UP govt may seek cancellation of MoU with centre for airports
The UP government is gearing up to move the centre for cancellation of Memorandum of Understand (MoU) it signed with the Airport Authority of India (AAI) two years ago for development of airports in Faizabad, Meerut and Moradabad, in a development that could further sour the relations between the Samajwadi Party and the Bhartiya Janta Party in an election year. The move comes a day after the union civil aviation ministry gave its nod to develop `no-frill’ airports – airport with no non-essential services — in Kanpur, Bareilly, Agra and Allahabad. Sources, however, said that the centre has expressed apprehensions for setting up an airport in Faizabad, Meerut and Moradabad after a feasibility study showed a low Investment Return Ratio (IRR). Experts insist that an airport is viable only when the IRR is 12 – meaning that return on investment is at least 12%. In case of the three airports the value was much low. A top government functionary told TOI that the UP’s civil aviation department has already served a notice to the centre asking as to “why the MoU for the three cities may not be cancelled”. Sources said that a formal decision on the issue is likely to be taken by the state cabinet soon. “If that was the case, the centre should have carried out a feasibility study before signing a MoU,” said a senior official in the Chief Minister secretariat. Ian Thomas Jersey
Civil aviation policy: Warts apart, a credible policy
The National Civil Aviation Policy 2016 aims to provide an eco-system for the harmonised growth of various aviation sub-sectors. The Policy is credible in that it is wide and addresses as many as 22 policy areas while still preserving and maintaining an integrated view of the sector in terms of the vision, mission and objectives outlined in it. Also, it is noteworthy that the policy frameworks outlined for each of the sub-sectors have consistent reference to the identified objectives in terms of establishing an integrated eco-system; enhancing ease of doing business through deregulation, simplified procedures and e-governance; ensuring safety, security and sustainability of the aviation sector, etc. Given the pendency of some of these issues and the associated debate, there had to be trade-offs. What was important was that adequate debate preceded the policy pronouncement and the trade-offs were identified up-front, analysed, and informed choices made through the stakeholder consultation process. The Ministry of Civil Aviation undertook extensive consultations, providing stakeholders the opportunity of sharing their perspectives and viewpoints. So is this a good policy document? A defining feature of a good policy is that it should be amenable to speedy and effective implementation. NCAP’s focus on making flying affordable for the masses and the release of associated implementation details for stakeholder consultation on 1st July is a good example of the policy trying to address longer-term priorities – looking beyond minor tweaks, while remaining focused on speedy implementation Ramon Humber Jersey
Aviation challenge awaits Jayant
Junior minister Jayant Sinha’s shift from finance ministry to civil aviation is being blamed on his father, Yashwant Sinha’s less-than-flattering remarks about the Modi government’s performance. But Sinha Jr is an articulate minister and has carved his place by explaining the Modi government’s objectives in a succinct manner. Ashok Gajapathi Raju – a nominee of the BJP’s key ally, the TDP – cannot be removed from civil aviation even though he has had a pretty patchy record. Last month, when the government decided to permit foreign airlines to hold a 100 per cent stake in domestic airlines, the ministry botched up when it failed to change a key requirement that mandates that Indians should remain in effective control of a domestic airline. Raju failed to address the basic contradiction that exists in the substantial ownership and effective control norms under the aviation policy and the relaxation in the FDI rules. Sinha could have been brought in to the civil aviation ministry to deal with such embarrassments. After the government relaxed the so-called 5/20 rule that permitted newbie airlines like Vistara, co-owned by the Tatas, to fly abroad even though it did not have five years of domestic flying experience, the civil aviation ministry will have to grapple with the bigger issue of farming out unused bilateral rights under agreements that India has signed with more than 80 countries round the world. The bilateral rights cover such aspects as landing rights and the number of seats that can be offered to airlines that wish to fly abroad. Demarcus Walker Jersey
Oil losses mount as world markets hit by Brexit woe
Oil prices fell further in Asian trade today, tracking losses across equities and currency markets as fresh fears about the impact of Britain’s exit from the EU sent investors fleeing high-risk assets. A warning from the Bank of England that there was evidence risks from the June 23 Brexit vote “have begun to crystallise” sent shudders through world markets, with the pound diving to levels not seen since mid-1985 and stock markets diving. The uncertainty unleashed by Europe’s second biggest economy leaving the European Union battered the oil market this week, with Brent diving 4.3% and West Texas Intermediate shedding 4.9% yesterday. The contracts today extended the losses. At 0330 GMT Brent was down 30 cents, or 0.63%, at $47.66, while WTI eased 33 cents, or 0.71%, to $46.27. The two are well down from the levels above $52 touched at the start of last month. “Uncertainties and concerns over how Brexit will influence the market is expected to last for a long time, increasing volatility in oil prices,” Will Yun, commodities analyst at Hyundai Futures in Seoul, told Bloomberg News. “Even when we see a decline in stockpiles in the US, it’s not strong enough to push prices up unless there are some major production cuts.” Adding to the downward pressure is news that oil cartel OPEC had boosted output in June, adding to an already painful global oversupply. Ernie Stautner Jersey
