NGS’ NG/LNG SNAPSHOT – OCTOBER 2020, VOLUME 2
National News Internatonal News
NATIONAL NEWS
City Gas Distribution & Auto LPG
Dharmendra Pradhan dedicates 42 CNG Stations and 3 City Gate Stations to the service of the community
Expanding the reach of environment friendly Compressed Natural Gas (CNG) in various areas, Minister of Petroleum & Natural Gas and Steel Shri Dharmendra Pradhan today dedicated 42 CNG stations and
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3 City Gate Stations of Torrent Gas to the service of the community. All CNG stations and City Gate Stations were connected through video conference during the event with the Minister.Torrent Gas has the authorization to lay City Gas Distribution network in 32 Districts across 7 States and 1 UT. These CNG stations are located across various states, including 14 in Uttar Pradesh, 8 in Maharashtra, 6 in Gujarat, 4 in Punjab and 5 each in Telangana and Rajasthan. The City Gate Stations include one each in Uttar Pradesh, Maharashtra and Punjab. Speaking on the occasion, Shri Pradhan called upon all CGD agencies to grow into the Comprehensive Energy Retailers. He said that the Government has visualized that consumers, as per their purchasing capacity and their choice of fuel, should be able to buy any type of fuel from the retail outlet- be it petrol, diesel, CNG, LNG or electric charging. He also said that the Government wants to supply fuel through the mobile dispensers so that consumers can get the fuel at their doorstep, as per their convenience. The Minister said that the strategy is being made to expand the battery swapping facilities also. The Minister advocated adopting the digital platforms on large scale, in every aspect of transaction. Shri Pradhan said that India will become the largest energy consumer in the world in the coming years. He said that Development of CGD network in India is in line with the vision of our Hon’ble Prime Minister to achieve the COP-21 Climate Change goals set for 2030. In the Solar energy sector, India has already become the role model. Shri Pradhan said that an investment of about $60 billion which is more than Rs 4 lakh crore, is being made in the gas infrastructure which includes laying of pipelines, terminals, gas fields. He said that the country is moving towards the gas-based economy, which is not only clean and efficient fuel, but will also help in reducing the country’s dependence on imported crude oil. Shri Pradhan called upon the CGD companies to also invest in the biomass-based plants to produce Compressed Bio-gas, using agriculture residues, forest produce, city waste and Gobar. Secretary, Ministry of Petroleum and Natural Gas Shri Tarun Kapoor, speaking on the occasion, lauded the effort of CGD entities to meet their targets, despite Covid problem. He said that in India’s quest to transform into a gas-based economy, establishment and augmentation of distribution networks is pivotal in order to ensure smooth transition towards the enhanced usage of PNG and CNG. Number of CNG stations have increased to more than double in the country, from 938 CNG station in year 2014 to around 2300 CNG stations in 2020. After the bidding rounds, India shall have CGD infrastructure operational across 407 districts of the country having potential of covering more than 50% of country’s area and serving more than 70 % of the population. Such large capacity addition in the CGD sector is expected to provide strong demand for PNG meters, PNG regulators, CNG compressors, CNG dispensers and CNG cascades in the forthcoming years. The existence of such assured demand from the CGD sector will provide a strong incentive to increase domestic manufacturing and promote Aatma Nirbhar Bharat Abhiyan and making clean fuel available in various parts of the Country.
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Torrent Gas to invest Rs 8,000 cr
Torrent Gas Ltd on Tuesday (Oct 6) said it will invest Rs 8,000 crore over the next five years in expanding its city gas operations with a target to set up 500 CNG dispensing pumps by March 2023.
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It holds a city gas license for selling compressed natural gas (CNG) to vehicles and piped cooking gas (PNG) to industries and households kitchens across seven States. Within 18 months of its operations, Torrent Gas has set up 100 CNG pumps, its director Jinal Mehta said at a virtual event organised to announce the commissioning of 42 CNG stations. This commissioning took the number of CNG stations under Torrent fold to 100, he said. “Torrent Gas intends to make a total investment of Rs 8,000 crore (USD 1.1 billion) over the next 5 years towards the creation of CGD infrastructure in the country, of which Rs 1,050 crore has already been invested,” Mehta said. “We are working to set up 200 CNG stations by March 2021 and 500 CNG stations by March 2023, apart from making PNG widely available to industries and residences in our authorised areas,” Mehta said. Speaking on the occasion, Oil Minister Dharmendra Pradhan said CNG pumps should look at becoming energy providers by also selling traditional fuels such as petrol and diesel alongside alternatives like biogas and LNG. He said the government wants to increase the number of CNG stations in the country from about 2,300 currently to 10,000 in the next four-to-five years. The CNG stations commissioned on Tuesday are located across various states, including 14 in Uttar Pradesh, eight in Maharashtra, six in Gujarat, four in Punjab and five each in Telangana and Rajasthan. Besides, City Gate Stations in Uttar Pradesh, Maharashtra and Punjab were also commissioned.
https://telanganatoday.com/torrent-gas-to-invest-rs-8000-cr
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Mumbai: Mahanagar Gas cuts CNG, PNG prices
Mahanagar Gas on Tuesday (Oct 6) revised down the retail prices of CNG and PNG with immediate effect. While the price of compressed natural gas is cut by
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Rs 1.05/kg, the same on domestic piped natural gas (PNG) is down by Rs 0.70/SCM (standard cubic meter) in and around Mumbai, the state-run utility said in a statement. The company said the price cut is consequent to the reduction in the price of domestically produced natural gas by the government. Accordingly, the revised delivered prices inclusive of all taxes of CNG and domestic PNG in and around Mumbai will be Rs 47.90/kg and Rs 28.90/SCM for Slab 1 customers) and Rs 34.50/SCM for Slab 2 customers, respectively, Mahanagar Gas said. At this price, CNG helps customers save about 62% and 38% over petrol and diesel, respectively.
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CNG and domestic gas cheaper in Delhi-NCR, know the price
LPG and piped cooking gas (PNG) prices in Delhi-NCR have been reduced. The prices of CNG and PNG have been reduced after the price of natural gas has come down.
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Cng prices in Delhi have come down by Rs 1.53 per kg. Cng prices in Noida, Greater Noida and Ghaziabad have been slashed by Rs 1.70 per kg. Cng prices in Delhi have gone up to Rs 42.70 per kg after the price fell. CNG prices in Noida, Greater Noida and Ghaziabad are now priced at Rs 48.38 per kg after the new prices are implemented. The new rates have come into effect from today. Cng will now cost Rs 56.55 per kg in Muzaffarnagar. It will be available at Rs 50.68 per kg in Karnal and Kaithal, Rs 53.40 per kg in Rewari and Gurugram and Rs 59.80 per kg in Kanpur district. With this, IGL has also announced a cut in the prices of LPG PNG supplied through pipes in all cities from today. Png prices in Delhi have been reduced from Rs 1.05 per unit (SCM) from Rs 28.55 to Rs 27.50 per unit. Similarly, png prices in Noida, Greater Noida and Ghaziabad have come down by one rupee from Rs 28.45 to Rs 27.45 per SCM.
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Kochi: Only 6 per cent of households have got PNG connections in 5 yrs
The five-year term awarded to Indian Oil Adani Gas Private Limited (IOAGPL) by Petroleum and Natural Gas Regulatory Board (PNGRB) for implementing gas project in the city will end in a fortnight.
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But only 2,500 households in Kochi have received the piped natural gas (PNG) connections so far against the actual target of 40,000. Following the intervention of state government, the gas company has decided to expedite the work and provide PNG connections to around 12,000 households in three months. With the project implementation progressing at snail’s pace, the government has issued an order to all local bodies asking them to permit road cutting for laying pipelines within 21 days of submitting an application in this regard. The order also stated that agencies like IOAGPL should complete the work in three months at local bodies where nod has already been issued. “As of now, Thrikkakara municipality has given the nod to dig up roads in 13 wards. We will give at least 12,000 connections in these wards in three months,” an official with IOAGPL said, adding that authorities with Eloor municipality have informed us that they will be giving approval for road digging in three wards in a day or two. However, applications submitted by IOAPGL for digging roads in local bodies like Kochi corporation are pending for years. We expect to start the work in corporation limits in a month,” he said. The government also instructed the agencies like IOAGPL to complete the backfilling of roads that were dug up within 48 hours and ensure complete restoration of such roads in 30 days. Agencies may do the restoration jobs on their own or entrust it to the local bodies by paying the restoration charges. The agencies should ensure that no utilities on the shoulders of the road are being damaged during the pipe laying work. They will be liable for accidents, if any, occurred due to road digging. The board will have to give an extension to IOAGPL to complete the work. “We expect that PNGRB would give us an extension to complete the project. We are yet to receive a formal communication in this regard,” an official with IOAGPL said. According to state government, the delay is because of the lackadaisical attitude on the part of IOAGPL as well as the local bodies’ reluctance to give road cutting permissions for laying distribution pipeline.
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Electric Mobility & Bio- Methane
Govt invites proposals for development of EV charging infra on major highways
The government has invited proposals for installation of charging stations for electric vehicles (EVs) on major highways and expressways.
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The Department of Heavy Industry has floated an Expression of Interest (EoI) for inviting proposals from government organisations, PSUs (state/ central), state-owned discoms, oil PSUs and other public and private entities to build and operate public EV charging infrastructure. Proposals have been invited from interested entities to build and operate EV charging infrastructure on the Mumbai – Pune, Ahmedabad-Vadodara, Delhi-Agra, Bengaluru-Mysore, Bengaluru-Chennai, Surat – Mumbai, Agra – Lucknow, Eastern Peripheral and Hyderabad-ORR expressways. Proposals have also been invited for highways including Delhi – Srinagar, Delhi-Kolkata, Agra-Nagpur, Meerut to Gangotri Dham, Mumbai – Delhi, Mumbai-Panaji, Mumbai-Nagpur, Mumbai-Bengaluru and Kolkata to Bhubaneswar. Under Phase-II of the FAME India Scheme, the Government of India (GoI) intends to support the development of EV charging infrastructure by extending capital grant to organisations for promoting the use of electric vehicles. The Centre has approved Phase-II of FAME (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) scheme for three years commencing from April 1, 2019.
Source: ET Auto
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Delhi govt exempts road tax on battery-operated vehicles under its EV policy
The Delhi government has exempted road tax on its battery-operated vehicles under its new Electric Vehicle Policy, Delhi Transport minister Kailash Gahlot said on Sunday (Oct 11).
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The Transport department, in its notification issued on Saturday, stated that the Lieutenant Governor of the National Capital Territory of Delhi exempted the tax levied upon all battery electric vehicles with immediate effect. Gahlot said in a tweet “Congrats Delhi! As promised by CM @ArvindKejriwal when announcing landmark EV Policy, Delhi govt has EXEMPTED road tax on Battery Operated Vehicles. With rigc vehicle ht incentives & supporting infra, we are determined to ensure Delhi leads the country in rapid transition to Elec Vehicles.”
Source: ET Auto
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20 PMPML buses to run on bio-CNG from mid-October
Twenty buses of the Pune Mahanagar Parivahan Mahamandal Limited (PMPML) will run on fuel made from food waste collected from different hotels from
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October 20. Called bio-CNG or CBG (compressed bio-gas), Indian Oil will supply it to the transport body, PMPML chairman- cum-managing director Rajendra Jagtap told TOI, adding that the trials have been completed. “There is a refuelling station in Talegaon, and buses from the Bhosari depot of the PMPML moving towards Talegaon area will be running on this fuel. Another fuelling station at Nigdi will be ready within three months. More than 50 buses in the PMPML fleet will run on bio-CNG. We are keen on use of alternative and eco-friendly fuel,”Jagtap said. In 2014, the Pune Municipal Corporation and the Pimpri Chinchwad Municipal Corporation got into an agreement with Noble Exchange Environment Solutions Private Limited to collect hotel food waste and convert it into bio-fuel. “The PMPML buses have undergone trials twice. We want more than 100 buses to use this alternative fuel by next January. The buses, instead of the normal CNG, have been fuelled by bio-CNG. Permissions and approvals have been obtained from Central Institute of Road Transport and Automotive Research Association of India,” the CMD added. There are more than 1,500 CNG run buses in the fleet.“The costs for CNG and bio-CNG are almost the same. Work on construction of the fuel station at the Nigdi depot is going on. It has been approved by the board of directors,” a PMPML official said .
