GAIL's US commitments: Markets are nervous

GAIL's committed LNG volumes from the US are expected to land in India from next month.
That is when the countdown begins on how the gas major's US offtake will eventually impact its bottomline.
GAIL is remarkably reticent to share information on where it has tied up its volumes, as it claims it has.
But a reasonable number of cargoes are expected to land in India
Even though the company's other baseline parameters, including petrochemical capacity, gas transmission volumes and tariffs, are all expected to be up, the US LNG risk overwhelms all positives.

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Oil & gas logistics in India: Opportunities galore

Oil & gas storage logistics has become a highly lucrative niche business in India.
First mover firms are reaping the benefits of the growing need for storage and logistics as public sector companies run out of space.
A secondary distribution market has emerged with good margins given the growing economy.
The website carries here an example of how private companies are stepping in to plug the gap.
Clear business opportunities are available, both from the view point of the investor as well as the supplier of equipment and services.

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LNG shipping: Tightening up

The LNG shipping market is likely to show signs of tightening up soon in the face of rising supplies.
The expectation is that the tightening will happen from the current quarter and the trend will continue right up to 2020
There is a big net decrease in available tonnage
Then again, the number of uncommitted newbuilds has come down
New-tech LNG vessels are enjoying a significant premium over their conventional counterparts
In fact, a three-tier LNG market has evolved as of now

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Indian offshore vessel industry: Wait out for the good times to come.

So, after disappointing global growth over the past few years, the recent allround economic pickup combined with the relatively subdued fleet growth provides an ideal window of opportunity for the shipping industry to enjoy good returns.
So expect shipping companies to do better this year
The expected uptick in oil & gas vessels may not happen this year but the worst is over. A rapid expansion is now projected going ahead, and increased activity will go on until 2027, as per projections already carried here
The industry needs to just sit it out before the party begins

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ONGC on the rise: Gas volumes to go up 40%

It is all good for ONGC from here onwards
Gas volumes from upcoming investments are expected to go up by close to 40% in 4 years
The highly profitable new petchem capacity (OPAL) will ramp-up to 80% utilisation by March 2018 from current 50%
Realisation will jump: APM gas price will structurally revive with a lag to oil price rise.
Moreover, most new fields will attract ~2x APM gas price
Cost efficiencies will improve: Operating costs will remain low post the 32% fall since CY16, due to lower equipment costs and higher drilling efficiencies. 

Prices to rise, costs to come down

Find out by how much will ONGC gas output go up anually over the next four years
When is the KG-DWN-98/2 likely to kick start?
By how much is APM and non-APM price expected to go up over the next four years?
And by how much have finding costs gone down?
And by how much has offshore drilling costs reduced?
What kind of further opex saving does the company expect?

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Petrochemical industry: Know more

Find our more on the following topics:
Is India ready to embrace value added petrochemicals?
A case for development of benzene value chain in India – lessons from China
Maximizing refinery margins by Petrochemicals Integration
Coal to olefins – relative economics in low crude oil regime & status of projects in China
Logistics and supply chain dynamics for petrochemicals

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BP maintains a stiff upper lip in India: Onus falls on RIL to manage the relationship

BP is a huge global oil & gas conglomerate and it has a big presence in India through the RIL-BP collaboration which is trying to dig out more gas in the KG Basin
And yet, globally, its reputation among oil and gas professionals is much lower than its heft
A recent survey of global professionals shows that BP's credibility is significantly lower than many companies with a far lower footprint.
Shell and Exxon Mobil, and even companies like Statoil and Cairn score higher than BP
In India too, BP maintains a stiff upper lip and an inflexible demeanor, incommensurate with its prowess, thereby losing both credibility and power, not just with the government but with other stakeholders as well.
It is the failure of the local team to do the footwork that leaves BP's swashbuckling CEO Bob Dudley to do most of the liaisoning directly with key Indian stakeholders.
The abject failure of the BP team to make a mark in New Delhi's corridors of power has forced the responsibility entirely on RIL to be the big partner in the relationship.
It is time for a wholesale managerial change in BP. 

