IGL: Strong margin, volume trend to continue
A strong rebound in compressed natural gas (CNG) volumes, which grew 8.4 per cent year-on-year (y-o-y), was the highlight of Indraprastha Gas (IGL)’s results for the March quarter (Q4). Notably, this is the fastest volume growth in this segment (78 per cent of IGL’s revenues) over the past eight quarters. CNG volumes grew in a narrow band of two to six per cent in these eight quarters. Volume growth in piped natural gas, too, was at a multi-quarter high of 8.9 per cent, though slightly lower than analysts’ estimates of 10-12 per cent. Overall, volumes grew 8.4 per cent in Q4. Falling realisations, though, took some sheen off the top line, which fell 3.4 per cent year-on-year to Rs 8.82 billion and missed the Bloomberg consensus estimate of Rs 9.20 billion. Strong gains in earnings before interest, taxes, depreciation and amortisation (Ebitda) margin fuelled earnings, which grew 12.3 per cent y-o-y to Rs 1.08 billion and were in line with the estimate of Rs 1.09 billion. the cost of IGL’s key input, natural gas, fell 674 basis points to 59.5 per cent in Q4 and enabled a 308 basis points Ebitda margin expansion to 22.3 per cent, compared to the year-ago period. Margin gains could have been higher but for price cuts. The trend of improving volumes and as margins is expected to continue for IGL. The odd-even rule in Delhi (April 15 to 30) had pushed up CNG volumes by 15-20 per cent and would add two per cent to IGL’s volumes in the ongoing quarter, estimate analysts at Jefferies in a note this month. Factors such as conversion of taxis to CNG along with regulatory push to the greener fuel will continue to aid volumes. Petronet LNG’s renegotiation with RasGas has lowered the price of long-term LNG, which could, in turn, aid IGL’s industrial segment. This, along with volume contribution from acquisitions of Maharashtra Natural Gas and Central UP Gas, augurs well for overall volumes. The company’s monopolistic position in Delhi, strong return ratios and improving margin trajectory are some of the reasons why analysts are positive on IGL. In fact, Bloomberg consensus estimates peg IGL’s Ebitda margin at 22.8 per cent in FY17, an increase of 183 basis points over FY16. The scrip currently trades at 15 times the FY17 estimated earnings and appears fairly valued. While the business case appears strong, any sharp, unprecedented rise in gas prices is a risk factor. Reggie Miller Authentic Jersey
Drones to monitor GAIL pipelines
The Indian Railways and National Highways Authority of India use drones for similar purposes. The government has granted permission to the Gas Authority of India Limited (GAIL) to use drones for aerial surveillance of its pipelines. This follows the use of drones for similar purposes by the Indian Railways and the National Highways Authority of India. “As line patrolling is extremely difficult for pipeline sections passing through forests, rivers, environmentally sensitive areas and other inaccessible areas, GAIL (India) Limited has awarded an order for aerial surveillance of 200 kilometres for the Hazira Vijaipur Jagdishpur/Dahej Vijaipur pipelines with drones as a pilot project,” Minister of State (independent charge) of Petroleum and Natural Gas Dharmendra Pradhan told Parliament. “Surveillance of a vast network of pipelines across the country is required to ensure the safety and reliability of pipelines and guard against sabotage, exposure, soil erosion, excavation and construction works,” Pradhan said. “Currently, it is being achieved through regular, periodic, foot-patrolling and air surveillance by hiring helicopter services on a monthly basis.” The drones will carry out surveillance using high-resolution and infrared cameras. NHAI signed a pact with the Indian Space Research Organization’s National Remote Sensing Centre and the North East Centre for Technology Application and Research for the use of UAVs to aid in surveillance of construction work. Separately, the Indian Railways has used drones to monitor the progress on the Dedicated Freight Corridor. Auston Matthews Womens Jersey
OPaL closes in on commissioning of Dahej units by procuring feedstocks
ONGC Petro additions Ltd (OPaL) is nearing commissioning of its dual feed cracker unit and dowstream polypropylene plant at Dahej. The company recently procured propylene and naphtha, which are the principal feedstock for the two upcoming units. An over $4.5 billion enterprise promoted by ONGC, OPaLis setting up SouthAsia’s largest integrated mega-petrochemicals complex at Dahej, Gujarat. The company recently procured propylene, a principal feedstock to start operations of its polyproylene unit wherein propylene was transported to OPaL’s petrochemical complex through road tankers. Moreover, Naphtha, the principal feedstock for OPaL’s Dual Feed Cracker Unit, arrived recently at GCPTCL port Dahej, through sea route from ONGC Hazira, for onward transmission through pipeline to OPaL’s production facility. “Procuring the feedstocks is a big leap forward towards the commissioning of this mega-project, as it will lead to starting of