Natural Gas : February, 2014

Natural Gas : February, 2014  :

NATURAL GAS:

INFORMATION AND UPDATES

Alaya Legal announces its fourth issue of Natural Gas: Information and Updates. This issue covers developments in ‘low concentration’ areas and major developments in all other areas. Developments in the Republic of India are covered separately.

Low Concentration Areas are Papua New Guinea,
Bangladesh, Germany, Poland, Cameroon, Mozambique, Colombia, Philippines, Chile, Bahrain, Republic of the Congo, Sudan, Cuba, Italy, Tunisia, Namibia, Denmark, Rwanda, South Korea, Afghanistan, Serbia, Equatorial Guinea, New Zealand, Croatia, Cote d’Ivoire, Mauritania, Gabon, Ethiopia, Austria, Ghana,
Japan, Ireland, Georgia, Hungary, Ecuador, France, Tanzania, Taiwan, Turkey, Jordan, Bulgaria, Tajikistan, Somalia, Kyrgyzstan, Czech Republic, Guatemala, Belarus, Spain, Morocco, Benin, Democratic Republic of the Congo, Greece, Albania, South Africa, Barbados, Macau.

GLOBAL SCENARIO

Statistics

Papua New Guinea:
It has 5.48 trillion cubic feet natural gas proved reserves.

Bangladesh:
It has 6.49 trillion cubic feet natural gas proved reserves. Bangladesh is the seventh largest natural gas producer in Asia. The country produced 710 billion cubic feet in 2011, all of which was domestically consumed. Natural gas production in Bangladesh has increased by an annual average of 7 percent over the past decade, from 2002 to 2011.

Germany:
It has 6.20 trillion cubic feet natural gas proved reserves. Germany has no LNG terminals, so it must import natural gas exclusively through several major cross-border pipeline networks. Almost all natural gas imports come from Russia via the Nord Stream system, Norway via Norpipe and Europipe systems, and the Netherlands via four main pipelines.

Poland:
Poland has 3.36 trillion cubic feet natural gas proved reserves. Poland produces very small quantities of natural gas and it is a net natural gas importer. The country contains shale resources, but resource estimates have recently been revised downward following unsatisfactory exploration results. In 2012, Poland’s total primary energy consumption was 3.9 quadrillion Btu. Poland imports natural gas primarily from Russia, Norway, and Germany.

Cameroon:
It has 4.77 trillion cubic feet natural gas proved reserves.
Mozambique:
Mozambique holds 4.5 trillion cubic feet of proven natural gas reserves. The country has large onshore and offshore sedimentary basins that contain natural gas resources, but much of it is unexploited. Mozambique is one of the two countries (including Tanzania) that produces natural gas in East Africa.

Columbia:
According to the Agencia Nacional De Hidrocarburos (ANH), Colombia had proven natural gas reserves of more than 5.7 trillion cubic feet as of December 31, 2012. The bulk of Colombia’s natural gas reserves are located in the Llanos basin, although the Guajira basin accounts for the majority of current production.

Chile:
It has 4.77 trillion cubic feet natural gas proved reserves.

Most of Chile’s natural gas imports arrive as LNG from Equatorial Guinea, Trinidad and Tobago, Qatar, and Yemen. Chile has two regasification terminals: Mejillones, in the north, and Quintero, near the large urban centers of Valparaíso and Santiago. Chile also imports natural gas from Argentina by various pipelines that were constructed in the late 1990s.

Philippines:
It has 3.48 trillion cubic feet natural gas proved reserves.

Bahrain:
Country is a small producer of natural gas, and produced 446 billion cubic feet of dry natural gas in 2011. In order to meet future natural gas needs, Bahrain plans to import gas from a number of sources, either via pipeline from Qatar or via imports of LNG following the awarding of a contract to construct a new LNG terminal.

Sudan:
It has 3 trillion cubic feet natural gas proved reserves. Most of Sudan’s and South Sudan’s proved reserves of crude oil and natural gas are located in the Muglad and Melut basins, which extend into both countries. Natural gas associated with oil fields is flared or re-injected. Both countries currently do not produce or consume marketed natural gas. Italy:
Italy has the sixth-largest proved natural gas reserves in Europe with 2.3 trillion cubic feet, as of January 1, 2013. Natural gas imports were around 2.4 trillion cubic feet in 2012, while dry natural gas production that same year totalled 304 billion cubic feet. The majority of Italy’s natural gas imports come from Algeria and Russia.

