Page 9 - AsianOil Week 06

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SOUTH ASIA
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HPCL, meanwhile, is investing INR262.64bn ($3.69bn) in overhauling and modernising its currently 8.3mn tpy (166,000 barrel per day) Visakh refinery. The company intends to expand the facility’s refining capacity to more than 15mn tpy (300,000 bpd) while also boosting produc- tion capacity of low-sulphur fuels.
The state company’s investment in Andhra Pradesh is part of a wider push by the gov- ernment to develop the entire value chain of the country’s energy industry. The country’s state-run oil and gas companies have pledged
to invest more than INR985.21bn ($13.83bn) in financial year 2020-21 in upstream, mid- stream and downstream projects, according to the Union Budget 2020. The figure is around 4% higher than INR949.74bn ($13.33bn) the same companies are projected to invest in 2019-2020.
ONGC is planning to expand its investment by 19% year on year to INR325.01bn ($4.56bn) in the coming financial year. HPCL, mean- while, intends to keep investment steady y/y at INR115bn ($1.61bn).™
Tellurian, Petronet reportedly ready to sign deal
PROJECTS & COMPANIES
THE US’ Tellurian and India’s Petronet LNG, the country’s leading gas importer, are report- edly preparing to sign a $2.5bn liquefied nat- ural gas (LNG) deal later this month. Citing two sources familiar with the matter, Reuters reported that the deal was due to be signed during US President Donald Trump’s upcom- ing visit to India.
Tellurian is proposing to build the proposed 27.6mn tonne per year (tpy) Driftwood LNG terminal in Louisiana, on the US Gulf Coast, at an estimated cost of $27.5bn. The company has taken a different approach from some of its com- petitors to obtaining the financing necessary to proceed with Driftwood, and is offering equity participation in the project in addition to offtake agreements. This is the route its deal with Petr- onet will take, and it follows on from a non-bind- ing memorandum of understanding (MoU) that the two companies signed in September 2019, during Indian Prime Minister Narendra Modi’s visit to the US.
Under the MoU, the companies agreed on a preliminary basis that Petronet would pay $2.5bn for an 18% equity stake in Driftwood – including the terminal and the pipeline that will supply it. This level of equity would make it the largest outside participant in the project so far. Under the MoU, Petronet will also have the rights to negotiate the purchase of 5mn tpy of LNG from Driftwood. Tellurian’s CEO, Meg Gentle, said in September that the MoU also included a $5bn debt commitment.
“We will sign the document sometime in the first quarter and we will have financing ready to close simultaneously, and then we will begin construction,” Gentle told Bloomberg in September. “India is one of the fastest growth markets for LNG and should soon become the second-largest LNG importer.”
The deal is the largest agreed by an Indian company in the US LNG space, and comes as the
Asian country is seeking to diversify its supply sources and bolster energy security.
Petronet’s investment into Driftwood is expected to be made over a five-year period, with supplies beginning in 2024. They will be gradu- ally ramped up to 5mn tpy by 2028, according to one of the Reuters sources.
The source added that the delivered price of gas to India would be below $6 per million British thermal units ($165.96 per 1,000 cubic metres). This would be around 30% cheaper than the LNG India receives under its existing long- term deal with Qatar.
“India will be getting the producer-based prices, unlike other deals where Indian compa- nies are only one of the customers,” the source told Reuters.
It is notable that the news that Petronet and Tellurian are on the verge of signing a definitive agreement comes after Qatar turned down India’s request to renego- tiate the terms of their LNG deal. India had been seeking more favourable pric- ing given the collapse in prices for LNG, which has made buying on the spot market a more attractive proposition. However, Qatari Minister of Energy Saad Sherida al-Kaabi said his country would not rene- gotiate any existing contracts, though it was open to offering new volumes.
India’s existing contract with Qatar runs until 2028, and LNG from the Middle East- ern country accounts for about 40% of overall Indian gas imports currently. However, India is aiming to increase the share of natural gas in its energy mix to 15% by 2030 from 6.5% today and will be seeking more LNG supplies in an effort to achieve this. Unless Qatar offers any new volumes at a lower price, it will be unsurprising if India looks elsewhere. Petr- onet’s upcoming deal with Tellurian appears to be an illustration of this.™
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