NGS’ NG/LNG SNAPSHOT – APRIL 2020, VOLUME 2
National News Internatonal News
City Gas Distribution & Auto LPG
IGL cuts CNG price by Rs 3.20/kg, PNG by Rs 1.55/unit
A day after domestic natural gas prices were cut by 26%, Indraprastha Gas Ltd on Thursday (Apr 2) cut CNG price by Rs 3.20 per kg and PNG rate by Rs 1.55 per unit in Delhi.
The reductions will be marginally higher at Rs 3.60 per kg in Noida, Greater Noida and Ghaziabad due to incremental decrease in state taxes. From 6am on Friday, CNG will cost Rs. 42.0 per kg in Delhi and Rs 47.75 per kg in Noida, Greater Noida and Ghaziabad. The revised price in Muzaffarnagar would be Rs 56.65 per kg, in Karnal Rs 49.85 per kg and Rewari as well as Gurugram would be Rs 54.15 per kg. PNG price will come down from Rs 30.10 per scm (standard cubic meter) to Rs. 28.55 in Delhi, while households in Noida, Greater Noida and Ghaziabad would pay Rs 28.45 per scm – a decrease of Rs 1.65 from Rs 30.10 per scm. The revised PNG rate in Rewari would be Rs 28.60 per scm. After the revision, CNG would offer over 56% savings towards the running cost against petrol vehicles at the current prices. When compared to diesel vehicles, CNG will provide 32% saving. In order to promote cashless transactions and push CNG refuelling during off-peak hours, a special cash-back scheme of 50paise per kg is also offered for CNG fuelling done only at IGL CNG Stations through IGL Smart Cards between 11 am to 4pm and 12am to 6amMeanwhile, rationalised CNG services of IGL for public fueling shall continue during the lockdown period primarily to meet the requirements of emergency and essential service vehicles. A total of 276 CNG stations are being run during this period.
Sabarmati Gas Limited slashes rates of CNG and PNG
Sabarmati Gas Limited has reduced the price for its CNG and PNG customers, it said on Thursday (Apr 9). CNG will be retailed at 52.65 per kg,
a drop of Rs. 2.25 per kg, effective April 9, it said. SGL has reduced gas price for its PNG Domestic customers also by Rs. 1 per SCM effective April 9. The revised PNG price shall now be Rs 27.70 per SCM. The price reduction shall benefit over 2 lakh vehicle owners and over 1.85 lakh residents across district of Gandhinagar, Sabarkantha, Arvalli, Mehsana &Patan, a statement from SGL said.
.Electric Mobility& Bio- Methane
Delhi EV Policy 2019 Highlights
The Delhi Govt announced EV policy 2019 with a motto to reduce air pollution levels by promoting electric mobility in the state. Here are the Delhi EV Policy 2019 Highlights.
The policy main motto is:
To improve the air quality of Delhi.
Setting up Charging Infrastructure
Avoid Oil Imports
Incentives for Electric Vehicle Buyers
So lets see Delhi EV policy Highlights in detail. Plan For the Next Year
Planning for 35,000 new electric vehicles including (2/3/4 Wheelers and buses)
1000 EVs for last-mile deliveries 250 public charging/swapping stations
Plan for the next 5 years
5 lakh new EVs registrations, with this step Delhi government can Avoid Rs 6,000 crores in oil and liquid natural gas imports and
4.8 million tonnes of CO2 can be reduced
Benefits for EV Buyers
EV owners are exempted from road tax and registration fees
Purchase incentive of ₹5,000 per kWh of battery capacity
Max ₹10,000 subsidy on Two Wheeler
electric two-wheeler taxis for a clean last-mile connectivity
All two-wheelers engaged in last-mile deliveries should be 100% electric by March 2025
For Electric Three-wheeler
Purchase Incentive of ₹30,000 per vehicle
Open Permit for E-Autos on first come first serve
For Electric four-wheeler
Purchase Incentive of ₹10,000 per kWh of battery capacity for first 1000 cars with a maximum incentive cap of Rs 1,50,000 per vehicle
50% on new buses to be electric in Delhi
For Charging Infrastructure
Subsidy for the purchase of charging equipment up to ₹6,000 per charging point for the first 30,000 charging points at homes/workplaces.
Providing accessible public charging/battery swapping facilities within 3 km travel from anywhere in Delhi
So, these are the highlights of Delhi EV policy 2019, it is a great initiative from the Delhi government introducing EV policy to reduce pollution levels.
BYD Toyota EV technology company
A joint venture between a Chinese automaker BYD Company (BYD) and Toyota Motor Corporation was announced on November 7, 2019,
to conduct research and development of battery electric vehicles (BEVs). But now it has announced that they are into preparations to commence the operations in May 2020.
The registration of the new company has been done and the new company is named as BYD Toyota EV Technology (BTET). Its chairman will be from Toyota, Hirohisa Kishi and Zhao Binggen from BYD will be the chief executive officer (CEO). The company’s new chairman said that both the companies engineers will work together at the same place and we aim to develop BEVs that gives higher performance and will meet the needs of the customers in China by collaborating the two companies strength. CEO Zhao Binggen said that they will focus on the research and development of electric vehicles with technology from both China and Japan. The company will promote high-quality technology, more eco-friendly, safe, comfortable and intelligent.
He said that their vision is to create a future customer-first mobility style and harmonious society for humans and nature. Recently, Toyota and Panasonic have joined their hands to form a joint venture specialising in automotive prismatic batteries for electric vehicles.
Gas/ Pipelines/ Company News
Domestic gas output falls in FY20 after two years of growth
Domestic production has been falling with the ageing of existing fields and muted response from the industry to take up new projects,
ONGC gas output drops by 15% as shut factories refuse to take supplies
State-owned ONGC has been forced to cut natural gas production by over 15% as factories shut down following the unprecedented nationwide lockdown
While factories across sectors have been shut down following the lockdowns, the ones seeking stoppage or reduction in gas intake are mostly in the Gujarat region. Gas is used as a fuel in a variety of industries – from glass to fertilizer plants. Large factories such as fertilizer plants continue to use gas as they have been classified as essential commodities. The demand for gas has also been hit as all vehicles, barring the ones used by law enforcement agencies and those used in maintaining essential supplies, have gone off the road. This meant vehicles run on compressed natural gas (CNG) too have gone off the road in cities ranging from Delhi to Mumbai to Ahmedabad. Lesser CNG vehicles meant lesser need of gas and so city gas distributors too have sought a reduction in the volumes they used to take from GAIL/ONGC, the sources said. Indraprastha Gas Ltd, the company that retails CNG to automobiles and piped cooking gas to households in the national capital and adjoining cities, has already shut two-thirds of its CNG dispensing pumps in view of the demand constraints.
Gas sales by Petronet LNG, GAIL dip by a quarter, firms to invoke force majeure with foreign companies
Given the 21-day lockdown, the two firms may also face issues in lifting the contracted cargoes arriving at ports in the near future and ask foreign suppliers for rescheduling of the shipments. Following the imposition of a national lockdown since March 22,
sales of natural gas by Petronet LNG and Gail India have dropped by 20-25 MMSCMD or around 25%, as consumption across power, fertiliser, refineries, and city gas distribution (CGD) sectors have fallen substantially. The companies have already issued force majeure notices to their suppliers, which may allow them to renegotiate the scheduling of cargoes over the coming weeks and months. Petronet LNG managing director & CEO, Prabhat Singh told FE,
“As per the relevant clause in the contracts we have issued force majeure notices to our suppliers following the complete lockdown situation in the country. We will discuss with our suppliers in coming days on how to go about rescheduling of the cargoes.” Petronet LNG imports around 250 cargoes in a year and plans to import around 260-270 cargoes in FY21. Petronet’s around 144 cargoes or 9 MMT of LNG is tied on long term contract, while the balance is sourced from the spot market. “Given the current situation we may have to reschedule some of the cargoes in the short term depending on the offtake from our clients,” Singh said. Gail India has also issued force majeure notices to its suppliers after it received such notices from its customers in the CGD, steel, glass, ceramics and power sector, a senior Gail India official told FE.
While, Petronet LNG saw its natural gas sales drop to 140 MMSCMD from 160 MMSCMD, GAIL India’s supplies dropped to between 72-78 MMSCMD from 98 MMSCMD before the lock down. Of the 160 MMSCM that Petronet LNG supplies per day, fertiliser units consume 44 MMSCMD, power companies consume 30 MMSCMD, CGD consumes another 29 MMSCMD, refineries 20 MMSCMD, and petrochemicals consume 10 MMSCMD, while miscellaneous consumes the rest. A senior Gail India official said there is drop in consumption of power as the industrial demand has dropped. Similarly, the offtake of fertiliser has also slowed down creating problems of storage.
