Petronet submits proposal to set up $1 billion LNG terminal in Bangladesh
Petronet LNG Ltd, India’s biggest liquefied natural gas importer, has submitted a firm proposal to set up an LNG import facility in Bangladesh at an investment of about USD 1 billion, its Managing Director & CEO Prabhat Singh said. Petronet had last year signed a MoU with Petrobangla to set up a 7.5 million tonnes a year project to receive and regasify LNG on Kutubdia Island in Cox’s Bazar and lay a 26-km pipeline to connect it to the consumption markets. The firm has now made a formal proposal with techno-economic details including the cost to the Bangladesh government for approval, Singh said. “We have told them that we can build the land-based LNG receipt facility in 42 months from the date of receiving all approvals,” he said. The project envisions future expansion and can be used for supplying LNG through small barges and LNG trucks to users which are not connected by the gas grid. Once Bangladesh government accepts the proposal, a formal pact will be signed between Petronet and Petrobangla, he said. Kutubdia islands has a natural harbour with a good draft and a natural breakwater, ideal for setting up LNG terminal. The proposed terminal is beside the one Bangladesh is looking to set up at Matar Bari in Moheshkhali Island of Cox’s Bazar district or Anwara, Chittagong. The terminal, to be set up on the build-own-operate basis, will supply gas to power plants. Bangladesh has a lot of unmet demand. Gas demand is projected to more than double to 45 million tonnes from the current 20 million tonnes in next 20 years. Excelerate Energy is looking at setting up a floating terminal at Moheshkhali. Originally, Petronet was one of the five global energy firms shortlisted for setting up the LNG import terminal. The others shortlisted included Anglo-Dutch super-major Shell, China’s Huanqiu Contracting & Engineering, Tractebel Engineering of Belgium and Japan’s Mitsui. Only Petronet now remains in fray for the project. Bangladesh is looking at importing gas to ease its energy crisis in southeastern Chittagong region, which was once almost self-reliant in natural gas but started facing a supply crisis in 2006 as output diminished from the Sangu gas field. The country’s sole offshore gas well, Sangu-11, was permanently closed in October 2013. As a result, some plants are running below the capacity and a few have been shut due to non-availability of gas. The LNG terminal will supply gas to a proposed 1,000 MW combined cycle power plant as well as the existing power plants in Raozan and Sikalbaha through a planned pipeline. Bangladesh is also looking at setting up a floating LNG import facility in the Bay of Bengal. The Floating Storage and Regasification Unit (FSRU) of 500 million cubic feet a day capacity can, however, meet only a part of the growing demand for gas in power, fertiliser, factory, and industry. Andrei Mironov Jersey
HPCL Visakh Refinery to double capacity
Hindustan Petroleum Corporation Limited’s Visakh Refinery embarked on expansion which would see its capacity nearly doubling to 15 million metric tonne per annum (MMTPA) from current 8.33 MMTPA. “HPCL is planning to expand capacity of VR (Visakh Refinery) to 15 MMTPA along with bottoms up- gradation and products quality up-gradation incorporating advanced refining technologies for modernisation. This expansion project called Visakh Refinery Modernisation Project (VRMP) will enable VR to meet increased product demand and improved quality of petrol & diesel (BS-VI grade),” the oil major said in a release. Completion of this technologically advanced project will reinforce HPCL as a major player in energy sector, catering to the demand of the region in addition to giving boost to revenue generation for state & central exchequer and provide immense growth opportunity to the people of the region, it added. “Environmental Clearance (EC) from MOE&F, Consent for Establishment (CFE) from APPCB and PESO approval for plot plan are in place for the project. Major site clearance activities have been completed. Process engineering and other preparatory activities are in progress,” it explained. In 2017-18 financial year, the refinery achieved highest ever crude throughput of 9.635 MMT in 2017-18, which is nearly 115 per cent of its installed capacity. In technical parlance, crude throughput is the total amount of crude that goes into a refinery before it comes out processed. “Continuous supply of 100 per cent BS-IV grade of motor spirit (petrol) and BS-IV grade diesel to the supply region is in place by continuous operation of Motor Spirit (MS) Block units and DHDS (diesel hydrodesulphurization) / DHT (diesel hydro-treater) units and associated facilities. These cleaner and greener fuels will continue to improve the ambient air quality in line with international standards,” it explained. The quality compliance of the products supplied from the refinery is ensured by quality control laboratory in the refinery which is a world class facility. It is an NABL-accredited installation, it added. The refinery is also operating and maintaining the crude cavern storage facility installed by Indian Strategic Petroleum Reserves Limited (ISPRL). Part of the cavern facility is also being used for refinery crude storage purposes. On safety management, it said safety is accorded utmost importance in the refining operations. All the management strategies are focused to achieve safer and healthier working conditions. Refinery follows a stringent online work permit system which tracks the hot-work activities on line. Safe Work Practices (SWP) for different activities in refinery have been developed. Brandon Williams Authentic Jersey
