Friday, 17 January, 2020

Natural Gas Prices: $

International News
1. Jordan gets first natural gas supplies from Israel

 Under the agreement, the U.S.-Israeli consortium will supply Jordan gas for 15 years
from the field in the Mediterranean.
 Texas-based Noble Energy has begun pumping the first supplies of Israeli gas
to Jordan, Jordan's National Electricity Company (NEPCO)
 The supplies, from Israel's largest offshore natural gas field Leviathan have begun for
an experimental three-month period, according to the terms of a $10 billion deal
NEPCO struck with Noble Energy Inc in 2016, the state-owned power utility said in a
statement.
 Under the agreement, the U.S.-Israeli consortium will supply Jordan gas for 15 years
from the field in the Mediterranean.
 The deal has faced opposition in Jordan where many view Israel as an erstwhile enemy.
Activists and parliamentarians have lobbied the government for years with little success
of scrapping the purchase.
Source: https://energy.economictimes.indiatimes.com/news/oil-and-gas/jordan-gets-first-
natural-gas-supplies-from-israel/73063644

2. Iran Wants to Start Oil & Gas Production in this Disputed Hotspot

 Given the array of sweetener deals in the oil and gas sector promised to Russia by Iran
in the past year or so – suspended until public outcry over these bargain-basement
giveaways has died down – Tehran is now sufficiently confident in its implicit support
from Russia that it is going ahead with fully developing a long-disputed area of the
massive Caspian Sea oil and gas reservoir.
 The wider Caspian basins area, including both onshore and offshore fields, is
conservatively estimated to have around 48 billion barrels of oil and 292 trillion cubic
feet (Tcf) of natural gas in proved and probable reserves, on the basis of field-level data.
 The area accounts for an average of 17% of the total oil production of the five littoral
states that share its resources, on average totalling 2.5-2.9 million barrels per day
(mbpd).
 Given that Russia’s share from the Caspian whole is greater, and that its influence over
the other Caspian littoral states is even more evident to each of them than before, it is
all in favour of Iran fully developing the Sardar-e-Jangal field.
 Source: https://oilprice.com/Geopolitics/Asia/Iran-Wants-To-Start-Oil-Gas-Production-In-
This-Disputed-Hotspot.html

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 Friday, 17 January, 2020

3. Venezuela Is Quietly Ramping Up Oil Production

 Bouncing back from a string of blackouts, outages and fires, PDVSA managed to bring
back its oil output to levels unseen since February-March 2019 (i.e. the December
average stands so far at 0.91mbpd).
 This move corresponds with China’s return to official dealings with PDVSA or the
intermediary Rosneft, without resorting to the exotic practice of new Malaysian blends.
 In the meantime, PDVSA still faces an upward battle to keep the company afloat – one
need not look any further than the NOC’s desolate downstream segment, completely
irresponsive to the relative rebound in Venezuela’s economic stature.
 Source: https://oilprice.com/Energy/Energy-General/Venezuela-Is-Quietly-Ramping-Up-Oil-
Production.html.

4. Russia-Ukraine Finalize Key Gas Deal

 Gazprom and Ukraine’s Naftogaz finally reached a deal on the transit of Russian natural
gas through Ukraine to Europe.
 There was concern in Europe that the two may fail to reach an agreement that would
affect Russian gas deliveries to Europe given the tense political relations—and legal
disputes—between the neighbors but, once again, pragmatism seems to have prevailed.
 The good news for Ukraine, for whom gas transit fees are vitally important, is that the
agreement includes stipulations about guaranteed volumes of gas that Gazprom will
send across Ukraine. These are 65 billion cubic meters for 2020, falling to 40 billion
cubic meters for the period between 2021 and 2024.
 The good news for Gazprom is that Naftogaz will waive its claims to the 2009 contract
between the companies as would Gazprom itself. The waivers might finally put an end
to the legal saga that has been dragging for years. During these years, Naftogaz accused
Gazprom of failing to supply the agreed volumes of gas while Gazprom accused
Naftogaz of not paying for all the gas it received.
 According to Reuters, Gazprom has a 36-percent share of the European natural gas
market, with European exports outside the former Soviet Union averaging 200 billion
cubic meters. Of this, 86.8 billion cubic meters were transited through Ukraine last year.
Source: https://oilprice.com/Latest-Energy-News/World-News/Russia-Ukraine-Finalize-Key-
Gas-Deal.html

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 Friday, 17 January, 2020

National News
1. Should India start worrying about oil prices?

 The day on which the hike in train fares came into effect, state-owned fuel retailers
announced a 2.6% increase in the price of aviation turbine fuel (ATF) used to power
planes.
 Two back-to-back monthly increases have pushed prices to their highest since June
2019 and may force already cash strapped airlines to hike fares.
 The price of non-subsidised cooking gas LPG has also gone up by Rs 19 per cylinder,
the fifth straight monthly increase since September.
 The price at which the Indian refiners buy their crude oil has risen in the last couple of
months — from $59.70 a barrel in October, to $62.54 in November and breaching the
$65 mark in December.
 India imports nearly 84% of its oil needs. Low oil prices bring down our import bill
which is good news for current account deficit
 Low oil price also means lower pressure on the rupee as we need fewer dollars to buy
oil. Centre spends less on subsidising fuel and LPG prices and oil companies can cut
petrol and diesel prices and help bring down inflation
 The lower risk of inflation means increased room for RBI to cut interest rates. Having
to allocate less money to oil means higher public resources for other welfare projects
and schemes. A sharp decline in oil prices within months of Narendra Modi taking over
as prime minister in 2014 had helped the government rein in inflation, mop up resources
by raising fuel tax and splurge money on big-ticket social sector schemes. Oil prices
fell from $114.81 on June 20, 2014 to $48.79 per barrel on January 23, 2015.
Source: https://energy.economictimes.indiatimes.com/news/oil-and-gas/should-india-
start-worrying-about-oil-prices/73063707

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 Friday, 17 January, 2020

CGD News
1. Oil ministry wants cut in GST on CNG vehicles to 5 per cent

 The ministry is seeking support from the finance ministry to cut GST rate on CNG
vehicles to make them more affordable, people aware of the development told ET.
 The oil ministry has proposed reducing the goods and services tax on compressed
natural gas (CNG)-driven vehicles to 5 per cent — at par with electric vehicles — from
the current 28 per cent to help the government’s drive to popularise gas vehicles.
 Natural gas emits 25 per cent less Co2 than petrol on every unit of energy produced.
 The government aims to raise the share of natural gas in country’s primary energy mix
to 15 per cent by 2030 from 6 per cent now.