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* Vitol secures several key gas deals in H1 2024
The agreement between Korea Middle Power Co Ltd (KOMIPO) and Vitol to extend an existing long-term LNG supply and purchase agreement (SPA) is the latest deal signed by Vitol, a Netherlands-based oil and gas trading house.

The original deal was signed in 2011 and deliveries commenced in 2015, with Vitol supplying KOMIPO with more than 4M tonnes of LNG over 10 years. Under this extension agreement, from 2025 to 2028 Vitol will supply three cargoes of LNG per annum to KOMIPO.

In February 2024, Vitol announced the execution of a natural gas SPA with EOG Resources, where EOG will supply 180,000 MMBtu/d of natural gas (equivalent of approximately 1.25M tonnes of LNG equivalent per annum) to Vitol with 140,000 MMBtu/d at a purchase price indexed to Brent crude oil price (Brent) and the remaining volumes indexed to Brent or a US Gulf Coast gas index for 10 years commencing in 2027.

In January 2024, GAIL (India) Ltd and Vitol Asia Pte Ltd signed a long-term LNG supply deal into India for 1M tonnes per year of LNG for approximately 10 years, starting from 2026. Under this deal, Vitol will deliver LNG from its global LNG portfolio to GAIL and these deliveries will be on a pan-India basis.

Vitol has traded LNG for over 16 years and last year traded more than 17M tonnes of LNG worldwide.

Vitol chief executive Russell Hardy said of the trading company’s 2023 activity, “Natural gas and LNG volumes grew by 19% and 24% respectively. We continue to see gas as a transitional fuel for the medium term, both in its displacement of coal in power generation and as a necessary complement to intermittent renewable generation.”

(Source: Riveria)

* Cedigaz: global LNG imports increased 1.7 percent in January-May
Global LNG imports rose by 1.7 percent to 169.3 million tonnes in January-May 2024, up from 168 million tonnes during the same period in 2023, according to preliminary data released by Cedigaz.

Confirming the trend seen this year, the growth was driven by Asian gas demand, with LNG imports increasing by 10.37 million tonnes year-on year, up 15.3 percent, to 115.31 million tonnes, the France-based association said in a report.

Meanwhile, European LNG importsfell by 11.4 million tonnes, down 20 percent year-on-year, to 45.37 million tonnes in the first five months of 2024, it said.

Asia was followed by Central and South America (+1.25 million tonnes, or up around 30 percent to 5.34 million tonnes) and the Middle East (+0.82 million tonnes, or up 45 percent to 2.62 million tonnes), Cedigaz said.

In Europe, reduced gas demand and high inventories were primarily behind the drop in LNG imports, it said.

Cedigaz said the sharpest drop in terms of volume was recorded by the UK, where imports fell by 6.21 million tonnes, down around 59 percent, to 4.21 million tonnes, amid low gas-to-power and residential demand in the UK and increased LNG import capacity in Europe.

China’s LNG imports jump

In Asia, China led the pack with a total of 31.97 million tonnes, representing around 28 percent of imports in Asia, imported in January-May 2024, up from 27.10 million tonnes during the equivalent period in 2023, Cedigaz said.

This was also the highest level reached since the same period in 2021, when China LNG imports hit 32.96 million tonnes, the association noted.

For the whole of 2024, China is projected to hit a new record in LNG imports of around 78-80 million tonnes, with demand driven by the industrial and commercial sectors, according to reports citing a PetroChina official in May, Cedigaz said.

China imported a total of 70.4 million tonnes in 2023, according to Cedigaz database, though the highest annual level was reached in 2021 with 78.79 million tonnes.

China was followed by Japan, which imported 27.81 million tonnes in January-May 2024, and South Korea with 20.41 million tonnes, it said.

India boosts LNG imports
India’s LNG imports posted the second biggest year-on-year increase in terms of absolute changes (+2.52 million tonnes, up almost 30 percent year-on-year) to 10.99 million tonnes, Cedigaz said.

This marked an increase from 8.47 milion tonnes during the same period last year, making India the fourth-largest importer so far this year after overtaking the UK, which slipped to the 12th position, it said.

India boosted its LNG imports this year and past winter as softer prices fueled buying interest to meet soaring demand – the country remains a price-sensitive market.