CNG to hydrogen-CNG: Why switch, and how
Nearly 16 years after Delhi’s entire bus fleet started to run on CNG to reduce air pollution, authorities are now pitching for an even cleaner alternative, hydrogen-CNG (H-CNG). The Environment Pollution Prevention and Control Authority (EPCA) recently recommended to the Supreme Court that Delhi’s buses switch to H-CNG within the next two or three years. Days earlier, the Ministry of Petroleum & Natural Gas had issued a draft notification, following a NITI Aayog proposal, for H-CNG as an automotive fuel. CNG & H-CNG CNG is compressed natural gas. With natural gas mainly composed of methane, CNG emits less air pollutants — carbon dioxide, carbon monoxide, nitrogen oxides and particulate matter — than petrol or diesel. H-CNG is a blend of hydrogen and CNG, the ideal hydrogen concentration being 18%. Compared to conventional CNG, use of H-CNG can reduce emission of carbon monoxide up to 70%, besides enabling up to 5% savings in fuel, tests by the Automotive Research Association of India and Indian Oil Corporation Ltd (IOCL) have found. H-CNG has not yet gained worldwide currency. Trials have been held in countries such as the US, Canada, Brazil and South Korea. Inexpensive switch In its report to the Supreme Court, the EPCA has estimated that to fuel Delhi’s 5,500 buses, about 400 tonnes H-CNG would be needed per day. Setting up four fuel-dispensing facilities would cost Rs 330 crore, which can be funded from the Environment Compensation Charge (ECC) fund made up of cess on commercial vehicles entering Delhi, it said. For consumers who pay Rs 42 per kg for CNG, the cost of H-CNG would not be more than Rs 43 per kg. “Clearly, the costs are not prohibitive and if further work can be done to reduce NOx (oxides of nitrogen) then this approach can be scaled up and implemented across the full bus fleet in the city within 2-3 years,” the report says. Easy for buses The EPCA report says Delhi is well placed for a transition to H-CNG for its buses as its public transport system already runs on CNG. “The most promising aspect of this technology is that it will allow for the utilisation of the existing infrastructure of CNG — buses as well as the piping network and dispensing station.” The engines of CNG-fuelled buses “will be able to process hythane or H-CNG considering the ratio at which hydrogen is being mixed”, said Anumita Roychowdhury, executive director (research & advocacy), Centre for Science and Environment. However, the gas storage system may be impacted if the hydrogen concentration goes up. She added some “minor engine optimisation” is needed to make existing buses H-CNG-ready as it will involve “high temperature combustion”. Existing buses need not be replaced. Not yet for autos Delhi’s public transport includes autos, which too run on CNG, but researchers believe that these are not yet ready for a switch. The tests so far have been conducted in heavy-duty engines. Anumita Roychowdhury said cars and autos would not be able to use H-CNG with the prevailing technology, mainly because hydrogen is “highly volatile” and the possibility of a rise in combustion temperature. Manufacture While recommending the use of H-CNG as an alternative fuel, the NITI Aayog-CII Action Plan for Clean Fuel notes that physical blending of CNG and hydrogen involves a series of energy-intensive steps that would make H-CNG more expensive than CNG. IOCL’s research & development wing has developed a technology that does away with the need for physical blending. Its ‘Compact Reforming Process’ directly produces a hydrogen-CNG mixture from natural gas, using a single step. The cost of production is significantly lower than physical blending, the EPCA report says. Keith Hernandez Jersey
Indian Oil says no to unified tariffs for gas transmission
State-run refiner Indian OilCorp has opposed natural gas firm GAIL’s pitch for a unified tariff for its pipelines, saying such a move would raise input cost for its three refineries by Rs 1,000 crore and only help operators of old liquefied natural gas terminals and pipelines. Indian Oil, BP and Shell have also demanded separation of GAIL’s natural gas transportation and marketing business before shifting to a unified tariff. Petroleum and Natural Gas Regulatory Board (PNGRB) is debating moving to a unified method for computing gas transmission tariffs that would end the current distance-based tariff. The proposed unified tariff, aimed at increasing the penetration of gas to far-flung areas, would raise tariff for customers closer to the source of gas and lower the cost for far-off customers. The downstream regulator had called an open house on the matter on July 17 in which several gas suppliers and consumers submitted their views. GAIL has argued that unified tariff will help develop local gas market as it will encourage those located in distant locations to consume gas, according to the minutes of the open house made available by PNGRB. This would also help in raising utilisation of GAIL’s pipelines and expanding