Energy policy may bring subsidy cut, price control in power, fertilisers
The government will soon outline comprehensive energy sector reforms that could free up sectors such as coal, electricity and fertilisers of subsidies and price controls, helping produce more power and make generation projects commercially viable for private companies. The policy could also give greater emphasis towards improving the financial condition of power distribution companies (discoms), which are bogged down by debt, to make the sector profitable in the medium to long term. Key suggestions being considered include overhauling the entire structural and functional capacity of discoms so that they operate more professionally. Official sources told ET that after intense deliberations held for more than a year with stakeholders, the government’s premier think-tank Niti Aayog has firmed up the National Energy Policy and the first draft will soon be made public. According to people who spoke to ET requesting anonymity, the electricity and fertilizer sectors are heavily subsidised, which is why their input costs cannot be increased as of now. “There is a need to bring down subsides in such sectors and the energy policy is expected to lay out a clear roadmap for lowering subsidies and aligning their prices to that of the market,” one of the people said. State discoms should run on commercial lines, either be privatised or run in private-public partnership mode or as a franchise to become profitable, according to Praveer Sinha, managing director of Tata Power Delhi Distribution. “While the Central government policies related to the sector are in the right direction, state utilities have to transform in a big way. Enough manpower capacity should be created to run them professionally and there should be integration of technologies between discoms,” said Sinha, who was part of the initial deliberations on the proposed policy. Ajay Mathur, director general of research institute TERI, is of the view that electricity reforms and coal supply are important to make the power sector commercially viable as well as available to all. “India’s energy sector needs continuation of strategic procurement policy for oil and gas while harmonising the domestic market. “Besides, the policy should focus on long-term strategy in the electricity sector to move towards renewables,” said Mathur, who too took part in the initial discussions on the policy. The Central government rolled out the Ujwal DISCOM Assurance Yojana (UDAY) to help discoms become profitable while finding a permanent solution to their financial mess. The scheme aims to provide a permanent solution to their legacy debt of about Rs 4.3 lakh crore and address potential future losses. The scheme comprises four initiatives for discoms – improving operational efficiency, reducing cost of power, lowering interest costs and enforcing financial discipline through alignment with state finances. The turnaround scheme allows state governments, which own the debt-laden discoms, to take over 75% of their debt, as of September 30, 2015. Discoms are expected to issue bonds for the remaining 25% of their debt. Zack Smith Authentic Jersey
Oil Ministry orders detailed review of ONGC board of directors
Oil & Natural Gas Corp is in for a shakedown with the petroleum ministry ordering a detailed review of its board of directors for a possible revamp of the functional heads, following prolonged delays in projects linked to output enhancement.While examining the status of oil and gas production last January, Petroleum Secretary KD Tripathi noted lapses in the development of discovered oilfield Ratna and R-Series, restarting of oil production from Amguri field as well as in conducting two-dimensional seismic surveys to identify new oil and gas reserves. “In this context, Secretary advised Joint Secretary (Exploration) to examine on file the re-organisation of ONGC Board of Directors, in particular the role of functional directors, with a view to have a lean structure facilitating quick decision making to boost the overall performance,” says the minutes of the meeting. Following replies by the ONGC officials during the January 17 meeting, Tripathi directed that each of the three projects be directly monitored by Director General of upstream quasi-regulator Directorate General of Hydrocarbons. Jake Matthews Jersey
AG&P and Air Liquide Global E&C Solutions sign MoU to deliver fully integrated LNG infrastructure solutions in Southeast Asia