Tunisia:
The Trans-Mediterranean Pipeline, which transports natural gas from Algeria to Italy, passes through Tunisia. In lieu of transit fees, Tunisia receives natural gas as a royalty. Tunisia is a relatively small hydrocarbon producer. Tunisia produced 68 billion cubic feet of dry natural gas in 2011.

Cuba:
It has 2 trillion cubic feet natural gas proved reserves.

Denmark:
It has 1.52 trillion cubic feet natural gas proved reserves.

Namibia:
It has 2.20 trillion cubic feet natural gas proved reserves.

Rwanda:
It has 2 trillion cubic feet natural gas proved reserves.

New Zealand:
It holds 1.04 trillion cubic feet natural gas proved reserves. Croatia:
It holds 0.88 trillion cubic feet natural gas proved reserves.

Cote:
It holds 1 trillion cubic feet natural gas proved reserves.

Ethiopia:
It holds 0.88 trillion cubic feet natural gas proved reserves.

Austria:
It holds 0.57 trillion cubic feet natural gas proved reserves.

Ghana:
Ghana has about 800 billion cubic feet of proved natural gas reserves, although the country does not currently produce dry natural gas. Ghana plans to build a natural gas pipeline to pipe associated gas at oil fields, which is currently flared and reinjected. Ghana imported 29 billion cubic feet of natural gas in 2011, mostly from Nigeria. Some of those imports came via the West African Gas Pipeline, which runs east to west from Nigeria to Ghana.

Japan:
Japan is the world’s largest LNG importer. Japan’s limited hydrocarbon reserves and its need to secure energy imports are the incentives the government uses to support upstream Japanese companies in their quest to purchase overseas oil and natural gas equity. Japan consumed about 37% of global LNG in 2012, as the Fukushima disaster spurred greater demand for LNG in the power sector since 2011. A third of the country’s LNG imports are from Southeast Asia, but Japan has a diverse portfolio of supply sources.

Mauritania:
It holds 1 trillion cubic feet natural gas proved reserves.

Gabon:
It holds 1 trillion cubic feet natural gas proved reserves.

Ireland:
It holds 0.35 trillion cubic feet natural gas proved reserves.

Georgia:
It holds 0.30 trillion cubic feet natural gas proved reserves.

Hungary:
It holds 0.28 trillion cubic feet natural gas proved reserves.

Ecuador:
Ecuador has relatively small proven natural gas reserves and a limited natural gas market. It holds 0.28 trillion cubic feet natural gas proved reserves.

France:
It holds 0.38 trillion cubic feet natural gas proved reserves.

Taiwan:
It holds 0.22 trillion cubic feet natural gas proved reserves.

Turkey:
Turkey holds a strategic role in natural gas—between the world’s second largest natural gas market, continental Europe, and the substantial gas reserves of the Caspian Basin and the Middle East. Turkey is increasingly dependent on natural gas imports as its domestic consumption rises each year. Natural gas is used domestically mainly in the electric power sector. It holds 0.22 trillion cubic feet natural gas proved reserves. Jordan:
It holds 0.21 trillion cubic feet natural gas proved reserves.

Serbia:
It has 1.70 trillion cubic feet natural gas proved reserves.

Equatorial Guinea:
Proved natural gas reserves were 1.3 trillion cubic feet as of January 2013, the tenth-largest in the region. Much of these reserves are located offshore near the Bioko Island.

South Korea:
South Korea is the second-largest importer of LNG in the world behind Japan. South Korea relies on imports to satisfy nearly all of its natural gas consumption, which has approximately doubled over the previous decade.

Afghanistan:
It has 1.75 trillion cubic feet natural gas proved reserves.

Market Updates – Global

Hammerfest LNG plant opened
January 08, 2014 Statoil resumed the production at Hammerfest LNG plant in the Barents Sea. The plant was shut down after a gas leak.

Gas from Azerbaijan: European Commission welcomes final investment decision to extract gas pledged for Europe:
December 17, 2013 The European Commission welcomed final investment decision on extracting gas from the Shah Deniz II gas field in Azerbaijan. It is confirmed that Europe will get 10 billion cubics metres per year starting from end 2019.
Chevron Confirms First Oil Production from Papa-Terra Offshore Brazil
November 12, 2013
Chevron Corporation confirmed that its Brazilian subsidiary and Petrobras have started crude oil production from Papa-Terra’s floating production, storage and offloading vessel offshore Brazil.