infrastructure. Indian Oil Corp has opposed the move, saying this would raise input costs, resulting in extra outgo of about Rs 1,000 crore for its three refineries at Koyali, Mathura and Panipat. Shell and BP, two international oil majors with operations in India, supported the idea of unified tariff, saying it will help develop the market and raise share of gas in India’s energy basket. They, however, prescribed a few preconditions for this. “BP supported unified tariff for all cross country interconnected pipelines of all entities and not of a single entity otherwise it would create distortion in transition from entity wise unified tariff,” according to the minutes. BP said it should be done “after unbundling of transmission and marketing functions of an entity”. Among prerequisites Shell demanded for unified tariff implementation are “independent system operator, uniform code of conduct, and online booking of capacity to ensure transparent allocation of capacity”. Brett Kern Authentic Jersey
BHP sells US oil and gas assets to BP for $10.5 bn
The world’s biggest miner BHP announced Friday the sale of its US shale oil and gas operations to BP for US$10.5 billion, a heavy loss but a potential windfall for shareholders. The Anglo-Australian firm spent US$20 billion in 2011 to acquire the assets, but the sector later experienced a fall in prices, hammering profits. It prompted BHP to announce plans to exit the business last year. With its net debt currently towards the lower end of its target range of US$10-US$15 billion, the money raised is set to be returned to shareholders, either through dividends or share buybacks. “We are pleased that we have agreed to sell all of our shale assets in two simple transactions that provide certainty for shareholders and our employees,” said BHP chief executive Andrew Mackenzie. “The sale of our onshore US assets is consistent with our long-term plan to continue to simplify and strengthen our portfolio to generate shareholder value and returns for decades to come.” Under the deal, BP American Production Company, a subsidiary of the British giant, will acquire Petrohawk Energy Corporation, which holds BHP’s Eagle Ford, Haynesville and Permian assets, for US$10.5 billion. In a separate transaction, a unit of the privately owned Merit Energy will buy BHP Billiton Petroleum (Arkansas) Inc. and BHP Billiton Petroleum (Fayetteville) for $US300 million. Both sales are expected to be completed by the end of October, with BHP’s share price jumping 2.22 percent to Aus$34.38 in early trade Friday. The move follows a push last year by New York-based Elliott Advisors, a significant shareholder in the company, for BHP to restructure the business, including spinning off its US oil and gas operations. – ‘World-class’ – In addition to its demerger of South32 in 2015, BHP has now announced or completed more than US$18 billion of divestments over the last six years. It is all part of its plan to focus on its most profitable core long-life operations — iron ore, copper, petroleum, coal and potash. BHP said it expected to record a one-off post-tax charge of about $US2.8 billion in its full-year results due next month on account of the BP and Merit Energy deals. Despite the shale operations proving to be a poor investment for BHP, BP chief executive Bob Dudley called the businesses “world class” with rising oil prices boasting their prospects. “This is a transformational acquisition… a major step in delivering our upstream strategy and a world-class addition to BP’s distinctive portfolio,” he said in a statement. “Given our confidence in BP’s future — further bolstered by additional earnings and cash flow from this deal — we are increasing the dividend, reflecting our long-standing commitment to growing distributions to shareholders.” The Eagle Ford, Haynesville and Permian fields produce oil and gas that is sold both domestically in the United States and to international customers, producing around 58.8 million barrels of oil equivalent (boe/d) annually. BP is already a significant operator in the US onshore oil and gas sector, pumping 315,000 boe/d across five states a year. Moritz Wagner Womens Jersey
APSEZ signs long-term pact with GAIL for LNG facility at Dhamra port
Port infrastructure developer Adani Ports and Special Economic Zone (APSEZ) today said it has entered into a long-term pact with state-run GAIL (India) to provide liquefied natural gas regasification services at its upcoming LNG import terminal at Dhamra port in Odisha. The LNG regasification services would be provided to GAIL on a use or pay basis, the company said in a BSE filing. GAIL India has booked 1.5 million tonnes per annum (MTPA) regasification capacity for a period of 20 years, it said. GAIL plans to supply the gas to its portfolio of customers located in the eastern region and along the under development Jagdishpur- Haldia gas grid. The LNG facility “will also become a hub for supply to Bangladesh and Myanmar”, APSEZ CEO Karan Adani said. The foundation stone of the project was laid in July last year and construction has been commenced by Larsen & Toubro. The terminal is likely to be commissioned during the second half of 2021. The proposed Dhamra LNG import terminal is designed for an initial capacity of 5 MTPA, expandable up to 10 MTPA. It will be the second LNG terminal on the east coast after IOC’s Ennore terminal in Tamil Nadu. Luke Witkowski Authentic Jersey