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Government extends deadline for EV components localisation by six months
The department of heavy industries on Tuesday (Sep 29) extended the deadline for the localisation of several components under its phased manufacturing programme (PMP)
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for electric vehicles (EV) from October 1 to April 1 next year, offering a breather to the industry. Compliance with the PMP is a condition for availing subsidies. The move is expected to help the fledgling EV industry as the localisation plans of several companies were derailed due to the disruption from the pandemic. To get demand incentives under the Rs. 10,000-crore second phase of the Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) scheme, companies must gradually increase the local sourcing of components for their EVs as stipulated in the PMP.
Amongst the components for which the centre extended the date for mandated local procurement were traction motors, motor controllers, vehicle control units, on-board chargers, convertors and instrument panels.
“The government has taken a practical approach and given six months extra. It was a much-needed move,” said Sohinder Gill, director general of Society of Manufacturers of Electric Vehicles (SMEV), an industry lobby. He is also the global chief executive of Hero Electric. The pandemic delayed the entire ecosystem by 3-4 months, Gill said. Companies that were looking to invest in the local production of EV components pushed back their plans. The process of vehicle certification also slowed down during this period. Vehicle testing agencies like the Automotive Research Association of India (ARAI) and International Centre for Automotive Technology (ICAT) certify compliance of EVs with the PMP. They usually take 2-3 months for clearing a vehicle but now that period has been stretched to 4-4.5 months, Gill said. Even for companies that met the deadline, the extension creates an opportunity to review more vendors and build a larger supply-base, said Naga Satyam, executive director at electric bus maker Olectra Greentech Limited. EV makers said localisation of EV components gets difficult as there wasn’t sufficient demand in the country for suppliers to invest in a manufacturing setup.
The PMP was introduced by the government with the intention of allowing imports of key components until there was sufficient local demand for EVs and then gradually increasing the localisation requirements for availing demand incentives. “The government is moving in the right direction. Once players enter the market and begin manufacturing, you push them to localise the products in order to create a holistic and more sustainable industry within the country,” said Jeetender Sharma, managing director at Okinawa Autotech. “This is a win-win situation for all.” The Phase-II of the FAME scheme has a financial outlay of Rs 10,000 crore for a three-year period starting April 2019. The scheme gives direct subsidies to buyers of electric vehicles. About 27,200 electric vehicles were subsidised at an expense of Rs 95 crore by September 10 this year, Heavy Industries and Public Enterprises Minister Prakash Javadekar earlier said in a written reply to the Lok Sabha.
Source: ET Auto
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Toyota-Suzuki’s battery EV plan for India still on: Masakazu Yoshimura, MD, Toyota Motor
Japanese automaker Toyota Motor, which plans to introduce an electric vehicle in India with alliance partner Suzuki Motor Corporation (SMC),
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said lack of adequate charging infrastructure in the country may dissuade potential buyers of battery operated cars. In India, Toyota operates in a joint venture with the Kirloskar Group. “It is still on. BEV (battery electric vehicle) is always the tough one. We can put on the market, but perhaps buyers will not come due to the lack of charging infrastructure. There are no charging stations,” said Toyota Kirloskar Motor managing director Masakazu Yoshimura, adding the company can explore deploying the vehicle for demonstration in smart cities. Yoshimura said Toyota globally has on offer electric vehicles in its portfolio. The carmaker has the technology to develop a product suited for the Indian market. However, if volumes remain low, the company may not be able to manufacture it locally and would have to import it into the country. “BEVs are running in China, Japan. So we can produce, we can make it different sizes and all. But again, if we bring BEV, we have to import. If volumes become larger, consumers accept BEV, then perhaps feasible demand will be created that can be sustainable for more local production. (But) Plan is still the same,” he said.
Source: ET Auto
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First CBG plant in Punjab to go on stream in March
As part of its efforts to mitigate the crisis-like situation arising out of crop residue burning in Punjab and Haryana, the Union government is setting up the first compressed biogas (CBG)
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plant in north India in Lehragaga of Sangrur and it is expected to be commissioned in March next year. The CBG plant, being set up under the ‘Sustainable Alternative Towards Affordable Transportation (Satat), will convert straw into CNG. Although the plant was initially scheduled to be commissioned in 2020-end, it got delayed following late arrival of machinery due to Covid. According to sources, the plant authorities have started collecting paddy straw to store it at the plant, as 300 tonne stubble will be used per day in the plant to produce 31 tonne CBG per day. The plant is being set up by Verbio India Pvt Ltd. Five more such plants are coming up in Punjab but those may not be commissioned before early 2022. These six plants will have a combined capacity to produce 70 tonne CBG per day by consuming 2.5 LMT paddy straw per annum. Similarly, 64 such plants are coming up in Haryana. “RBI has included CBG in its list of priority sector lending and the SBI has started loan schemes and oil companies have agreed on a buy-back rate of Rs 46/kg for five years… The CBG projects once commissioned will create a market for straw and provide farmers an incentive not to burn the resource,” said former executive director at Indian Oil Corporation (IOC) and currently bio fuels adviser to the company. The first CBG plant in India was set up in September 2019 and many such plants are already operational in Maharashtra, Gujarat and Tamil Nadu. Environmentalist and executive director of Centre for Science and Environment Sunita Narain said, “Degradation of environment through various means including burning of stubble is worrisome. To overcome it, there is a need to provide income to farmers for the residue and improve environmental sustainability. We need to provide machinery to farmers for in-situ management, provide value to biomass as farmers may not burn if they are paid for the straw.”
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Aiming to get first-mover advantage by bringing India’s first luxury EV: Martin Schwenk
India’s largest luxury carmaker Mercedes-Benz is quite bullish for its ‘Ambition 2039’ journey that focuses on a sustainable future, carbon-neutral footprint.
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The company rolled out its first EV in India, EQC, at ₹99.30 lakh on Thursday. In a candid interaction with ETAuto , Martin Schwenk, managing director, Mercedes-Benz India informed that sales has reached 70-80 percent of pre-covid volumes and believe that the increasing trend of intercity travel, inclination towards personal mobility will further boost the demand of luxury cars.
Source: ET Auto
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Natural Gas/ Pipelines/ Company News
Total CEO reviews projects with Gautam Adani
French supermajor Total S A CEO Patrick Pouyanne made a day-long visit to India to review the gas and renewable energy projects his firm has with Adani Group.
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Pouyanne flew into Ahmedabad on Monday on a day-long visit to hold reviews of joint ventures with Adani Group. “Always a pleasure to host my friend, business partner and CEO of TOTAL @PPouyanne at our Ahmedabad HQ. Easily one of the boldest and transformational champions of Green Energy I have known,” Adani Group Chairman Gautam Adani tweeted after the meeting. He did not offer details of the meeting, but sources said the visit of Pouyanne, the first in a year, was purely for business review. He left the country soon after. Total has joint ventures with Adani Group firms for city gas distribution, LNG import terminal, and renewable energy projects. In February this year, Total and Adani Green Energy Ltd (AGEL) created a 50:50 joint venture into which AGEL transferred its solar assets in operation. These projects are spread over 11 Indian states and have a cumulative capacity of over 2 GW. All the projects benefit from nearly 25-year power purchase agreements (PPA) with national and regional electricity distributors, with a fixed rate, according to the announcement made at the time of the formation of the joint venture. The French firm also has a 50:50 joint venture with Adani for constructing a 5 MMTPA LNG import terminal at Dhamra in Odisha. It has a 37.4% stake in Adani Gas Ltd, the publicly-traded company for city gas distribution. AGL holds 38 licenses for the sale of CNG to automobiles and piped cooking gas to households. The two firms are also looking at developing a network of fuel stations (2,500 in 15 years) through Total Adani Fuel Marketing, a 100 per cent affiliate of AGL.
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PNGRB proposes unified tariff to benefit consumers away from natural gas sources
The Petroleum and Natural Gas Regulatory Board (PNGRB) has proposed unified tariff regulations aimed at benefiting consumers located away from natural gas sources.
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According to the proposal, there would be cross subsidisation of consumers located away from natural gas sources by consumers located near the gas sources. Essentially, this will benefit consumers in places like Delhi as they would not be paying significantly higher natural gas transport costs. “The draft regulations essentially propose pooling of the existing approved pipeline tariffs of the pipelines comprising of the National Gas Grid to arrive at one single tariff to be charged across the pipelines and will be called the Unified Pipeline Tariff,” a statement from ratings agency ICRA said. “The regulations propose to divide the entire network into two zones, i.e. Zone-1 extending till 300 km from the point of injection of natural gas in the national gas grid from either end i.e. Western or Eastern end of the grid and the entire length thereafter comprising of Zone-2. The tariff paid by the consumers in each of the zone will be a uniform single tariff irrespective of the location,” the ICRA statement added. “The draft regulations will remain revenue neutral for the gas pipeline operators although there will be redistribution of the transmission tariffs being paid by the consumers post the implementation of these regulations,” ICRA said.
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Cess reduction to benefit upstream oil and gas companies: India Ratings
Ratings agency India Ratings and Research has opined that a cess reduction on oil and gas sector is likely to benefit upstream firms such as Oil and Natural Gas Corporation and Oil India.
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“Together, these developments (likely cess reduction and change in the gas price regime), if implemented, will be a big positive for their cash flows from operations; however, this may not necessarily translate to higher free cash flows as the dividend payouts could increase,” the agency said in a statement. “These discussions come at the back of the current lower crude and gas price environment, continued higher taxation (cess, royalty) and dividend distribution by these companies, which results in lower risk capital available with them, thus lowering the potential exploration, hampering increase in the output of domestic crude and natural gas.” According to the agency, the cess is calculated as a per cent of the crude price realised by the upstream companies on their nominated blocks. “During FY20, the upstream companies paid a total of INR148 billion in cess to the central government on a total crude production of 22.4MMT from the nominated blocks,” it said. “Given that bulk of upstream oil and gas production comes from the nominated blocks on which the companies share a 20 per cent cess with the central government on the crude price realised, a higher cess will result in lower profitability for them.” Consequently, if the cess is reduced, the cost of production would decline for them, leading to higher EBITDA. “The change in the cess computation methodology and the rates has also been effected in the past to align the same with the crude price scenario,” it added.
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Unified tariff expected to make KG Basin gas more attractive to consumers
The new unified gas pipeline tariff regulation, once implemented, is expected to significantly cut rates of gas to be procured from the Krishna Godavari Basin (KG Basin), Nomura analysts said.
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Based on the FY20 consumption levels, the Petroleum and Natural Gas Regulatory Board (PNGRB) has indicated that unified gas pipeline tariff would be around Rs 56.8 per MMBtu. Under the current additive pricing regime, the transportation cost of gas sourced from the KG Basin, touted to be the largest source of upcoming new gas in the country, is in the range of Rs 100 to Rs 193 per MMBtu. For the Jagdishpur-Haldia-Bokaro-Dhamra (Urja Ganga) pipeline, rates of gas transportation from the KG Basin might fall by as much as Rs 128.3 per MMBtu — or 66% lower than current tariff levels — if the new unified tariff norms are put in place, the brokerage firm noted. The unified tariff would be applicable on the integrated trunk network of 13 pipelines with combined volume of 113 MMSCMD—about 75% of the country’s FY20 consumption levels— mostly run by state-run Gail and Gujarat State Petronet (GSPL). Analysts at ICICI Securities pointed that unified tariff would help boost the Urja Ganga pipeline’s utilisation, as otherwise, its rates would be prohibitively high. The idea behind unified tariffs is the development of new gas markets in far flung areas by rationalising pipeline transportation rates. The current additive pricing system raises pipeline charges every 300 km, discouraging potential consumers located in areas far from the gas production facilities and import terminals. “Excluding a few customers in zone-1 of Gail’s Hazira-Vijaipur-Jagdishpur network and GSPL’s network in Gujarat, tariff will not increase meaningfully for other customers (compared to overall gas costs), even for Mumbai High gas of ONGC or LNG imports at Dahej,” Nomura said in a recent note on the Indian gas sector. As FE reported earlier, industrial natural gas consumers had objected to the government’s unified tariff plan, pointing that since the new tariff structure will not be imposed on all the gas pipelines in the country, it will lead to market distortion. Customers will end up paying under multiple tariff regimes, depending on the pipelines used by them.