India’s LNG imports were already expected to increase this year due to demand fundamentals, Cedigaz said.

With the country currently going through an unusually severe heatwave, this trend is only expected to strengthen, Cedigaz added.

(Source: LNG Prime)

* GAIL to set up India’s largest, 1,500-KTA Ethane Cracker project in MP
GAIL (India) Limited has plans to set up India’s largest, 1,500-KTA Ethane Cracker Project at Ashta in Sehore district of Madhya Pradesh (MP), the company said on Monday. The product will entail an investment of around Rs 600 billion and will have a product slate of various ethylene derivatives. The public sector undertaking (PSU) will seek investment approval for the project from its Board of Directors.

GAIL said in a regulatory filing to the stock exchanges that it has submitted its request to the Madhya Pradesh state government for providing suitable enablers for the project. “Around 800 hectares of land shall be provided by the MP Industrial Development Corporation Limited, for which the state government has already initiated the process,” said GAIL.

(Source: PSU Watch)

* Energy ministries: Delicate balance between energy security, rising demand
In the last two terms of the Narendra Modi-led National Democratic Alliance (NDA) government, clean energy and energy transition became a crucial part of economic growth. With India now positioning itself as the voice of the Global South, the push towards green growth is expected to continue. However, rising energy demand could tilt India’s energy basket towards fossil fuels from coal to oil and natural gas.

Return of coal and natural gas

The country’s electricity demand has not been as coal-dependent as in the past couple of years. With electricity demand touching a new record every year, it is coal that is running the show.

The Union power ministry has pulled all strings to ensure surplus supply, including directives on importing coal and running gas-based units. Officials say this has helped the country wade through extreme heat days with no major hiccups.

This has had a domino effect on supply of domestic coal, imported coal, and also natural gas. Coal India Ltd (CIL) is looking to have the highest ever supply of coal this year.

The Union Ministry of Coal has ensured coal availability of more than 15 days this summer (it usually would go below 10 days).
The new coal minister has to maintain this streak with the much-needed support from the Railways, states, the power ministry, and generating stations.

Maintaining enough fuel supply while facing global pressure to dial down on coal mining and usage will remain a challenge for these two ministries.

But, for the power ministry, the challenge of energy security is multifold. It would need to balance green energy, which has grown multiple times in the last decade but is not available round the clock. All the power ministers in the Modi government have also donned the hat of the minister of new and renewable energy.

With India committing 500 Gw of green energy by the end of this decade, both the power and new and renewable energy ministries would need to put feet on the pedal while developing allied infrastructure from transmission to energy storage. The new power minister will also have to walk the tightrope on the new power distribution reforms scheme, which requires cooperation from all states to fix the beleaguered power supply ecosystem. In tandem with the larger push towards cleaner fuels, the petroleum and natural gas ministry aims to expand the Sustainable Alternative Towards Affordable Transport (SATAT) scheme, under which it aims to set up 5,000 compressed biogas plants by FY25, officials say.

(Source: Business Standard)

* India hoping for firm interest at latest oil, gas auction amid policy continuity
India is hoping that its latest round of oil and gas block auction will generate robust interest among investors and bidders, as the return of the National Democratic Alliance government for the third consecutive time would ensure policy continuity

New Delhi has extended the bid submission deadline for the second time in the ninth round of the Open Acreage Licensing Policy, highlighting lukewarm response from exploration companies to the oil and gas block auction process.

The latest round started invited applications on Jan. 3 with the original closing date set for Feb. 29 but the deadline was first extended until May 15. Now, the latest date for bid submission has been further extended to July 15.

Narendra Modi on June 9 was sworn in as the prime minister and the leader of Bharatiya Janata Party-led NDA government for the third straight term — a result that is expected to ensure policy continuity for the energy and commodity sectors.

The BJP-led alliance won a relatively lower number of seats compared with the previous elections in 2019, while the opposition alliance sharply improved its performance from the previous polls.

Clarity after elections
Petroleum ministry officials are hoping that more interest might emerge to the auction round now.

In OALP-IX round, a total of 28 blocks spread over 136,596 sq km were offered for oil and gas exploration at eight sedimentary basins where the companies taking part will have the freedom to carve out areas for drilling.

Out of the total 28 blocks offered for bidding, 9 blocks are on-land, 8 blocks are in shallow water and 11 blocks are in Ultra-Deep-water.