ONGC to lose Rs 4,000 crore with the new gas price
State-owned Oil and Natural Gas Corp (ONGC) will lose about Rs 4,000 crore in revenue and start making cash losses
after the government slashed the natural gas prices by a steep 26% by benchmarking it against rates prevalent in gas-surplus nations. Prices of natural gas, which is used to produce fertilizer, generate electricity and gets converted into CNG for use in automobiles and piped natural gas for household cooking, was from April 1 cut to $ 2.39 per MMBtu – a rate about 37% lower than the cost of production. “These rates are unsustainable for us. We have already told the government that the gas pricing should be freed. There should be complete pricing and marketing freedom,” ONGC Chairman and Managing Director Shashi Shanker told PTI here. Oil Minister Dharmendra Pradhan, in a written reply to a question in the Lok Sabha on March 20, 2017, had stated that the cost of production of natural gas in the prolific Krishna Godavari basin is between $ 4.99 -7.30 per MMBtu. The same for other basins is in the range of $ 3.80 -6.59 per MMBtu, he had said. For ONGC, which produces most of its 64 MMSCMD from western offshore, the breakeven is around $ 3.8. For every $1 dollar change, the company’s revenues are impacted by Rs 4,400-4,500 crore annually. On April 1, the gas price was reduced from $ 3.23 per mmBtu to $ 2.39 – an 84 cent reduction which translates into annual Rs 4,000 crore of revenue loss. The price of gas produced from difficult fields such as deepsea too has been cut to $ 5.61 from $ 8.43 per MMBtu. This would just about breakeven ONGC’s new production from KG Basin. ONGC is India’s largest integrated oil and gas company, accounting for 75 per cent of crude oil and natural gas production by volume, and 17 per cent of domestic refining capacity.
GAIL shuts Pata Petrochemical plant on demand, offtake issues
GAIL (India) Ltd. has shut its petrochemical plant at Pata, Uttar Pradesh, joining a host of petchem makers who have been forced to shut units
as the unprecedented nationwide lockdown evaporated demand and created transportation hurdles.The state-owned gas utility first cut capacity of the 400,000-tonnes-a-year polyethylene plant at its Pata complex by half as two-thirds of trucks that used to transport finished products to users stopped operations soon after the lockdown was imposed, sources privy to the development said. But with polymers it produces filling every inch of space in its godowns, GAIL last week shut the plant, they said, adding the company continued to operate the LPG production unit at Pata to meet the cooking fuel demand in the country. Polymers/polypropene finds usage in a broad range of industries such as textiles, packaging, stationery, plastics, aircraft, construction, rope and toys. The firm had previously shut the 210,000-tonnes-a-year high density/linear low density polyethylene swing plant since March 25. Several petrochemical plants in India have been forced to shut down since a nationwide lockdown was imposed from March 24 until April 14 to fight the fast spreading coronavirus. The lockdown shut factories that made plastics products and packing material using polymers produced at plants such as GAIL’s Pata unit. Also, the petchem units faced labour shortage as migrant labourers returned home. The lockdown has also hit trucking operations, hampering transportation of finished goods. The lockdown has also hit trucking operations, hampering transportation of finished goods. Major producers, including Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd., and Haldia Petrochemicals Ltd. have reduced production or shut units in an effort to balance inventory against the sharp drop in domestic demand. While Indian Oil is on the verge of shutting down its 800,000-tonnes-a-year cracker at Panipat in Haryana due to low demand, Haldia Petrochemicals has closed its steam cracker and polymer units, sources said.BPCL has reduced operating rates at its refinery-linked petrochemical units in Kochi and Mumbai to less than a third. ONGC Petro Additions is reducing operating rates at its high-density polyethylene and linear low-density polyethylene production lines at Dahej in Gujarat.Mangalore Refinery and Petrochemicals Ltd. shut its 440,000-tonnes polypropene plant at Mangalore. Indian Oil also shut its 700,000-tonnes polypropene plant at Paradip in Odisha.It was not clear if Reliance Industries Ltd., which operates crackers and downstream units producing paraxylene, purified terephthalic acid, monoethylene glycol and polymers, has also reduced operating capacity. Officials are hopeful that even if the lockdown is not lifted completely, some industries such as petrochemicals units will be allowed to resume operations as the material they make is used not just in packing of medicines and medical equipment but also find usage in personal protective equipment.It remains to be seen how fast the plants can get back into production considering it may take some time for workers to return and for logistics and transportation to resume normal operations.
GAIL expects gas demand to pick up soon
State-run GAIL, whose natural gas sales have dropped 30% since the lockdown began, expects demand for the fuel to pick up
soon as fertiliser plants increase production ahead of the sowing season and electricity generation expands to meet increasing air-conditioning needs with rising temperature, said a senior executive. “Demand for gas will only rise from hereon, although only gradually,” said an executive, who did not want to be identified. The demand expansion would happen despite an extension of lockdown, he said, explaining the demand recovery would come mainly from fertiliser and power plants, two biggest consumers of gas in the country.
GAIL and its customers are also seeking to cautiously manage their cash flows to avoid any future financial turbulence due to economic uncertainties induced by the lockdown. “Most of our customers are paying on time but some, mainly small customers, have sought an extended payment period. We too have requested our suppliers for making payments with some delay. This is just to balance our cash flow,” said the executive. For GAIL, the biggest demand hit came from city gas companies that mainly supply to small industries and compressed natural gas (CNG) vehicles. CNG vehicles receive cheap domestic gas supply and as they went off the roads during lockdown, domestic production of gas too had to be reduced. “Luckily for us, fertiliser and power customers are still taking about 90% of the committed volume while many in other sectors or smaller industries are shut,” said the executive. Plants will have to increase production now so that fertiliser reaches farmers in sufficient quantities ahead of the sowing season that begins in May, he said.
Lack of transport facilities has hurt evacuation of output from fertiliser plants during lockdown, cutting production, but some easing is now on the cardsThe government has extended the nationwide lockdown until May 3 but part easing for some areas may be considered in a week. The farm sector is likely to get a softer treatment as the sowing season is approaching and any obstruction in the agriculture cycle can hurt national food productionPower demand may also pick up on increased home air-conditioning demand with the onset of summer. This may boost fuel demand from gas-fired power plants as well. Domestic and imported natural gas are currently available at record-low rates, an inducement for gas-based power plants to increase utilisation.
Policy Matters/ Gas Pricing/Others
India’s fuel sales drop 18% in March; petrol demand falls 16%, diesel slips 24%
Petrol and diesel demand is down 66% in April, while aviation turbine fuel (ATF) consumption has collapsed by 90% as most airlines have stopped flying, industry officials said.
India had consumed 2.4 MMT of petrol and 7.3 MMT of diesel in April 2019. As much as 6,45,000 tonnes of ATF was used in that month last year. The collapse of demand in the world’s third-biggest consumer during April comes on the back of worst fuel sales in more than a decade recorded in March 2020. The country’s petroleum product consumption fell 17.79% to 16.08 MMT in March as diesel, petrol and ATF demand fell, according to official data released here. Diesel, the most consumed fuel in the country, saw demand contract by 24.23% to 5.65 MMT. This is the biggest fall in diesel consumption the country has recorded as most trucks went off-road and railways stopped plying trains. Petrol sales dropped 16.37% to 2.15 MMT in March as the 21-day nationwide lockdown enforced to prevent the spread of COVID-19 took most cars and two-wheelers off the road. With flights grounded since mid-March, ATF consumption fell 32.4% to 4,84,000 tonnes. The only fuel that showed growth was LPG as households rushed to book refills for stocking during the three-week lockdown period. LPG sales rose 1.9% to 2.3 MMT in March. This is the first estimate of total petroleum product consumption in the country. This includes sales by both public and private sector companies. Previously, provisional numbers of the three public sector oil marketing companies — Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) — were released that also showed a 17% drop in petrol and 26% slump in diesel sales in March. Industry officials said the pattern in fuel consumption is continuing in April as the lockdown is to last till mid of the month and there are indications that part restrictions will continue even after the lockdown is lifted. March is the first month in two-and-a-half years when petrol sales have seen a negative or de-growth. Naphtha consumption in March was up 15.7% to 1.38 MMT, possibly because of its increased use in power plants. But, other industrial fuels such as fuel oil posted a 10.4% drop to 4,82,000 tonnes. Bitumen, used in road construction, saw a 4% drop in consumption to 5,25,000 tonnes. In the full 2019-20 fiscal (April 2019 to March 2020), petroleum product consumption was almost unchanged at 213.68 MMT as compared to 213.21 MMT of fuel consumed in the previous 2018-19. LPG consumption saw a 5.8% rise to 26.3 MMT, while petrol sales were up 5.9% to 29.97 MMT. ATF sales slipped 3.6% to 8 MMT and diesel consumption was down 1.1% at 82.6 MMT. Diesel sales had shown modest growth in April 2019 to February 2020.