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World's largest diesel gen set operator in India uses energy saving devices to stay viable

The current price correction should be seen as a one-time correction and this will not be a precedent for any such action later for any other similar contacts Find our more on how the world's largest diesel operated power plant in India maintains its viability.
It has been able to fit in two-stage steam turbine induction generator to take full advantage of the extra steam that is produced.
The typical Energy Conservation Steam Turbine can generate incidental Clean, Green Electric Power.

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Our daily LNG price and vessel rates database

For reference purposes, the website has a daily Indian LNG projects carrier price database
We also have daily LNG prices data for key markets around the world
The daily prices are given in terms of
-- FOB rates
-- Transhipment rates, where relevant
-- Spot rates
Easy maneuverability and past price trends are the highlights of our pricing software

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New pricing norm for Basra crude: Indian refiners are unhappy

A new method of pricing Basra crude from Iraq using the monthly average of DME Oman futures two months before the oil loads has not gone down well with Indian refiners. Other Middle East producers like Saudi Arabia, Kuwait and Iran price their oils one month before loading.

This means Iraqi crude loading in October would be priced off DME’s futures contracts in August.
This poses a risk to Indian buyers, who would only be notified by mid-September whether they had successfully bid for a cargo, making it hard for them to hedge against price changes in advance.

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LNG plant in Bangladesh: Petronet LNG out of the race

Petronet LNG seems to be losing out on a deal to build an LNG plant in Bangladesh.
The company could not compete with a host of international competitors, including Chinese and international companies such as Shell.
The selected bidder would have 60 percent stakes in the proposed 3.5 MMTPA project while Bangladesh would have the remaining 40 percent which would be built under engineering, procurement and construction contract.
Read more on Indian LNG projects imports by Bangladesh, with deals not just with Oman but with Malaysia and Indonesia in the offing.

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Rs 12,000 crore coal-based ammonia urea units: LSTK contracts are coming up

Nearly 70% of China's urea capacity is based on ammonia produced from syn gas extracted out of coal
In India, two such projects are coming up, with price tags of around Rs 12,000 crore
In one, an international agency has been hired as consultant
In the other, process licensors have been selected.
Clearly promoters of both these urea-ammonia plants seem to be seriously going about trying to get their clearances and financial closures
For one, the RFQ for the LSTK contractor is expected in November 2017, for another in 2018

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Greka Drilling: Flying high

Greka Drilling is primarily focused on China but India too is a big market
In India, it has partnered with Essar Energy in CBM drilling work in its Ranigank block.
But Greka really came on its own in April when it was chosen ahead of 16 other contractors for a 73 well programme for state-owned energy group ONGC in the Bokaro CBM block.
Greka is now confident of bagging more CBM related work in the future.

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Khed SEZ: Good location for oil & gas equipment suppliers

The 4200 acre Khed SEZ near Pune is a big success story.
The industrial park is being built in a JV between the Kalyani Group and the MIDC
The first phase has been launched and more than 40 manufacturing units have settled in comfortably in the park.
The park is ideally located for manufacture of oil and gas equipment too, this website believes

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Fresh US sanctions on Russia: LNG lobby sees more than what meets the eye

There is much much talk in the LNG community that recent US sanctions on Russia were prompted to push US LNG cargoes to Europe and stall fresh pipeline imports
The idea may sound a little far fetched but the website carries here a cogent argument on why this may actually be so
The argument then goes on to reveal that Asian competition may deter Europe from accessing US cargoes

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Road shows by ONGC: Rs 850 crore of equipment purchase

Highly placed sources said that ONGC RIL tenders contracts is planning road shows abroad for some of its critical equipment requirements so as to be able to elicit more competition
One such road show will involve critical drilling related equipment worth around Rs 850 crore.
Find out more on what kind of equipment this is going to be and who can qualify
The qualification rules are also to be relaxed to ensure higher competition.

What kind of discount is ONGC looking for?

