudley said at a press conference at the India Energy Forum by CERAWeek on Monday, “I think the speed of decision making does and will be faster in the future in India. But the speed of decision making is something that is not good for Brand India. I am very open about my views on this.” The tribunal also awarded costs of $8.3 million to be paid by the government to the consortium. The dispute pertains to a $1.55 billion penalty imposed on RIL, BP and Niko by India for allegedly exploiting gas reserves belonging to state-run Oil and Natural Gas Corp. Ltd (ONGC) in the course of its own drilling activities. The adjacent deepwater fields in question are RIL’s D6 field (KG-DWN-98/3) and ONGC’s KG-DWN-98/2 block, in the Krishna-Godavari (KG) basin off India’s east coast. RIL, BP and Niko Resources together own the D6 block. “So, we have to one, continue to have confidence in the country and what we do and our investments. And we also have to go through processes like these. And its probably slowed down our investments. Our investments probably would been have faster. But I am confident. I am confident otherwise we wouldn’t be investing this much money,” added Dudley whose firm has made a $12 billion investment commitment in India. The petroleum ministry had raised the demand on 4 November, 2016, giving RIL one month to pay up, after the justice A.P. Shah panel told the ministry on 31 August that RIL should make up for the “unfair enrichment” it had obtained by way of retaining the gains of gas that seeped into its field from ONGC’s. RIL proposed arbitration to resolve the issue. Accordingly, the government nominated G.S. Singhvi, a former Supreme Court judge and former Competition Appellate Tribunal chairman, as its arbitrator. RIL’s nominee on the arbitration panel was Bernard Eder, a former high court judge in the UK. Dudley added that regulatory slow-downs are not specific to India. “Regulatory slow-downs happen in many places. It has happened to us in the United States on a massive scale. So, it is not singled out India. But everywhere around the world, everyone in business likes regulations. They want to know what the rules are, what’s the level playing field? And decisions can be made to work within regulations. Its when regulations are clear and decisions are made faster within regulations, as particularly something that holds back investments in any country. And I think I am seeing a trend, I know I am in speeding up decisions and getting things done faster and quicker which can only help India as a country, and all sectors, in particular in the very sensitive energy sector. So again, I am optimistic,” Dudley said. According to a report by DeGolyer and MacNaughton, a US-based consultancy selected by both ONGC and RIL that was relied upon by the Shah panel for confirmation of the gas flow between the blocks, about 11 billion cubic metres (bcm) of gas migrated to KG-D6 from adjacent fields between 1 April 2009 and 31 March 2015, of which 8.9 bcm was tapped by RIL. Dudley also expressed confidence about no return of fuel price control. The National Democratic Allance (NDA) government earlier this month effected a Rs 2.50 per litre cut in prices of petrol and diesel to ease inflationary pressure and boost consumer confidence. Out of the Rs 2.50 cut, the Centre will reduce excise duty by Rs 1.50 per litre while state-run fuel retailers will take a hit of Rs 1 for every litre sold. However, the government’s move to ask state-run fuel retailers to take a hit of Rs 1 per litre on petrol and diesel has been viewed as against the spirit of deregulation of fuel prices. Many BJP-ruled states have also cut value-added tax (VAT) on fuel by an equivalent amount at the Centre’s request. “Well, I think price control will not be good for the sector in the longer term. And I have not heard any, even suggestions, that India will go back to price controls. There have been some reductions, on parts of taxes and whatever and I understand that prices of fuel now are very painful in the country. So, finding a way through that, to make sure that the retail sector stays vibrant and the Indian oil companies stay as vibrant, is very important. And if the price controls are put on that and the Indian oil companies that sell most of the fuel, then reduces their income, it reduces the dividends back to the government,” added Dudley whose firm has fuel retail plans in India along with RIL. The government’s decision has also raised questions about its commitment to keep fuel prices outside its control. In the run-up to 2019 general elections, Fitch Ratings in a recent report on raised the spectre of return of state control on fuel pricing in India. Petrol prices were deregulated in June 2010 by the Congress-led United Progressive Alliance (UPA) government. Prime Minister Narendra Modi’s government decontrolled diesel prices in October 2014. With dynamic fuel pricing introduced in June last year, the NDA government has maintained that it has no role in pricing. “So, as a cycle here, that there is a whole lot unintended consequences of price controls. Actually, its isn’t that great for the government. So, I think people are working their way through this,” Dudley said and added, “And, I recognise that prices are off the fairway of comfort
Sentimental issues pose a challenge not oil supply position: Pradhan
The price of crude oil is being driven by sentiments that pose a challenge for India according to Minister for Petroleum and Natural Gas, Dharmendra Pradhan. Speaking with reporters at the sidelines of the India Energy Forum by CERAWeek, Pradhan said, “The issue is not shortfall, the issue is now sentiment. As on today, OPEC has promised in the month of June, there will be an additional production of one million barrels per day after their decision of capping.” “But according to our information, though Russia and Saudi, the major two contributors of OPEC have increased their production, some of the countries are lagging behind,” he said. “With that also, there is no issue of availability of crude oil today. But due to some geo-political instability in different parts of the world, there is a sentimental issue. So that is the primary challenge,” he added. Responding to concerns raised by BP on the move to artificially suppress auto fuel prices, Pradhan said, “Government has no business to interfere in the pricing mechanism of petroleum products. The day to day price mechanism was developed by oil companies. The government has a role in the tax and we have done that in the last week.”
BPCL offers light diesel oil; unit restart seen delayed to December
India’s Bharat Petroleum Corp Ltd (BPCL) has offered light diesel oil (LDO) in a rare move following an extended shutdown of a secondary unit at its Mumbai refinery that could last until December, a source who tracks refined oil products said. BPCL is looking to sell up to 33,000 tonnes of LDO for October 27-30 loading from Mumbai through a tender closing on October 18. In August, the state-owned refiner shut a 6,000-tonnes-per day hydrocracker at its 120,000-barrel-per day (bpd) Mumbai refinery following a fire that left 40 people injured. A hydrocracker is a unit needed to make middle distillates, namely diesel and jet fuel, while LDO, which is used as feedstock for the cracker, is a blend of gasoil and residual fuel often used as marine fuel or in industrial equipment. The hydrocracker was previously expected to restart last month but this could now be delayed to early December, the same source said.