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ONGC-OIL gas under-recoveries pegged at Rs 7,500 cr in FY21
With the government reducing the price of domestic natural gas to $1.79 per MMBtu, analysts expect state-run gas producers Oil and Natural Gas Corporation (ONGC) and Oil India (OIL)
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to face losses of Rs 7,500 crore cumulatively in FY21 from their gas businesses. Under-recoveries from gas production in FY20 for ONGC-OIL were in the range of Rs 1,700 crore to Rs 2,000 crore, when average gas price was $3.5/MMBtu, India Ratings said on Thursday (Oct 1). The average gas output cost of ONGC which produces about 80% of the domestic natural gas is $3.7/MMBtu. Gas sales account for around 18%-19% of the companies’ upstream revenues. Analysts at Moody’s estimate ONGC’s revenues and earnings before interest, tax, depreciation and amortisation (Ebitda) to decline by Rs 1,500 crore Rs 1,600 crore on account of lower gas prices. “The decline is equal to around 0.4% of the company’s expected consolidated revenue and around 3.5% of consolidated Ebitda for FY21,” Moody’s said. By the end of Thursday, ONGC shares were trading at Rs 69.15, which was 0.22% lower than the previous day’s close. “Domestically, the extremely low gas prices are a cause of anxiety for gas producers,” ONGC had said in its FY20 annual report, adding that “without the necessary policy support and fiscal incentives the prospect of a gas-based economy looks difficult”. The country aims to increase the share of natural gas in its energy mix from the current level of about 6% to 15% by 2030. The domestic gas price is linked to the weighted average price of four global benchmarks (US, UK, Canada and Russia). Spot US LNG prices have fallen more than 21% in the last six months to $1.5/MMBtu. CARE Ratings had earlier noted that gross production of domestic natural gas will fall by 10.6% during FY21 as “no company would aggressively want to increase production or get into high-risk projects with such a low gas price”. Indigenous natural gas production caters to about half of the country’s requirements.
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Govt puts gas under standard bidding route for transparent price discovery
In a big reform initiative, the government on Wednesday (Oct 7) decided to put domestically produced gas under a standard price discovery mechanism to help scale up local production
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from fields of ONGC, OIL, Reliance and Vedanta and help create a uniform gas market. Accordingly, the Union Cabinet approved a standard e-bidding procedure for market-based price discovery of gas across various contractual regimes. Petroleum Minister Dharmendra Pradhan said that under the new reform initiative, a standardised e-bidding mechanism will be suggested by upstream regulator Directorate General of Hydrocarbons (DGH) for transparent market-based discovery of gas price. The regulator will also suggest a panel of e-bidding platforms to the producers. Gas producers will have a choice to opt for a platform and get the best market determined price for their gas. With the changes in gas pricing regime, government hopes that its objective of developing a gas-based economy will get the necessary push. Pradhan said the changes will also help increase domestic gas production by an additional 40 MMSCMD, from the current 84 MMSCMD. Government has already given marketing and pricing freedom for gas from blocks awarded under the Discovered Small Field Policy (DSF), Hydrocarbon Exploration and Licensing Policy (HELP) and Coal Bed Methane (CBM) contracts, and discoveries from difficult fields such as deep water, ultra-deep water and high pressure-high temperature areas. The new changes approved by the Cabinet will allow gas from all such fields to discover pricing under a common e-bidding platform. While allowing reforms in pricing, the government has left the existing production of gas from nomination fields untouched. Accordingly, such gas blocks would continue to be guided by a 2014 government-set formula that takes average rates from global trading hubs to determine domestic prices twice a year – in April and then in October. At present, out of 310 exploration blocks awarded so far under various bidding rounds (discovered field, pre-NELP & NELP), 189 blocks/fields are operational. 17 blocks under nomination are being operated by ONGC and OIL. Petroleum Exploration Licences (PEL) for domestic exploration and production of crude oil and natural gas were granted under four different regimes over a period of time: nomination basis — PEL, Pre-NELP discovered field, Pre-NELP exploration blocks and New Exploration Licensing Policy (NELP). As many as 117 companies are operating in these blocks post the ninth NELP round. This has at least 11 public sector undertakings, 58 private firms and 48 foreign companies.
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Policy Matters/ Gas Pricing/Others
Reduction in gas price to hike losses for upstream companies: India Ratings
Ratings agency India Ratings and Research has said that recent domestic gas price reduction on account of a substantial fall in the benchmark indices would significantly
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increase losses for upstream companies, while improving the profitability of end-user industries. In industry parlance, upstream companies deal primarily in exploration of resources. According to the ratings agency, end-user industries, specifically city gas distribution (CGD), fertilisers and power are expected to benefit out of this move. However, a new gas pricing framework could benefit the upstream companies while the other sectors may face a low-to-medium negative impact, cited the agency. Recently, domestic gas prices were reduced to $1.79 per mmbtu for 2HFY21 from $2.39 per mmbtu for 1HFY21 on account of a substantial fall in the benchmark indices during 1QFY21. “The proposal outlines the Japan Korea mark-up (JKM) index to act as a floor while calculating domestic gas pricing,” the agency said. “Currently, the domestic gas prices are linked to low-priced international benchmarks such as the US, Canada, Russia and the UK, are reset bi-annually and follow these indices with a one quarter lag. Given that India is a net importer of gas, the domestic prices would more closely follow the spot LNG prices under the proposed regime, indicating parity in pricing for the major importing nations — Japan, Korea, China and India.” On the other hand, it said the indices used in the current framework reflect prices of major exporting nations which have abundant gas reserves and thereby a lower cost of production than India’s, keeping the profitability of gas producers in the country low.
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India-Russia webinar held on use of natural gas as motor fuel
The first ever India-Russia webinar on the use of natural gas as motor fuel was organized under the aegis of Ministry of Petroleum and Natural Gas,
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Government of India and the Ministry of Energy of the Russian Federation. In his inaugural speech, Shri Tarun Kapoor, Secretary, Ministry of Petroleum & Natural Gas, Government of India informed that the Memorandum of Understanding between Ministry of Petroleum and Natural Gas, India and Ministry of Energy of the Russian Federation for cooperation on the use of Natural Gas for Transportation was signed in presence of Hon’ble Prime Minister of India Mr. Narendra Modi and Hon’ble President of Russian Federation Mr. Vladimir Putin. He further noted that the implementation of this MoU would assist in collective efforts to use natural gas as an environment friendly. H.E. Mr. Anton Inyutsyn, the Russian Deputy Minister, in his address expressed that he was positive that the exchange of information in this webinar would be beneficial for both countries and would lead to joint activities and mutual investments. Mr. D B Venkatesh Varma, Ambassador of India to the Russian Federation delivered the welcome address. He stressed on the importance of continuous collaboration between the two nations with historic felicity and friendship. He assured that the Indian Embassy in Russia would extend all possible support for making this partnership in the energy sector more robust.
The webinar included two Technical sessions on LNG as Transport Fuel and CNG as Transport Fuel, wherein perspectives from Indian and Russian sides were presented and saw the attendance of dignitaries, speakers and participants from both India & Russia. Speakers from KPMG India and PWC India set the initial tone for the webinar by their presentations on CNG and LNG usage, policies and future prospects in the Indian markets. Besides, from Russia, there were presentations by Rostec, Kamaz Group and Natural Gas Vehicles Association speaking on the prospect of partnership for the CNG and LNG equipment manufacturing for the transport sector. During the webinar, Indian speakers highlighted the growth potential of LNG and CNG as a transport fuel. It was mentioned that LNG is being promoted as a transport fuel because of its low carbon emission. India is likely to have 120,000 LNG vehicles by 2030. By then, road transport is forecast to account for 1.2-3 MMTPA LNG demand which is likely to go up to 4.5 MMTPA by 2035. City Gas distribution network expansion is the Backbone for CNG growth. Now CGD coverage is being expanded to over 400 districts across 27 states and Union Territories. There is a huge market potential in the CNG sector in India with expected investment of USD 3-4 billion in CNG equipment, USD 50-60 billion through CNG vehicles and USD 1-1.5 billion via service market till 2030. Russian speaker from Rostec, which is having a significant share of Russia’s industrial assets, spoke at length about the technological and equipment aspects of LNG production and the supply chain. Speaker from Kamaz gave a comprehensive overview of the various LNG vehicles designed by the Company and ready for use in Indian market. Speaker from Natural Gas Vehicles Association eloquently described the vast scope for Natural Gas in automobile industry, both in Russia and India and the need for corporation of both the counties in increasing the share of Natural gas as a motor fuel. Subsequently, speakers from Indian companies, namely GAIL (India) Limited and Indian Oil Corporation Limited also made presentations about their experience in CNG and LNG as transport fuel in India. The webinar is expected to act as a catalyst for coming up with practical measures for initiating projects on pilot basis in each other’s countries and eventually to scale up to the national levels and for mutual investments.
https://www.indianweb2.com/2020/10/india-russia-webinar-held-on-use-of.html
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Government resets domestic natural gas price to historic low
The government has reset the price of domestic natural gas to a historic low of $.179 per MMBtu from October 1 to March 31 under its pricing policy.
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While gas exploration companies will see their revenues fall under in the second half of this fiscal because of this, industries that use natural gas as an input, primarily fertilizer and power, stand to benefit. The gas price for locally produced fields stood at $ 2.39/MMBtu in the first half of the fiscal; the new price brings it down by 25.1%. Meanwhile, the ceiling price for gas to be produced from difficult fields has also fallen to $4.06/MMBtu from $5.61/MMBtu, resulting in a 27.6% decrease. Prices of domestic natural gas have fallen third time in a row now and prices which will be prevalent H2-FY21 onwards will be the lowest gas price ever recorded under the New Domestic gas policy. In a research note analysing the impact of the price fall, credit ratings agency CARE Ratings said that upstream oil and gas exploration companies will see their per unit realisations in the natural gas segment decline. This could potentially discourage upstream companies to take up domestic gas exploration which is already down by 13.2% y-o-y in the current financial year (April-August) due to the low offtake of domestic natural gas, it said. “However, the 25.1% fall in natural gas prices augurs well for natural gas end users as it substantially decreases the cost of manufacturing of urea and petrochemicals where natural gas is used as a feedstock,” the note said. “It will also result in the fall in prices of CNG (compressed natural gas) and PNG (piped natural gas) which will benefit the consumers. Decrease in price of natural gas will also be beneficial for the margins of the power sector and sponge iron industry where it used for the generation of energy.” Mint reported earlier this month that gas-based power plants on the western coast has increased power generation over the last few months following a drop in international spot LNG rates. India has roughly 25GW of gas-fired power plants, of which 14.3 GW are stranded. The operating plants reported an increased average PLF (plant load factor) of 28.63% in July, rising from 22.13% in January. A further drop in domestic gas prices is likely to boost generation at power plants further.
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India, Australia discuss cooperation in energy sector
They discussed several aspects of cooperation in energy sector, which are integral to the Comprehensive Strategic Partnership between the two countries, Petroleum and Natural Gas Ministry said in a tweet.
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Union Minister for Petroleum and Natural Gas and Steel Dharmendra Pradhan held a meeting with Australian High Commissioner Barry O’Farrell on Wednesday and discussed about Australian companies actively partnering and investing in India’s gas infrastructure and in developing the hydrocarbon value chain in the country. They discussed several aspects of cooperation in energy sector, which are integral to the Comprehensive Strategic Partnership between the two countries, Petroleum and Natural Gas Ministry said in a tweet. “They discussed about participation of Australian companies to actively partner and invest in India’s gas infrastructure and in developing the hydrocarbon value chain in India,” it said. Pradhan reviewed the supplies of coking coal, LNG and other energy supplies from Australia. “O’Farrell assured Australia of being a strong partner in this context, and the need for working together to ensure secure and reliable supply chains, and in this context referred to the QUAD meeting at Foreign Ministers’ level next month in Japan,” the ministry said.
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What new gas pricing norms will mean for IGL, Mahanagar Gas
The government has approved the standardised e-bidding process for natural gas. The oil minister says that producers can choose any platform for e-bidding of natural gas
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but producing companies cannot participate in natural gas bidding. However, subsidiary companies can participate in the process. We will have to look into detail at some point of time but more important to me would be the pricing part of it. When you start putting across the pricing in an open platform, it means that you are allowing the market price to get determined as against the government dictating the price and this is a fundamental change. I am happy about this because for the producing companies when the market price determining mechanism is available, it could possibly result in a better realisation. This could possibly allow them to command a better price.