India may offer opportunities for Houston’s oil services companies
Some Houston companies are poised to benefit as India begins doling out $27 billion in new contracts in an effort to cut fuel imports. Spending plans are ratcheting up and projects are restarting after the government in March announced pricing freedom for natural gas from deep-sea fields that begin production this year. Coming as the cost of rigs and services has halved, that’s prompted India’s largest explorer Oil and Natural Gas Corp. to launch its biggest development campaign yet. Reliance Industries Ltd. is preparing to restart work at four offshore oil and gas blocks. The flurry of activity is providing some respite to services companies, including Houston-based Schlumberger and Halliburton, and Technip, whose U.S. headquarters are here. Service firms were stung last year when explorers slashed more than $100 billion in spending as oil collapsed. Investments in India are growing to meet Prime Minister Narendra Modi’s target of cutting import dependence by 10 percent over six years as increased consumption puts the nation on track to become the world’s third-largest oil consumer. “In India, there are two to three major identified projects and they are probably bigger than anything else going on in rest of the world,” Technip India’s Managing Director Bhaskar Patel said in an interview. “India is a place where there is work available.” India’s hydrocarbon resources still remain highly undeveloped and the government’s new liberal approach is nudging companies to invest in tapping them. The measures are expected to boost gas output by 35 million standard cubic meters a day and unshackle projects worth 1.8 trillion rupees ($27 billion), Oil Minister Dharmendra Pradhan had said when the policy changes were announced. About 90 percent of the new spending would go to companies that provide services from drilling to testing and the laying of infrastructure. Halliburton is positioned to participate in “the country’s ambitious plans to increase its domestic production,” the company said in an emailed response to questions. “India plays a crucial role for sustained development in the region for Halliburton.” The Indian government’s initiatives will increase the pace of exploration, ONGC Chairman Dinesh Kumar Sarraf said. ONGC will contract deepwater drill ships and dozens of jack-up rigs for a $5 billion development program in the Krishna-Godavari Basin, he said. The company intends to spend 11 trillion rupees by 2030 to raise output. Reliance has held meetings with oilfield-services companies to restart work at four offshore oil and gas blocks, including one of India’s biggest natural gas discoveries, people with knowledge of the plan said in May. It plans to drill 21 wells in four offshore areas, including the deepwater KG-D6 block in the Bay of Bengal, the people said. India’s exploration binge still won’t be enough to compensate for canceled projects around the world as oil prices settle below 50-a-barrel of crude from more than $100 two years ago. Worldwide, the oil and gas industry will cut $1 trillion from planned spending on exploration and development because of the price slump, consultant Wood Mackenzie Ltd. said this month. Investing during the current down-cycle ensures lower costs for explorers as well as future returns over four or five years once oil recovers, Technip India’s Patel said. ONGC has reduced the cost of its Krishna-Godavari basin block by almost a third from earlier estimates of about $7 billion as prices slide for the contract rate for rigs and oilfield equipment and services. Offshore jack-up rigs, which used to cost $80,000 to $90,000 a day, are now available for less than $50,000, ONGC’s Sarraf said. “We could say there is 20 percent to 50 percent reduction in the cost of goods and services.” Despite the price competition, service providers are finding that an India strategy is critical given the scarcity of spending elsewhere. Finnish company Wartsila OYJ’s Indian unit sees opportunity here given the tough global environment. “In the exploration segments, if projects are coming up of course it’s an opportunity for us,” Kimmo Kohtamaki, president and managing director of Wartsila India, said. “We have matching products and no one else is investing. Everyone is laying off, it’s a tough market.” Fred Lynn Jersey
SCI to resume sailing to Iran, transport oil cargo for HPCL
After a four-year hiatus, Shipping Corporation of India (SCI) will resume sailing to Iran to ferry ‘transport crude oil’ from the Persian Gulf nation for state refiners. SCI, which was in 2012 forced to stop transporting crude oil due to unavailability of insurance cover for its ships following tightening of international sanctions against Iran, will resume sailing, initially to ferry crude oil for Hindustan Petroleum Corp Ltd (HPCL). This follows lifting of sanctions against Iran in January. The largest domestic shipping line will ferry the first cargo of crude oil from Iran something this month. “State-run HPCL has approached SCI for deputation of a vessel for importing crude oil. In-principle, it has agreed to it,” Shipping Secretary Rajive Kumar said. However, the exact date has to be fixed for transporting the oil cargo, Kumar said. Other state refiners Mangalore Refinery and Petrochemicals Ltd (MRPL) and Bharat Petroleum Corp Ltd (BPCL) too have contracted SCI for shipping oil from Iran. After SCI and other ship owners stopped ferrying Iranian oil, the Persian Gulf nation offered free delivery of oil to customers in India in its own vessels. This was aimed at keeping its key customers during the tough sanctions period. But with the lifting of sanctions, Iran has