Rosneft files $1.4 billion lawsuit against Sakhalin-1 firms ONGC Videsh, others
Russia’s largest oil company Rosneft filed an 89 billion rouble ($1.41 billion) lawsuit on Monday against participants of the Sakhalin-1 oil and gas project operated by ExxonMobil subsidiary Exxon Neftegaz Ltd. The suit, received by an arbitration court in the Sakhalin region in Russia’s Far East, seeks to recover funds gained by parties between 10 July 2015, and 31 May 2018, through “unjust enrichment and interest gained by using other people’s money”, according to paperwork issued by the court. The lawsuit has been filed against five entities, claiming 10 billion roubles from Sakhalinmorneftegaz, 7.5 billion from RN-Astra, 26.7 billion from Exxon Neftegaz Ltd, 26.7 billion from Sakhalin Oil and Gas Development Co., and 17.8 billion from India’s ONGC Videsh Ltd. Sakhalin-1 is operated by Exxon Neftegaz Ltd, through which ExxonMobil owns 30% in the project. Rosneft and ONGC control 20% each. Japanese consortium SODECO owns 30%. A Rosneft spokesperson confirmed it had filed the suit, but declined to elaborate. Exxon Neftegaz said it was “aware of the court action, rejects the claims and will take action to defend the rights of the Sakhalin-1 consortium”. A preliminary court hearing was set for 10 September. Barkevious Mingo Jersey
Oil industry concerned over BNSF’s move to limit retrofit tank cars
U.S. refiners and producers are seeking ways to counter efforts by BNSF Railway Co to limit use of retrofitted oil tank cars following an Iowa derailment last month, Reuters has learned. The crackdown by the country’s largest railroad, owned by Warren Buffett’s Berkshire Hathaway Inc, could take thousands of tank cars off a key rail line at a time when producers and refiners are scrambling to hire them. Demand for oil tanker cars has surged in recent months as oil production in the largest U.S. and Canadian oil plays has outpaced pipeline capacity. The bottleneck has forced rail freight prices up and crude prices down. Lease rates for the new tank cars, called DOT 117s, have surged to more than $1,000 a month per car from $400 a month late last year, according to two brokers. Last month, 14 tank cars carrying sludgy, Canadian oil derailed and punctured in Iowa, sending some 230,000 gallons of oil into a state waterway. The tank cars were retrofits, called DOT 117Rs, according to state and federal officials. After the incident, BNSF told shippers that it was going to ban the retrofitted tank cars in all new contracts, according to three sources familiar with the discussions. Shippers include refiners and producers like Phillips 66 and Exxon Mobil Corp, along with logistics companies such as Enbridge Energy Partners LP. Since 2016, some 11,000 older tank cars have been retrofitted with thicker shells to comply with regulations issued in 2015 following a series of fiery derailments, according to the Railway Supply Institute. Thousands more will need to retrofitted by 2020 to comply with the new regulations. Many of those retrofitted cars are used to carry crude. The American Fuel and Petrochemical Manufacturers, the largest U.S. refinery association, said its members “have raised concerns with BNSF’s decision to refuse certain DOT-authorized tank cars and are currently considering options to address these concerns with the railroad.” The options being considered by the oil industry include legal action and meetings with the head of the rail company. ConocoPhillips, which owns the retrofitted tank cars that derailed in Iowa, owns a number of the redesigned cars. It deferred questions to the American Petroleum Institute (API). The API said it would continue working with federal regulators to ensure oil transportation was safe. BNSF spokeswoman Jessa Lewis said all companies involved in oil transportation by rail needed to work together to ensure only the safest tankers were used. The oil tank cars are owned by shippers, not BNSF, Lewis said. She declined to comment on whether the company had told clients that the retrofitted cars would no longer be available for new contracts. BNSF rail lines haul the most crude oil in the nation, accounting for nearly half of the 88,571 carloads moved in the last quarter of 2017, according to the latest data from the U.S. Department of Transportation. Marquise Goodwin Authentic Jersey
LNG import plan for South Australia targets first gas in mid-2020
A private firm is looking to import liquefied natural gas (LNG) to South Australia starting in 2020, around the same time as two other proposed import projects, looking to fill a supply gap as domestic gas gets sucked into LNG exports. Venice Energy, set up by former BHP Billiton executives, plans to submit a development application to the South Australian government within the next month to park a floating storage and regasification unit (FSRU) in Port Adelaide, Managing Director Kym Winter-Dewhirst said. If regulatory approvals come through by March, construction could begin by June 2019, he told Reuters in an interview. The project would be funded partly by Venice’s owners, management consultancy Integrated Global Partners, with other equity sources which have yet to be lined up. “And then we could have first gas into the South Australian market by June/July 2020,” Winter-Dewhirst said. The LNG import plan is part of a