Impact of new norms on IGL, Mahanagar Gas
This reform is basically suggesting a market driven pricing mechanism both for procurement as well as distribution of gas. IGL and MGL are utility companies that would basically be working on the spread. And now that the entire sector is opened up, they would have a competitive bidding process taking place and they would be in a position to buy their resources for the gas that are priced on different platforms based on their ability to do so. I would think they would have a better mechanism to pass on this particular cost to the end customers. They would be in a position to maintain their spreads. From an investment point of view, one would look at these companies more on the basis of internal rate of return (IRR) that they generate and the return they are producing out of it. One would like to have these stocks in the portfolio but more importantly, viewed against the complex gas pricing mechanism which the government used for determining price based on four different countries gas pricing and averaging them out, bringing the entire thing on the market platform gives me a good amount of confidence that these companies would be in a far better position to manage their purchases and yield better realisation out of it.
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Ban on selling gas to affiliates lifted
The Cabinet on Wednesday (Oct 7) gave a massive shot in the arm for private natural gas firms such as Reliance Industries and Vedanta-owned Cairn India.
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The Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi decided to set in place a common e-bidding system for gas sales and lift the ban on selling gas to affiliate companies. Gas producers themselves, however, continue to be banned from buying gas from their own fields. The CCEA has also extended complete marketing freedom for gas blocks where “Production Sharing Contracts already provide pricing freedom”. As currently structured, the gas marketing system is focused on keeping prices low. A senior gas industry executive who spoke on condition of anonymity said that while pricing freedom had been extended to gas fields in 2016 and 2019—except for those operated by state-owned ONGC Ltd and Oil India Ltd on a nomination basis—prices remain lower than “natural market levels”. “The ban removed much of the competition, so prices stay low… many affiliates owned by upstream companies could not buy gas from their parents… effective market was smaller,” he said. A case in point is Reliance Industries and British oil major BP Plc, whose gas marketing joint venture—India Gas Solutions Pvt Ltd. (IGSPL)—has been unable to buy gas from fields owned by RIL and BP, such as the KG-D6 assets. While the ban on selling to affiliates has been lifted, other safeguards on price manipulation remain. According to oil minister Dharmendra Pradhan, if only affiliates participate in a particular auction, then re-bidding will be mandatory. The decision to extend marketing freedom to fields where PSCs allow pricing freedom is also advantageous to firms such as Cairn, and Focus Energy, who operate several fields. Both will now be able to sell gas to anyone, unlike earlier when they could only sell to state-owned GAIL India. According to Pradhan, “this will add 40 MMSCMD of production from K-G basin and other areas to the current output of 84 MMSCMD”, and “will bring uniformity in the bidding process across the various contractual regimes and policies”. The question of who can bid for gas auctions has raged on for a while, especially after September 2017, when Reliance sold all the gas produced in its Madhya Pradesh coal bed methane field to itself. An enquiry was begun but did not result in a licence cancellation. The e-bidding platform lessens the scope for such controversy. The Directorate General of Hydrocarbons will now notify guidelines for the e-auctions and shortlist a panel of e-bidding platforms which may be used by the gas producers.
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Govt mulls domestic gas floor price system to protect explorers’ margin
The government proposes to implement a new floor price mechanism for gas produced from domestic fields by companies such as the Oil and Natural Gas Corporation (ONGC)
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to prevent the fuel price from crashing below an identified threshold in current subdued market conditions. Domestic gas price has fallen to $1.79 per MMBtu for the October-March period of the current fiscal. The administered price of the gas has fallen in the last four six-monthly revision cycles and has now reached the lowest price levels since 2014. At this level of natural gas prices, exploration companies such as ONGC actually lose money on fuel as tariffs crash. Sources said the Petroleum Ministry is considering a proposal under which domestic gas will have a floor pricing that would be linked to gas prices with the Japan-Korea Marker, a benchmark index used to determine LNG tariff in North Asia with a discount. With JKM prices hovering over $5 per MMBtu even with a $1 MMBtu discount, the Indian gas floor price under this formula will be close to $4 MMBtu. This is much higher than the government’s current administered price of natural gas and would give necessary margins to oil explorers to economically maintain gas production cycles. While a gas floor price at this juncture would benefit oil companies, it could render the price of piped natural gas to households and CNG for transportation expensive. The average cost of gas production for the country’s largest public sector oil company ONGC is about $3.7/MMmBtu, much higher than the current regulated price of natural gas at $1.79/MMBtu. If the current demand cycle in the oil market sustains, gas prices may fall even further. Lower gas price is bad news for the ONGC as it would mean further suppressed margins and losses. The company is set to lose close to Rs 6,000 crore on low gas prices this year, brokerages have said. Brokerages have put ONGC’s FY22E gas price at $3.6-4.2/MMBtu depending on discount to JKM price if the new floor price is implemented. With low LNG liquefaction capacity addition ahead, JKM spot futures for FY22-FY26E are expected at $5.2-5.8/MMBtu vs $4.7-4.1/MMBtu in FY20-FY21E. Petroleum Ninister Dharmendra Pradhan has said earlier that India will phase out price controls in natural gas and make it market-linked soon.
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LNG Development and Shipping
India’s gas imports set to rise, demand reaches pre-pandemic level
India’s gas imports are set to rise as GAIL (India) Ltd has reopened its western India imports facility after months of shutdown during the monsoon and as local demand has returned to pre-pandemic levels,
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its head of marketing said on Monday (Oct 5). GAIL had stopped importing liquefied natural gas (LNG) cargoes at its 5 million tonnes/year Ratnagiri terminal in western India in May, as the start of the monsoon season makes operations difficult without a breakwater to protect the harbour from large waves. “Now our imports will be normal as the shutdown is over,” E.S. Ranganathan told Reuters. GAIL on an average receive 5 LNG cargoes a month at the terminal but its imports have been hit since end-March due to a nationwide lockdown to stem the spread of COVID-19. Since the shutdown, it unloaded a cargo on Sept. 27. India meets about half of its daily 160-170 MMSCM of gas demand through imports. LNG imports, however, slipped over three years low to 1,947 MMSCM in April, when coronavirus-linked lockdowns hit mobility and industrial activity. India’s overall gas demand during the month shrunk to the lowest since March 2015 to 4,013MMSCM, according to the government data. Gas demand has started increasing as restrictions were eased from May. “Gas demand has come back to pre-Covid level… new customers are added that together makes up for the loss in demand from some CGD (city gas distribution) area,” said Ranganathan. India’s city gas distribution companies supply gas to domestic households, transport and small industries. Ranganathan said most fertiliser and power plants, key consumers of gas, were operating at a normal rate. India is also adding more stations to sell gas to automobiles, and building pipelines and import facilities as Prime Minister Narendra Modi is keen to boost the share of cleaner fuel in the energy mix to 15% by 2030 from 6.2% now.
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Russia and India plan to join forces to encourage LNG as vehicle fuel
The first ever India-Russia webinar on the use of natural gas as motor fuel was organized under the aegis of the Ministry of Petroleum and Natural Gas of India and
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the Ministry of Energy of the Russian Federation. A Memorandum of Understanding between both countries for cooperation on the use of natural gas for transportation was signed in presence of Prime Minister of India Narendra Modi and President of Russian Federation Vladimir Putin. Anton Inyutsyn, the Russian Deputy Minister expressed, that he was positive that the exchange of information in this webinar would be beneficial for both countries and would lead to joint activities and mutual investments. Venkatesh Varma, Ambassador of India to the Russian Federation stressed on the importance of continuous collaboration between the two nations. He assured that this embassy would extend all possible support for making this partnership in the energy sector more robust. KPMG India and PWC India set the initial tone for the webinar by their presentations on CNG and LNG usage, policies and future prospects in the Indian markets. Indian speakers highlighted the growth potential of natural gas as a low-carbon vehicle fuel. India is likely to have 120,000 LNG vehicles by 2030. By then, road transport is forecast to account for 1.2-3 MMTPA LNG demand which is likely to go up to 4.5 MMTPA by 2035. In addition, there is a huge market potential in the CNG sector in India with expected investment of USD 3-4 billion in CNG equipment, USD 50-60 billion through CNG vehicles and USD 1-1.5 billion via service market till 2030.
On behalf of Russia, there were presentations by Rostec, Kamaz Group and the Natural Gas Vehicles Association speaking on the prospect of partnership for CNG and LNG equipment manufacturing for the transport sector. Speaker from Rostec spoke at length about the technological and equipment aspects of LNG production and the supply chain. Speaker from Kamaz gave a comprehensive overview of the various LNG vehicles designed by the company and ready for use in Indian market. The webinar is expected to act as a catalyst for coming up with practical measures for initiating projects on pilot basis in both countries and eventually to scale up to the national levels and for mutual investments.
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Natural Gas / Transnational Pipelines/ Others
U.S. natgas rises to 5-week high on higher LNG exports, hurricane worries
U.S. natural gas futures jumped over 7% to a five-week high on Monday (Oct 5) as liquefied natural gas (LNG) exports rise and worries production could be shut in again later this week
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with another hurricane expected in the Gulf of Mexico. Tropical Storm Delta is expected to strengthen into a hurricane before slamming into the Gulf Coast between Louisiana and Florida on Friday. Front-month gas futures rose 17.7 cents, or 7.3%, to settle at $2.615 per MMBtu, its highest close since Aug. 31. Despite the rise in the futures, spot gas prices for Monday fell to their lowest in years in several regions of the United States and Canada as mild weather and coronavirus demand destruction cut usage of the fuel for heating and industrial purposes. Gas speculators, meanwhile, boosted their net long positions on the New York Mercantile and Intercontinental Exchanges last week for a second week in three on expectations energy demand will rise as the economy rebounds once state governments lift more coronavirus-linked lockdowns. Data provider Refinitiv said output in the Lower 48 U.S. states averaged 86.8 billion cubic feet per day (bcfd) so far in October, down from a four-month low of 87.2 bcfd in September. Those production declines come as low prices earlier in the year due to coronavirus demand destruction caused energy firms to shut wells and cut back on new drilling so much that output from new wells no longer offsets existing well declines. With milder weather coming, Refinitiv projected demand, including exports, would slip from 86.8 bcfd this week to 86.4 bcfd next week. That, however, was higher than Refinitiv’s forecasts on Friday. The amount of gas flowing to LNG export plants averaged 7.1 bcfd so far in October, up from 5.7 bcfd in September as vessels started returning to Cameron in Louisiana.
Source: LNG Global
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German Jan-July gas import bill shrinks 37.4 per cent as imports fall 6.4 per cent
German January-July imports were 3,007,700 Terajoules (TJ), or 85.5 billion cubic metres (bcm), compared with 3,214,440 TJ a year earlier, said trade statistics office BAFA.
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July imports alone totalled 311,779 TJ. FRANKFURT: Germany imported 6.4% less natural gas in the first seven months of 2020 after imports in July alone dropped by 32.8% year-on-year while lower prices reduced the Jan-July import bill by well over a third, official data showed. Gas, power and carbon traders monitor gas imports because the supply and demand balance can change prices and traded volumes in all three markets. Gas statistics also correlate with coal, which competes with gas in the production of electricity, and with carbon emissions permits. German January-July imports were 3,007,700 Terajoules (TJ), or 85.5 billion cubic metres (bcm), compared with 3,214,440 TJ a year earlier, said trade statistics office BAFA. July imports alone totalled 311,779 TJ. Imports in the year to May were 8.7% above the same period a year ago, but then a slump in demand because of the coronavirus crisis and global oversupply weighed on the market. Importers’ bills for the seven months fell to 9.7 billion euros ($11.40 billion), 37.4% less than a year earlier. Average prices paid on the border in July were 2,617.86 euros per TJ, equivalent to 0.94 euro cents per kilowatt hour (kWh), and down 27.9% from the same month in 2019. Average border prices across the January-July period were down 32.8 year-on-year at 3,234.37 euros/TJ. Germany mainly imports gas from Russia, Norway, the Netherlands, Britain and Denmark via pipelines.
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Partners in Tamar split on new natural gas sale to Israel Electric
Some of the partners in Israel’s Tamar natural gas site have agreed to sell an additional 2 billion cubic meters of gas to state utility Israel Electric Corp. (IEC)
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for about $290 million, one of the partners said. Isramco Negev said in a regulatory filing in Tel Aviv the purchase price would be lower than in the initial agreement and that it would be joined by partners Tamar Petroleum and Alon Natural Gas Exploration. It said other partners in Tamar, Noble Energy and Delek Drilling, were offered to participate. In a separate filing on Monday, Delek Drilling said the deal went against another supply agreement IEC had signed with partners in the larger Leviathan gas field, which include Delek and Noble. Delek said it would was reviewing its options. IEC in 2011 signed a deal to buy $8 billion of gas from Tamar for 15 years starting in mid-2013 when production began. It also agreed in 2019 to buy 4 BCM, or $700 million, of gas from Leviathan in an interim deal until mid-2021 or when the Karish field comes online.
