Page 5 - AsianOil Week 08

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Oil’s slump has spurred OPEC’s biggest exporter, Saudi Arabia, to press fellow members and allies to hold an emergency meeting and consider new output cutbacks. Yet the proposal has so far met resistance from Russia, the group’s most important ally, which is able to weather lower prices more easily.
The report showed that, even though many OPEC members made a strong start with fresh output curbs that took effect last month, the virus’ impact on consumption will leave them with a new overhang.
The group collectively pumped 28.86mn bpd in January, and if it maintains that rate there will be a surplus of 570,000 bpd during the second quarter, when consumption slows down season- ally. The monthly report is compiled by OPEC’s Vienna-based research department.
OPEC does not see the effects of the disease confined to the start of the year, bringing down its growth estimate for global oil demand in 2020 as a whole by about 230,000 bpd to just under 1mn. Still, the increase remains slightly higher than last year’s actual figure.
Though crude futures have recovered on speculation that the spread of the disease could be nearing its peak, prices of about $55 a barrel in
London remain well below the levels most OPEC members need to cover government spending.
Since the producer group formed an alliance with non-members such as Russia three years ago, the coalition has restrained supplies to offset a surge of production from the US shale indus- try, and keep prices supported. They embarked on a new round of cutbacks in January.
Last week, a committee of technical experts from the alliance, known as OPEC+, recom- mended reducing output by a further 600,000 bpd to offset the impact of the coronavirus. Sen- ior members of the cartel feeling the pinch and the lack of a response from Russia have brought about the potential cut of 300,000 bpd that is reportedly now on the table.
Meanwhile, developments continue in the wider world. South Korea is now on “high alert” for the disease; significant outbreaks have occurred in Italy and Iran, with Turkey closing its border with the latter, and China, at the epi- centre of the virus, has reported 76,936 cases and 2,442 deaths; Premier Xi has stated that the epi- demic is still “serious and complex and a major publichealthemergency”.Itisbynomeansclear where this will strike next and how deep and long-lasting its outcome will be.™
SOUTH ASIA
ONGC seeks Tapti exploration licence
PROJECTS & COMPANIES
INDIA’S state-run Oil and Natural Gas Corp. (ONGC) has reportedly applied for a 10-year exploration licence to the depleted Tapti natural gas field.
Output from Tapti, which was operated by the Panna, Mukta and Tapti (PMT) joint ven- ture, began to decline in 2008 and production ended in March 2016. The central government handed over the field’s facilities to ONGC for use in the company’s adjacent Daman and C-26 clus- ter projects that year.
ONGC, Reliance Industries Ltd (RIL) and Royal Dutch Shell were partners in the ven- ture. The private companies handed control of the Panna and Mukta to the state developer on December 21.
ONGC now plans to revive production at Tapti, the Business Standard reported on Feb- ruary 25, citing unnamed sources close to the matter. ONGC is understood to have applied to the Ministry of Petroleum and Natural Gas as well as the Directorate General of Hydrocarbons (DGH) for the licence.
“At present, production from this region is 11,000 barrels a day of crude oil and some small quantity of natural gas
too,” the paper quoted an unnamed ONGC official as saying.
Shell said in December 2018 that Tapti’s decommissioning had already begun and was expected to be complete in 2020. Shell Com- panies in India chairman Nitin Prasad told reporters at the time that the company had signed an agreement paving the way for the decommissioning.
He said: “We now have India’s first offshore decommissioning of Tapti fields and we will begin that work. We have already been doing the first couple of plugging wells and other works. We have already transferred some of the assets over to ONGC, but now we will begin the real decommissioning works.”
ONGC is also reportedly optimising its oil transportation operations at the Pan- na-Mukta fields, with PTI quoting unnamed sources on January 1 as saying the company had changed contracts covering the ship- ment of the field’s crude to onshore process- ing facilities and reducing costs by $5,000 per day. PTI said the developer was also con- sidering the construction of subsea pipeline to replace the use of ships.™
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