three-stage project with a budget estimated at A$750 million to A$800 million ($556 million to $593 million). That investment includes building a 500 megawatt gas-fired power plant in two phases. Japanese trading company Mitsubishi Corp backed feasibility work on the project and Venice is in talks with Mitsubishi for future participation, Winter-Dewhirst said. “We are studying many possibilities for our future business developments in Australia and it’s one of the options,” a Mitsubishi spokesman said when asked about the project. He declined to elaborate further. Venice Energy’s plan coincides with projects proposed by AGL Energy and a group called Australian Industrial Energy, backed by top Japanese LNG importer JERA, to import the superchilled fuel to the states of Victoria and New South Wales. Gas prices have soared there as domestic supply has been piped into LNG export plants in Queensland. At the same time, the dominant gas supplier to those states, ExxonMobil Corp, has also said it was considering importing LNG to Victoria. All are pushing ahead despite a recent report by Australia’s energy market operator saying it no longer expects a gas shortfall in southeastern Australia before 2030. Australia’s government commodities forecaster said in a recent report that imports could help cap soaring gas prices, but the economics might not work as it might be tough to find cheap LNG beyond 2022. Energy consultants Wood Mackenzie forecast in a report last week that only one LNG import terminal would be needed until the 2030s. However, Venice Energy’s Winter-Dewhirst said given the costs of piping gas across long distances in Australia, his company might be able to work out gas swaps with AGL’s LNG project. “They’re complementary in some ways,” he said. Venice Energy’s plans were first reported by the Australian Financial Review. Jake Muzzin Jersey
Ban on non-BS-VI-compliant vehicles: Oil, environment ministries clash in Supreme Court
In a peculiar case, petroleum and environment ministries have taken a contradictory stand before the Supreme Court on banning sale of non-BS-VI-compliant vehicles from April 1, 2020, the date by which the cleaner fuel will be made available across the country. In an affidavit, the ministry of petroleum and natural gas contended that not only manufacturing but even sale of BS-VI non-compliant or lower vintage vehicles be banned from April 2020 to realise full benefit of the cleaner fuel. This stand, however, is contradictory to the submission of ministry of environment and forests which has consistently taken a stand that automobile companies should be allowed to sell their inventory of BS-IV vehicles till the end of June 2020 for two wheelers and up to September for four wheelers. “The Public Sector Oil Marketing companies are investing approximately Rs 28,000 crore for upgradation of refineries for supply of BS-VI fuels. This investment is being made to upgrade the fuel quality for better environment. The environmental benefits of BS-VI fuels are only marginal if it is used in BS-IV or lower vintage vehicles. If sale of BS-VI non-compliant vehicles is allowed after April 1, 2020, the environmental benefits in terms of reduction in particulate matter emission is only marginal in spite of huge public investment. Hence, sale of BS-VI non-compliant vehicles should not be allowed after March 31, 2020,” the petroleum ministry said. It even hinted the cut-off date to stop manufacturing of BS-IV vehicle should be advanced to ensure such vehicles are not sold after March 31, 2020. The environment ministry had earlier told the apex court that manufacturing of BS-IV vehicles be banned and not their sale after BS-VI norms kick in to allow auto manufactures to exhaust their stocks. “If the date of shift to BSVI becomes date of registration then it would actually reduce the time available to industry for manufacturing to a mere two years or so although BS-VI fuel will not be available across the country till April 1, 2020 … It may also be difficult to have zero stock of BS-IV with dealers on March 31, 2020 as sales cannot be predicted in advance,” the ministry’s affidavit said. Advocate Aparajita Singh, who is assisting the court as amicus curiae, contended that people are dying of pollution and there was no need to give grace period to auto-makers to sell BS-IV vehicles beyond March 31, 2020. The advocate, appearing for manufacturers, said the companies will have to switch over to BS-VI vehicles from December, 2019 which would be a difficult task. Holding that the health of millions of people was more important, the apex court had in March last year dismissed the plea of automakers to allow them to dispose of existing stocks of BS-III vehicles. Chris Boswell Womens Jersey
Government considering using LNG as transportation fuel: Dharmendra Pradhan
The Government is actively considering using Liquefied Natural Gas (LNG) as a transportation fuel, Union Minister Dharmendra Pradhan said today. LNG is being imported under open general license on terms and conditions mutually agreed upon between buyers and sellers and it is being traded in the country on market-based mechanism. During Question Hour, Pradhan told the Lok Sabha that the government is actively considering using LNG as a transportation fuel. It is a new, cost-effective and clean proposal, the Petroleum and Natural Gas Minister said. To a query, he said that at present, there is no pipeline in the country to transport LNG in liquid form from LNG terminal to end user directly. “The LNG after re-gasification is being transported in the gaseous state through trunk gas pipelines from terminals to end consumers of such pipeline,” the minister said. Martin Brodeur Womens Jersey