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Noble Energy shareholders approve $4.1 billion sale to Chevron
Noble Energy shareholders on Friday (Oct 2) approved a deal to sell the oil and gas producer to Chevron Corp, making Chevron the No. 2 U.S. shale oil producer and giving it international natural gas reserves
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close to growing markets. The all-stock deal values Noble Energy at around $4.1 billion, excluding $8 billion in debt, and the vote cements the first big energy deal since the coronavirus crushed global fuel demand. The addition of Noble will boost Chevron’s U.S. shale oil holdings, making it the No. 2 producer behind EOG Resources, according to data from Rystad Energy. It also adds nearly 1 billion cubic feet of natural gas reserves. Noble’s Leviathan in Israeli waters, one of the world’s biggest offshore gas discoveries of the last decade, began pumping gas from the field late last year. While 89% of Noble shareholders voted in favor of the deal, just 60% voted for merger-related executive payouts, according to regulatory filings. Proxy adviser Glass Lewis had recommended voting for the deal but against “excessive” executive payments, which would be triggered by the sale of the company. The deal has become even cheaper for Chevron since it was announced in July with a value of $5 billion, as shares of both companies have traded down alongside oil. The deal is worth about $4.1 billion based on Friday’s closing price for Chevron of $71.19. Noble investors will receive 0.1191 shares of Chevron for each Noble share. Activist investor Elliott Management Corp, which took an undisclosed stake in Noble but never came out publicly against the deal, declined on Friday to say how it voted its shares or whether it has sold or kept its stake. The deal is expected close early this quarter. It comes during a tumultuous year for the oil and gas industry and “the hurdles remain high for corporate deals,” said Jennifer Rowland, analyst with Edward Jones. “Any deal that requires significant cost savings or a higher oil price to justify the price paid will not be well-received.” Chevron last year walked away from a deal for Anadarko Petroleum and took a $1 billion break fee, a decision that looked even better as oil prices cratered.
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Total bets its future on renewables and gas
France’s oil and gas major Total is joining other European peers, aiming to reinvent itself into a broad energy company, and will be betting on profitably growing its liquefied natural gas (LNG)
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and renewable businesses. Total plans to increase the energy it produces while decreasing its carbon footprint, the company said in its Strategy & Outlook this week. To reduce emissions and become a broad energy company, Total will grow its energy production by one third, with half the growth coming from LNG and half from electricity, mainly from renewables. The company will also scale up profitable investments in renewables and electricity from US$2 billion to US$3 billion per year, representing more than 20 percent of capital investments. The French firm also confirmed its ambition, announced earlier this year, to get to net-zero by 2050. Last week, Total’s chief executive Patrick Pouyanné told French newspaper Le Parisien that the firm aims to be among the world’s top five producers of renewable energy. The company’s operations mix today is 55% oil, 40% gas, and less than 5% electricity from renewables, Pouyanné said, noting that in 2050, Total’s operations will be divided into 20% oil, 40% gas, and 40% renewable energy. European oil majors have pledged various commitments to become net-zero energy companies and significantly expand their renewable energy, hydrogen, or power market portfolios. BP said in its new strategy in August that it would reduce its oil and gas production by 40% by 2030 through active portfolio management and would not enter exploration in new countries.Equinor mandated its incoming chief executive Anders Opedal—who will replace retiring Eldar Sætre in November to accelerate Equinor’s transition from an oil company to a broad energy company. Eni announced in June a “new business structure to be a leader in the energy transition,” creating an Energy Evolution division in the company to accelerate its plans to significantly boost renewable power generation and biofuels production. Shell said this week it is reorganizing for a low-carbon future, which would mean up to 9,000 job cuts by the end of 2022.
https://oilprice.com/Latest-Energy-News/World-News/Total-Bets-Its-Future-On-Renewables-And-LNG.html
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Polish watchdog fines Gazprom $7.6 bln over Nord Stream 2 gas pipeline
Poland’s anti-monopoly watchdog said on Wednesday (Oct 7) it had fined Russia’s Gazprom more than 29 billion zlotys ($7.6 billion) for building the Nord Stream 2 gas pipeline without its approval.
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The UOKiK watchdog also said it had imposed a 234 million zloty fine on five other firms involved in financing $11 billion project set to double Russia’s gas export capacity via the Baltic Sea. Nord Stream 2 is led by Gazprom, with half of the funding provided by Germany’s Uniper and BASF‘s Wintershall unit, Anglo-Dutch company Shell, Austria’s OMV and Engie. Poland sees Nord Stream 2 as a threat to Europe’s energy security as it will increase reliance on Russian energy. The United States has also imposed sanctions on companies laying pipes for the project. UOKiK has been examining the project for years. In August it fined Gazprom 213 million zlotys over a lack of cooperation regarding the project. “The launch of NS2 will threaten the continuity of natural gas supplies to Poland. An increase in the price of the product is also highly likely, with the said increase being borne by Polish consumers,” said Tomasz Chrostny, president of UOKiK. “Completion of this investment project increases economic dependence on Russian gas – not only in the case of Poland, but also of other European states,” Chrostny said. Gazprom did not reply to a request for immediate comment. Construction of the 1,230-kilometre pipeline is nearly finished but for a final stretch of roughly 120 km in Danish waters. Work was halted in December as pipe-laying company Swiss-Dutch Allseas suspended operations because of the U.S. sanctions targeting companies providing vessels.
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Cost of oil, gas projects in Norway rise amid COVID-19 pandemic
The COVID-19 pandemic has interrupted the development of offshore oil and gas projects in Norway and pushed their costs up, the government and operator Equinor said on Wednesday (Oct 7).
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Equinor’s Martin Linge oil and gas field is now expected to cost 60.8 billion Norwegian crowns ($6.52 billion), up from an estimate of 56.1 billion crowns a year ago, the government’s 2021 fiscal budget showed. The company’s Arctic Johan Castberg oilfield development is now estimated to cost 53.4 billion crowns, up from 49 billion crowns previously, the government said. Cost overruns also hit the Njord Future and other developments. “The Covid-19 pandemic and weakened Norwegian (currency) have negatively impacted some of the projects, but the combined project portfolio is still very resilient,” Equinor said in a separate statement. The long-delayed Martin Linge development in March became the first offshore field to be hit by the COVID-19 pandemic, interrupting ongoing installation work at its platform. The pandemic also interrupted construction of the Johan Castberg’s floating production, storage and offloading unit (FPSO) at a yard in Singapore, while the company also discovered technical problems.
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Global LNG Development
Bangladesh to increase spot LNG imports because of rising demand
Bangladesh is expected to double its imports of liquefied natural gas (LNG) from the spot market starting in December as demand rises and to capitalise on low prices of the super-chilled fuel,
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two energy officials told Reuters. Bangladesh’s state-run Rupantarita Prakritik Gas Company is seeking 138,000 cubic metres of so-called lean LNG, which has a lower energy content, for Dec. 9-10 delivery, said the two officials, one from Rupantarita and one from Petrobangla, the state-owned company that is in charge of LNG imports into the South Asian country. Rupantarita, a subsidiary of Petrobangla, may issue a second tender next week for a similar volume of lean LNG for end-December delivery, the two officials said. The second tender will increase the number of LNG cargoes purchased under short-term, or spot, contracts, to two per month from one currently, said the Petrobangla official. The imports are needed to meet rising demand and as prices remain lower than normal. Spot LNG prices for Asia LNG-AS were estimated at $5.50 per MMBtu, which is up from the record low hit earlier this year but still 29.6% below its five-year average. Rupantarita Prakritik bought Bangladesh’s first spot LNG cargo ever from trading house Vitol at $3.8321 per MMBtu for delivery over late September to early October. The company is also currently assessing offers for its second spot cargo for Nov. 12-13 delivery. Bangladesh, with a population of about 160 million people, is expected to become a major LNG importer in Asia, along with Pakistan and India, as domestic gas supplies fall. The country currently has two floating storage and regasification units (FSRUs) with a total regasification capacity of 1 billion cubic feet per day – equal to about 7.5 MMTPA. Bangladesh imported 3.89 MMT of LNG in 2019 through two long-term contracts with Oman and Qatar.
Source: LNG Global
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‘Winter challenges’ for LNG market on spotlight at GECF lecture
Prospects and challenges for the LNG market in the period ahead, particularly during the ensuing winter season, were on the spotlight at the latest GECF Monthly Gas Lecture, held by videoconferencing.
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At the virtual session, a panel of experts from leading information provider, Refinitiv, uncovered what the 2020-21 winter might hold for the LNG industry reeling from the double whammy of coronavirus pandemic and economic downturn. Entitled ‘Winter outlook for global LNG – cautiously optimistic’, company analysts, Anne Kat Brevik, director – LNG Research & Forecasts, Laura Page, Lead LNG analyst, and Hengky, senior analyst (LNG), sifted through the demand and supply outlook and their relationship with market’s balance and pricing dynamics. “We expect LNG demand to increase by 4bn cubic metres (bcm) this winter and that’s led by growth in China, Japan, and South Asia. LNG supply is expected to grow by 3bcm led by the United States. And when we put together demand and supply forecast, we expect the LNG market to be slightly tighter than last winter by 1bcm,” noted the Refinitiv representatives. However, there remained several risks to the forecasts, foremost of which are winter temperatures and coronavirus pandemic. The former was unusually warm last winter for the northern hemisphere, dampening LNG demand. In the case of the latter, the full-blown effect of Covid-19 is unclear particularly as it is currently worsening in many countries and levelling off in others. Recognising the importance of scientifically drawn forecasts, which are included in GECF annual ‘Global Gas Outlook 2050’ secretary general Yury Sentyurin said, “In many ways, Covid-19 has highlighted the importance of data so we can map and understand the economic and social effects of pandemic-related measures. This belief in the supremacy of data to generate valuable insights can be found in the DNA of both the Forum and Refinitiv. The lecturers shared that the story of LNG playing out vastly differently last winter in Japan and South Korea, the world’s largest and third largest LNG buyers, respectively. In Japan, LNG import declined by about 4% due to the mildest winter on record in addition to an industrial demand that was hit by Covid-19 in the first quarter (Q1) of 2020. In contrast, South Korea saw an uptick of about 7% in LNG import due to the government policy of turning off coal-fired power plants between December and March to improve air quality; March alone witnessed the shuttering of some 28 coal-fired power plants, stimulating gas for power demand. “That said, while the economic recovery is still very slow in Japan, we do see the ‘La Nina’ weather pattern emerging for this winter and that will mean colder temperatures than last winter, boosting demand for heating,” the experts noted. South Korea, meanwhile, may witness a 10% decline in LNG import due to higher availability of nuclear power plant and the assumption that government-mandated coal-fired plant closures may not be as aggressive as last year. “In terms of pricing dynamics, as the markets move into a period of oversupply due to the growing convergence of global gas prices, it is important to keep an eye on the direction of gas hubs like the Henry Hub, TTF (Title Transfer Facility) and Asian spot price,” they concluded.
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Global LNG-Asian LNG prices rise on firm demand
Asian spot liquefied natural gas (LNG) prices rose this week on firm demand in the region, as well as supply concerns in the United States due to a hurricane and stronger European gas prices.
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The average LNG price for November delivery into northeast Asia LNG-AS was estimated at $5.50 per MMBtu, $0.30 MMBtu above last week’s level. The price for December 2020 delivery was at around $5.70 per MMBtu, trade sources said. Demand for LNG is expected to be high in both Asia and Europe in the fourth quarter. “We are expecting a substantial year-on-year increase in Northeast Asia’s Q4 2020 demand for LNG because of increased heating load compared to last winter,” consultancy Energy Aspects said in a report, adding that lower nuclear output in South Korea may also create additional LNG demand. In India, demand is back to usual levels after a fall caused by the COVID-19 pandemic earlier this year, a source in the country said. Pakistan has awarded two November cargoes to trader Gunvor , who offered the lowest bids at 14.2277% slope of Brent for the first cargo and 13.8377% for the second. It has also invited bids for six December delivery cargoes. Japan’s Tohoku Electric Power was seeking a cargo for delivery in late November, while Mexican state power utility CFE was looking to buy a cargo for October. U.S. producer Cameron LNG said on Thursday (Oct 8) it would shut its export plant in Louisiana as Hurricane Delta was expected to slam into southwest Louisiana on Friday. Russia’s Novatek offered seven cargoes for delivery to Europe over December 2020 to June 2021. An ongoing workers’ strike in Norway on oil and gas fields has helped lifting European gas prices this week to the highest levels since December.