Make free market for local natural gas: ONGC
The government should end all price control over locally-produced natural gas without which it would be hard to develop several fields and raise local output,
ONGCNSE -3.73 % chairman Shashi Shanker has said after the domestic gas price slid 26% to record-low of $2.39 per unit, hammering the state-run firm already under pressure from 18-year-low oil prices.“There is an urgent need to revisit the gas price formula and the price ceiling for gas from difficult fields. If we want to really raise domestic production and move towards a gas-based economy, we must permit a free market and do away with the gas price formula,” Shanker told ET.ONGC, which produces about three-fourths of the domestic gas, loses money on producing gas every time local formula price drops below $3.75 per MMBtu. At the current formula price of $2.39 per MMBtu, applicable for April-September period, ONGC would lose on average $1.36 per unit of gas produced. With oil prices dropping to $23 per barrel, ONGC doesn’t quite have the stomach to absorb such losses from its gas business, Shanker said. “Low prices make unviable many of ONGC’s planned projects, which would break even between $5 and $9 per MMBtu of gas price, and it would be hard for the board to green signal such projects,” Shanker said.“The global gas market has been very dynamic with supply-demand conditions and prices changing rapidly. But our formula fails to capture that as it takes much older international data for future domestic prices,” Shanker said, illustrating his point by saying that the formula price applicable for April-September 2020 is based on average international prices for January-December 2019. “This leaves little room for producers to respond to market conditions and deal with customers.”The formula also provides for an arbitrary deduction of half a dollar from the average of international rates, which again is illogical, he said. “In the US, producers just put unprocessed gas in the trunk pipeline, while we process it incurring additional cost. But we get no reward for that,” he added.The government allows gas from difficult fields to be sold at market rates subject to a price ceiling linked to alternative fuels like coal, fuel oil and liquefied natural gas (LNG). The ceiling has dropped 33% to $5.61 per mmBtu for April-September.“LNG price used to calculate ceiling includes just the spot LNG rate plus freight. This is not a fair comparison as a domestic customer would need to pay customs duty, regasification and transport charges and other domestic duties before using the gas,” Shanker said. ONGC’s output from difficult fields is very small today but expected to grow in the coming years. Spot LNG rates have dropped to record lows of below $3/MMBtu in recent times. This made it hard for ONGC and Reliance-BP to extract good prices for their deep sea gas in recent auctions.
Shuttered buyers send Force Majeure notices to Energy Cos
As nationwide demand plummets, oil and gas players flooded with such notices. Energy companies are flooded with force majeure notices
from customers as the lockdown has shuttered factories and commercial establishments, destroying fuel and electricity demand. From small tile makers in Gujarat to big fertiliser and power producers, refiners, and oil & gas producers have been jolted by the global spread of Covid-19, the measures taken to stem its spread and the economic fallout. Several small factories that have shut due to the lockdown have mailed force majeure notices to city gas distributors, who have in turn sent similar intimations to gas marketers such as GAIL, IndianOil and GSPC. GAIL, meanwhile, has issued force majeure notices to its domestic and overseas suppliers, including ONGC, Petronet LNG and Russia’s Gazprom. “It’s a chain reaction. If the end consumer loses appetite, the effect will go right up to the producer. This is an extraordinary time, and the problem is so widespread that it’s hard for anybody in the middle to absorb the shock,” said a GAIL executive. GAIL has also received force majeure notices from several heavyweight customers in the fertiliser, power and refinery sectors. Power plants are facing a 30% drop in consumer demand as industries and offices remain shut. Fertiliser units have slowed due to labour shortage and transport hurdles, which has brought down their gas requirements. Petronet LNG, India’s biggest gas importer, has declared force majeure with respect to its gas purchase contracts with suppliers in Qatar and Australia, and deferred deliveries. Demand cut notices from GAIL, GSPC and other smaller buyers have forced 18% gas output cut at ONGC, India’s largest gas producer. “We have selectively shut wells and will be able to reopen them quickly when demand picks up after the lockdown,” ONGC chairman Shashi Shanker said. With fuel sales evaporating during the lockdown, refiners filled up their storages, cut run rates and then issued force majeure notices to suppliers across the globe. “This is an unprecedented situation. You can’t take more crude than you can process or store. It’s a global pandemic and even suppliers understand the problem,” said an executive at a state oil company. Most refineries in the country are running at about half their capacity and this might shrink further over the next few days. IndianOil, MRPL and HPCL are among refiners which have already invoked force majeure and deferred most of their April deliveries. Industrial customers whose functioning has been hampered due to the lockdown have also sent force majeure notices to refiners, citing an inability to take refined products.
LNG Development and Shipping
Gail India sells US LNG cargo loading from Cove Point in May: sources
GAIL (India) has sold a liquefied natural gas (LNG) cargo for loading from the Cove Point terminal in Maryland in the United States in May,
three industry sources said on Wednesday (April 8). It sold the cargo on a free-on-board (FOB) basis at around $1.50 to $2 per MMBtu, two of the sources said. The Indian importer has 20-year deals to buy 5.8 MMTPA of US LNG, split between Dominion Energy’s Cove Point plant and Cheniere Energy’s Sabine Pass site in Louisiana.
Dahej LNG terminal utilization rates slump
Utilisation rates at India’s largest LNG receiving terminal, the 17.5mn t/yr Dahej facility, are expected to dip further next week after they fell below 50%
this week from around 70% at the end of last week. Rates have fallen as gas consumption has taken a sharp hit following the Indian government’s restrictions on business and industrial activity and road travel to halt the spread of the coronavirus. The state-controlled, Petronet-operated terminal will continue to operate but at much reduced rates, with pipelines linked to the terminal already running at capacity and storage capacity almost at its maximum, a Petronet official said. And, consequently, only a few vessels are expected to arrive at Dahej this month. “A few cargoes may still be required and it is likely that Petronet will look to see how to maximize utilisation of the terminal under the current circumstances,” said an official at state-owned BPCL, which owns capacity at Dahej. “But regasified LNG demand from Dahej has fallen by at least 30pc since the lockdown. In March, we and our customers were just taking whatever was allocated to meet month-end sales targets but this is going to be very difficult in April. ” Dahej operated at an average 104.2pc between April 2019 and February 2020, according to data released last month from the Petroleum Planning and Analysis Cell (PPAC). The terminal is capable of receiving around 24 cargoes a month at nameplate capacity, assuming a cargo size of around 60,000t. Industry participants expect that while term deliveries will be postponed to a later date, spot cargoes purchased earlier this year for delivery in April, and possibly May, will most likely be delayed or diverted to alternative markets instead of being deferred to a later date. Industry participants expect any cargo discharge delays could take as long as a week for cargoes already sailing towards India. Indian importers secured around 13 spot cargoes for delivery in April, around four of which specified Dahej as a possible discharge outlet.
Source: Indian Oil & Gas/Argus
India’s LNG imports jumped 68 per cent in Feb as energy companies take advantage of low prices
India’s Liquefied Natural Gas (LNG) imports jumped 68% to 3,453 MMSCM in February this year compared to the corresponding month a year ago,
as gas-based power plants, oil refineries and gas marketing companies take advantage of low spot LNG prices, according to fresh data released by the oil ministry. The overall increase in LNG imports during FY20 has not come at the cost of inflating the country’s trade deficit, data showed. According to data published by the oil ministry’s statistical arm, the value of India’s LNG imports during the April-February period last financial year decreased 7.36% to $8.8 billion, as compared to $9.5 billion recorded in the corresponding period a year ago. Asian spot LNG prices plummeted to a record low of $2.71 per MMBtu in February 2020 as demand from China, Asia’s largest LNG importer dropped on account of the Covid-19 outbreak. Imported LNG is used as a feedstock by fertilizer producing companies, oil refineries, city gas distribution (CGD) companies, gas-based power plants, petrochemical producing companies and other industrial units. Sector analysts indicated that many refiners, gas marketing companies and gas-based power plant operators aggressively grabbed distressed LNG cargoes in February in anticipation of robust natural gas demand in the country. “Imports jumped in February because China declared force majeure and there were a lot of cancelled cargoes which were floating around and prices crashed to $2.7 per MMBtu. I am guessing that gas-based power plant players in India may have opportunistically picked up cheap cargoes. Also, we hear that certain industrial clusters such as Morbi took advantage of the low price and switched fuel,” Debasish Mishra, Partner at Deloitte said.
Natural Gas / Transnational Pipelines/ Others
Oil prices jump as focus swivels to OPEC, Russia meeting on output cuts
Thursday’s, April 9, meeting between members of the Organization of Petroleum Exporting Countries (OPEC) and its allies,
including Russia, is widely expected to be more successful than their gathering in early March. SEOUL: Oil climbed on Wednesday, reversing most of the prior session’s losses, as investors pinned hopes on a Thursday meeting where OPEC members and allied producers will discuss output cuts to shore up prices that have tumbled amid the coronavirus pandemic. Brent crude was up by 72 cents, or 2.3%, at $32.59 per barrel by 0044 GMT after falling 3.6% on Tuesday. U.S. West Texas Intermediate (WTI) crude rose $1.30, or 5.5%, to $24.93 a barrel after dropping 9.4% in the previous session. Thursday’s meeting between members of the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, is widely expected to be more successful than their gathering in early March. That ended in failure to extend cuts and a price war between Saudi Arabia and Russia amid slumping demand. But doubts remain over the role of the United States in any production curbs. Saudi Arabia, OPEC member countries and Russia are likely to agree to cut output, but that accord could be dependent on whether the United States would go along with cuts. The U.S. Department of Energy said on Tuesday that U.S. output is already declining without government action. “Saudi Arabia and Russia continue to hammer out a deal … What is clear is that the United States must be involved,” ANZ Research said in a note. U.S. crude production, meanwhile, is expected to slump by 470,000 bpd and demand is set to drop by about 1.3 million bpd in 2020, the U.S. Energy Information Administration (EIA) said on Tuesday.
Damaged Turkey gas pipeline still not repaired
The flow of Iranian natural gas to Turkey that was disrupted 14 day ago (due to a pipeline explosion) has not resumed, director of dispatching
at the National Iranian Gas Company said. “Unlike previous incidents which were dealt within three days at the most, Botas, the importing company, has so far taken no measure to repair the ruptured pipeline over the last two weeks,” Mehdi Jamshidi Dana was quoted as saying by IRNA. Turkey’s natural gas import from Iran was halted for the tenth time on March 31 following an explosion in the pipeline 1.5 km inside Turkey near the border with Iran. Local authorities said the blast hit a section of the pipeline near the Gurbulak Border Crossing in the eastern province of Agri.