production operations of our Dual Feed Cracker Unit and downstream Polypropylene Plant,” said K Satyanarayana, chief executive officer, OPaL. According to Satyanarayana, the procurement will act as a ‘huge confidence booster’ for all its stake-holders who are waiting to see the plant go on-stream in the coming months. The multi-billion joint venture company was incorporated in 2006, as a public limited company under the companies Act, 1956, promoted by Oil and Natural Gas Corporation Limited (ONGC) and co-promoted by GAIL (India) Limited and Gujarat State Petroleum Corporation (GSPC). OPaL’s grass root mega petrochemical project at Dahej in Gujarat mothers a Dual Feed Cracker with a capacity to produce 1,100 KTPA Ethylene, 400 KTPA Propylene along with Polymerisation Units and various Associated Units consisting of Pyrolysis Gasoline Hydrogenation Unit, Butadiene and Benzene Extraction Units. The Polymer plants of OPaL has 2X360 KTPA of LLDPE/HDPE Swing unit, 1X340 KTPA of Dedicated HDPE and 1×340 KTPA of PP. The project in the advance stages of commissioning and is expected to go on-stream in 2016. Von Miller Womens Jersey
Numaligarh signs bio-refinery unit agreement with Chempolis
Bharat Petroleum Corporation Ltd’s Assam-based facility Numaligarh Refinery Limited (NRL) has signed a term sheet with Chempolis Ltd, a Finland-based bio refining technology for setting up a bio-refinery unit. The term sheet will be the basis for formation of a joint venture agreement for implementation of the project. A partnership agreement for the biorefinery project was signed between NRL and Chempolis in 2014. According to a statement from NRL, the company is implementing India’s first bio-refinery in Assam at an estimated cost of Rs 9.50 billion which would produce bio-ethanol with co-production of furfural and acetic acid from locally available non-food bio-mass feedstock. Bamboo is one of the major non-food biomass resources available abundantly in North East India and is among the fastest growing plants. 49,000 tons of bio ethanol produced annually would primarily be used to blend NRL petrol as mandated by the National Policy on Biofuel, with the surplus to be sold to other oil marketing companies. The company added that NRL has already inked MoUs with Nagaland Bamboo Development Agency (NBDA) and Arunachal Pradesh Bamboo Resources Development Agency (APBRDA) last year for sourcing of bamboo for the Bio Refinery. Cam Atkinson Authentic Jersey
RIL gets green nod for exploratory drilling project in Tamil Nadu
The Centre’s green panel has given its nod to RIL for carrying out eight additional exploratory well drilling to ascertain reservoir capacity and commercial viability of hydrocarbons in the block CY-III-D5 in Bay of Bengal off the coast of Tamil Nadu. Reliance Industries has been awarded exploratory rights for hydrocarbons prospecting in the offshore block DY-III-D5 under the New Exploration Licensing Policy-III. RIL has already been given the environment clearance to drill 11 exploratory wells in this block. As on date, the company has drilled nine wells and discovered hydrocarbons in three wells. Since seismic data and the drilling campaign shows presence of hydrocarbons in the block, RIL is planning to carry out eight additional exploratory well drilling to establish the reservoir capacity in this block. “In a recent meeting, the Expert Appraisal Committee of the Environment Ministry examined the proposal. After detailed deliberations, the committee recommended the project for environment clearance,” a senior government official said. The Committee has recommended the Ministry to give final clearance to RIL’s project subject to certain specific and general conditions, the official added. Among key conditions specified, the Panel has suggested the company to ensure gas produced during the testing should be flared with appropriate flaring booms. The flare system should be designed as per good oil field practices and oil industry safety directorate guidelines. The company should ensure that there is no impact on flora and fauna due to drilling of wells in the offshore sea. It should undertake conservation measures to protect the marine animals/biota in the region. The company should monitor the petroleum hydrocarbons and heavy metals concentration in the marine fish species regularly and submit report to the government. Among others, the Panel suggested that all the hazardous waste generated at the rig/offshore facility should be properly treated, transported to on shore and disposed of in accordance with the norms. Reliance entered the exploration and production business by becoming a 30 per cent partner in an unincorporated joint venture with British Gas and RIL in the Panna Mukta and Mid and South Tapti blocks. Besides Panna Mukta and Tapti (PMT) blocks, their domestic portfolio comprises of five conventional oil and gas blocks in Krishna Godavari, Mahanadi, Cauvery Palar, Gujarat Saurashtra and Cambay Basin and two Coal Bed Methane (CBM) blocks in Sohagpur East and West in Madhya Pradesh. The company also has blocks in overseas. Bryan Trottier Jersey