Taiwan’s Formosa buys first ever US crude to replace Middle east oil
Taiwanese oil refiner Formosa Petrochemical has bought a US crude oil cargo for the first time to replace Middle East crude, the company spokesman said on Monday. The company bought 1 million barrels of US Mars crude to be delivered between the second-half of September and the second-half of October as its price was competitive with those of Middle East oil, Formosa’s spokesman KY Lin told Reuters. Vernon Davis Jersey
Energy giants opening natural gas spigots, fueling profit rise
The world’s largest oil companies are pumping more natural gas than ever before, helping to spur a rise in profits while sating rising global demand for fuels that can mitigate global greenhouse gas emissions. This marks a shift over the past decade for an industry that once focused predominantly on crude oil, with gas in most cases an after-thought. Now, the rise of gas-powered electric generation, surging production from U.S shale fields and the burgeoning liquefied natural gas (LNG) industry that makes shipping the fuel possible, have conspired to create a boom. BP Plc, Exxon Mobil Corp, Royal Dutch Shell Plc, Total SA and Chevron Corp have collectively increased natural gas output 15 percent in the past decade thanks to better technology and lower costs, according to data from Wood Mackenzie energy consultancy. Analysts expect all to post double-digit increases in second-quarter profit in coming days, according to Thomson Reuters I/B/E/S. “LNG is the growth commodity for these companies,” said Brian Youngberg, an energy industry analyst with Edward Jones, who expects the global LNG industry to grow at least 4 percent annually for the next five years. At Total, gas is actually 61 percent of output, up from 47 percent as recently as 10 years ago, according to WoodMac. Total is expected by analysts to post a 44 percent jump in second-quarter profit on Thursday to $3.56 billion, according to Thomson Reuters I/B/E/S. FUTURE PROSPECTS Even as gas production has risen, so too have reserves of natural gas. International energy companies saw gas reserves jump 16 percent last year to 35.33 billion cubic feet, according to a study by the EY consultancy. “There are investments and capital expenditures being made to increase the level of gas reserves, and that should only continue,” said Herb Listen, an EY energy analyst. Exxon, for its part, sees natural gas usage growing at the fastest rate of any energy type out through 2040, reaching a quarter of global demand by that time. “Worries about energy supplies have faded away, erased in large part by natural gas,” Exxon Chief Executive Darren Woods told the World Gas Conference last month in Washington, D.C. Exxon is expected by analysts to post a 62 percent increase in quarterly profit to $5.45 billion on Friday, according to Thomson Reuters I/B/E/S. Gas does have limitations. It’s harder to transport than crude oil, which can be stored indefinitely in tanks, and it must be processed right away, boosting costs. But greenhouse emissions from gas are far less than coal or oil when it is burned, boosting its appeal for a sector eager to combat allegations that it is the primary cause of anthropogenic climate change. “I’m confident that natural gas will play a central role in meeting global energy needs for decades,” Mike Wirth, Chevron’s chief executive, said at the World Gas Conference. Chevron, which operates two major LNG facilities in Australia, is expected by analysts to post quarterly profit of $4 billion on Friday, more than double year-ago levels, according to Thomson Reuters I/B/E/S. Shell put natural gas at the heart of its long-term strategy with the $53 billion acquisition of BG Group in 2016. The Anglo-Dutch company, already the world’s largest LNG trader, is expected by analysts to post a 68 percent jump in quarterly profit to $6.08 billion on Thursday, according to Thomson Reuters I/B/E/S. London-based BP is going through the fastest growth era in its history with plans to boost production by around 900,000 barrels of oil equivalent by 2021. The company launched eight projects in 2017 and is set to launch seven more this year, most of which are related to gas. Analysts expect BP to post a more-than fourfold jump in quarterly profit to $2.66 billion on July 31, according to Thomson Reuters I/B/E/S. Andrew Luck Jersey
The evolving energy landscape in India: Opportunities for investments