Chevron Establishes Recoverable Resource in the Duvernay Shale Play
October 25, 2013
Chevron Corporation announced the successful conclusion of the initial exploration phase by its Canadian subsidiary, Chevron Canada Limited, in the Kaybob area of the Duvernay play, located in west-central Alberta, Canada. Chevron Canada Limited successfully concluded the initial twelve well exploration drilling program in the liquids-rich portion of the Duvernay shale play. Five wells have been completed and are tied into production facilities, and an additional four wells are waiting on completion and tie-in. The company’s acreage is well positioned in the condensate-rich and volatile-oil portion of the play. Liquids yield for the completed wells range from 30 to 70 percent with initial production rates up

to 7.5 million cubic feet of natural gas per day and 1,300 barrels of condensate per day.

Chevron Acquires New Acreage Offshore Australia
October 22, 2013
Chevron Corporation announced its Australian subsidiary has acquired exploration interests in two offshore blocks located in the Bight Basin, a deepwater frontier basin. Blocks S12-2 and S12-3, which span more than 8 million acres (32,375 square kilometers), are located approximately 275 miles (443 kilometers) west of Port Lincoln off the South Australia coast. Chevron Australia is the operator with a 100 percent interest.

Alaska LNG Project Selects Lead Terminal Location
October 7, 2013
ExxonMobil, British Petroleum (BP), ConocoPhillips and TransCanada have selected a
site in the Nikiski area on the Kenai Peninsula as the lead site for the proposed Alaska LNG project’s natural gas liquefaction plant and terminal. More than 20 locations were evaluated based on conditions related to the environment, socioeconomics, cost, and other project and technical issues.

Chevron and Tohoku Electric Sign Wheatstone LNG Agreement
October 1, 2013
Chevron Corporation announced that its Australian subsidiaries have signed binding long-term Sales and Purchase Agreements with Tohoku Electric Power Company, Inc. to supply LNG from the Chevron-operated Heatstone Project in Western Australia.

Market Update- Republic Of India

Oil India Limited completes transaction for acquisition of interest in Rovuma Area 1 Offshore Block in
Mozambique
January 07, 2014
Oil India Limited along with ONGC Videsh Limited (OVL), has completed the acquisition of 100% shares in Videocon Mozambique Rovuma 1 Limited from Videocon Mauritius Energy Limited. Videocon Mozambique Rovuma 1 Limited holds a 10% participating interest in the Rovuma Area 1 Offshore Block in Mozambique. Area 1 has the potential to become one of the world’s largest LNG producing hubs with first LNG expected in 2018.

OVL, Cairn to jointly bid for Sri Lankan oil, gas blocks
November 6, 2013

OVL and Cairn India Limited are likely to bid jointly for oil and gas blocks in Sri Lanka Sri Lanka is offering 13 offshore exploration blocks in the Cauvery and Mannar basins, located to the North and West of the island nation.

Government to go easy on enforcing ‘rigid’ oil & gas contracts
November 6, 2013

The Government plans to form an empowered group under the oil minister to grant “operational flexibility” in enforcing contracts, and help explorers start producing oil and gas from over 70 discoveries that are mired in contractual disputes. The production sharing contract between the Government and the explorer has rigid timelines for each stage of exploration.

Videocon strikes gas in Brazilian offshore block
November 5, 2013,
Videocon Industries drilled the Wahoo-5 appraisal well at (block) BM-C-30 and encountered more than 200 net feet of high-quality pay in a pre-salt reservoir, with a total hydrocarbon column now established at 460 feet. Anadarko holds 30 per cent interest and is the operator of BM-C-30. Bharat Petroleum holds 25 percent stake and Maersk 20 percent interest. A joint venture of Videocon and Bharat Petroleum holds the remaining 25 percent.

Reliance refuses to sign Oil Ministry resolution
November 4, 2013
Reliance Industries has refused to sign an Oil Ministry-sponsored resolution rejecting a revised investment plan for the main gas fields in the KG-D6 block, saying it does not reflect deliberations on the issue.
India seeks sovereign payment guarantee from Pakistan ahead of gas deal
November 4, 2013
India has sought from Pakistan sovereign payment guarantees before it can sign a contract to export natural gas through a pipeline from Punjab. Gas Authority of India Limited (GAIL) plans to initially supply five million standard cubic meters per day of gas to Pakistan through a 110-km pipeline from Jalandhar to international border near Atari. But before GAIL enters into a gas supply contract with a Pakistani firm, New Delhi wants Pakistan to provide payment guarantees.