stopped free shipping and has since April started charing concessional rates. Essar Oil, which along with MRPL are the biggest buyers of Iranian oil, has already started making its own arrangements for shipping oil from Iran. The premier shipping line which owns and operates around one-third of the Indian tonnage, and services both national and international trades, has stopped sailing to Iran in 2012 as insurance cover for oil and cargo could not be obtained in the wake of sanctions targeting Iran’s nuclear programme. After lifting of sanctions in January, International Group of Protection and Indemnity (P&I) Clubs which insure the tanker market have been able to obtain cover from some markets, an official said. The largest domestic ship liner has a fleet of 69 vessels of which 17 are bulk carriers, 16 crude oil tankers and 14 product tankers and is planning expansion of its fleet. A Parliamentary panel has recently recommended that SCI buy fuel-efficient ships, replacing the old stock. “If the international market situations are viable, they may go for purchasing new fuel-efficient vessels in place of the old ones,” Parliamentary Standing Committee on Transport, headed by Kanwar Deep Singh, has said. The SCI was established in 1961, by the amalgamation of Eastern Shipping Corporation and Western Shipping Corporation. It owns and operates around one-third of the Indian tonnage, and has operating interests in practically all areas of the shipping business and servicing. Apart from being the largest shipping company in India, SCI exclusively operates in break-bulk services, international container services, liquid/dry bulk services, offshore services, passenger services. Dontari Poe Authentic Jersey
Petronet LNG plans Rs 50 billion terminal in Bangladesh
India’s biggest gas importer Petronet LNG Ltd has plans to set up a Rs 50 billion LNG import terminal at Kutubdia islands in Bangladesh as it looks to build terminals to feed demand in neighbouring countries. “We have proposed to construct a 5 million tons per annum capacity liquefied natural gas (LNG) import terminal at Kutubdia islands off Cox’s Bazar,” Petronet Managing Director & CEO Prabhat Singh told PTI here. The terminal will be besides 3.5 MT terminal at Bangladesh is looking to set up, for which Petronet is one of the firms that has been shortlisted. “Bangladesh has huge unmet gas demand particularly to power generation. So during the recent visit of Petroleum Minister Dharmendra Pradhan to Dhaka, we proposed to set up a 5 million tons capacity terminal on government-to-government basis,” he said. Besides Bangladesh, Petronet has also proposed to set up 1 MT LNG terminal in Sri Lanka to meet local demand. Singh said Kutubdia islands has a natural harbor with good draft and a natural breakwater, idle for setting up LNG terminal. The proposed terminal is besides the one Bangladesh is looking to set up at Matar Bari in Moheshkhali Island of Cox’s Bazar district or Anwara, Chittagong. The terminal, to be set up on the build-own-operate basis, will supply gas to power plants. Petronet is one of the five global energy firms shortlisted for setting up this LNG import terminal. The others shortlisted include Anglo-Dutch super-major Shell, China’s Huanqiu Contracting & Engineering, Tractebel Engineering of Belgium and Japan’s Mitsui. Bangladesh is looking at importing gas to ease its energy crisis in southeastern Chittagong region, which was once almost self-reliant in natural gas but started facing a supply crisis in 2006 as output diminished from the Sangu gas field. The country’s sole offshore gas well, Sangu-11, was permanently closed in October 2013. As a result, some plants are running below the capacity and a few have been shut due to non-availability of gas. Sources said the LNG terminal will supply gas to a proposed 1,000 MW combined cycle power plant as well as the existing power plants in Raozan and Sikalbaha through a planned pipeline. Brandon Sutter Authentic Jersey
OIL-IOC deal spoils OVL’s Vankor deal negotiations
OIL-IOC-BCPL combine’s USD 2.02 billion deal to acquire 23.9 per cent stake in Russia’s Vankor oilfield has spoilt ONGC Videsh Ltd’s chance of negotiating down the price for additional 11 per cent it is buying in the same field. OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), had in September last year bought 15 per cent stake in Russia’s second biggest oilfield of Vankor for USD 1.268 billion. In March this year, Rosneft agreed to sell another 11 per cent to OVL. Simultaneously, it struck a deal to sell 23.9 per cent in Vankor to a consortium of Oil India Ltd (OIL),Indian Oil Corp (IOC) and a unit of Bharat Petroleum Corp Ltd (BPCL). Sources said the board of OVL wanted the price of the additional 11 per cent stake to be renegotiated downwards. Going by the September 2015 agreement, OVL would have to pay about USD 930 million for the additional stake. But the company board was of the opinion that since it was picking up a sizeable stake in the field operated by US-sanctioned company, the asking price has to be renegotiated. But as OVL sought renegotiations, the OIL-IOC-BPCL consortium last month signed definitive agreements for buying 23.9 per cent stake in Vankor for USD 2.02 billion OIL-IOC-BPCL consortium has also agreed to pay interest to Rosneft till such time the deal is closed and all payments made, which is likely by September 30. Sources said Rosneft is now arguing that when the buyer of larger 23.9 per cent stake is willing to pay a price in line with the September 2015 deal, there remains no scope for negotiating it with a buyer who is picking up less than half, about 11 per cent. The 23.9 per cent stake would be split in the ratio 33.5-33.5-33 between IOC, OIL and Bharat PetroResources Ltd (a subsidiary of Bharat Petroleum Corp Ltd) — IOC and OIL will take 8 per cent stake each while the remaining 7.8 per cent stake would go to BRPL. Darren Fells Womens Jersey