Methane emissions hit a new record and scientists can’t say why
Airborne methane levels rose markedly last year, according to a preliminary estimate published today by the U.S. National Oceanic
and Atmospheric Administration. The results show a dramatic leap in concentration of the second most-powerful greenhouse gas, which is emitted from both industrial and natural sources. “Last year’s jump in methane is one of the biggest we’ve seen over the past twenty years,” said Rob Jackson, professor of Earth system science at Stanford University and chair of the Global Carbon Project. “It’s too early to say why, but increases from both agriculture and natural gas use are likely. Natural gas consumption surged more than two percent last year.” Methane levels have accelerated twice in the last 15 years, first in 2007 and again in 2014. Scientists have yet to pinpoint the exact cause (or causes). Virtually every contributor to the global methane problem may play a role, from the oil-and-gas industry to human agriculture to wetlands changing with the climate. Methane is about 25 times more powerful a heat-trapping gas than its nearest competitor—carbon dioxide—when extrapolated over the course of a century. Oil and gas producers have long been criticized for tolerating methane leaks at gas well sites, pipelines, and compressor stations. A June 2018 study by the Environmental Defense Fund estimated that these leaks are equivalent to $2 billion in losses for the industry. The EDF did not take into account the gas producers purposely burn at at well sites to keep even more crude flowing, a practice that enrages environmental activists. Some of the world’s biggest oil and gas producers have recently become more vocal about addressing leaks and setting climate goals. Last month Bernard Looney, the recently appointed chief executive officer of BP PLC, pledged to cut carbon dioxide emissions from the company’s own operations and production by 2050, the boldest plan yet from the fossil fuel industry. Energy use and economic activity are tightly connected, which means that the halt in global production from the Covid-19 pandemic is likely to cause the highest drop-off in emissions seen in decades.The recent collapse in crude prices may also lessen the need to flare gas, which was already on the decline in the Permian over the first three months of 2020, according to data released Monday by Rystad Energy AS.
Shell’s Prelude LNG to keep flaring gas during shutdown
Shell’s Prelude floating LNG will keep burning excess gas during a production shutdown of many months, adding to its already high initial carbon footprint.
Production from Shell’s 488m-long showpiece off the Kimberley coast shut down in February and is not expected to recommence until the third quarter of 2020.
Boiling Cold understands that Shell has shut-in most of the subsea wells to reduce gas flow, but the Prelude is still receiving more gas than it can consume. The Prelude emitted 2.32 MMT of greenhouse gases in the 12 months to June 2019 for just one shipment of LNG. The Prelude first received gas from its subsea wells in December 2019 but has been powered by gas from as early as June 2018 when it received a load of LNG.
Boiling Cold asked Shell why the Prelude could not be powered by diesel during the shutdown, as it was before June 2018, to stop flaring. A response was not received. LNG plants are expected to flare more gas than average in the early stages of operation. Still, new facilities generally do not operate for as long as Prelude while producing so little. The excess gas is burnt safely from a flare tower. The carbon dioxide released has a much lower greenhouse gas effect than unburnt methane but reducing flaring as much as possible is regarded as oil and gas industry best practice. The LNG industry’s case that its product is a net benefit to climate change rests the emissions saved by consumers burning gas instead of the dirtier fossil fuel coal exceeding the significant carbon emissions from LNG production. A Shell spokesperson said the amount of gas flared each month was now 60% less than when the Prelude commenced operations. “We are committed to further improving performance over time,” the spokesperson said. “Shell’s policies aim to minimise all types of flaring, managed through annually updated greenhouse gas and energy management plans.”
Source: LNG Global
Over US$50bn in capital expenditure cuts announced as oil and gas companies grapple with COVID-19 and oil price war, says GlobalData
As the oil and gas sector comes to terms with decade-low oil prices and global disruptions caused by the coronavirus (COVID-19),
company costs and investments are being slashed with over US$50bn pledged to date and more on the horizon, says GlobalData, a leading data and analytics company. Daniel Rogers, Oil and Gas Analyst at GlobalData, comments: “Of the announced US$50bn in cuts to date, approximately 20% of that is coming solely from Saudi Aramco, which could have implications for its ongoing expansion projects in the country. Elsewhere, across the supermajors, the investment cuts are within the 20-25% range, resulting in multibillion dollar pull backs in new projects and non-critical investments.” GlobalData has calculated that the average announced capital expenditure (CAPEX) cut for 2020 currently sits at 29% from original forecasts. On the higher end of the spectrum, US operators with significant shale acreage and Australian operators with imminent large-scale liquified natural gas (LNG) projects have taken the most drastic reduction measures. While US operators such as EOG Resources and Occidental Petroleum cut down on rig counts, Australian players Woodside Petroleum and Santos are opting to defer LNG projects until investment conditions improve.
Rogers continues: “We have yet to see companies such as Exxon Mobil and BP release budget cut estimates, but based on what we have seen already it is highly likely a further US$10bn could be taken off the table in 2020.”
Regained market stability at sustainable levels is required to bring back delayed spending and investment confidence. In addition to deferred project investments, share buy backs, dividend pay-outs and general overhead costs have all come under review for 2020 with revisions downward.
Rogers concludes: “The types and severity of the cuts seen will differ depending on stakeholder requirements. National oil companies will strive to protect obligated payments to the government, whilst maintaining production volumes, whereas independent oil companies will focus on strengthening balance sheets and continuing to generate returns for investors in a challenging environment.”
Australia’s massive oil and gas crash stimulus
Australia’s policy makers face a new challenge as they pump stimulus into a faltering economy: the Saudi Arabia-Russia clash that’s sent oil prices plummeting
and belted the third-largest export Down Under. The cost of crude — which liquefied natural gas is typically priced off — fell by nearly two-thirds in the first three months of this year. While cheaper gasoline may help households, the rapid growth of the LNG industry in Australia now means lower oil prices aren’t the positive for the domestic economy they once were. …“The slump in oil prices hurts Australia’s economy more than it helps. That may come as a surprise, given Australia is a net oil importer. But the transformation of Australia’s economy over the last decade into the world’s largest LNG exporter means that the slump in oil prices could more than halve the value of Australian LNG cargoes landed Japan, placing exports worth 2.5% of GDP at risk.” Poppycock. The lower the oil and gas price crashes the better. The reason why is simple. The LNG sector pays very little tax so the income hit is minimal. It employs very few people so the employment hit is minimal.
The volumes will still go out so the GDP impact is minimal. The only hit will be to the Australian trade account but the capital account boost will offset a lot of that given most of the sector is foreign-owned and will see collapsed outgoing dividends. Meanwhile, since Australia’s failed energy markets benchmark gas and electricity off Asian prices, the falls in prices provide a massive stimulus to every household and business on the east coast. A few months ago, local gas and electricity prices were being benchmarked at 14% Brent oil at $11Gj local. At its lows last week (before the Trump oil fantasy took hold) it was $8Gj, a huge stimulus via lower utility bills. The collapse in oil and gas prices is unambiguously positive for Australian economic activity. Bloomie would do much better to ask why it is that Australian benefits when its second-largest export crashes in price.
Global LNG Development
Shell offers LNG cargoes for five years from 2021 in unusual move: traders
Shell has, in an unusual move, offered liquefied natural gas (LNG) cargoes for loading from 2021 onwards for a period of
at least five years through a tender, three traders said on Monday (April 13). The firm has issued a five-year strip tender offering four cargoes a year from 2021 onwards with an option to extend for another five years, two of them said. The tender closes on May 18, they added. The cargoes are likely for loading from Australia, one of them said.
Source: LNG Global
Coronavirus to hit LNG demand at world’s largest LNG importers
LNG demand in 2020 from the world’s three largest importers is now set to fall year on year, ICIS forecast.
- Chinese 2020 imports to fall to 58.1m tonnes, down 5.2% year on year
• Japanese 2020 imports to fall to 76.2m tonnes, down 1.1% year on year
• South Korean 2020 imports to fall to 38.5m tonnes, 4.7% down year on year
LNG demand destruction, caused by the impact of the coronavirus pandemic, will cause imports to be lower in China, Japan and South Korea this year, compared to 2019.
“The forecast weakness in over half of the world’s LNG import market for 2020 will only exasperate the current oversupply and keep pressure on key natural gas and LNG prices,” said ICIS LNG Analyst Tom Marzec-Manser. “While Japan and South Korea have been contracting as LNG markets for a few years, a shrinking Chinese market will cause major headaches for those producers looking to find demand for their increasing output.” Noticeably lower macroeconomic indicators have driven much of the downward revision from ICIS, which updates its LNG demand forecasts monthly and in response to market moving developments. Chinese LNG demand for 2020 is forecast at 58.1 MMT, a drop of 3.2 MMT on cargo arrivals in 2019. In the first three months of 2020 imports have already fallen 4.6% compared to the same period a year earlier. ICIS expects further declines over the year as gas inventories fill. The world’s largest importer, Japan, is now forecast to receive 76.2 MMT of LNG in 2020, down from 77.1 MMT in 2019. During Q1 ’20, the country’s LNG imports were already down 2.6% year on year at 21.6 MMT indicating a revival later in the year. ICIS forecasts South Korean LNG imports this year will fall by 1.9 MMT to 38.5 MMT. While imports over the opening three months of the year have been sharply higher than a year earlier, this was largely driven by environmental policies that will have little impact over the rest of the year. In 2019, China, Japan and South Korea collectively imported 179 MMT of LNG, which was 51% of the 354 MMT that was imported globally. ICIS’ LNG demand forecast covers the rolling 24-month horizon, on a monthly granularity.