ONGC asked to pay record Rs 13,796 crore subsidy for Q2
November 1, 2013,
The Oil Ministry on October 31 issued orders asking upstream oil and gas producers Oil & Natural Gas Corporation (ONGC) and Oil India Limited (OIL) to give Rs 16,729.74 crore to make up for 47 per cent of the Rs 35,328 crore revenue that retailers lost on selling diesel, domestic LPG and kerosene at government controlled rates in second quarter.

Govt notice to RIL: Five KG-D6 discoveries are deemed
relinquished says Oil
Secretary October 30, 2013 The government formally informed Reliance Industries Limited (RIL) that five of its controversial discoveries worth $6.76 billion in the KG-DC block are deemed relinquished.

Cairn to ramp up Indian hydrocarbon production
October 30, 2013
Cairn India Limited will ramp up its gross production from Indian hydrocarbon concessions to 225,000 barrels per day in the current fiscal year.

Reliance Industries topples ONGC to become top-ranked Indian energy firm
October 29, 2013
Reliance Industries have become the top Indian firm in a global ranking of energy companies. ONGC held on its 22 nd ranking, the position it had in 2012, while RIL improved from last time’s 27 th rank. The 2013 list is topped by Exxon Mobil Corporation, with Chevron Corporation in second place.

GAIL to charter LNG ships for transporting natural gas from US
October 29, 2013
GAIL will be chartering six to seven LNG ships for transporting its natural gas cargoes from the US from 2017. The ships would be for transporting six million tonnes of GAIL’s contracted LNG cargoes, which are on free-on-board (FoB) basis.

Double penalty on RIL to impact investment climate: Plan Panel
October 27, 2013

The Planning Commission has warned that imposing a second penalty on Reliance Industries for producing less-than-projected natural gas from its KG-D6 fields could impact investment climate in the same manner as retrospective tax amendments.

Petronet hires fourth LNG tanker from SCI-Japanese consortia
October 27, 2013,
Petronet LNG, the nation’s largest LNG importer, will hire a fourth LNG ship from a consortium of state-owned Shipping Corporation of India and Japanese lines.

GAIL sells part of stake in China Gas Holdings for Rs 385 crore
October 25, 2013
GAIL has sold more than a fourth of its 4.6 per cent stake in Hong Kong-listed city gas distribution firm China Gas Holdings for INR 385 crore. GAIL, which made a strategic investment of INR 137 crore by acquiring 210 million shares of China Gas in 2005, has sold 60 million shares.
Assam government clears ONGC’s INR 7,800-crore investment plan
October 26, 2013
The Assam government has agreed to grant forest clearances that were holding up a major investment by state-run oil explorer ONGC as a measure to revive the hydrocarbons industry in the state.

Essar Oil questions Rajasthan government’s rebates to HPCL
October 26, 2013
Essar Oil, which lost its case for tax concessions for its Vadinar refinery, has questioned the Rajasthan government’s move to give a generous deal to State-run HPCL’s proposed refining unit in Barmer.

CBI reopening corruption case against DGH on KG-D6
October 25, 2013
The CBI is reopening an old case involving alleged malpractices by the directorate general of hydrocarbons handling of issues related to the KG-D6 block of Reliance Industries.

ONGC writes to Directorate General of Hydrocarbons (DGH) about possibility of RIL drawing gas from blocks
allocated to it
October 24, 2013
ONGC has asked the Government for data from Reliance Industries’ KG-D6 block as it apprehends that RIL may be drawing gas from a reservoir connected to the gas reserve in the adjoining block operated by the State firm.

Cairn India seeks partner to hunt for shale resources in Rajasthan block
October 24, 2013
Cairn India is keen to partner global leaders to hunt for shale resources in its prolific
Rajasthan block and wants a policy regime to allow companies to produce hydrocarbons irrespective of whether they are contained in a conventional field or a new source.

GAIL to develop natural gas footprint in Bihar
October 23, 2013
In order to expand its natural gas footprint in eastern India, GAIL signed a Gas Cooperation Agreement (GCA) for Natural Gas Infrastructure and City Gas Distribution with the Department of Industries, Government of Bihar.

Government may exempt GAIL from sharing subsidy burden
October 23, 2013
The Oil Ministry has decided to exempt GAIL India from paying any compensation to state fuel retailers for selling diesel, kerosene and cooking gas below market rates because it does not make windfall profits when international crude oil and gas prices soar.