What is the extent of discounts that ONGC is currently seeking from suppliers of E&P equipment?
The discount sought is high.
Since the rapid decline of equipment and service prices, the traditional Last Purchase Rate model for determining the reserve price is no longer working.
A rough yardstick is followed, which is usually a deep discount to the Last Purchase Rate

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The rise of the second rung of oil & gas EPC contractors: Is a third rung likely?

The inexorable rise of the second rung of oil and gas EPC contractors is something to take note of
The likes of Kalpataru Power Transmission Ltd, with its cut rate quotes, are quickly pushing out more established competitors out.
Just as the first rung of indigenous players such as L&T and Punj Lloyd pushed out the multinationals, companies such as Kalpataru are pushing the first rung out.
They are eating up the EPC space not just in the high cost, low-end E&P segment but also in the midstream section.
As the second rung moves up the value chain, as L&T did, will a third rung emerge?

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Oil demand and supply: Battle still on

Saudi Arabia’s then Oil Minister Ali al-Naimi had once said that “whether it goes down to $20, $40, $50, $60, it is irrelevant,”. This was when Saudi Arabia had tried to run US shale producers to the ground by driving the price as low as possible
Ali al-Naimi's strategy did not work and he lost his job.
Saudi Arabia, in the face of quickly declining foreign exchange reserves, is trying to shore up the market by leading production cuts
The website carries here an interesting picture of declining crude prices in relationship with the decline in Saudi foreign exchange assets
But the battle is not over yet between US shale and Saudi oil

When will demand begin to fall?

The advent of electric cars is meant to cause demand to begin a downward slide
But when is that going to happen remains a moot point
While some say that the point of inflexion can happen sooner than later, there are a lot of others who say that this point is not coming anytime soon.

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Business development opportunities in fertilizers

New SSP plant: No response to a tender for contractor
New ammonia- urea fertilizer complex: Environment clearance granted
Technical pesticide unit: Tender for gas likely in October 2017
Find out when will Chambal's new ammonia-urea plant will go onstream: When will 2 mmscmd of gas demand will come up?
New 800 TPD SSP unit coming up

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Tug of war over rights to KG Basin gas: GAIL vs. GITPL

A tug of war is on between GAIL and GSPL India Transco Ltd (GITPL) over who should have the rights to transport gas from ONGC's Odalarevu terminal from where the Indian E&P projects gas major's KG Basin gas output is to come in.

GITPL is implementing the cross-country Mallavaram-Bhilwara-Vijaipur natural gas pipeline and it claims that one of the major reasons why it was set up was to ferry gas from ONGC RIL tenders contracts, offshore KG Basin fields, such as the S1 and VA deepwater fields, and eventually gas from the KG-DWN-98/2 in 2019.
GAIL has now laid a counter-claim to do what is called a tie-in with the Odalarevu terminal from its regional KG Basin network on the ground that it is the nearest pipeline network. GITPL's tap-off point is 13 km away from Odalarevu whereas GITPL's is 50 km away. The ball in now in the court of the PNGRB

What is causing "significant adverse changes in gas demand"?

A worrying point that needs highlighting is the GITPL's assertion that there are "significant adverse changes in market demand" that is threatening the viability of the Mallavaram-Bhilwara-Vijaipur natural gas pipeline. The 1800 km pipeline will traverse through 33 districts and six states. GITPL also claims that it will be able to cut down tariff drastically: gas from the KG basin can travel to NFL's Vijaipur plant at 25% of the current applicable tariff.
But the point is what is what has changed about gas demand in the heart of industrial India through which the pipeline winds it way?
Clearly, demand for gas has not been found to be as buoyant as was anticipated earlier.

The inability of cross-country pipelines in India to stay viable needs a further investigation. The market for gas is becoming more dynamic, with a plethora of competing fuels as crude prices continue to stay low. LPG, FO/LSHS and Pet Coke are competing with gas for the attention of dual feed furnace owners. Low cost renewable energy may also increasingly emerge as a competitor. 

Undoubtedly, India should ordinarily have an insatiable appetite for gas but when will demand emerge remains a moot point.  Will disruptive changes -- such as lower for ever crude prices or the advent of electric car or really low cost renewable energy --  kill this demand before it emerges?
The jury is still out on this subject.

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