Now, GAIL to hive off its transportation business to address conflict
GAIL will not be split but will have to hive off its transportation business into a subsidiary to reduce the conflict of interest that arises with the same entity housing both the functions of marketing and transport of natural gas, according to people familiar with the plans of the oil ministry. The ministry and the Petroleum and Natural Gas Regulatory Board have considered the idea of splitting GAIL for some time now, hoping to ‘unbundle’ marketing and transportation of natural gas in the country, a necessary condition for the development of a competitive gas market. But strong resistance from GAIL, which owns most of the gas pipelines in the country, appears to have dissuaded the ministry from breaking up the company, the persons cited earlier told ET. The government appears to have bought GAIL’s argument of local gas market not being mature enough to prompt breaking of the firm, they said. Besides, the government isn’t willing to divert the company’s top management’s attention from laying a critical gas pipeline connecting the electorally-important eastern states and taking piped gas to several politically important cities on the pipeline’s route, they said. Now, the understanding between the government and GAIL is that the company will set up a subsidiary to house pipelines, and make its dealings with rival gas marketers more transparent by setting up a web portal to provide them with real-time data on availability of pipeline capacity, they said. It has been alleged that GAIL’s dominance in the pipeline business puts other gas suppliers as well as customers at a disadvantage. Planning to enhance their presence in the expanding local gas market, private and foreign companies have been pushing for the unbundling of marketing and transportation functions in the country. Unbundling and the government’s plan to set up a gas trading platform by the end of this year are seen as key steps towards developing India’s gas market. But without open access to pipelines and liquefied natural gas import terminals, the trading platform may not be fully effective in a country that imports about half of the natural gas it consumes. Last month, oil minister Dharmendra Pradhan had hinted at dropping the plan to split GAIL when he said his job was not to create more companies but to create more accessibility through policy. GAIL has also often reasoned that all its pipelines were self-funded and, therefore, other gas marketers should have only limited access to these assets. Jordan Mills Jersey
Now, GAIL to hive off its transportation business to address conflict
GAIL will not be split but will have to hive off its transportation business into a subsidiary to reduce the conflict of interest that arises with the same entity housing both the functions of marketing and transport of natural gas, according to people familiar with the plans of the oil ministry. The ministry and the Petroleum and Natural Gas Regulatory Board have considered the idea of splitting GAIL for some time now, hoping to ‘unbundle’ marketing and transportation of natural gas in the country, a necessary condition for the development of a competitive gas market. But strong resistance from GAIL, which owns most of the gas pipelines in the country, appears to have dissuaded the ministry from breaking up the company, the persons cited earlier told ET. The government appears to have bought GAIL’s argument of a local gas market not being mature enough to prompt breaking of the firm, they said. Besides, the government isn’t willing to divert the company’s top management’s attention from laying a critical gas pipeline connecting the electorally-important eastern states and taking piped gas to several politically important cities on the pipeline’s route, they said. Now, the understanding between the government and GAIL is that the company will set up a subsidiary to house pipelines, and make its dealings with rival gas marketers more transparent by setting up a web portal to provide them with real-time data on the availability of pipeline capacity, they said. It has been alleged that GAIL’s dominance in the pipeline business puts other gas suppliers as well as customers at a disadvantage. Planning to enhance their presence in the expanding local gas market, private and foreign companies have been pushing for the unbundling of marketing and transportation functions in the country. Unbundling and the government’s plan to set up a gas trading platform by the end of this year are seen as key steps towards developing India’s gas market. But without open access to pipelines and liquefied natural gas import terminals, the trading platform may not be fully effective in a country that imports about half of the natural gas it consumes. Last month, oil minister Dharmendra Pradhan had hinted at dropping the plan to split GAIL when he said his job was not to create more companies but to create more accessibility through policy. GAIL has also often reasoned that all its pipelines were self-funded and, therefore, other gas marketers should have only limited access to these assets. Alex Mack Authentic Jersey
On Iran oil crisis, India needs a long-term strategy
