LNG

UK major BP posted solid results in the third quarter that saw the Chief Executive resign while in company activities a very strong oil trading result along with higher oil and natural gas production were partly offset by weaker natural gas marketing and trading results.

Indian liquefied natural gas imports for the fiscal year dropped by more than 14 percent and below the 20 million tonnes mark and were also well down for the month of March following a brief resurgence in the previous month when shipments had risen.

Reliance Industries, the Indian conglomerate and a leading oil, natural gas and chemicals company supplying rising gas volumes to supplement LNG imports, reported a jump in earnings from energy exploration and production amid higher gas prices for more Bay of Bengal volumes.

Reliance Industries, the leading Indian energy company supplying natural gas to supplement LNG imports, reported an almost 57 percent jump in fiscal third-quarter revenues while its domestic natural gas price was at just over $6 per million British thermal units.

Reliance Industries of India and BP of the UK said a second natural gas field had come on stream ahead of the mid-2021 schedule in the Krishna Godavari Basin offshore the Indian East Coast, adding to the nation’s gas supply in addition to LNG shipments.

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. 

UK major BP and India's Reliance Industries Ltd have started production from an ultra-deep-water block in the Krishna Godavari Basin offshore the East Coast of India as part of a project that will eventually supply about 15 percent of India’s domestic gas needs and slightly reduce the nation's LNG import requirements, though overall demand is forecast to increase in the years ahead.

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.

The Indian Minister of Petroleum and Natural Gas, Dharmendra Pradhan, said the government was committed to promoting a natural gas-based economy and that infrastructure investment requirements amounted to around $100 billion for pipelines, city-gas connections, LNG terminals and gas fuel projects.

Indian liquefied natural gas terminal developer H-Energy and Kakinada Seaports signed an agreement for an LNG regasification and reloading terminal to be sited at Kakinada port in Andhra Pradesh, which would be only the second such facility on the East Coast of India.

Kakinada Seaports controls the concession for the Kakinada Deep Water Port under an agreement with the government of Andhra Pradesh.

“H-Energy shall develop an LNG hub at the Kakinada Port catering to the needs of domestic customers in the state of Andhra Pradesh and shall supply LNG through small LNG vessels to H-energy’s proposed Kukrahati LNG terminal in the state of West Bengal and neighboring countries like Bangladesh and Myanmar,” explained H-Energy.

Darshan Hiranandani, Chief Executive of H-Energy, said the company was excited to partner with Kakinada Seaports for this East Coast project.

“We believe that Kakinada with its existing breakwater and deep draft combined with its close proximity to various natural gas pipelines makes this an efficient and successful project for our customers, our partners, and ourselves,” said the CEO.

“The PSA along with its associated agreements envisages a long-term association between the two organizations contributing towards India’s growth story, especially, the vision of the Government to promote a gas-based clean economy," he added.

Depending on the timing, the Kakinada terminal could be only the second on the East Coast of India after the start-up in March 2019 of the first facility at Kamarajar Port in Tamil Nadu.

The Kamarajar terminal is owned by Indian Oil Corp., the refining and fuel marketing company, and has 5 MTPA of import capacity and two tanks each with storage of 180,000 cubic metres.

The Hiranandani group also has plans to deploy a floating storage and regasification import project at Jaigarh port, south of Mumbai, by the end of 2019.

The H-Energy subsidiary will operate the Jaigarh terminal with annual capacity of 4 MTPA of LNG and with re-loading capabilities.

H-Energy has explained that the FSRU charter to H-Energy is for a period of five years and the ship will arrive at the LNG jetty at Jaigarh just before the start-up.

Most of the onshore infrastructure work has almost been completed by Engineers India Ltd, a project construction company.

H-Energy said the West Coast facility would be of great benefit to Maharashtra state in western India by providing clean fuel for transportation and for city-gas use.

When operational, the regasified LNG will be supplied to customers through the pipeline connected to national gas grids at the city of Dabhol.

The facility would be the fifth LNG import terminal located near Mumbai, with three of them located at Hazira, Dahej and Dabhol for use by importers Shell, Petronet LNG and Gas Authority of India respectively.

A fourth is mechanically completed at Mundra. It is owned by Gujarat State Petroleum and the Adani Group, though has yet to be fully commissioned.

H-Energy also recently signed a cooperation accord with Russian company Novatek, operator of the Yamal LNG plant in Siberia and developer of the Arctic LNG II project.

Novatek said the memorandum of understanding envisaged cooperation in LNG supplies to India on a long-term basis, joint investment in future LNG terminals of H-Energy and in Russian LNG projects.

The Hiranandani conglomerate and Novatek said they also planned to establish a joint venture to market LNG and natural gas to end-customers in India, Bangladesh and other markets.