India’s energy use will grow at a rapid pace to fuel economic development, urbanisation, and improved energy access . This provides a $750 billion investment opportunity for investors. The energy sector globally is going through a transition. Oil prices have rallied to a four-year-high, on the back of increasing demand and production cuts by both Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members. Now it has reached a point where India and other oil importing countries are starting to feel the heat. The Petroleum Planning & Analysis Cell (PPAC) estimates that even at an average crude price of $65 a barrel, India’s import bill could reach almost $110 billion in FY18-19, a jump of almost 25% over $88 billion in FY17-18. This would imply a significant deterioration in the current account deficit, increase in inflation and adverse effect on the overall growth prospects of the economy. India continues to be the fastest growing large economy in the world. The Jan-March quarter of 2018, saw a 7.7% GDP growth rate, with more than 7% growth in electricity consumption, and more than 5% growth in consumption of petroleum products. And this trend in energy consumption will continue in the medium- to long-term. International agencies including International Energy Agency (IEA), OPEC and BP etc. are projecting India’s energy demand to grow in excess of 5% over the next two decades, fastest among major economies in the world. Interestingly, as the world transitions towards a low-carbon economy, the impact on ‘import dependent’ nations is likely to be more profound and rapid. India is heavily dependent on fossil fuel imports (83% for crude, 50% for LNG and 18% for coal, though coal imports have come down in the recent years). Falling prices of solar photovoltaic (PV) power generation costs, expectations of falling battery storage costs, and adoption of electric vehicles (EV) is going to transform the energy landscape in the coming two decades. Prime Minister Narendra Modi, while elaborating on his vision for energy sector in India, alluded to the ‘seven horses of the chariot of the sun God,’ emphasising on the need for India to tap into all affordable and sustainable sources of energy. With overwhelming focus on solar, wind, biomass, diversifying supply reliance beyond the conventional coal, hydro-, nuclear-, and gas- based power generation would be a key imperative for future. India would need to explore all possible sources of energy for greater access, security, affordability and sustainability. Government initiatives over the last four years are a clear indication of the fact that India is gearing up to embrace this transition. It has accelerated the target for renewable energy capacity to reach 225 GW by 2022. The PM has set the target of reducing oil import by 10%, by 2022, through an increase in domestic exploration and production activities, and harnessing the potential of bio-fuels. There is considerable thrust on moving towards a gas-based economy and massive investments have been planned on developing pipeline infrastructure, LNG facilities, and expanding the City Gas Distribution (CGD) network, to support this move. In the wake of these developments, Deloitte came out with a thought paper on energy transitions and investment opportunities in the Indian energy sector, as a part of the IEF Summit in April 2018. Emerging trends reveal a plethora of investment opportunities across the value chain. While part of this investment would be towards capacity ramp-up and development of supporting infrastructure, a large share of it would also be attributed to systemic innovation and digital interventions across the value chain. In the power sector, electricity generation has shown considerable growth in the last few years, and India has successfully transitioned from an era of chronic power shortages, into a situation of over-capacity. This will lead to almost negligible or no investment in the conventional coal- based generation capacity in the next 5 to 7 years. The focus in generation segment will largely be on renewable energy, solar power in particular. Electricity distribution, however, remains an area where state utilities have considerable ground to cover, as the government is targeting universal access of 24*7 electricity to all Indian households, having reached all villages in April 2018. The government is therefore focusing on developing initiatives around smart grids, smart metering, and automation solutions for the utilities. Digital transformation of utilities to improve asset utilisation and reliability, is another area which is likely to see growth. Battery and storage solutions market could also see growth spurt in foreseeable future, and is garnering considerable investor interest. Overall, power and utilities, together with the renewable energy sector, could attract investments of over $425 billion. Oil & gas sector in India has also seen several transformational reforms in the last four years. Access to clean cooking fuel has expanded rapidly. Through PM UJJWALA Yojana, nearly 40 million households have been given free LPG gas connection and the government is targeting another 40 million through this scheme. Through HELP, the entire licensing regime in the upstream sector has been liberalised and through continuous rounds of bidding, India’s sedimentary basin will be fully covered from an exploration & production (E&P) standpoint. Over the last two decades, India has emerged as a refining hub in Asia, serving a massive domestic market for refined petroleum products and also catering to the exports market. Some of the key areas of focus in the downstream value chain include overall energy efficiency, upgrading refineries to produce BS-VI compliant fuels and so on. Petrochemicals also offer a great opportunity for the incumbents and is likely to grow at a CAGR of 10% over the next five years, to reach the $100 billion mark by 2022. Oil & gas segment could witness investments to the tune of $325 billion over the next decade. Overall, what comes out clearly is that India’s energy use will grow at a rapid pace to fuel economic development, urbanisation, improved energy access and improved manufacturing base. This provides a $750 billion investment opportunity for investors in the energy sector over the