BP issues force majeure to Golar over TortueAhmeyim LNG project
BP is expecting a one-year delay due to the pandemic and currently sees no possibility for reducing that time frame,
according to a statement from Golar’s unit Gimi MS Corp. Golar LNG Ltd said on Tuesday (Apr 7) it received a force majeure notice from a BP unit seeking to delay by a year receipt of a floating liquefied natural gas facility for the African TortueAhmeyim project. The notice is the latest force majeure claim issued in the LNG sector that is struggling with a seasonal plunge in demand as well as the spread of the coronavirus, which has further hammered the consumption of the super-chilled fuel globally. BP is expecting a one-year delay due to the pandemic and currently sees no possibility for reducing that time frame, according to a statement from Golar’s unit Gimi MS Corp.BP was expected to take delivery of the facility in 2022 and charter it for 20 years to liquefy gas from its Greater TortueAhmeyim project on the maritime border between Mauritania and Senegal. “While the full impact cannot yet be determined, as a reasonable and prudent operator, BP is engaging transparently and collaboratively with key stakeholders to mitigate risks,” a BP spokesman said.” This includes issuing a Force Majeure (FM) notice to Golar in line with the terms of the lease and operate agreement dated 26 Feb 2019. This is a direct result of the ongoing business impacts due to COVID-19(disease caused by the new coronavirus).” Golar said it was in talks with BP to establish the duration of the delay and the extent to which this has been caused by the coronavirus outbreak. Kosmos Energy owns around 28% of the project, for which first gas is projected to start flowing in the first half of 2023, but it has said it wants to reduce its stake to around 10%.The plant is designed to produce an average of about 2.5 MMTPA. The construction of the floating facility was expected to cost about $1.3 billion, excluding financing costs. Golar also said it was talking to its main building contractor, Keppel Shipyard Ltd, to re-schedule activities to reduce its capital spending commitments for 2020 and 2021.Companies invoke force majeure when they cannot meet their contractual obligations because of circumstances beyond their control.
U.S. LNG cargoes heading to China after Beijing awards tax waivers
Tankers carrying U.S. liquefied natural gas (LNG) are on their way to China after Beijing started granting tax waivers to some importers,
shipping and trade sources said. This is the first time since March 2019 that shipments have resumed after a long-standing trade war in which China raised tariffs on LNG imports from the United States to 25% last year. Four LNG tankers are en route to China after loading cargoes last month in the United States, ship-tracking data from Refinitiv and data intelligence firm Kpler shows. The tankers are expected to arrive in China between late April and early May, the data shows. One of them, SK Resolute has diverted at least twice but is now heading to Tianjin, China, after loading its cargo from the Cameron LNG plant in Louisiana. Two others, Cool Explorer and Hoegh Giant, loaded from Sabine Pass, Louisiana, according to the data, and are now also heading to Tianjin, where China National Offshore Oil Corp (CNOOC) and Sinopec operate LNG terminals. The fourth tanker, Palu LNG, loaded from Corpus Christi, Texas, on March 25 and changed its destination to Tianjin on Monday. It is due to arrive at the Chinese port on April 21, Refinitiv data shows. Beijing has started granting tax waivers to LNG importers, three China-based sources familiar with the matter said, though details on the companies that have received exemptions on the tariffs were not clear. Two of the sources said the tariff has dropped to zero, though a separate value-added tax of 10% still applies. Companies are asked to apply for tax waivers monthly and are required to report to the government once transactions are concluded, said another of the sources, a Chinese gas trader. China’s Ministry of Finance, which is in charge of granting the waivers, did not immediately respond to a faxed request for comment. China announced in February that it would grant exemptions on retaliatory duties imposed against 696 U.S. goods after both sides reached a Phase 1 trade deal that took effect on Feb. 14. Companies were supposed to submit their applications on March 2.
Source: LNG Global
LNG-Asian prices drop to record low as coronavirus slams gas demand
Asian spot liquGlobal efied natural gas (LNG) prices fell to a record low this week as lower industrial output from countries
which have restricted people’s movement severely dented gas demand while supply remained ample. The average LNG price for May delivery into northeast Asia LNG-AS fell to an estimated $2.30 per MMBtu this week, down 50 cents, or nearly 20%, from the previous week to a record low, traders said. The previous low was in February when demand dropped in China, where the coronavirus first emerged, but prices later started edging higher after the fall stoked some buying interest. This week, prices took a turn for the worse after top buyers in India declared force majeure on LNG imports. That combined with a drop in demand from Europe, which has seen some of the highest number of coronavirus cases, has caused LNG supply to swell globally. Brunei’s LNG export plant sold two May-loading cargoes at prices ranging from $2.15 to $2.35 per MMBtu, three industry sources said. The buyer is likely Vitol, one of the sources said, though this could not immediately be confirmed, while a second source said it was likely the lowest ever physical price achieved for an Asian LNG cargo. Papua New Guinea likely sold a cargo for delivery in mid-May at around $2.30 to $2.45 per MMBtu, sources said. Oman LNG may be offering two to three cargoes for loading over May to June while Icthys LNG has offered a cargo for loading over April 20 to 24, they added. Cheniere Energy bought four cargoes for delivery in Europe, industry sources said, adding that this was an unusual move for the firm which is typically a seller. This likely indicates that shipping U.S. cargoes to Europe or Asia is currently not profitable, traders said. Still, some demand from China emerged as the country slowly returned to work. Yudean likely bought a cargo for delivery into Dapeng over mid-May to mid-June at about $2.40 per MMBtu, sources said. Turkey’s Botas is seeking three cargoes for delivery in April, industry sources added.
Source: LNG Global
China’s LNG demand makes a comeback to aid virus-hit market
As the coronavirus pandemic roils the global liquefied natural gas market, suppliers are finding that the center of demand
has come full circle back to where it was first hit: China. Over the past two weeks, Chinese buyers have become some of the most active in the Asian market. That signals a turnaround from February, when the country’s top importers sought to delay or cancel shipments due to demand and logistical constraints caused by the Covid-19 outbreak. Meanwhile, stalwart buyers in South Asia and Europe have taken a step back as governments kick off strict lockdowns. Indian importers, who helped soak up a global LNG glut by snapping up cheap cargoes, had to declare force majeure on prompt shipments due to the pandemic. The clause allows companies to remove liability for natural and unforeseeable events. The reversal illustrates how the fast-spreading coronavirus can shut down economies and disrupt trade flows at the drop of a hat. China’s gas consumption is recovering, aided by a March rebound in manufacturing activity as factories ramp up operations after weeks of work suspensions. “Demand has also been driven by smaller players with storage capacity, who are emerging to take advantage of low spot prices,” said Edmund Siau, a Singapore-based analyst at energy consultant FGE. China imported about 1.26 million tons of LNG in the week of March 23, the first time it’s risen above the 2019 weekly average in more than a month, according to vessel-tracking data from Kpler. The buying increase is mainly from smaller utilities, which are trying to take advantage of cheap prices while their bigger counterparts struggle to consume all their contracted supply, said BloombergNEF analyst Lujia Cao. Deals in March include the purchase of several cargoes by ENN Energy Holdings Ltd. and Guangdong Yudean Natural Gas Co. for delivery throughout 2020. Shandong Zhongnuo closed its first-ever tender seeking three shipments for May to October delivery, while Yudean had a separate tender for a May to June shipment. State-owned China National Offshore Oil Corp., the country’s biggest LNG importer, has been largely absent from the market as it grapples with bloated inventories. CNOOC in February invoked force majeure on prompt LNG deliveries to Chinese ports. Sinopec Group, which has room available in its storage tanks for spot cargoes, is in the market seeking cargoes for April and May delivery, according to traders with knowledge of the matter. There’s uncertainty over how sustainable China’s demand revival will be and whether it’s enough to arrest a slide in spot prices as the economy faces a growing threat from slumping external demand. The Asian benchmark LNG Japan/Korea Marker fell this week to a record amid the worsening coronavirus impact on other parts of the world.
Source: LNG Global
Qatargas delivers first Q-Flex LNG cargo to China’s Zhoushan terminal
Qatargas Operating Company Limited (Qatargas) announced Wednesday the delivery of the first cargo of liquefied natural gas (LNG)
on a Q-Flex vessel to the ENN Zhoushan LNG receiving terminal in China.
The cargo aboard the Qatargas-chartered LNG vessel, ‘Al Gharrafa,‘ was loaded at Ras Laffan on 16 March and delivered to the terminal located in the New Port Industrial Park of Zhoushan Economic Development Zoneon Wednesday (April 1). This is the first cargo discharge operation by Qatargas to Zhoushan LNG terminal involving a Q-Flex LNG carrier. The terminal consists of two shore tanks, each having a capacity of 160,000 cubic metres. The terminal also has a dedicated LNG berth with a capacity of 3 MMTPA in its first phase.