Source: LNG Global/Reuters
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There’s more upside for natural gas/LNG prices
With winter around the corner, the outlook for natural gas demand just got a boost. Forecasts, for now, seem to point to a normal winter, meaning a rise in gas demand for power generation and heating.
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But will prices follow? They are already improving in Asia, not least because weather forecasts suggest a colder than usual winter. The spot price for natural gas in Northeast Asia has recovered from the record lows reached earlier this year amid the pandemic and currently hovers around $5.20 per MMBtu, similar to pre-pandemic levels although still lower than the average of $6 per MMBtu gas traded at this time last year in Northeast Asia. The news from China specifically is also good: imports of liquefied natural gas this year are seen up 10 percent this year from last as local industries snap up cheap cargos while the oversupply lasts. Business activity in Asia’s hothouse is improving and consumer demand appears to be strengthening too post-pandemic, which will drive greater demand for LNG. Total gas demand, however, is likely to be weaker than some might hope: a recent government report forecast gas demand growth this year at 4.2%. This would be the slowest rate of growth for the last five years. In India, the picture is perhaps a little more optimistic. The country’s largest gas processing and distribution company, GAIL, said that local demand for gas had recovered to pre-pandemic levels, which prompted the company to reopen its gas import facility in the western part of the country, where cases of Covid-19 are still rising. India satisfies about half of its gas demand from imports. Gas demand in Europe is also picking up and with it, prices. Between May, when they hit a trough, and last month, spot prices for natural gas at the Title Transfer Facility rose by 265 percent to over $3.60 per MMBtu, the Wall Street Journal reported in mid-September citing S&P Global data. Excessive stocks have dwindled, which bodes well for LNG exporters ahead of the winter season. On the flip side, if Covid-19 cases continue to surge in Europe, movement restrictions would be tightened further, which would likely affect gas demand even during peak demand season. In the summer, Europe canceled a lot of LNG cargoes amid a slump in demand, and pipeline imports from Russia also fell substantially because of the devastation that the pandemic wreaked on demand. Storage facilities filled up in the low season, making Europe unable to absorb excessive stocks elsewhere as it has traditionally done. It is doubtful whether we will see a repeat of that situation thanks to the seasonal factor, but natural gas’s good fortunes in Europe are not exactly guaranteed, either. Supply, meanwhile, has been shrinking not just because of the improving demand that has helped draw down inventories, but also thanks to a couple of outages in Australia, which last year took the crown of largest LNG exporter by capacity from Qatar. Shell’s Prelude LNG project has been offline since the start of the year and the company only last month began preparations to restart production. Prelude has an annual capacity of 3.6 million tons of LNG. Chevron, operator of the 15.6-million-ton Gorgon project, will be shutting down all three trains gradually after it detected damage in a key component of the liquefaction equipment. Supply has also declined in the United States, where a lot of natural gas is extracted as a by-product of oil drilling in the shale patch. Last year, this became a problem, especially in the Permian where a shortage of pipeline capacity to take away the gas pressured prices. This year, when shale drillers started shutting in oil wells in response to the price slump, gas production also fell, eventually reducing the gap between supply and demand and stimulating prices. For now, gas fundamentals look good for sellers and also good for buyers. It would only be a matter of time for this to change but with winter coming, unless the weather cheats again remaining milder than usual, gas prices may be in for a further rally.
https://oilprice.com/Energy/Energy-General/Theres-More-Upside-For-Natural-Gas-Prices.html
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Vietnam approves Exxon’s $5-billion LNG-to-power Project
The port city of Hai Phong in Vietnam has approved a liquefied natural gas (LNG) project for power generation, expected to be developed by U.S. supermajor ExxonMobil and to cost US$5.09 billion.
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The people’s committee of the city of Hai Phong approved the project which is expected start electricity generation in 2026 or 2027, Reuters reported on Friday, citing a statement from the Vietnamese city. The power plant is expected to have an initial capacity of 2.25 gigawatts (GW) when it becomes operational. Capacity will be doubled to 4.5 GW by 2029-2030, the city of Hai Phong said. In June this year, Vietnam’s Prime Minister Nguyen Xuan Phuc told Irtiza Sayyed, President of ExxonMobil LNG Market Development, that Vietnam welcomes the U.S. supermajor’s plans to invest in the Southeast Asian country. Exxon is exploring the possibility of investing in new projects to develop LNG-to-power plants in Vietnam, the local government said at the time. The plans included a 4-GW LNG-to-power plant in Hai Phong, which could start generating power between 2025 and 2030, and a 3-GW gas-fired power complex in the Mekong Delta province of Long An. While LNG-to-power projects led by Exxon in Vietnam could become reality only in the latter half of this decade, the U.S. oil giant is doubling down in the more immediate future on its operations in Guyana—one of its key focus areas. Earlier this week, Exxon made the final investment decision on the Payara offshore oilfield in Guyana. Payara is expected to yield up to 220,000 bpd of crude oil when commercial production begins in 2024. This would be the third offshore development project of the supermajor in Guyana, which rose to fame thanks to a string of discoveries in the Stabroek block made by Exxon and its partner Hess Corp. So far, the discovered recoverable resources in the block have been estimated at more than 8 billion barrels of oil equivalent.
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Japan’s JERA looking to build 2 LNG power plants, scrap 5 ageing units
Japanese power generator JERA said on Tuesday it has begun an environmental assessment on building two 650 megawatt (MW) LNG power plants at its Chita thermal station in central Japan,
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and plans to scrap five ageing plants. The company has not made a final investment decision, but it is considering building 650 MW No.7 and No.8 plants, with gross thermal efficiency of about 63 per cent – one of the highest levels anywhere in the world – to help reduce CO2 emissions, a JERA spokesman said. If they go ahead, the two units would start operations in August and December 2027 respectively, he said. JERA, a thermal power and fuel joint venture between Tokyo Electric Power Company Holdings and Chubu Electric Power, plans to decommission the older No.1-No.4 plants by March 2022 and the No.5 plant by March 2027, shutting 3.1 gigawatts(GW) capacity in total. It will retain the 854 MW No.6 unit. JERA, which is also the world’s biggest LNG buyer, submitted a primary environmental impact consideration document to Japan’s industry ministry and local authorities on Tuesday, the first step in four phases of the environmental impact assessment process.
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Qatar to thrive as world’s top LNG exporter well into next decade: Apicorp
Qatar is expected to maintain its title as the world’s top LNG exporter well into the next decade, according to Arab Petroleum Investments Corporation (Apicorp).
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It is also expected that the FID (final investment decision) for the North Field Expansion (NFE) megaproject (estimated value at $50bn) would be pushed well into 2021, Apicorp said in its latest report “MENA-Gas-Petrochemical-Investment-Outlook-2020-24”. Currently, Qatar Petroleum (QP) is the largest equity LNG holder in the world with ownership of stakes ranging from 63% and 70% in Qatargas combined projects (52.5mn tonnes per annum equity nameplate capacity). Over the last decade (2009-19) the Australian wave of new additions totaling about 88 MMTPA was followed by the 2015-19 US wave of new LNG trains spurred by the surge of associated gas from shale oil bonanza that added more than 45 MMTPA of export capacity by end of 2019. In April 2020, QP announced that it signed an agreement with China’s Hudong-Zhonghua Shipbuilding Group (Hudong) to “reserve a significant portion of Hudong’s LNG ship construction capacity through 2027. In June 2020, QP also signed heads of agreements worth $19.2bn with the Korean trio: Daewoo Shipbuilding and Marine Engineering, Hyundai Heavy Industries and Samsung Heavy Industries to reserve construction capacity for up to 100 new LNG carriers through 2027. Qatar’s shipbuilding ambition is aimed at facilitating the LNG export quest providing shipping for QP and also ExxonMobil’s Golden Pass LNG. QP anticipates making a decision on partners by the fourth quarter of 2020, though delays in the EPC tender process and depressed gas prices are expected to push the decision further into 2021. Stressing that such a circumstance would make the possibility of solely funding the full project more likely if needed; Apicorp said, “Self-financing the NFE would be a historic precedent as compared to QP financing legacy LNG mega trains.” The previous Qatargas/RasGas projects were able to secure financing only after securing offtake guarantees, including the long-term contracts that underpinned FID on the mega trains. “Therefore, the plan to self-finance the expansion trains could remove the need to finalise marketing arrangements before reaching FID, although this would require QP and its potential partners to be willing to take on the marketing risk,” Apicorp said.
https://www.gulf-times.com/story/675167/Qatar-to-thrive-as-world-s-top-LNG-exporter-well-i
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Natural Gas / LNG Utilization
Global Feed Ecotrans will have a 90% natural gas powered fleet next year
The history of Global Feed Ecotrans begins in 2013, the result of the union of two companies with more than two centuries of experience in the transport sector: Traginers del Vendrell S.L. and Transportes Ojechar, S.L.
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Together with IVECO, they share the same objective: the search for sustainable and efficient road transport. Proof of this is the expansion of its fleet with 12 new IVECO S-WAY NP trucks, powered by LNG. Global Feed Ecotrans, which has a fleet distributed between Spain and Europe of 355 vehicles, of which IVECO represents half, has among its values the reduction of emissions and noise pollution. Aware from its origins to maintain the environment in which they carry out their activities, such as farm distribution or food transport, the company needs special requirements for its long-distance missions. Likewise, Global Feed Ecotrans, firmly convinced for years by the benefits of natural gas in road transport, has its own refueling point (developed by HAM) in La Roda, Albacete, and seeks to reduce its carbon footprint, especially in the logistics chain. “Our ecological policy is multilevel, since 2013 we have been taking this step, developing the environmental strategy ‘ECOTRANS SUSTAINABLE 2013-2021,’ a strategic plan that we have consolidated this year and with which we will achieve that, by 2021, 90% of our fleet is propelled by LNG. We are aware that we have to take advantage of the present while respecting the future, doing things differently. With the start-up in 2020 of our natural gas station located in La Roda, we have opted for a project that provides an innovative image both nationally and internationally,” the partners said. “In addition, one of the essential factors for which we have opted for natural gas is its continuity in the future thanks to biomethane, which will allow us a circular economy with neutral CO2 emissions,” they added.
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Tenerife adds first eco-friendly vehicles to its cleaning service fleet
The mayor of Santa Cruz de Tenerife José Manuel Bermúdez and the first deputy mayor and councilor for Public Services and Community Welfare Guillermo Díaz Guerra presented the first natural gas
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and electric vehicles that recently joined the municipal cleaning service of Valoriza Medioambiente, the concession company, with the aim of reducing the impact on the environment and noise levels. At the moment, 17 CNG vehicles and 32 electric vehicles have been added to the service, intended both for street cleaning, such as scrubbers, sweepers and flushers, as well as for the waste collection service and inspection. Valoriza’s objective is to renew the 97 vehicles that make up the cleaning service before the end of the year, of which 39% will be NGVs units, another 39% electrics, and 2% hybrids. The investment made amounts to 12 million euros. Eight out of 10 vehicles used for waste collection and street cleaning will be less polluting and quieter, said Bermúdez, who stressed that the aim of the city council is to bet on increasingly sustainable mobility. “They are new vehicles that incorporate technology that makes them less polluting and that meet the objective of cleaning our city in a sustainable way and promoting urban environmental improvement in Santa Cruz,” said the mayor. The 77 natural gas and electric vehicles that will be incorporated in 2020 will allow to provide a much more efficient and sustainable service, reducing CO2 emissions by more than 151 tons per year, in addition to being safer than conventional ones, helping to reduce energy consumption and cause less noise pollution.
