China aims to attract shale gas investment

Spanish Market: Natural gas
11/12/20

The Chinese government is subsidising costs and relaxing regulations surrounding shale gas exploration in the country in a bid to boost development of the sector. But it remains unclear if the latest move will attract much interest from state-owned or foreign firms.

The Guizhou province in China has offered six shale gas exploration blocks ranging from 56.8-159.2sq km in a government auction. The bidding prices for exploration rights of the blocks ranged between Yn290,000-800,000 ($44,334-122,301). This price range is far lower than the starting bid of Yn42.36mn for a 695sq km block offered in a bidding round by Guizhou authorities in 2017.

Companies are now allowed five years to explore the blocks before relinquishing them, compared with the three years mandated previously. Local and foreign firms can participate if they have a China-registered entity with a minimum capital of Yn300mn. Beijing further expanded its upstream sector since May this year to allow foreign firms to directly explore and develop acreage released by the government, as long as they have a China-registered office and meet other standard requirements.

It is unclear if the new regulations will attract much foreign interest after all as shale gas geology remains challenging in China. China has seen a significant exit of foreign firms from its major shale gas projects in the past few years. BP last year pulled out of the Neijiang-Dazu and Rongchangbei shale gas projects, in which it had partnered with China's biggest state-owned upstream firm CNPC, after Shell exited from its shale gas cooperation with CNPC a year prior to that.

Chinese unconventional gas output is playing an increasingly important role in boosting overall gas output as conventional reserves have showed signs of depletion. The government changed its subsidy system last year to include tight gas and rewarded incremental growth based on production levels in a bid to boost the sector.

China reached 15.4bn m³ in shale gas output last year, up by 41pc from the previous year, according to government figures. But it is unlikely to hit its target to produce 30bn m³ this year.

PetroChina, the largest beneficiary of subsidies given to unconventional gas development, may add up to 4bn m³ of shale gas output this year to reach 12bn m³ in its total yearly output. Sinopec produced 6.3bn m³ of shale gas last year, mainly from its Fuling project in Chongqing, and analysts forecast the firm's output to reach 7.5bn m³ this year.

While it is unclear if it will eliminate shale gas subsidies eventually, the Chinese government is expected to continue to provide "some form of policy support" to aid the development of the shale gas sector, according to an official from a state oil firm.

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19/02/25

India’s AMNS seek five-year term LNG deal from 2026

Mumbai, 19 February (Argus) — Indian steel manufacturer ArcelorMittal Nippon Steel (AMNS) is seeking a five-year term LNG deal for six cargoes a year starting in 2026 for its direct reduced iron (DRI) plant in the western Gujarat state of Hazira, sources close to the matter have told Argus . AMNS seeks to sign the deal with prices linked to the US Henry Hub or Brent on a delivered basis to India's west coast either at Petronet's 17.5mn t/yr Dahej terminal or Shell's 5mn t/yr Hazira terminal, the source said. The tender's final stage is expected to close by 27 February. The deal may equate to 1.8mn t of LNG supply over the period to 2030, assuming a 60,000t LNG cargo size. The Hazira plant has crude steel production capacity of 8.8mn t/yr, according to ArcelorMittal's September 2024 report. As much as 65pc of the capacity is based on DRI. The firm is on track to expand its low-cost steel-making capacity to 15mn t by 2026, the report says. This supply pact also underscores a trend in the global steel industry to use cleaner energy sources to produce green steel. The firm imports up to 75pc of its 1.72mn t in natural gas requirements on an annualised basis, a company official told Argus last year. The steelmaker had last signed a 10-year deal to buy LNG from Shell , with deliveries to start from 2027, at a 11.5 percentage of Brent crude prices that still remains one of the lowest-heard slopes for an Indian term LNG supply contract. And AMNS has a deal with TotalEnergies for 500,000 t/yr that is scheduled to expire in 2026 . The firm may consider extending it next year, another source said. India's demand for LNG term contracts continues to grow as several gas majors signed LNG contracts during the India Energy Week event. India's state-run Bharat Petroleum has signed a five-year LNG agreement with UAE's state-owned Adnoc at 115pc of Henry Hub price plus a constant of $5.66, similar to the Gail five-year term LNG deal signed in December, sources told Argus . State-owned refiner IOC signed a 14-year sales and purchase agreement for up to 1.2mn t/yr of LNG, valued at $7bn-9bn with Adnoc Gas, during the event. The deliveries are set to begin in 2026, and the cargoes will be sourced from the UAE's 6mn t/yr Das Island liquefaction facility. The deal was signed at 12.5pc of Brent crude prices, sources told Argus . And state-owned Gujarat State Petroleum (GSPC) during the event signed a 400,000 t/yr of LNG deal with TotalEnergies for 10 years to begin from 2026. Under this deal, TotalEnergies will deliver up to six cargoes a year to GSPC. The deal was signed at 119pc of Henry Hub price plus a constant of $4.4, sources told Argus . By Rituparna Ghosh Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU draft plan seeks to cut energy costs