US President Donald Trump’s decision to renege on the US-Iran deal had created considerable disquiet in India, given its implications on our energy security. Iran is a major exporter of petroleum to India, and the US will want India to cut back and eventually eliminate its oil imports from Iran within less than four months. This newspaper had taken a position that the US cannot push India into cutting back its oil imports from Iran. Recent data from the petroleum ministry is bound to worsen these worries. In response to a Lok Sabha question, the petroleum ministry has given statistics which show that oil imports from Iran accounted for almost one-fourth of our total oil imports form the West Asian countries in the first quarter of this fiscal year. The share of Iran in total oil imports from the region has jumped by almost ten percentage points in this period compared to what it was in the fiscal years 2016-17 and 2017-18. While oil trade is extremely crucial for Iran’s economy, India also stands to gain from it. Price of oil imports from Iran has always been less than that of Saudi Arabia since 2016-17. If India were to stop its oil trade with Iran, it would face a double whammy: lose a supplier of cheap oil and face even greater price because of the supply shock, which Iran’s exit from the global oil markets will create. To be sure, it is still not clear whether India will cease its oil imports with Iran. The government’s reply in the Lok Sabha has steered clear of answering the question whether refiners have been asked to prepare for such eventualities. This could be a manifestation of the government still being undecided or not wanting to show all its cards at the moment. An oil shock will hurt even more at a time when the global economy is staring at the prospect of a trade war, inflation is worsening, and a depreciating rupee is threatening to jeopardise macroeconomic stability. Having said all this, we also need to understand that India’s high import-dependence on its energy needs mean that it is always vulnerable to sudden shocks — geopolitical or otherwise — in the global petroleum markets. Our import dependence in oil is a big reason why India cannot exploit policies such as currency devaluation to make its export competitive, as increased oil bills offset gains in exports. While diplomatic efforts must be made to find an interim solution to the crisis at hand, there are no substitutes to pursuing the long-term goal of self-sufficiency in energy. Jordie Benn Womens Jersey
Petroleum definition changed for uniformity in operations: Government
Further easing the oil and gas exploration norms in India, the government has now redefined ‘petroleum’, thereby giving operators the option to explore all hydrocarbons — including traditional oil and gas, shale, coal bed methane and hydrates — in the same field. In a notification dated July 24 amending the Petroleum and Natural Gas Rules of 1959, the ministry of petroleum and natural gas said that petroleum means “naturally occurring hydrocarbon in the in the form of natural gas or in a liquid, viscous or solid form, or a mixture thereof.” However, it will not include coal, lignite and helium occurring in association with petroleum or coal or shale. The move is likely to benefit not just state-run companies like Oil and Natural Gas Corporation (ONGC) and Oil India, but also private sector majors like Vedanta Cairn. “The amendment would open up exploration of all hydrocarbons in existing fields which is in line with the new HELP. This should help in enhancing domestic exploration and production of hydrocarbons, thereby increasing India’s energy security and reducing our dependency on imports,” said Prashant Modi, Managing Director and chief executive officer of Great Eastern Energy Corporation. This comes after the new Hydrocarbon Exploration and Licensing Policy (HELP) cleared by the Union Cabinet in March 2016, which allowed uniform license for exploration and production of all forms of hydrocarbon. The move will open up more revenue opportunities for many of the 117 companies that were operating in India after the conclusion of the ninth round of NELP. After the nine rounds of NELP, at least 11 public sector undertakings, 58 private and 48 foreign companies marked their presence in India. Even though India is not known for its shale reserves, it is believed to have at least 91.8 trillion cubic feet of CBM reserves. Already the government has conducted discovered small field (DSF I) and Open Acreage Licensing Policy (OALP-I) in which the blocks were allotted under a uniform licensing policy. However, both the rounds did not attract the interest of foreign players to India. Early this month, the Cabinet rolled out sops for companies like ONGC and Oil India by relaxing production sharing contracts (PSC) of Pre-Nelp and New Exploration Licensing Policy (NELP) blocks. This includes giving relief to companies like ONGC and Oil India on sharing of royalty and cess in pre-Nelp exploration blocks. This is after a series of measures to boost exploration, including the government relaxing rules for state-owned Coal India Ltd for extraction of natural gas lying below coal seams in its blocks in a bid to quickly boost production. Earlier, Coal India Ltd had to apply to oil ministry for a licence to extract coal-bed methane (CBM) from its coal blocks. Now, the world’s largest coal producer does not need such permission. Wilt Chamberlain Jersey