ENN Group is one of the largest clean energy distributors in China. Its key business is the sale and distribution of piped gas and LNG. Its business also includes other multi-energy products, as well as investments in construction and operation of gas pipeline infrastructure, vehicle and ship refueling stations, and integrated energy projects. As of 31 December 2019, the ENN Group had 209 projects in China located in 27 provinces, municipalities and autonomous regions, covering a connectable urban population of 104 million people.
Source: LNG Global
First US LNG shipment in over a year heads to China
The first LNG cargo from the United States for more than a year is heading for the Chinese port Tianjin, east of Beijing,
from the Cameron export plant in Louisiana operated by Sempra Energy. If landed at Tianjin, as planned on April 29, the 180,000 cbm cargo could signal the start of a tepid recovery in Chinese gas demand as the country lifts its coronavirus lockdown. Chinese workers return and manufacturing is resuming, but the economic recovery remains patchy and still needs to translate in a substantial rise in energy demand. The rebound is tepid, our LNG Unlimited data shows, with imports recovering from less than 0,98 million tons (mt) at the height of the pandemic in China in the first week of February to 1,06 mt in the last seven days of February, and further to 1.27 mt in the final week of March.
Source: LNG Journal
Japan, Singapore lockdowns to stifle Asian gas, power demand further
Lockdowns in Japan and Singapore, two of Asia’s most developed economies, could cut electricity and natural gas demand further
at a time when energy consumption is already collapsing across economies as stay-at-home restrictions of varying degrees are enforced. The curbs are spreading to countries with a sizeable impact on gas demand — Japan is the world’s largest LNG importer — and to countries such as Singapore which had drawn first blood in fighting the spread of the coronavirus pandemic but is still seeing the number of cases rise. This has LNG and electricity traders worried and many cited uncertainty in assessing the impact of the restrictions, especially if secondary and tertiary waves of infection keep surfacing. Japan on Tuesday declared a month-long emergency asking citizens to stay at home, and Singapore implemented similar measures keeping only essential services operational. “As the Japanese economy has already been negatively impacted by the crisis, the state-of-emergency declaration itself is not expected to slash additionally significant energy demand,” senior analyst and head of the gas group at Institute of Energy Economics, Japan, Hiroshi Hashimoto, said, adding that Japan’s declaration of an emergency was different from lockdowns in other countries. “Having said that, the biggest impact on LNG demand from the crisis as a whole should be felt in the power generation and industrial sectors. The industry needs more time to assess the magnitude as it is still difficult to know exactly how long the trouble will last,” Hashimoto said.
In the event of a lockdown, Japan’s industrial sectors expected to the biggest drops in energy demand to be from construction at 92%, machinery 68%, ceramic engineering 67% and metal 54%, according to an analysis by IEEJ last week. Other sectors affected are chemicals, food and paper manufacturing. IEEJ said household energy demand will actually increase as more people stay at home, with heating demand expected to rise 10%, and lighting by 15% on higher usage of personal devices and entertainment systems. Sectors like schools and entertainment venues will be fully closed in a lockdown, offices and eateries are likely to be 70%-80% shut, hotels and other retail outlets by 50% and supermarkets at around 20%, the IEEJ estimated. It said while automotive fuels will be worst hit, the second-largest impact would be on electricity consumption. This is in line with Japan’s energy profile — around 42% of its primary energy demand comes from oil, 27% from coal, 23% from natural gas and the remaining from nuclear, hydropower and renewables.
Traders said they were worried about the impact on Japan’s LNG imports as the seven prefectures covered in the emergency declaration have major industrial hubs. The prefectures are Tokyo, Kanagawa, Saitama and Chiba in the east as well as Osaka, Hyogo and Fukuoka in the west. “After the lockdown in India, Japan is the only other market which could move LNG prices by $1/MMBtu if the virus outbreak worsens. So we are monitoring the situation in Japan very closely,” a Singapore-based trader said.
On Tuesday (April6), Singapore implemented a “circuit breaker” that fell short of a full-fledged lockdown, but still brought the city state to a grinding halt. On day one, peak electricity demand had already dropped by about 600 MW or 8-9% from the normal peak demand of 6.8-6.9 GW, a local power trader said. “We are getting hit quite badly. It keeps getting shaved,” he added. “The drop in power demand is mainly during the day, when factories, malls and offices close,” the trader said, adding that the impact on natural gas demand was minimal. “Technically everyone goes home to work, so the power demand is still there, but it’s more inefficient as each unit of air-conditioning is run rather than one central one,” he added. Singapore’s total electricity consumption was 50.4 TWh in 2018, of which the industrial sector accounted for 42.5%, commercial demand was 36.8% and household demand was 14.3%, latest official data showed.
More than 95% of Singapore’s electricity is generated from natural gas, with pipeline supplies from Indonesia and Malaysia, and an LNG import terminal.
TCEQ permits one Gulf Coast plant, fines another
The Texas Commission on Environmental Quality issued a pair of decisions this week impacting the oil and gas industry on Texas’ Gulf Coast.
During a phone conference on Wednesday (Apr 8), the TCEQ granted an air quality permit to Annova LNG, one of three proposed liquefied natural gas facilities at the Port of Brownsville. It did so despite objections of the nearby cities of Port Isabel and South Padre Island, which wanted a hearing over possible pollution from the facility and are worried about the LNG industry’s impact on the tourism and fishing industries. The TCEQ’s three commissioners denied the hearing request, saying it wasn’t filed timely. They also rejected a number of requests for a hearing made by nearby community members, saying all lived too far from the facility to qualify. Annova LNG, which is majority owned by Exelon Corp., plans to build a facility that is capable of exporting 6 metric tons of LNG per year. It has already won FERC approval and is looking to have its final investment decision made by the end of the year, a company spokesperson said. Also on Wednesday, the TCEQ issued a $600,000 fine against Buckeye Texas Processing LLC. The commission fined Buckeye for air quality violations at its Corpus Christi refinery. Between 2016 and 2018, Buckeye operated the refinery without a federal permit and several times exceeded the state limits on air pollution, according to the TCEQ. Half the money collected by the agency will be given to the Texas Association of Resource Conservation and Development Areas in order to repair or replace public water systems.
Natural Gas / LNG Utilization
HAM reinforces support to green mobility, adds 11 natural gas trucks
HAM Group has acquired 11 new Scania R 410 tractors that join their fleet of Transportes HAM, a leading company in the road transport sector,
specialized in the distribution of flammable and cryogenic products. The company’s entire fleet of vehicles is exclusively powered by LNG, a safe, clean and safe fuel, which allows HAM to continue taking care of the planet, mitigating the greenhouse effect on the environment, thanks to the reduction of polluting emissions by high percentages, compared to fossil fuels. HAM Group was the first European company to bet on the use of LNG in its vehicles for road transport, with the aim of reducing the greenhouse effect. In 2000 they imported 10 LNG-powered tractors from the United States and since then their green fleet has continued to grow progressively. The company’s bet has been recognized by the main companies and organizations in the sector and has been awarded several mentions, such as that given by Gasnam, which recognized HAM’s work with the Environmental Entrepreneurship Award. The new vehicles that the group has incorporated into comply with ADR regulations and allow us to make safe and comfortable vehicles available to their drivers, so that they can carry out their work in the best conditions, thus guaranteeing the highest quality of their services. HAM Group will continue to expand and renew its fleet of vehicles powered by LNG, following their highest level of demand and with respect to the environment. To analyze this extremely positive scenario for natural gas and sustainable road transport in the region, and evaluate the latest in alternative fuel technologies for clean mobility, AltFuels Iberia 2020 will be held on 28-30 October at IFEMA Trade Fair Center in Madrid. For more information about this Business Fair and Sustainable Energy Congress for road and marine transport,
New study says more polluted cities have higher COVID-19 death rates
People with COVID-19 who live in U.S. regions with high levels of air pollution are more likely to die from the disease than people
who live in less polluted areas, according to a new nationwide study from Harvard T.H. Chan School of Public Health. The study is the first to link the long-term exposure to fine particulate matter (PM2.5) to the risk of death from COVID-19 in the U.S. The PM2.5, generated largely from fuel combustion from vehicles, has been always known for contributing to serious public health problems. The study looked at 3,080 counties across the country, comparing levels of fine particulate air pollution with coronavirus death counts for each area. Adjusting for population size, hospital beds, number of people tested for COVID-19, weather, and socioeconomic and behavioral variables such as obesity and smoking, the researchers found that a small increase in long-term exposure to PM2.5 leads to a large increase in the COVID-19 death rate. The study found, for example, that someone who lives for decades in a county with high levels of fine particulate pollution is 15% more likely to die from COVID-19 than someone who lives in a region that has just one unit (one microgram per cubic meter) less of such pollution. The study suggests that counties with higher pollution levels “will be the ones that have higher numbers of hospitalizations, higher numbers of deaths and where many of the resources should be concentrated,” said senior study author Francesca Dominici.