OVL pulls out of Brazilian oilfield auction
October 22, 2013
OVL pulled out of an auction of $ 184 billion oilfield in Brazil after it could not stitch an alliance to bid for the giant project. OVL was among the 11 companies shortlisted to bid for Brazil’s Libra pre-salt block, one of the world’s largest offshore oil discoveries. The offshore area holds between 8 billion and 12 billion barrels of recoverable oil, according to Brazil’s oil regulator and Dallas-based oil certification company Degolyer & MacNaughton (D&G).

ONGC interested in Russia’s Arctic offshore
October 21, 2013

ONGC is interested in exploring oil and gas in the Arctic offshore with Russian partners. There is possibility of pumping Russian oil and gas by pipeline to India. ONGC’s overseas arm is a partner in the Sakhalin-1 oil and gas project, which is operated by a unit of Exxon Mobil. State oil major Rosneft, another Sakhalin-1 partner, is lobbying

for the right to export LNG to Asia-Pacific Rosneft and Exxon have announced plans to build a $15 billion LNG plant to process Sakhalin-1 gas, to be launched in 2018 with an initial capacity of 5 million tonnes per year.

New Gas Findings

Statoil makes another natural gas find offshore Tanzania
December 6, 2013
Statoil ASA and ExxonMobil Corporation have made their fifth natural gas discovery on Block 2 offshore Tanzania

amounting to an additional 2-3 trillion cubic feet. The discovery was made with the Mronge-1 well, drilled by the Discoverer. Noble makes gas discovery offshore Israel
December 4, 2013
Noble Energy Inc. has made a natural gas discovery with its Tamar Southwest exploration well offshore Israel.

Legal Developments

Chevron Corporation asked the Constitutional Court of Ecuador to revoke the fraudulent Lago Agrio judgment
December 23, 2013
Chevron Corporation asked the Constitutional Court of Ecuador to revoke the fraudulent Lago Agrio judgment for $ 9,500 million against the company due to multiple violations of constitutional guarantees.

KG basin dispute: Supreme Court reserves order on arbitrator appointment
January 08, 2014
The Supreme Court reserved order on the issue of appointing arbitrator for adjudication of dispute between Reliance Industries Limited and the Government over recovery of cost for developing the country’s key natural gas field in KG basin.

GMR Energy Limited v. RGTIL: Order dated
November 18, 2013
The Petroleum and Natural Gas Regulatory Board (PNGRB) vide order dated 10.1.2013 and 29.4.2013 had directed the Reliance Gas Transportation Infrastructure Limited (RGTIL), which is operating a common carrier pipeline, to provide open access to the GMR Energy Limited for transportation of natural gas but the RGTIL expressed its inability to transport gas. The PNGRB had directed RGTIL to ensure within 40 days that GMR Energy got access to its pipeline for transportation of natural gas from west coast to its power plant in Andhra Pradesh. The PNGRB order had allowed swapping of gas supply between the Kakinada based RGTIL plant and the west coast-based GMR plants.

High Court stays PNGRB’s Order against RGTIL
January 23, 2014
The Delhi High court issued a stay on an order issued in November 2013 by the Petroleum and Natural Gas Regulation Board for “virtual transport” of LNG from the west coast to east coast in a swapping transaction between Reliance Gas Transportation Infrastructure Limited (RGTIL) and GMR Energy Limited.

Oil regulator’s approval not needed for setting up CNG selling stations – Petroleum Ministry
December 9, 2013
The Petroleum Ministry has announced that the oil regulator’s approval is not needed for setting up CNG selling stations and companies were free to set up CNG pumps across cities.

Provide CNG to Gujarat at Delhi, Mumbai rates, HC tells Centre
October 25, 2013,
Gujarat High Court directed the Central Government to comply with its order to provide CNG to Gujarat at the same price as Delhi and Mumbai under the ‘Administered Price Mechanism’.
The Centre had failed to implement Court’s order of July 25, 2012. The Centre had earlier sought 16 weeks’ time to frame national guidelines to comply with the Apex court’s directions last month which upheld the Gujarat High Court’s order.

Sources

Norwegian Petroleum Directorate

U.S Energy Information Administration

The International Energy Agency

Economic Times

Natural Gas Asia and Europe

The Philadelphia Zoo uses natural gas to cool a greenhouse that simulates Guam’s tropical forest environment and creates a breeding facility for the rare Micronesian kingfisher — one of the most endangered species in the world.

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