LNG

India’s Reliance Industries, the group with growing natural gas and oil and chemicals businesses, reported increased overall fiscal first-quarter revenues while net income slipped amid moves to boost the nation’s domestic output with more exploration and production to offset LNG and oil imports.

Indian liquefied natural gas imports dropped by almost 11 percent as prices edged higher along with domestic gas output and the nation’s gas demand remained lukewarm.

North Asian spot cargo prices increased on the week though the differential remained at almost $10 in favour of the Dutch Title Transfer Facility European Union benchmark price as net withdrawals from EU gas storage increased because of sub-zero temperatures in the region.

Indian liquefied natural gas imports last month surged more than 9 percent along with domestic natural gas production, up more than 19 percent, as economic activity proved to be more resilient as the nation emerged from the worst of the Covid-19 pandemic.

Reliance Industries, the leading Indian natural gas producer in the ultra-deep-water block in the Krishna Godavari Basin offshore the East Coast to supply about 15 percent of the nation’s domestic gas needs and slightly reduce LNG import requirements, has sold off its assets in the US Marcellus Shale in Pennsylvania.

The Reliance subsidiary, Marcellus LLC, said it signed agreements to divest all of its interest in certain upstream assets in the Marcellus shale play of southwest Pennsylvania.

“These assets, which are currently operated by various affiliates of EQT Corp, will be sold to Northern Oil and Gas Inc., a Delaware corporation, for $250 million cash and warrants that give entitlement to purchase 3.25 million common shares of NOG at an exercise price of $14.00 per common share in the next seven years,” said Reliance.

A Purchase and Sale Agreement has been signed with Northern Oil and Gas and the transaction is subject to customary terms and conditions of closing.

Reliance said Citigroup Global Markets acted as its financial advisor and Gibson, Dunn & Crutcher LLP served as its legal counsel.

Reliance is India’s largest private sector company with annual turnover of $87.1 billion.

The conglomerate’s activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail and digital services.

Reliance, along with BP of the UK, is developing three deepwater gas projects in block KG D6, called the R Cluster field, the Satellites Cluster field and the MJ field.

The three fields in the project will utilise the existing hub infrastructure in KG D6 block, with BP holding over 33 percent and Reliance, as the operator of KG D6, owning the balance.

The R Cluster was the first of the three fields to come onstream.

It is located about 60 kilometres from the existing KG D6 Control and Riser Platform (CRP) off the Kakinada coast and comprises a subsea production system tied back to CRP via a subsea pipeline.

Located at a water depth of greater than 2,000 metres, it is the deepest offshore gas field in Asia.

The field is expected to reach plateau gas production of about 12.9 million standard cubic metres per day in 2021

The previous Asian company to withdraw from US shale was Japanese trading house Sumitomo Corp.

The company sold its shale oil business in the US, which was part of the Eagle Ford shale in southern Texas, during the fourth quarter of 2020. 

McDermott International, the US energy and LNG engineering company, said that first gas had flowed from a field development of India's Oil and Natural Gas Corp. (ONGC) in the offshore Krishna Godavari Basin in the Bay of Bengal.

McDermott was awarded the offshore contract for ONGC’s 98/2 Block in the KG Basin in October 2018.

The KG 98/2 block is situated offshore the Godavari River delta, about 35 kilometres off the East Coast state of Andhra Pradesh and extends for 7,290 square kilometres in water depths ranging from 300 metres to 3,200 metres.

It is currently one of the largest subsea projects in India and included the supply of a package including production systems (SPS), including 26 deepwater trees, and the installation of subsea umbilicals, risers and flowlines.

The early first gas involved the tie-back of a single well to the existing Vashishta facility.

At 4,265 feet (1,300 metres), the first well that has been opened for early first gas is the deepest water depth opened by ONGC.

The ONGC gas field will further help satisfy India's growing natural gas demand, about half of which is made up of domestic pipeline gas supplies from areas like the KG Basin, wile the other half comes from LNG imports.

“McDermott is a leader in the subsea space and we have worked incredibly hard to fast-track the production to early first gas,” said Ian Prescott, McDermott's Senior Vice President for Asia Pacific.

“To deliver this accelerated schedule is an exceptional achievement and testament to the benefits of the collaborative commercial model put forward to ONGC,” Prescott explained.

“Production from a deepwater well in less than 14 months is an outstanding achievement for the exploration and production industry,” he stated.

McDermott said that in line with the “Made in India' approach for the 98/2 project, a substantial amount of engineering and project management has been led from McDermott's operations in Chennai.

“This local approach is a new initiative in the deepwater subsea space for McDermott,” said the Houston-based company.

“We look forward to continuing our work in the Bay of Bengal as we help ONGC meet India's growing energy demands,” it added.

McDermott has been conducting business as usual while having to ease its financial concerns in mid-March when a US bankruptcy court in Texas approved the sale of its Lummus Technology business to global equity funds.

Under the terms of the Chapter 11 plan, McDermott will complete a comprehensive restructuring forced on it by financial problems, including those that arose from takeover of CB&I.

McDermott is involved in some of the world’s leading LNG construction projects, including several on the US Gulf Coast and the North Field Expansion in Qatar.

Currently McDermott is working with other firms on both the Cameron LNG project at Hackberry in Louisiana and the Freeport export facility at Quintana Island in Texas.

McDermott has additionally been engaged as a contractor on the Golden Pass LNG export project for Qatar Petroleum and ExxonMobil venture in Texas.