AG&P (Atlantic, Gulf and Pacific Company), a leading integrator of infrastructure solutions across the LNG supply chain, has signed a Memorandum of Understanding (MoU) with Air Liquide Global E&C Solutions, the engineering and construction arm of the Air Liquide Group, to develop small-scale LNG infrastructure for LNG distribution across Asia. By combining their respective strengths, AG&P and Air Liquide will be able to offer unique, fully integrated and cost-optimized solutions for LNG distribution with a focus on liquefaction, transportation and downstream infrastructure to deliver LNG to end users seeking LNG for power, shipping, ground transport and other industrial applications. Under the MoU, AG&P will integrate the technologies offered by Air Liquide with its expertise in planning, designing engineering, financing and operating LNG infrastructure modules to build technologically-advanced blocks that can plug into any part of the LNG supply chain. This will deliver end-users faster and more cost-competitive solutions that maximize a project’s value. Commenting on the strategic alliance, AG&P’s Chairman, Mr. Jose P Leviste (Jr.), said, “This milestone agreement with Air Liquide will enable the integration of downstream LNG infrastructure, including small scale regasification terminals, distribution hubs, truck loading stations and boil-off gas handling systems into AG&P’s LNG supply network for rapid delivery of tolled gas to last-mile customers. Our aim is to streamline Air Liquide’s know-how in gas processing technology and patents with AG&P’s experience in design, engineering and construction to bring the most competitive solutions to customers across Asia. We offer unique products for both onshore and offshore applications.” As part of this MoU, AG&P and Air Liquide will begin developing standardized downstream LNG modules (some as skids) that optimize costs and shorten delivery time. The MOU as well covers innovative Boil-off Gas (BOG) management systems eliminating the need for investment in BOG compressors, while ensuring that no gas is vented or flared, bringing environmental and economic benefits to the customer. AG&P has a long and successful track record as an integrator of pragmatic solutions for the oil and gas industry with specific expertise in LNG. It is only one of three companies globally to have a global technical and licensing agreement for membrane tank design from the French giant, GTT. In addition, AG&P owns a major stake in Gas Entec, the leading Korea-based engineering firm. AG&P further has entered in a joint venture with Risco Energy Group of Indonesia. Recently, AG&P has announced its development of an LNG terminal in East India with Hindustan LNG. AG&P also co-owns and operates the Hydro Deck, a unique giant mobile port, through a joint venture with global heavy lift and logistics leader, ALE. Domenico D’Élia, Vice President and Chairman, Air Liquide Engineering and Construction said, “We chose AG&P to be our partner because of their reputation for innovation, safety record and fast delivery. Through this agreement, we will be able to meet the dynamic requirements of customers in the vast region of Asia where small quantities of LNG need to be delivered efficiently to end-users scattered across vast distances.” The demand for LNG continues to grow worldwide as countries seek to replace oil and heavy fuel oil with LNG as a cleaner and cheaper fuel for power generation, shipping, ground transport and industrial use. However, uptake remains slow because of a lack of the requisite infrastructure and investment to deliver reliable and sustainable supply. Much of Asia requires massive development of assets to bring the gas from its source to demand centers dispersed over vast geographies where it is estimated that $70 to $80 billion USD needs to be invested in gas infrastructure over the next decade. Through this MoU, AG&P and Air Liquide will pioneer the development of this much-needed LNG infrastructure. Archie Manning Jersey
PM dedicates OPaL plant to the nation
Prime Minister Narendra Modi today dedicated ONGC Petro additions Ltd’s (OPaL) Rs 30,000-crore plant to the nation at the Dahej Special Economic Zone. “It is India’s largest petrochemical plant having an investment of Rs 30,000 crore,” Modi said on the occasion. “Today, the average per capita consumption of polymers in India is 10 kg, while the global average is 32 kg. There is tremendous potential for growth in the wake of higher disposable income of middle class and urbanisation. As per an estimate, OPaL’s market share in the polymer sector will be 13 per cent by 2018,” he said. The Prime Minister said the Gujarat government has worked very hard for over 15 years to develop the Dahej SEZ under the Petroleum, Chemical and Petrochemical Investment Region (PCPIR). “Dahej has become mini India, as people from across the country are now working here. When I was Gujarat CM, I used to visit Dahej. I saw this place getting developed brick by brick. Because of the efforts of Gujarat Government, Dahej achieved such tremendous success,” Modi said. “Due to government’s efforts, Dahej SEZ has secured a place among the top 50 SEZs of the world. This region has given employment to lakhs of citizens. So far, it has fetched a total investment of Rs 40,000 crore. I congratulate all the people who are behind the success of Dahej SEZ,” he said. Modi also visited the plant and saw a detailed presentation inside the main control room of OPaL. He was accompanied by Gujarat Chief Minister Vijay