19/02/25

EU draft plan seeks to cut energy costs

Brussels, 19 February (Argus) — The European Commission has set out plans to tackle the cost of energy in the EU, warning in a draft document that Europe risks de-industrialisation because of a growing energy price gap compared to global competitors. High energy prices are undermining "the EU's global standing and international competitiveness", the commission said, in a draft action plan for affordable energy, seen by Argus . The plan is expected to be released next week, alongside a clean industrial deal and other strategy documents. Much of the strategy relies on non-binding recommendations rather than legislation, particularly in energy taxation. Officials cite EU reliance on imported fossil fuels as a main driver of price volatility. And they also highlight network costs and taxation as key factors. For taxation, the commission pledges — non-binding — recommendations that will advise EU states on how to "effectively" lower electricity taxation levels all the way down to "zero" for energy-intensive industries and households. Electricity should be "less taxed" than other energy sources on the bloc's road to decarbonisation, the commission said. It wants to strip non-energy cost components from energy bills. Officials also eye revival of the long-stalled effort to revise the EU's 2003 energy taxation directive. That requires unanimous approval from member states. The commission pledges, for this year, an energy union task force that pushes for a "genuine" energy union with a fully integrated EU energy market. Additional initiatives include an electrification action plan, a roadmap for digitalisation, and a heating and cooling strategy. A white paper will look at deeper electricity market integration in early next year. EU officials promise "guidance" to national governments on removing barriers to consumers switching suppliers and changing contracts, on energy efficiency, and on consumers and communities producing and selling renewable energy. More legislative action will come to decouple retail electricity bills from gas prices and ease restrictions on long-term energy contracts for heavy industries. By 2026, the commission promises guidance on combining power purchase agreements (PPAs) with contracts for difference (CfDs). And officials will push for new rules on forward markets and hedging. There are also plans for a tariff methodology for network charges that could become legally binding. Familiar proposals include fast-tracking energy infrastructure permits, boosting system flexibility via storage and demand response. Legislative overhaul of the EU's energy security framework in 2026 aims to better prepare Europe for supply disruptions, cutting price volatility and levels. Specific figures on expected savings from cutting fossil fuel imports are not given in the draft seen by Argus . But the strategy outlines the expected savings from replacing fossil fuel demand in electricity generation with "clean energy" at 50pc. Improving electrification and energy efficiency will save 30pc and enhancing energy system flexibility will save 20pc, according to the draft. The commission is also exploring long-term supply deals and investments in LNG export terminals to curb prices. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU proposal to extend gas filling targets due in 1Q

18/02/25

EU proposal to extend gas filling targets due in 1Q

London, 18 February (Argus) — The European Commission will publish a legislative proposal on the extension of its gas storage regulation before the end of March, according to a leaked document seen by Argus . The commission will work with member states to "promote more co-ordinated and flexible gas storage refilling, including with dynamic targets to reduce system stress linked to gas storage refilling and support summer preparedness", according to the document. The existing regulation — which obliges member states to fill their storage capacity to 90pc by 1 November, but with derogations for certain countries — expires at the end of this year. The EU's storage fill mandate has supported front-summer contracts across European hubs in recent months, as stronger underground storage withdrawals than in recent years have pushed up expectations of summer injection demand. Summer 2025 contracts have disconnected at well above winter 2025-26 prices. Filling up storage before winter in the context of inverted seasonal spreads has become a growing concern of member states . Some countries, including Germany, have called for the storage fill requirements to be less rigid . Last week, discussions between member states and the EU's gas co-ordination group regarding the potential relaxation of EU storage obligations led to tightened summer-winter spreads. The TTF summer 2025-winter 2025-2026 spread was €2.75/MWh on 17 February, in from €5.29/MWh a week earlier. Tighter gas market supervision The commission will consult stakeholders on tightening the supervision of gas-trading markets, according to the document. The consultation will cover exemptions from conduct and prudential rules applicable to investment firms for which gas derivatives trading is "ancillary" to their main commercial business, as well as position limits in EU spot markets. It will consult on the joint supervision of gas trading by energy and financial regulators and the creation of a database gathering all open positions held by market participants. These measures were promoted in a report by former European Central Bank president Mario Draghi published in September last year . Draghi warned that mounting activity and speculation in the gas derivatives market could lead to price volatility and called for greater oversight of gas trading. The commission had already set up a gas market task force earlier this month to scrutinise European gas markets and identify behaviours that distorted prices, according to the document. The gas market task force will provide recommendations by the fourth quarter of this year. By Isabel Valverde Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Japan approves new energy mix target, climate plans