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New natural gas mobile station opens in northern France
C4T Europe has opened a new LNG-CNG mobile station in Marck, Calais, designed and manufactured by HAM Group. The unit is located near the Port of Calais and the Eurotunnel in the Industrial Zone of Transmarck,
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Exit 48 of the A16 / E40 motorway, which is a strategic point for national and international transport as it is the gateway to the United Kingdom. The mobile unit will be located there until the construction of the fixed natural gas station, which will also be designed and built by HAM. Thanks to this agreement, C4T Europe and HAM have managed to shorten start-up times for the new station and allow LNG-CNG users to refuel 24 hours a day throughout the year, using any credit/debit card, as well as HAM card, for the exclusive use of companies and professionals. With the installation of the new mobile unit, which allows refueling CNG to cars, light vehicles and trucks, and LNG to heavy vehicles, HAM makes available to all its customers an extensive network made up of 72 service stations, between fixed and mobile, located in Spain and the main European road transport routes. C4T is a company with extensive experience in offering high-quality secure truck parking and refueling facilities, with all the necessary services for road freight drivers to comfortably refuel and rest.
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100 MAN Lion’s City buses with CNG engine hit the streets of Paris
Delivery of a total of 100 natural gas powered MAN Lion’s City solobuses for public transport in Paris is in full swing. The Parisian public transportation company
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Régie autonome des transports Parisiens (RATP) is utilizing a range of the available drive types and lengths of the successful MAN model to transport its passengers reliably, in an environmentally friendly way and at the lowest possible costs. “The fact that the Paris transportation company has once again chosen MAN vehicles with natural gas drives clearly demonstrates how satisfied RATP is with our natural gas buses in particular and with our city buses as a whole. Almost a quarter of the Parisian fleet is made up of state-of-the-art MAN buses, more than 1,000 vehicles in total”, he added. As well as the French capital, local transport provider VWG Oldenburg put into service 15 new MAN Lion’s City 12 G with MAN EfficientHybrid for the biogas fleet. The urban transport provider in Northern Germany is one of the pioneers in natural gas technology and is committed to sustainable mobility: in 2004, when the decision was made that only scheduled services buses powered by natural gas would be used in subsequent years, MAN already had a presence in the market with suitable vehicle types. Then, four years ago, VWG Oldenburg converted its entire fleet of 112 scheduled-service buses to natural gas, including a large number of MAN Lion’s City G models. In addition, biomethane has been in use since 2013. Thus, on balance the VWG fleet in Oldenburg is almost CO2 neutral, saving around 9,500 tons of greenhouse gases per year. Natural gas versions of the MAN Lion’s City are also used in public transportation in many other cities throughout Europe. With the launch of the new generation of city buses, they are now available with the innovative E18 engine series: “We have put our decades of know-how into the development of a completely new gas engine, which is exceptionally efficient and has extremely low exhaust emissions. When the E18 engine is combined with the MAN EfficientHybrid module, it can be operated even more economically”, explained Kuchta.
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Clean Energy: more contracts to fuel bus fleets with CNG and bio-CNG
Clean Energy Fuels has signed a new agreement to operate and maintain the City of Phoenix transit bus facilities, which dispense an estimated 4.8 million gallons of natural gas per year. In addition,
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the company was awarded a station upgrade contract to install new equipment for the West County Transportation Authority (WCTA), Santa Rosa, California, along with a long-term service agreement, during which the fleet of 39 school buses are expected to fuel with 800,000 gallons of its renewable fuel Redeem. Access Services has deployed 20 newly certified CNG Dodge Promasters in partnership with its contractors for paratransit service in Southern California. Clean Energy signed a fueling agreement with Southland Transit, an Access Services contractor, for an expected 800,000 gallons of Redeem. Clean Energy has also signed a renewable natural gas contract with the California Department of General Services for the benefit of Solano County Transit (SolTrans), California for its fleet of 19 buses for an anticipated 600,000 gallons of Redeem. The City of Gardena, California has inked a network fueling contract for 18 CNG transit buses at the Clean Energy station at Los Angeles International Airport (LAX). This first round of CNG buses will fuel with an expected 150,000 gallons of renewable natural gas annually. The City of Lodi, California has signed a multi-year contract for an estimated 246,000 gallons of Redeem to power 37 buses and city fleet vehicles. Finally, and after obtaining grant funding to migrate its buses to biomethane, Anaheim Union High School in California has signed a contract with Clean Energy for an estimated 135,000 gallons of Redeem to fuel 15 new school buses.
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Andamur and Molgas inaugurate multi-fuel facility in Jaén, Spain
Andamur and Molgas collaborated to open their first natural gas station
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in the Andamur Guarromán Service Area. It is the first multi-fuel station for Andamur, capable of supplying natural gas, electricity and traditional fuel; while for Molgas, it is its ninth natural gas station in Spain. Before the end of the year, both companies plan to open another refueling point in the Andamur La Junquera Service Area. The new facility has an LNG pump for heavy vehicles and a double CNG pump for trucks, cars and vans. Open 24/7, it is publicly accessible and accepts debit and credit cards, as well as fuel cards from both companies. Scale Gas, a startup born from Enagás’ corporate venturing program, Enagás Emprende, dedicated to the field of small-scale infrastructure and logistics solutions, is in charge of the comprehensive management of the service station.
“The start-up of the station in Andamur Guarromán represents a great step for the company. We thus become a multi-energy company, capable of supplying all the fuels the transport sector may need: electric chargers, LNG and CNG services. We want to give the clients what they need now and in the future,” said Miguel Ángel López, CEO of Andamur. “The inauguration of this service station represents for Molgas the achievement of another milestone in our ambitious goal of offering our customers a global network (national and international) that meets their refueling and service needs. The addition to our network of an important logistical location such as Guarromán, together with the chosen travel partner, makes this project born with the highest guarantees of success,” commented Fernando Sarasola, CEO of Molgas Energía.
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IVECO achieves record CNG truck sales operation in South America
IVECO, a CNH Industrial Group’s brand with more than 20 years of experience in the commercialization and manufacture of vehicles powered by alternative fuels, has closed a new sale agreement for
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100 Stralis NP Cursor 13 trucks with NRG Argentina SA, a supplier company of fracture sand for the oil and gas industry. With this, IVECO becomes the first company to reach a milestone of these characteristics in South America. “The acquisition of a fleet of CNG trucks is a clear example of the importance for NRG Argentina of incorporating technologies and good practices that take into account the protection of the environment, while providing the solutions that customers need,” commented César Güercio, CEO of NRG Argentina SA The new vehicles will operate between the Argentine provinces of Entre Ríos, Neuquén and Río Negro. Another notable feature of this operation is the sale of 100 maintenance contracts that join the trucks ordered by the company. In this sense, IVECO will assist NRG Argentina S.A. in the development of an exclusive service and maintenance center within its base of operations, located in the province of Río Negro. The objective of this management is to provide support so that the new fleet can develop its operations with high standards in the service and assistance of the dealer in the area. The new vehicles have the highest technology, design and equipment superior to their diesel pair with a benefit of between 40% and 50% in reducing fuel costs. They have an AS440S46T/P 6×2 configuration and, because they are powered by CNG, their gas emission presents extraordinary reductions of up to 90% of nitrogen dioxide, 99% of particles and up to 95% of carbon dioxide when biomethane is used. In addition, they have a PIEK Certification that guarantees noise levels below 71dB, AEBS brake technology, hydraulic retarder, ESP and air suspension on the rear axle.
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Canadian agency BC Transit adds 60 CNG buses to Victoria’s fleet in 2020
This year, 60 CNG buses have been added to the BC Transit’s Victoria Regional Transit System fleet, providing a quieter, greener transit experience, and reducing the average fleet age.
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25 new medium-duty CNG buses have now been activated in Victoria, joining 35 heavy-duty CNG vehicles that also replaced existing aging buses in February. BC Transit is constantly updating their fleet to provide a reliable, comfortable service to their customers. While the average conventional fleet age in Victoria prior to this year’s CNG implementation was 12.5 years, it is now 9.8. CNG buses are part of BC Transit’s Low Carbon Fleet Program to support provincial targets for greenhouse gas emissions and align with the provincial CleanBC plan. The benefits of CNG technology are both environmental and economic, with reductions in tailpipe emissions and operational costs.
FortisBC supplies natural gas for BC Transit’s CNG fleets, while the filling station, located at the Langford operations and maintenance facility, is maintained by Clean Energy Fuels.
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Chile: energy ministry lauds ENAP’s LNG-fueled truck and service station
The Ministerial Regional Secretary (Seremi) of Energy Pedro Pablo Ogaz and the Regional Director of the Superintendency of Electricity and Fuels (SEC)
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Ricardo Miranda have visited the offices of Transportes Santa María in the Rengo commune, to see a new service station that allows refueling the first ENAP truck that runs on LNG. “This initiative marks a new milestone in the commitment made by the national government to have a cleaner and more sustainable national energy matrix. For this reason, I would like first of all to highlight that our O’Higgins region has an LNG refueling station, where we are complying with axis 5 of the Energy Route that promotes efficient transportation. This is why we are at the Santa María Transport Plant, in the town of Rosario, Rengo commune, where we want to relieve and congratulate its owners and ENAP for this pioneering project, with the first truck powered by natural gas, a project that puts us at the forefront, within the first countries supporting clean technologies, renewable energies,” said Ogaz. ENAP’s first LNG transport truck was manufactured by IVECO and is operated by Transportes Santa María and Cryolab. It is a more efficient vehicle, quieter and that emits 15% less greenhouse gases, compared to a similar vehicle that uses diesel. ENAP’s Director of Storage and Pipelines Roberto Valenzuela commented: “We want to highlight the importance of this start, in which a truck that uses LNG as fuel is already operating in this experimental plant, which is giving us very good results, with a range of approximately 1,600 kilometers. We are making the necessary emission and performance measurements to reach a satisfactory result in a few more months.” “We are today at our base in Rosario seeing this LNG truck, the first truck in Chile and South America that works with this technology, developed in conjunction with ENAP, Cryolab and IVECO. We have had very good results with this pioneering project in the inclusion of natural gas in transportation, here we are testing a clean, efficient fuel that could be the future of transportation in Chile. We have a very good product, with the support of the authorities, such as the SEC and the Seremi of Energy, we also have the support of the drivers and therefore this project has a potential for success,” added Gonzalo Middleton, General Manager of Transportes Santa María.
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CNG filling stations are economically unfeasible
The unprecedented rise in currency rates and low margins of fueling stations are pushing the CNG retail sector to the brink of insolvency, a member of the board of directors at Iran’s CNG Association said.
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“Although costs associated with developing and running a CNG station has increased ten-fold in the past five years, the profit margin for retailers remains as low as 3,000 rials (1 cent) for one cubic meter and has not increased since 2018,” Mohsen Johari was quoted as saying by ILNA. The cost of CNG business is increasing not the profit. “This is a disincentive to CNG suppliers” and apparently pushing gas station owners to the wall, Johari said. “Unless station owners are offered some relief in utility bills and taxes, most may have to declare insolvency sooner or later.”
https://financialtribune.com/articles/energy/105725/cng-filling-stations-are-economically-unfeasible
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LNG as a Marine Fuel/Shipping
CMA CGM’s new LNG-powered megaship sets cargo record
The world’s first natural gas-powered containership has also just set a new world record for the highest number of full containers loaded on a single vessel.
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The LNG-powered CMA CGM Jacques Saad was recently delivered by Hudong–Zhonghua Shipbuilding, a wholly-owned subsidiary of China State Shipbuilding Corporation. With capacity of 23,000 TEU, the 400-meter-long ship is the largest containership to be powered by cleaner burning Liquified Natural Gas (LNG). CMA CGM says the vessel departed Singapore this week carrying a whopping 20,723 “full” containers, which, if confirmed, would set a new world record for the greatest number of containers ever carried by a ship. The vessel operates on CMA CGM’s flagship French Asia Line (FAL 1), connecting Asia with Europe. Due to its size and the fact that it is powered by LNG, setting new world records comes with the territory. The Jacques Saad is powered by the largest and most powerful LNG-fueled engine, the X92DF developed by WinGD, which holds the title of the powerful two-stroke dual fuel engine delivering a whopping 63,840 kW of power. Cleaner burning liquefied natural gas has been viewed as a transitioning fuel in the shipping industry’s efforts to decarbonize. It is also compliant with the IMO’s .5% sulphur limit, reducing emissions of sulfur oxides and fine particles by 99%, and nitrogen oxides emissions by up to 85% compared to conventional fuels. CMA CGM Jacques Saad is the first of nine LNG powered, 23,000 TEU containerships ordered in 2017 at CSSC yards. In order to fuel the vessels, CMA CGM and French energy group Total have signed a 10-year strategic procurement contract for the supply of 300,000 tonnes of LNG fuel per year at the Port of Rotterdam using a specialized LNG bunkering ship.
https://gcaptain.com/cma-cgms-new-lng-powered-megaship-breaks-cargo-record/
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Singapore’s first LNG bunkering vessel to be operational by year end
FueLNG, a joint venture between Keppel Offshore & Marine and Shell Eastern Petroleum held a virtual naming ceremony on Thursday (Oct 1) for the vessel, FueLNG Bellina.
