Cairn India scouts for oilfield services firms in a bid to cut cost, boost output
Cairn India Ltd., which is in the process of getting merged with Vedanta Ltd., is scouting for global oilfield services companies like Schlumberger Ltd. and Halliburton Co., to take over operations of its key hydrocarbon assets in a bid to cut down expenses and boost production within a short span of time. Besides, parts of the company handling support services such as finance, statutory compliance and human resources will become part of Vedanta Ltd. post merger, which is expected to be completed in the first quarter of this calendar year. Cairn India and Vedanta Ltd; are owned by UK-listed natural resources giant Vedanta Resources Plc. Cairn India said in a statement to Mint ,in response to emailed queries, that the idea is to monetize its resource base with further investments. The company has held a round of discussion with two global oil and gasfield service providers and is exploring various partnership options with them and with others. The exact nature of the arrangement will be worked out keeping in mind the provisions in Cairn’s production sharing contract with the government for the hydrocarbon assets. A person with direct knowledge of the matter said on condition of anonymity that partnerships are being explored for the assets of Mangala, Bhagyam, Aiswharya, Barmer Hill and Raageswari Deep Gas fields in Rajasthan. The move is in line with recommendations made by the Boston Consulting Group, said the person. “We are planning to have a unique partnership approach with global oil and gas companies to leverage full potential of our resources. The model will open up avenues for introduction of new and latest technologies for exploration and production to monetize India’s hydrocarbon reserves. The proposed Cairn initiative to identify technological partnerships to unlock resource potential, evoked very positive response,” said the statement from Cairn, adding that the idea was to further improve economics of its key projects. The company, which on last Thursday reported a nearly 15-fold jump in profit after tax in the October-December period to Rs 6.04 billion from a year ago, said on that day quoting acting chief executive officer Sudhir Mathur that the company was in active discussions with world class oilfield services companies to partner for “end to end outsourcing of certain projects” meant to help in further optimizing costs, expedite project execution through better vendor coordination, and act as a force multiplier. Cairn’s plan to outsource operations comes in the wake of oil and gas field services becoming cheaper in the wake of global exploration companies cutting down capital spending due to muted crude oil prices. Cairn’s statement to Mint said the merger will be positive as it will generate value for the shareholders and de-risk Cairn India by providing access to Vedanta’s portfolio of diversified assets in a volatile market. The company, however, denied any plans to rationalize manpower for any function, post-merger. A company official, who asked not to be named, said that while balance sheets of the two companies will get merged, the merged entity will still preserve Cairn brand for its hydrocarbon business. Cairn needs statutory approval for transferring its production-sharing contract with the government to the merged entity. Cairn statement also said, quoting group chairman Anil Agarwal, that the company was committed to invest Rs. 300 billion to add 1,00,000 barrels of oil and oil equivalent over the next three years, primarily from its prolific Rajasthan fields. At present, Cairn accounts for 27% of India’s crude oil production and wants to raise its share to 50% over the next few years. Leonard Fournette Womens Jersey
LNG importer buys stake in shipping consortium
Petronet LNG Ltd, India’s largest liquefied natural gas importer, has bought a 26 per cent stake in the shipping consortium that built its biggest LNG ship to transport gas form from Australia. Petronet had in 2013 contracted Shipping Corp of India (SCI) and its Japanese partners to build and operate a 173,000 cubic meters capacity LNG ship. The LNG vessel, ‘Prachi’, was delivered in December last year. After sea trials, the ship has delivered the first cargo of LNG from Gorgon project in Australia to Petronet’s Dahej import terminal in Gujarat. “We have now decided to take 26 per cent equity in India LNG Transport Company (No 4) Private Limited,” Petronet Director (Finance) R K Garg said here. Singapore-headquartered India LNG Transport Co (No 4) is the firm that won the time-charter contract from Petronet and got the 173,000 cubic meter vessel built at Hyundai Heavy Industries Co Ltd’s Ulsan shipyard in South Korea. Garg said agreements for Petronet taking the equity have been executed and the consideration paid. “It (the money paid) is less than Rs 1 billion,” he said. After this, state-owned SCI holds 26 per cent and NYK Line of Japan hold 26 per cent stake each in the company, while 22 per cent is held by Mitsui OSK Line and K Line. ‘Prachi’ is the fourth LNG vessel to be hired by Petronet. The earlier three are all deployed for ferrying LNG from Qatar. SCI, K Line, NYK Line and MOL consortium had won the tender by quoting the lowest charter hire of a little over USD 78,000 per day for 19 years for hauling LNG from Gorgon. Teekay LNG Partners LP, the only other firm to put in a price bid, had quoted a charter hire rate of USD 79,200 per day. The consortium had also built the previous three vessels for Petronet as well. It in 2002 won a 25-year contract for two ships, ‘Disha’ and ‘Rahi’, by quoting the lowest day rate of USD 68,900 for each ship for transporting the cargo from Qatar, and a contract for the third vessel, ‘Aseem’, in 2006 at a day rate of USD 72,880. “We did not take any equity in first two vessels but exercised our right and took 3 per cent in third (Assem),” Garg said. SCI, India’s biggest ocean carrier, holds a 29.08 per cent stake each in ‘Disha’ and ‘Rahi’ and a 26 per cent stake in the third, ‘Aseem’. Garg said all the four ship will be managed by SCI. The first two vessels were capable of carrying 138,000 cubic meters of gas and the third was of 155,000 cubic meters capacity. The fourth vessel, with 173,000 cubic meter capacity, is the biggest Petronet has ordered yet, he added. State-owned Oil and Natural Gas Corp (ONGC), GAIL India Ltd, Indian Oil Corp and Bharat Petroleum Corp Ltd (BPCL) own 12.5 per cent stake in Petronet LNG Ltd, India’s biggest buyer of LNG. Brandon Allen Jersey