18/02/25

Japan approves new energy mix target, climate plans

Tokyo, 18 February (Argus) — Japan has approved its targeted power mix portfolio for the April 2040-March 2041 fiscal year, as well as its new greenhouse gas (GHG) emissions reduction goal, it announced today. The new power mix goal, the centrepiece of the country's Strategic Energy Plan (SEP), is in line with Japan's aim to reduce GHG emissions by 73pc by 2040-41 compared to 2013-14 levels. Tokyo plans to submit the 2040-41 emission target, as well as a 60pc emissions reduction goal for 2035-36, to the UN climate body the UNFCCC on 18 February as the country's nationally determined contribution (NDC). The country has not made major changes to its draft proposal that it unveiled in December. The new SEP sees renewable energy making up 40-50pc of the country's power generation in 2040-41, up from 22.9pc in 2023-24. The share of thermal power will fall to around 30-40pc from 68.6pc, while that of nuclear will increase to around 20pc from 8.5pc during the same period. The 2040-41 target is based on Japanese power demand of 1,100-1,200 TWh, which is higher by 12-22pc from 2023-24. The government has planned the power portfolio so that it is not heavily dependent on one specific power source or fuel type, the country's minister for trade and industry (Meti) Yoji Muto said on 18 February, although the new plan suggests making maximum use of low-carbon power supply sources. Public consultation over 27 December-26 January revealed that some think Japan should slow or even stop the decarbonisation process, given the US government's reversal of its climate policies, including its withdrawal from the Paris climate agreement, said Meti. But global commitment to decarbonisation will remain unchanged, said Muto, adding that Japan will lose its industrial competitiveness if the country delays green transformation efforts. But US president Donald Trump's "drill, baby, drill" policy has prompted the Japanese government to delete a segment from the draft SEP that had initially proposed bilateral co-operation through Tokyo's green transformation strategy and the US' Inflation Reduction Act. Despite Tokyo's decarbonisation goals, the new SEP assumes that fossil fuels, including natural gas, oil and coal, will still account for over 50pc of primary energy demand in 2040-41 in all of its scenarios — although this is down from 93pc in 2013-14 and 83pc in 2022-23. The scenarios vary based on the degree of uptake of renewables, hydrogen and its derivatives, and carbon capture and storage (CCS) technologies, to fulfil the 73pc emission reduction goal by 2040-41. Worst-case scenario Tokyo also has also set out a potential worst-case scenario, assuming slower development of clean technologies, in which fossil fuels would still account for 67pc of primary energy supply in 2040-41. Under this scenario, which assumes Japan will only reduce its GHG emissions by around 61pc by 2040-41, natural gas is estimated to account for about 26pc, or 74mn t, of Japan's primary energy supply, which is higher than the 53mn-61mn t in the base scenarios that are formulated in accordance to the 73pc emissions reduction target. Japan would need to address the potential 21mn t gap in gas demand, which will mostly be met by LNG imports, in 2040-41, depending on the development of clean technologies. The gap is equivalent to 32pc of the country's LNG imports of 65.9mn t in 2024. When asked by Argus whether the government will continue to try securing LNG to ensure energy supply security when considering the worst-case scenario, a Meti official said Tokyo should continue pursuing its 73pc GHG reduction target, but it is necessary to consider the potential risks for each individual policy and the measures that need to be taken, instead of making decisions based on the worst-case scenario. The new SEP has highlighted the role of LNG in the country's energy transition and the necessity to secure long-term supplies of the fuel. It is unclear what ratio gas-fired capacity will account for in Japan's 2040-41 power mix, as the SEP does not include a breakdown of thermal generation. But gas-fed output is expected to take up the majority share, given that gas has already outpaced coal in power generation and Tokyo has pledged to phase out inefficient coal-fired plants by 2030. By Motoko Hasegawa and Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

China's CNOOC starts output at Brazil Buzios7 oil field

17/02/25

China's CNOOC starts output at Brazil Buzios7 oil field

San Francisco, 16 February (Argus) — China's state-controlled CNOOC has started output at the Buzios7 oil field offshore Brazil's Santos basin, the firm announced today. CNOOC has a 7.34pc interest in the project while Brazil's state-controlled Petrobras, which operates the field, holds 88.99pc, with the remaining 3.67pc owned by China's state-controlled CNPC Exploration and Development (CNODC). The Buzios oil field is expected to commission a total of 11 projects by 2027 with total output expected to reach 1.5mn b/d by then, although its production capacity totals up to 2mn b/d, CNOOC said earlier this year. The latest production at Buzios7 will bring the output of the Buzios oil field up to 1mn b/d in the second half of 2025, CNOOC said. Buzios7 is located at a water depth of 1,900-2,200m and is also the sixth project commissioned from the oil field. The Buzios7 project includes a floating, production, storage and offloading (FPSO) and subsea production system. The FPSO can produce up to 225,000 bl of crude, process 12mn m³/d of natural gas and store 1.4mn bl of crude. It is also equipped with closed flare to reduce greenhouse gas emissions, and heat recovery devices to reduce energy consumption, CNOOC said. CNOOC expects a slightly smaller share of output from overseas projects, or around 31-33pc from 2025-27, from previous expectations of 33-34pc, although it did not provide a breakdown on actual output forecasts. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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