Page 7 - GLNG Week 41

GLNG COMMENTARY GLNG
for blocks in underexplored basins in February. Under the new terms, blocks will be awarded based on bidders’ exploration commitments rather than how much oil and gas is offered the government. The new policy also introduces shorter exploration periods, concessionary royalty rates as well as an alternative dispute resolution mechanism. The final date for bids is October 31.
Securing a partnership with the US super-major is something of a coup for ONGC, which has limited experience in deepwater exploration. The company has committed to prioritising difficult developments in its “Energy Strategy 2040”, which envisages the completion of 27 projects over the next four years to the tune of $12.25bn.
While ExxonMobil has agreed to study ONGC’s exploration assets in search of joint development opportunities, the US super-ma- jor is also looking to tap into growing domestic demand for natural gas and expand its mid- stream presence.
What next?
ExxonMobil unit ExxonMobil India LNG has also signed an MoU with state-run Indian Oil Corp. (IOC) to expand its LNG business in the country. The US giant said the two companies would focus on exploring natural gas supply models that “complement” the country’s tradi- tional pipeline network.
“It is a non-binding agreement. It is a tech- nical tie-up. The MoU provides a framework to enable future tie-ups between the two com- panies,” Reuters quoted an unnamed source as saying.
India’s demand for gas is being propelled by a government initiative to increase consump- tion from around 6.5% of the primary energy mix at present to 15% by 2030. Consumption peaked at 60.3bn cubic metres in 2011, accord- ing to BP’s Statistical Review of World Energy
2019, before falling on the back of shrinking domestic production. However, an expansion in LNG import capacity allowed gas use to grow to 58.1 bcm in 2018, even as production slid to 27.5 bcm.
Energy consultancy Wood Mackenzie has forecast that LNG demand will double from some 37 bcm in 2018 to 75 bcm by 2030. This anticipated explosion in demand has also encouraged French major Total to expand its presence in the country’s gas market.
Total has agreed to buy a 37.4% stake in Adani Group’s city gas retailer, Adani Gas, for an undisclosed sum – though some estimates have pegged the value of the stake at around $800mn. Total will look to buy up to 25.2% from public shareholders, with the remainder to come from the founding Adani family. Once the deal is closed, both Total and the family will own 37.4% of the retailer.
Total said it would bring its “LNG and retail expertise” to the partnership and would supply Adani Gas with LNG. Total and Adani will also establish a joint venture to market LNG in India and Bangladesh. The deal comes after the two agreed in October 2018 to develop multi-en- ergy offerings, including the development of the 5mn tonne per year (tpy) Dhamra LNG import terminal.
India’s growing energy needs coupled with efforts to overhaul the upstream sector make it an attractive investment target for international majors seeking new growth opportunities. The country’s midstream and downstream have already proved attractive to foreign investors, with the upstream representing a greater risk. ExxonMobil’s decision to review ONGC’s assets and consider joint development opportunities suggests that New Delhi’s efforts to improve its upstream offerings is finally paying off. Should the ExxonMobil-ONGC partnership prove suc- cessful, it could help lead to a rush of further such partnerships in the future.™
Total and Adani will also establish a joint venture to market LNG in India and Bangladesh.
An expansion in LNG import capacity allowed India’s gas use to grow to 58.1 bcm in 2018, even as production slid to 27.5 bcm.
Week 41 17•October•2019 w w w . N E W S B A S E . c o m
P7