The researchers also wrote, “The study results underscore the importance of continuing to enforce existing air pollution regulations to protect human health both during and after the COVID-19 crisis.” Thus, it is important to take into consideration all the existing alternatives to reduce particulate matter levels and improve the air quality in the most disadvantaged communities. In this regard, natural gas can be a perfect partner to fight the pollution generated by the transport sector. The use of natural gas does not contribute significantly to smog formation, as it emits low levels of NOx, and virtually no particulate matter. For this reason, it can be used to help combat smog formation in those areas where ground level air quality is poor. With clean, safe, and readily available technology, natural gas vehicles offer a significant reduction of harmful tailpipe emissions (NOx and particulate matter); more specifically, they almost eliminate particulate matter (99% less PM2.5 than diesel). In the current situation of the coronavirus pandemic, a higher use of natural gas can significantly reduce emissions in the short term, and policymakers should continue to work to harden regulations to help deploy low-emission mobility, such as NGVs, in urban centers.
U.S. EPA approves Landi Renzo’s CNG system for the Ford 7.3L engine
Landi Renzo USA has received U.S. Environmental Protection Agency (EPA) certification for the Ford 7.3L engine covering Class 4-7 vehicles.
The Ford models are included in the EPA CNG certification are: F-450/550, F-650/750, F-53/59, and E-450. California Air Resources Board (CARB) certification on the 7.3L is expected in late Q2 2020. The Landi Renzo USA eco-fuel CNG system for the 7.3L engine is used in airport and hotel shuttle buses, delivery trucks, service trucks, large package trucks as well as other vocational offerings. Many of these vehicles will be able to take advantage of various grant funding opportunities. Moreover, for fleets utilizing the Landi Renzo USA system, the Ford warranty remains fully in place. “Our EPA certification is result of the tremendous work of many individuals. We also want to recognize Ford’s support in helping us produce a world class CNG product,” said Paul Shaffer, EVP for Landi Renzo USA. During this 18-month effort, Landi Renzo USA conducted extensive engine and vehicle testing to meet the stringent Ford Q-185 gaseous prep guidelines and demonstrate full useful life durability.
Argentina: Foton announces new Auman liquefied natural gas truck
Foton Trucks has imported and commercialized seven units of the Auman EST LNG truck, and this year plans to officially launch this model in Argentina.
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Mexico: Michoacán promotes the use of NGVs to improve air quality
The vehicle conversion of gasoline to natural gas is an option – both in public transport vehicles and in passenger cars – to improve
air quality and reduce emissions of polluting gases to the environment in Michoacán, said Ricardo Luna García, head of the Secretariat of Environment, Climate Change and Development (Semaccdet), Luna García explained that natural gas as a vehicle fuel helps reduce CO2 emissions by up to 30% and also generates an average saving of 40% with respect to the cost of filling the vehicle with gasoline. “It is important that every day more citizens and owners of public transport know this type of less polluting alternatives to the environment, in these times when breathing cleaner air is a factor for the prevention of respiratory diseases and complications in chronic diseases among the population,” said the official. In 2018, a project was promoted in Morelia, in coordination with the municipal administration, so that taxis and vans could make the transition to CNG. In total, 1,134 vehicles benefited from this process, reported MiMorelia.com.
LNG as a Marine Fuel/Shipping
Record breaking LNG bunkering completed in the Port of Rotterdam
Heerema’sSleipnir, the world’s most powerful semi-submersible crane vessel,
received the largest LNG bunkering to have ever taken place: the total quantity of LNG supplied was almost 3,300 metric tons. Titan LNG organized the bunkering using Coral Fraseri, Anthony Veder’s LNG carrier, in the Port of Rotterdam, a collaboration of four Dutch innovative companies who have united to make history for sustainability in The Netherlands. The delivery took less than 24 hours to complete. Sleipnir arrived at the Port of Rotterdam for the first time following a successful global campaign. The vessel has a wide range of sustainability measures. It is fully outfitted with LED-lighting, has a hot/cold energy recovery system and is able to run on LNG. The use of this fuel considerably reduces harmful local emissions and emits less CO2 than other commonly used fuels. “We are proud to have received the world’s largest LNG bunkering. We are especially pleased that this achievement could take place in our home base of the Port of Rotterdam. The use of LNG on Sleipnir is one of many sustainability measures we have introduced, and we will continue to investigate ways to reduce our impact on the planet,” said Heerema’s CEO, Koos-Jan van Brouwershaven. Niels den Nijs, CEO of Titan LNG, commented: “Building on our five previous deliveries around the globe, we formulated and safely executed our plan of operation. We are proud of this operation in one of our home ports. It was extra special that we could also supply our bunker barge, the FlexFueler 001, with cargo from the LNG carrier. Sleipnir demonstrates that it is financially advantageous to sail on LNG, even in remote parts of the world.” Jan Valkier, CEO of Anthony Veder, added: “By investing in dedicated LNG vessels since 2009, we have made an essential contribution to the availability of LNG for the power generation and LNG as a marine fuel. We are therefore proud of this Dutch cooperation in our home port Rotterdam, where we carried out the largest LNG bunker operation with Coral Fraseria, an important step for Rotterdam as an LNG bunkering hub.”
“It is the Port’s ambition to be the greenest port in the world. Never before has a vessel bunkered as much LNG fuel as Sleipnir. I am proud that the vessel bunkered in Port of Rotterdam because that pays tribute to Rotterdam being the ideal LNG hub for import, export, storage, and bunkering,” concluded Allard Castelein, CEO of the Port of Rotterdam Authority.
Scotland’s first LNG bunkering facilities will be operational in 2022
Caledonian Maritime Assets Limited (CMAL) has awarded a contract to KC LNG,
Kosan Crisplant’s division under MAKEEN Energy, to design and install Scotland’s first LNG bunkering facilities at Uig and Ardrossan. When completed, the facilities will provide a source of LNG fueling for two dual fuel ferries – MV Glen Sannox and Hull 802 – which are currently under construction.Each installation will be a fully automated and remote-monitored facility with a 150 m3 LNG holding tank capability. These plants will be operated by CalMac on behalf of CMAL and are expected to be ready for operation in 2022 as part of major upgrade works at Uig and Ardrossan harbors. The contract includes a five-year maintenance agreement with annual service, call-out support remote monitoring and diagnostics to track performance and operation of the facilities. “We were keen to identify a complete solution with design, delivery and service, and Kosan Crisplant put together a customized package that will deliver that,” said Andy Crossan, senior technical manager and projects director at CMAL. “This marks an important milestone in the use of LNG fuel in Scotland’s maritime transport. It follows an expansion of LNG bunkering facilities across Europe as increasing numbers of ferry companies turn to LNG as a cleaner fuel to achieve emission reduction targets.”
Teekay LNG Partners secures new charters and $225m refinancing
Teekay LNG Partners has announced new fixed-rate charters for two of its part-owned LNG carriers
as well as a $225m refinancing. The new charters, a 12-month charter on the Arwa Spirit and an eight-month charter on the Methane Spirit, will commence upon completion and in direct continuation of their existing contracts in May and July 2020 respectively. The vessels are part of the fleet of Malt LNG, which is 52% owned by Teekay and 48% owned by Japan’s Marubeni. Additionally, Teekay LNG has refinanced its existing $225m unsecured revolving credit facility, which was scheduled to mature in November 2020. The new two-year facility is for the same amount and pricing is consistent with the previous facility of LIBOR + 140 bps. Mark Kremin, president and CEO of Teekay Gas Group, commented: “As we are an integral part of the world’s LNG supply chain, all of our vessels have continued to operate as expected under their existing fixed-rate contracts and I am pleased to report that, with these two new fixed-rate contracts, our LNG fleet is now 98 percent fixed though 2020 and 94 percent fixed for 2021. “We are also grateful for the continued strong support we receive from our bank group, as represented by the refinancing and closing of our $225 million unsecured revolving credit facility with 13 major international banks, which provides the Partnership with a strong consolidated liquidity position of approximately $400 million and increased financial flexibility with which to add value to our long-term unitholders.”
Vitol Group establishes foothold in Singapore bunker operations: Acquires Sinanju Tankers Holdings’ bunkering fleet and expertise
Vitol Marine Fuels Pte Ltd, a subsidiary of the Vitol Group, has acquired 100% of
Singapore-based bunkering specialist Sinanju Tankers Holdings (“Sinanju”). The Singapore Bunkering license holding entity has been renamed Vitol Bunkers (S) Pte Ltd and from 1st April 2020 all bunker deliveries will be carried out by Vitol Bunkers (S) Pte Ltd. Through the transaction, Vitol has acquired an expert bunker tanker manager and operator with extensive experience of physical bunker supplies in the port of Singapore, the world’s largest bunkering port, and a fleet of 15 modern Singapore flagged bunker tankers, including Singapore’s first and currently only Liquefied Natural Gas (LNG) powered dual fuel bunker tanker “Marine Vicky”. Dato’ Kho Hui Meng, President and CEO of Vitol Asia said: “With the acquired entity’s valuable expertise in bunker tanker operations and Vitol’s existing strength on the bunker oil supply side, Vitol Bunkers will be in a strong position to provide a high quality, seamless ‘end to end’ delivered bunker supply service in Singapore and internationally.” Vitol Bunkers and its related companies will continue to operate as before, but under the Vitol brand.