Rupani, Union Ministers Mansukh Mandaviya and Nitin Gadkari. Modi expressed confidence that this PCPIR in Gujarat would give employment to 8 lakh people upon its full utilisation. “Dahej was selected for one of the four PCPIRs to be developed across the country. At present, it provides employment to over 1.25 lakh people. When this PCPIR starts functioning at its full capacity, it would give employment to around 8 lakh persons,” he added. Modi said he has personally seen this PCPIR growing. “Therefore, it is natural for me to have an emotional bonding with it,” Modi said. OPaL is the single largest petrochemical plant in India that has a capacity to produce 14 lakh tonnes of polymers and 5 lakh tonnes of chemicals such as benzene annually. It is a joint venture company promoted by ONGC, GAIL, and GSPC with an investment of Rs 30,000 crore, an official statement by ONGC said. Jay Beagle Jersey
Italy’s 15-cargo LNG buy tender attracts competitive bids
A tender to supply Italy with about 15 liquefied natural gas (LNG) cargoes between April and September attracted highly competitive winning bids from traders including Gunvor, Trafigura, MET and Uniper, trade sources said. Companies offered to supply the shipments at only a slight premium to prevailing prices at Britain’s National Balancing Point (NBP) trading hub, traders said. At the same time bids for a tender to supply Argentina with LNG attracted bids carrying a $0.30 per million British thermal units (mmBtu) premium to NBP levels, whereas the prices for the Italy tender showed only a slight premium, traders said. “It was very aggressively bid and suppliers may in the end opt not to deliver the cargoes if the economics don’t make sense,” one trader said. Under the tender, suppliers retain cancellation rights. The list of suppliers may not be exhaustive and the exact quantities to be delivered by each party are preliminary and could not be fully confirmed. According to traders, Gunvor will supply most of LNG – an estimated 10 cargoes – with Trafigura contributing about four. Italy launched a tender last month to buy 1.5 billion cubic metres of natural gas as LNG for delivery to OLT LNG, moored off the Tuscan coast, and the Panigaglia facility in northern Italy. The volume equates to about 15 standard-sized LNG carriers though some of the suppliers may opt to use smaller tankers, resulting in a higher carrier count. Tommy McDonald Jersey
OVL submits $3 billion new development plan for Farzad-B field
ONGC Videsh Ltd has finalised an over USD 3 billion master development plan for the coveted Farzad-B gas field off Iran and is likely to wrap up a deal by September. The new plan, filed with Iranian Offshore Oil Company (IOOC), excludes liquefaction facilities to turn the gas into LNG for ease of shipping to nations like India, sources privy to the development said. The two nations were initially targeting concluding a deal on Farzad-B field development by November 2016 but later mutually agreed to push the timeline to February 2017. Now, the deal is being targeted to be wrapped up by September after the two sides agree on a price and a rate of return for OVL’s investments. Farzad B was discovered by OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), in the Farsi block about 10 years ago. The project has so far cost the OVL-led consortium, which also includes Oil India Ltd and Indian Oil Corp (IOC), over USD 80 million. Iran was initially unhappy with the USD 10 billion plan submitted by OVL for development of the 12.5 trillion cubic feet reserves in Farzad-B field and an accompanying plant to liquefy the gas for transportation in ships. It felt the USD 5 billion cost OVL and its partners have put for developing the field was on the higher side and wanted it to be reduced. OVL will earn a fixed rate of return and get to recover all the investment it has made in the field development. Sources said in the new master development plan (MDP), the company has revised the cost downwards after making some adjustments in the production facilities. The field in the Farsi block was discovered by the OVL-led consortium in 2008. It has an in-place gas reserve of 21.7 tcf, of which 12.5 tcf are recoverable. New Delhi is keen that the gas from the field comes to India to feed the vast energy needs. But it initially felt deterred from investing because of the fear of sanctions imposed by the US. But with the lifting of sanctions last year, it is back to discussing a master development plan. Sources said that gas evacuation plans are not part of the new MDP. Gas produced from the field can either be converted into liquefied natural gas (LNG) by freezing at sub-zero temperature and shipping in cryogenic ships to India or transported through a pipeline — via overland passing through Pakistan or sub-sea. Options, they said, include an offshore liquefication facility. Another option on the table is that Iran would buy the gas and use it for reinjection into depleted oilfields to boost crude output. Malcom Brown Jersey