Analysts said that the bidding process had slowed down due to the elections. The extension of the bid submission date to July 15 was an attempt to carry out the final process of awarding the contracts once the new government was in place.

The blocks are expected to be awarded by September, said an official of the Directorate General of Hydrocarbons, the upstream market regulator.

The extension of the bid deadline twice did not come as a surprise to industry participants as the bids in the previous round — OALP-VIII — opened in July 2022 but the blocks were awarded to the winners earlier this year after multiple extension of the bid submission deadlines.

(Source: SP Global)

* Can Modi’s Third Term Spark a Renewed Momentum for India’s Renewable Energy Sector?
Modi has been sworn in as the Prime Minister of India for a third term, creating significant momentum in the renewable energy sector.

Over the past decade, India’s energy landscape has transformed remarkably. During his 10 years in office, Narendra Modi and his Bharatiya Janata Party (BJP) have committed the world’s third-largest emitter to decarbonizing half of its energy system by 2030 and achieving net zero by 2070. They have also overseen a 59 percent reduction in fossil fuel subsidies, surpassing many other major economies. This has spurred substantial growth in India’s renewables sector, and the recent election results indicate further progress on this front.

Some of the key initiatives of the BJP-led government over the past decade include the establishment of the International Solar Alliance in 2015, the commitment to achieving 175 GW of renewable energy by 2022, and the ambitious target of net zero emissions by 2070. In their 2014 manifesto, the BJP promised to promote carbon credits, which led to the introduction of a Carbon Credit Trading Scheme in 2022 to incentivise the generation and trading of these credits. The BJP has been instrumental in advancing India’s electricity sector, setting a plan to install 500 GW of renewable energy by 2030 and aiming to meet 50 percent of the country’s electricity demand with renewables by the same year.

Thanks to the government’s positive stance on the renewable sector, its policies have yielded significant results. India has made impressive strides in solar capacity addition, now hosting four of the world’s ten largest solar parks, including the second largest, the 2,255 MW Bhadla Solar Park in Rajasthan. Additionally, India is home to Cochin International Airport in Kerala, the world’s first and only 100 percent solar-powered airport. These and other major projects have propelled the country’s installed solar capacity to 82.63 GW, which is 30 times larger than it was nine years ago and the fifth highest in the world.

Significant progress has been made, but much remains to be done in the nation’s clean energy sector. The start of Modi’s third term has reignited optimism in the renewable sector, largely due to his pre-election pledge to build on India’s renewable energy achievements.

The third term also comes as a promise to work on the existing schemes, providing for their seamless implementation, such as PM Surya Ghar Muft Bijli Yojana, targeting to light up 10 million households (10 million households) across India.

(Source: Energetica India)Jefferies in its latest note said that the Modi government reviving talks to include natural gas under GST should aid companies such as Gujarat Gas Ltd, GAIL (India) Ltd and Petronet LNG Ltd, adding that three out of four key states that could hold sway are under the ruling NDA. Such an inclusion could lower natural gas cost by $0.8-0.9 per mmBtu and aid faster adoption, helping GAIL’s transmission and trading volumes in the medium term, the foreign brokerage said. GAIL’s consolidated Ebitda could rise 2 per cent assuming it retains the benefit in the LPG segment, it added.

In the case of Gujarat Gas Ltd, it’s competitiveness to propane is seen improving 6 per cent, aiding volumes or margin. Gujarat Gas would benefit in Morbi, Jefferies said noting that the 6 per cent VAT on natural gas sold in Morbi, if subsumed under GST, would improve Gujarat Gas’ competitiveness to propane by Rs 2.5 per kg at current prices. If passed on, this would improve volumes; if retained, it would improve margins.

Petronet LNG could also benefit as improved competitiveness of natural gas if GAIL passes on the $0.8-0.9 MMBtu benefit should drive volume growth, aiding PLNG’s LNG volumes. It said such benefits would accrue gradually over the medium term.

“VAT on CNG in Delhi/Mumbai/Gujarat is 0 per cent/3 per cent/5 per cent. We expect CGD players to pass on the benefit to consumers if CNG is subsumed under GST. This should increase the discount to petrol/diesel and marginally aid volume growth,” Jefferies said.

(Source: Business Today)