Qatargas using boil-off gas to unload LNG, starting in Japan
Qatargas, the world’s biggest LNG producer, said Monday (April 6) it will use boil-off gas
to power its chartered conventional LNG vessels, after a successful unloading in Japan. The Al Jasra LNG vessel was used to start the boil-off program while discharging at the Niigata LNG Terminal in October 2019, Qatargas said. The program has the support of Japanese buyers, it added. Prompted by IMO2020 rules that have placed severe limitations on the use of high-sulfur fuel oils, LNG vessel operators have looked to alternative methods to power their ships, including sulfur from the gas stream or a switch to very-low sulfur fuel oil, marine gasoil as well as LNG boil-off gas. LNG tankers are designed to carry natural gas in liquid form at a temperature of minus 163 degrees C, which is close to the vaporization temperature. The natural evaporation, known as boil-off, is unavoidable and has to be removed from the tanks to maintain the cargo tank pressure. Using the boil-off natural gas instead of conventional fuel oil reduces greenhouse gas and other harmful emissions over the course of the discharge operation, Qatargas said
Samsung Heavy Industries lands order for 2 LNG-powered VLCCs
Samsung Heavy Industries announced on April 14 that it has received an order for two
LNG-fueled very large crude carriers (VLCCs) from a shipping company in Bermuda for 253.6 billion won. The ships will be delivered until April 2022. The two LNG-fueled VLCCs will be loaded with S-Fugas, an LNG fuel supply system developed by Samsung Heavy Industries. The advanced system can prune sulfur oxides by 99 percent, nitrogen oxides by 85 percent, and carbon dioxide by 25 percent in exhaust gas compared to when diesel oil is used. It allows ship owners to effectively respond to the International Maritime Organization (IMO)’s 2020 environmental regulations that came into force beginning 2020. In addition, the shipbuilder’s eco-friendly smart ship technologies will be used in building the two ships. The technologies include various fuel-saving devices that boost ships’ fuel efficiency by controlling the flows of sea water during operation, and the smart ship solution SVESSEL which automatically draws up optimal operation plans to reduce fuel consumption. To date, Samsung Heavy Industries has won orders for 22 LNG-fueled crude oil carriers (54 percent share of the global market) and remains the world leader in this field. Meanwhile, Samsung Heavy Industries’ order target for 2020 is US$8.4 billion. Including the contract, the shipbuilder has won orders for five vessels — two crude carriers and three shuttle tankers — for US$500 million so far this year.
Technological Development for Cleaner and Greener Environment Hydrogen & Bio-Methane
EU-funded project trials hydrogen-fueled rigid truck in the Netherlands
A 27-ton hydrogen fuel cell rigid truck built by VDL started its first demonstration with BREYTNER as part of the EU-funded H2-Share project in Schelluinen,
the Netherlands. Wystrach GmbH built a low-energy mobile hydrogen refueler to accompany the truck on its demonstration sites. This truck, which is unique in the Benelux, represents a giant leap forward in the development of the zero-emission heavy-duty vehicle industry in Northwest Europe. BREYTNER, a zero-emission transport provider, will operate the truck for three months in retail logistics, such as replenishing stores and feeder lines for zero-emission last-mile solutions. By testing the truck in different types of logistical processes, BREYTNER hopes to contribute to the question of where a hydrogen truck is best deployed. After this trial, the truck will go to one of the other project partners for its next demonstration.
The aim is to demonstrate the truck at six locations in Germany, the Netherlands, Belgium and France, where Wystrach is also presenting its user-friendly and officially approved solution in the form of a mobile refueling station with ample storage capacity that allows flexible application possibilities. The truck can also refuel at the hydrogen stations in Rhoon/Rotterdam and Helmond during the demonstration in Schelluinen. Evidence from the logistics sector shows a strong, growing interest in zero-emission solutions to reduce environmental impact on air quality. The objective of H2-Share (Hydrogen Solutions for Heavy-duty transport Aimed at Reduction of Emissions in North-West Europe) is to facilitate the development of a market for low-carbon heavy-duty vehicles on hydrogen for logistics applications and to gain practical experience in different regions in North-West Europe. The H2-Share project will deliver proof of readiness of hydrogen technology for heavy-duty applications in real-life conditions and will provide a basis for the development of zero-emission heavy-duty vehicle industry in the NWE area. The project receives 1.69-million-euro EU funding through Interreg NWE and is coordinated by WaterstofNet.
“Currently Europe is facing an unprecedented crisis. Our economy will be greatly affected and hydrogen, as innovative technology, can play a crucial role in supporting the post-COVID-19 recovery plan while complying with the EU Green Deal. With the deployment of the H2Share truck, we have tangible evidence that hydrogen fuel cell technology is ready today to play its part,” said JorgoChatzimarkakis, Secretary General of Hydrogen Europe (European Hydrogen and Fuel Cell Association).
Green hydrogen, a competitive fuel for Danish public transport fleets
Hexagon Composites’ subsidiary Hexagon Purus has been awarded an order from Everfuel to supply two new generation X-STORE high-pressure
hydrogen distribution modules. Deliveries of these distribution systems are scheduled for the third quarter of 2020. The modules have a nominal payload capacity of 958 kg of compressed hydrogen at 300 bar and will be produced at Hexagon Purus’ production and assembly facility in Kassel, Germany. They will be used to transport hydrogen to refueling stations serving hydrogen fuel cell taxis and buses in Denmark. “Everfuel has the clear ambition to make green hydrogen a competitive fuel in Europe. High capacity hydrogen distribution is an essential part of reaching this ambition,” said Jacob Krogsgaard, CEO of Everfuel. “We are very pleased to cooperate with Hexagon Purus to make the hydrogen distribution as efficient as possible”. Everfuel provides green hydrogen for larger vehicle fleets like buses, trucks and taxies. “We are proud to support Everfuel in becoming a leading zero emission fuel distributor in Europe,” commented Hartmut Fehrenbach, Vice President Hydrogen Distribution of Hexagon Purus. “This order showcases our technology leadership and capability to offer high payload hydrogen storage systems, enabling reduced operating costs for our customers.”
New study evaluates map and state of biomethane market in Europe
The European Biogas Association (EBA) has participated in a research on the state of play of the biomethane market in Europe.
The report provides a general European overview, together with an in-depth mapping at country level of 23 European countries covered by the REGATRACE project. The study shows that the countries with the biggest production of biomethane are Germany (10,018 GWh in 2018), United Kingdom (3,300 GWh in 2018), the Netherlands (2,226 GWh in 2018), Denmark (1,425 GWh in 2017), Sweden (1,281 GWh in 2018) and France (1,207 GWh). The production and consumption of biomethane is well-balanced in most Member States. Denmark and Germany produce more biomethane than they consume, and the excess of production is exported or stored. In Sweden, the consumption of biomethane doubles its production. This can be explained because Swedish incentives are focused on the consumption side, whereas most Member states tend to subsidize the production or injection. End-use pathways for biomethane are quite clearly defined and regulated in some countries. In Sweden and Italy, the main end-use application is transport, whereas in the United Kingdom is heating & cooling. Most of Sweden’s biomethane is used in the transport sector due to a favorable support system. In Italy, the use of biomethane as vehicle fuel is facilitated by the already existing infrastructure and NGV fleet. In 2014, the Italian government introduced the first obligation for the use of biofuels in the transport sector. In Germany, most biomethane is used for electricity production in CHP units. The usage of biomethane as transport fuel is indirectly supported in Germany through its inclusion into the list of fuels accepted for the reduction of GHG footprint for fuel distributing companies. The study also examines consumer readiness to pay for biomethane. A choice experiment has allowed to monetize individual aspects or characteristics of the renewable gas and predict consumer preferences. The experiment shows that GHG emission reductions compared to natural gas are the aspect of the renewable gas which has the highest impact on consumers’ choice (29%), followed by additional cost compared to natural gas (27%), origin of the renewable gas (17%) and its reliable delivery (14%).
New alliance will develop hydrogen refueling infrastructure in Australia
Fortescue Metals Group and ATCO Australia have signed an agreement to explore the deployment of hydrogen vehicle fueling infrastructure in Western Australia.
Under the agreement, the two parties will collaborate to build and operate a combined hydrogen production and refueling facility at ATCO’s existing facility in Jandakot in the Perth metropolitan area, with the possibility of wider deployment across the State. The companies have sought funding under the State Government’s Renewable Hydrogen Fund to support the development of this infrastructure, and are awaiting the outcome of this submission. The initial refueling facility will provide Fortescue, ATCO and approved third parties with the opportunity to refuel vehicles capable of utilizing hydrogen as the primary fuel source, including a fleet of Toyota Mirai fuel cell vehicles which have been made available by Toyota Motor Corporation Australia. The project will serve as a showcase for hydrogen mobility in Western Australia and support the transition to the next generation of zero-emission transport. “ATCO’s Clean Energy Innovation Hub has been generating and testing the use of renewable hydrogen for more than six months in gas blending and power applications. The Hub provides a fantastic base from which to partner with Fortescue to contribute to Western Australia’s burgeoning renewable hydrogen industry,” said ATCO Managing Director in Australia Pat Creaghan. “We look forward to working with Fortescue capitalize on Western Australia’s natural advantages for the benefit of the environment, the economy and the community.” Toyota Australia Manager of Future Technologies and Mobility Matt MacLeod also commented, “The agreement between ATCO and Fortescue demonstrates a clear commitment to hydrogen energy in Australia and this emerging economic sector. We congratulate both companies on this innovative approach to their joint vision for the future of zero emissions transportation.”