5 oil PSUs sign JV pact for N-E Natural Gas Pipeline Grid
Five central oil PSUs – IOCL, ONGC, GAIL, OIL and NRL – today signed a joint venture agreement for executing the North-East Natural Gas Pipeline Grid as a step towards the Urja Ganga Gas Pipeline Project, a NRL statement said here. The JV company shall develop, build, operate and maintain the Natural Gas Pipeline Grid connecting Guwahati to the other major North-Eastern cities and major load centres such as Numaligarh Refinery and integrating it with gas producing fields, wherever feasible, in the region. The JV agreement was signed by IOCL Executive Director (Project) H K Singh, ONGC General Manager R Kaul, GAIL Chief General Manager (PD) D M Rao, OIL Chief General Manager (PL) B K Mishra and NRL Senior Chief General Manager (Corporate Affairs) A K Bhattacharya, the statement said. The Rs 6000 crore Grid’s estimated length would be around 1500 km, the statement said adding that the tentative time schedule for commissioning it would be four years, including one year for pre-project activities. The JV company will have equal equity contribution from all the partners. The project will connect the state capitals of all the eight North Eastern states – Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. The Gas Grid Project will connect all NE States to the National Gas Grid through Barauni-Guwahati Gas Pipeline being laid by GAIL. From Guwahati, the pipeline will extend to Numaligarh, Dimapur, Kohima and Imphal in one direction; Shillong, Silchar, Aizawl and Agartala in the second direction and to Itanagar in the third direction. Gangtok will be connected from Siliguri from the gas pipeline of GAIL coming from Barauni to Guwahati. Evgeny Svechnikov Womens Jersey
Spot LNG prices slide as demand retreats in Japan, China, South Korea
Asian spot liquefied natural gas (LNG) prices softened for another week as the focus of purchasing activity switched to September, encountering weak demand, new supply and a falling yuan potentially sapping Chinese demand. Spot prices for September delivery in Asia were assessed at $9.50 per million British thermal units (Btu), down 50 cents from the previous week. Traders Vitol, Trafigura and Diamond Gas International offered five cargoes in total via the Platts Market on Close process but there were no takers even as offers on some of the cargoes slipped to around $9.05 per mmBtu, traders said. In the world’s three-biggest LNG importers Japan, China and South Korea demand weakened or was set to drop later in the year. Already, Japanese LNG imports in June fell to the lowest in more than two years as utilities switched on more nuclear reactors shut following the Fukushima nuclear disaster in 2011. Japan has six reactors operating and three others have passed safety inspections and could be operating by October, allowing utilities to switch away from LNG. With temperatures in Japan set to fall back in line with average levels over the next week, demand for gas should also be tempered as cooling demand dips. Chinese demand could be reduced by the yuan’s sharp slide against the U.S. dollar to a one-year low as the trade dispute between Beijing and Washington unnerves markets, making U.S. dollar-denominated LNG more costly for Chinese buyers. The pace of spot purchasing has slackened in China although one deal was heard done this week at an estimated $9.50 per mmBtu, sources said. Two Arctic shipments from Russia’s Yamal project flowed to China as ice melt along the Northern Sea Route cleared a path, speeding up deliveries to the world’s second-biggest LNG consumer, potentially curbing China’s call on spot purchases for now. In South Korea, imports are set to ease from record levels racked up in the first half of the year, with appetite for the fuel from utilities seen fading as a raft of nuclear power stations come back online. With an average of only six reactors expected to be offline over the rest of the year, analysts say shipments of LNG into the world’s No.3 importer of the fuel are likely to decline. Restocking LNG inventory at South Korean terminals is already well under way ahead of winter, sources said. South Korea’s Korea Midland Power Co sought a cargo for November delivery via tender on Friday. Russia’s Sakhalin II LNG project added to supply this week after offering a cargo loading on Sept. 5. In the Atlantic, Trinidad’s Point Fortin LNG Exports also offered a cargo loading at the end of August. Furthermore, new supplies are expected in September. Japan’s Inpex expects its Ichthys plant in Australia to start up in September, along with the second production train at Yamal in Russia, boosting shipments to world markets. European spot prices so far remain uncompetitive with Asia in drawing away Qatari cargoes, as storage inventories recover across the continent. Indian Oil Corp was seeking a cargo for late August delivery. Nick Vigil Womens Jersey