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The first LNG bunkering vessel in Singapore is expected to become operational by the end of this year, providing ship-to-ship bunkering services in the port for the first time. The 7,500 cubic metres vessel is due to arrive in Singapore later this year from Keppel’s shipyard in China. The ship’s first contracts will be to provide ship-to-ship LNG bunkering to Shell-chartered tankers and for one of German container shipping line Hapag-Lloyd’s container vessels, the joint venture partners said in a statement on Thursday. “It is our next step towards regular ship-to-ship LNG bunkering activities in Singapore,” said Chee Hong Tat, Singapore’s senior minister of state for the Ministry of Transport.
“As we progress towards a low-carbon future, we will intensify our efforts to develop the Port of Singapore into a global LNG bunkering hub.” The shipping industry has been under pressure to reduce carbon emissions, after also introducing new rules this year to cut the sulphur content in marine fuels, also known as bunker fuels. This in turn is prompting demand from tanker operators and cruise liners for LNG as a bunker fuel. Singapore, the world’s largest marine refuelling, or bunkering, hub has been expanding its LNG infrastructure by increasing storage capacity and also adding the capability to break up big cargoes into smaller ones. Keppel, Shell and FueLNG Keppel are also setting up a dedicated LNG bunkering facility, which is expected to be operational by end of next year, and will be the first in Singapore. FueLNG will provide LNG bunker to receiving vessels such as harbour crafts and small vessels from that facility, which will be built by Keppel, with Shell supplying the LNG to it, they said.
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DSME clinches US$1.8 billion order for 6 LNG carriers from European client
Daewoo Shipbuilding & Marine Engineering (DSME) has been awarded an order to build six liquefied natural gas (LNG) carriers valued at US$1.8 billion. DSME
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announced on Oct. 12 that it has received the order from a European shipping company, without disclosing its name. Industry insiders say that the client is highly likely to be Novatek, Russia’s second-largest natural gas producer. Novatek has been pushing to place orders for icebreaking LNG carriers to be used for an Arctic Ocean LNG project. The order is the first one for LNG carriers in 10 months since December 2019. It will boost the company’s order intake target attainment rate from 24 percent to 46 percent. Its target for this year is US$7.21 billion. Novatek recently placed an order for 10 icebreaking LNG carriers with its shipbuilder Zvezda Shipyard. Zvezda will reportedly give the order to its technology partner Samsung Heavy Industries. Samsung Heavy Industries is also set to sign a contract with French chemical company Total to build eight LNG carriers for a Mozambique gas field project. The two orders are valued at about US$4 billion.Malaysia’s state-run energy company Petronas is also expected to order six LNG carriers within the year for a Canadian LNG project. Petronas has a 25 percent stake of the project. Analysts say that Hyundai Samho Heavy Industries is highly likely to win the order. An industry insider said that while the Qatar LNG project has been delayed somewhat, LNG ship orders from Russia and Canada will ease the order drought for Korean shipbuilders. Global shipping companies are also increasing their orders for container ships. China’s Shanghai Container Freight Index (SCFI) has recently hit an eight-year high since mid-July 2012 due to a rebound in the shipping industry. Germany’s Hapag-Lloyd reportedly requested bid proposals for LNG-powered container ships from Korean and Chinese shipbuilders in late September.
https://www.businesskorea.co.kr/news/articleView.html?idxno=53054
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Singapore says LNG bunkering capacity likely to hit 1 million tonnes by 2021
Singapore’s annual liquefied natural gas (LNG) bunkering capacity is expected to hit 1 million tonnes by 2021, as the world’s largest marine refuelling hub transitions toward cleaner shipping fuels,
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a senior minister of state said on Tuesday (Oct 6). The push is part of the International Maritime Organisation’s (IMO) aim to halve the sector’s greenhouse gas emissions by 2050 from 2008 levels. “As the maritime community continues the search for low or zero carbon fuels to meet the IMO’s 2050 goal, LNG is a viable transitional fuel to mitigate CO2 (carbon dioxide) emissions from ships,” said Chee Hong Tat, Singapore’s senior minister of state for the Ministry of Transport. To expand its capacity, the Maritime and Port Authority of Singapore “will be launching the Request for Proposal in the coming weeks to issue additional LNG bunker supplier licences,” he said at the virtual Singapore International Bunkering Conference. Singapore, the world’s largest marine refuelling hub with annual sales volumes of about 50 million tonnes of bunkers, is the only port globally that implements a licensing regime for bunkering suppliers and craft operators. Singapore, which has provided more than 270 truck-to-ship LNG bunkering services this year so far, is likely to offer its first ship-to-ship LNG fuel transfer by the first quarter of 2021 and a total of about 300 STS LNG bunkering operations, Chee said. Beyond LNG, the city state also plans to invest in the search for cleaner alternative fuels. “Today, the MPA, the Port of Rotterdam (Netherlands) and the Ministry of Land, Infrastructure, Transport and Tourism, Japan, will be signing a memorandum of cooperation (MoC) on a future fuels port network,” said Chee. “The MoC will allow for the development of a roadmap on the adoption of future marine fuels to support decarbonisation.”
Source: LNG Global/Reuters
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Technological Development for Cleaner and Greener Environment Hydrogen & Bio-Methane
Spain launches Hydrogen Roadmap, with deployment of 5,000 vehicles
The Council of Ministers, at the proposal of the Ministry for the Ecological Transition and the Demographic Challenge (MITECO), approved the “Hydrogen Roadmap: a commitment to renewable hydrogen.”
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With this planning, the Government promotes the deployment of this sustainable energy vector, which will be key for Spain to achieve climate neutrality no later than 2050. The development of renewable hydrogen will encourage the creation of innovative industrial value chains in the country, the technological knowledge and the generation of sustainable employment, contributing to the reactivation of a green economy with high added value. The document, whose development is contemplated in the Integrated Energy and Climate Plan (PNIEC) 2021-2030, features 60 measures and sets national objectives – aligned with the European Hydrogen Strategy – to 2030. Some of the goals are 4 gigawatts (GW) of installed power of electrolyzers, a minimum of 25% of hydrogen consumption by the industry that must be renewable and the implementation of hydrogen fueling stations, trains and heavy transport vehicles powered by this fuel. The achievement of the 2030 objectives reflected in the Roadmap will facilitate the reduction of greenhouse gas emissions by 4.6 million tons of CO2 equivalent (CO2eq). In the first place, the commitment to renewable hydrogen will activate the development of value chains. New opportunities are being opened for the generation of sustainable employment and economic activity in areas such as the manufacture of electrolyzer assemblers, fuel cells, components (electronics, control, automotive, mechanics), vehicles, shipyards, pressure tanks, renewable hydrogen production plants or service stations, as well as their management, large-scale storage solutions, equipment for the transport of hydrogen or mobility services based on renewable hydrogen. Regarding mobility, a fleet of at least 150 buses, 5,000 light and heavy vehicles, and two lines of commercial trains powered by renewable hydrogen are expected by 2030. Similarly, a network with a minimum of 100 filling stations and handling machinery powered by hydrogen should be implemented in the first five ports and airports.
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UK dairy cooperative converts cow manure into biogas to fuel milk fleet
UK dairy cooperative Arla is driving its sustainability to the next level with a unique three-month trial which will transform cow manure from its farms into biomethane which can be injected into the national grid.
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With the help of Gasrec, this biomethane can then be drawn down and used to fuel a pair of trucks being used to transport milk from the participating farms to the cooperative’s dairy processing sites. Together, the two vehicles are expected to cover around 90,000km during the trial and help reduce Arla’s carbon impact by around 80 tons – the equivalent to 23 car journeys around the world. Arla will use manure from 500 cows – that’s around 190 tons of slurry each week – to create 27,000 liters of biomethane to fuel the trial vehicles. This will see farmers send their cows’ manure to a nearby anaerobic digestion plant where it will be broken down into different components, including clean biomethane. The trial, in partnership with Kite Consulting and Olleco, makes Arla the first UK business to use waste from its own farms to power both its tankers and create nutrient-rich fertilizer which Arla farmers can put back on to their land, making it an entirely closed loop. If it proves a success, it will lay clear foundations for a new approach to more sustainable fuel solutions within the industry and beyond. The Renewal Transport Fuel Obligation (RTFO) scheme is administered by the Department of Transport to encourage the use of renewable fuels in the transport sector. Qualification under the RTFO program ensures fuel is from renewable sources and allows the reporting of CO2 savings by vehicle operators. This makes it ideal for fleets wanting to maximize their sustainability in a similar way to domestic users buying renewable electricity through the Green Energy Supply Certification Scheme.
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Piedmont now offers renewable gas at Nashville fueling station
Piedmont Natural Gas, subsidiary of Duke Energy, announced that renewable natural gas is now available at its CNG fueling station in Nashville. By fueling with biomethane at this station,
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fleets and organizations can further reduce their emissions footprint and meet their sustainability goals – helping decarbonize transportation in Tennessee. “Drivers of CNG vehicles and companies with CNG fleets already have been benefiting from the cost advantages of fueling with abundant, domestic natural gas,” said Phillip Grigsby, Piedmont’s senior vice president of ventures and business development. “But there’s a tremendous environmental benefit as well, since CNG vehicles have lower greenhouse gas emissions compared to diesel-fueled vehicles. That environmental advantage over diesel increases even more when the natural gas source is renewable.” Bluesource, an environmental action partner based in Cottonwood Heights, Utah, will pair biomethane available in the pipeline system with Piedmont’s station, bringing the environmental benefits of this biofuel to Piedmont’s consumers. “We’re thrilled to partner with Piedmont and empower their customers to manage and reduce greenhouse gas emissions. The economic and environmental benefits of renewable natural gas drive real change at the consumer level and beyond,” commented Bluesource Vice President Will Overly. Piedmont’s own fleet consists of 43% CNG vehicles, approximately 643 vehicles. The company provides CNG for commercial customers, including refuse, transit, over-the-road fleets and construction, as well as services for private use at CNG fueling stations. Piedmont operates a network of 11 publicly accessible CNG fast-fill stations within its three-state service area in the Carolinas and Tennessee, all open 24/7. The company plans to continue extending renewable natural gas as a fuel source in its CNG fueling stations.
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LIFE NIMBUS: circular economy and renewable-fueled buses in Barcelona
Cetaqua has launched LIFE NIMBUS, a project that improves the circular economy between the city and the wastewater treatment plants through the implementation of a new sustainable model:
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the ecofactory, a concept that turns the traditional treatment plant into a facility that generates valuable resources. The initiative is funded by the European Commission and is part of the LIFE Program. In this project, waste from the treatment plants (sludge) will be used as fuel to promote green transport in the Metropolitan Area of Barcelona. The Baix Llobregat wastewater treatment plant (WWTP), managed by Aigües de Barcelona, will be in charge of revaluing waste by producing biomethane suitable for injection in vehicles. In turn, LIFE NIMBUS promotes power-to-gas technology to store surplus renewable energies. LIFE NIMBUS promotes the concept of ecofactory as a solution to promote the circular economy and reduce the environmental impact in Barcelona. Thanks to research and collaboration between the public and private sectors, it is intended to demonstrate the technical capacity and economic viability of power-to-gas technology for the conversion of electrical energy into gas based on biological processes to produce biomethane. To achieve this, a biological methanization demonstration plant will be designed, built and operated at the Baix Llobregat WWTP. The biomethane produced, used to power a bus of Transports Metropolitans de Barcelona’s (TMB) fleet, is the opportunity to link the generation of renewable electricity with the decarbonization of the transport sector, which demands around 33% of total consumption of primary energy in Europe. In this way, the project will promote that energy consumption comes from renewable sources and that the city of Barcelona approaches the climate neutrality proposed for 2050. In addition to Cetaqua, the project has the collaboration of Aigües de Barcelona, operator of the Baix Llobregat WWTP; Labaqua, in charge of the design and construction of the biological methanization unit; TMB, which will provide a bus with a daily route of 100 km; and the GENOCOV research group of the Universitat Autònoma de Barcelona (UAB), in charge of the design, construction and development of bio-electrochemical technology (BES). The project also has the support of the Barcelona Metropolitan Area.
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