Govt may sell Air India in parts to attract potential buyers
India is considering selling state-owned Air India in parts to make it attractive to potential buyers, as it reviews options to divest the loss-making flagship carrier, several government officials familiar with the situation said. Prime Minister Narendra Modi’s cabinet gave the go-ahead last month for the government to try to sell the airline, after successive governments spent billions of dollars in recent years to keep the airline going. Air India – founded in the 1930s and known to generations of Indians for its Maharajah mascot – is saddled with a debt burden of $8.5 billion and a bloated cost structure. The government has injected $3.6 billion since 2012 to bail out the airline. Once the nation’s largest carrier, its market share in the booming domestic market has slumped to 13 percent as private carriers such as InterGlobe Aviation’s IndiGo and Jet Airways have grown. Previous attempts to offload the airline have been unsuccessful. If Modi can pull this off, it will buttress his credentials as a reformer brave enough to wade into some of the country’s most intractable problems. His office has set a deadline of early next year to get the sale process underway, the officials said, declining to be named as they were not authorized to speak publicly about the plans. The timeline is ambitious and the process fraught, with opinion divided on the best way forward: should the government retain a stake or exit completely, and should it risk being left with the unprofitable pieces while buyers pick off the better businesses, officials said. Already, a labour union that represents 2,500 of the airline’s 40,000 employees has opposed the idea of a sale even though it is ideologically aligned to Modi’s Bharatiya Janata Party. JaVale McGee Authentic Jersey
UP nudges solar companies to cut power tariff on older pacts
Following a steep fall in solar tariffs in the last two years, Uttar Pradesh is pressuring solar power project developers to cut rates of electricity agreed upon in earlier contracts even though the pacts were signed when equipment prices were high. Winners of an auction conducted in September 2015 have been urged to voluntarily lower power tariff of plants nearing completion. Uttar Pradesh’s nodal agency for renewable energy New Energy Development Agency (NEDA) declared results of the auction in 2015, after which contracts were signed with 15 developers at tariffs ranging between Rs 7.02 per kwH and Rs 8.60 per kwH. The biggest winners were Adani Green Energy which bagged a 50-MW project at a tariff of Rs 8.43 per kwH and Essel Infra Projects which also won a bid for 50 MW at a tariff of Rs 7.02 per kwH. However, they have all recently received the pro-forma of a letter the UP Electricity Regulatory Commission (UPERC) wants them to sign by which they would voluntarily agree to lower solar tariffs to Rs 7.02 per kwH, the price that was proposed by the lowest bidder during the auction. “Subsequent to approval of the tariff quoted by the firm by the UP cabinet, PPA [power purchase agreement] was executed by the firm with UPPCL [Uttar Pradesh Power Corporation Ltd],” the suggested letter says. “On adoption of tariff, UPERC directed for reducing the quoted tariff. As per the direction of UPERC, we give our consent for tariff of Rs 7.02 per kwH.” This has put the project developers in a fix. “The project was won at a particular price but now they are asking winning bidders to lower it and match the price of the lowest bidder,” said a source close to the development. “Bidders have been given a standard letter on a piece of blank paper and told to sign or else quit the project. How can they quit? Most of the plants have already been built.” The PPAs are for 12 years, not 25 years as is the usual practice. Officials of UPERC and UP NEDA were not available for comment. Solar tariffs have fallen drastically throughout the country due to improved technology for solar module manufacturing as well as excess production in China, from where most Indian developers source solar equipment. The lowest solar tariff reached so far has been Rs 2.44 per kwH in an auction conducted by the Solar Energy Corporation of India (SECI) for the Bhadla Solar Park in Rajasthan in May. The solar tariff compares well with the price of power supplied by coal-fired plants. Bhadla has the highest solar radiation in the country. Though solar radiation in UP is weaker in comparison, tariffs have fallen there too. The last solar auction of 125 MW conducted in the state in March 2016 by SECI saw winning tariff of Rs 4.43 per kwH. UPERC thus seems reluctant to adhere to PPAs where the state discom will have to pay almost double for solar power. Jung-ho Kang Womens Jersey
Aramco CEO sees oil supply shortage as investments and discoveries drop
The world might be heading for an oil supply shortage following a steep drop in investments and a lack of fresh conventional discoveries, Saudi Aramco’s chief executive said on Monday. Unconventional shale oil and alternative energy resources are an important factor to help meet future demand but it is premature to assume that they can be developed quickly to replace oil and gas, Amin Nasser told a conference in Istanbul. “If we look at the long-term situation of oil supplies, for example, the picture is becoming increasingly worrying,” Nasser said. “Financial investors are shying away from making much needed large investments in oil exploration, long-term development and the related infrastructure. Investments in smaller increments such as shale oil will just not cut it,” Nasser said. About $1 trillion in investments have already been lost since a decline in oil prices from 2014. Studies show that 20 million barrels per day of new production will be needed to meet demand growth and offset natural decline of developed fields over the next five years, he said. “New discoveries are also on a major downward trend. The volume of conventional oil discovered around the world over the past four years has more than halved compared with the previous four,” Nasser said. State oil giant Aramco, which is preparing to sell around 5 percent in itself next year in an initial public offering, is continuing to invest in maintaining its oil production capacity of 12 million barrels per day. “We plan to invest more than $300 billion over the coming decade to reinforce our pre-eminent position in oil, maintain our spare oil production capacity, and pursue a large exploration and production program centering on conventional and unconventional gas resources,” Nasser said. Nasser said that one of Aramco’s priorities was “direct conversion of crude oil into petrochemicals” while adding the company was also focusing on solar and wind projects. Giovanni Fiore Authentic Jersey
LNG exports to India, China, others not affected by Gulf rift, says Qatar
Qatar’s exports of liquefied natural gas (LNG) to Japan, India, South Korea and China have not been affected by a boycott of Doha by four Arab states, Energy Minister Mohammed al-Sada said in a statement on Monday. He said Qatar’s exports to the four Asian countries accounted for nearly three-quarters of the country’s total exports. Exports to the United Arab Emirates, Saudi Arabia and Bahrain accounted for less than eight percent, the statement said, citing comments made by the minister at an energy conference in Istanbul. Qatar remains “committed to all its agreements with its partners and is determined to maintain this status despite the illegal and unjust embargo imposed on it,” the statement said, referring to LNG exports. Magic Johnson Jersey
BPCL plans to buy first U.S. crude via tender Document
Indian refiner Bharat Petroleum Corp Ltd plans to buy its first ever cargo of crude oil from the United States, a tender document showed on Monday. BPCL is seeking at least 1 million barrels of crude either for loading on Aug. 16-Sept.5 or delivery on Sept. 26-Oct. 15, it said. Part 1 of the tender closes on July 11 and part 2 on July 14. Offers will remain valid until July 14. Orlando Pace Jersey
Reliance Industries pulls the plug on Peru oil block, trims overseas assets
Reliance Industries has pulled out of the last oil block it held in Peru, trimming its overseas assets to just two properties in Myanmar. The billionaire Mukesh Ambani-led firm had in 2007 set up Reliance Exploration and Production (REP) DMCC primarily for acquiring overseas assets. It had steadily acquired 16 conventional oil and gas assets, including four in Peru, three in Yemen (one producing and two exploratory), two each in Oman, Kurdistan and Colombia and one each in East Timor and Australia. It last bagged two oil and gas exploration blocks in Myanmar in 2014. But the company slowly exited most of its international assets. In its latest annual report for 2016-17, RIL says it has “withdrawn from Block 39” in Peru. RIL held 10 per cent interest in the block. Anglo-French oil and gas company Perenco held 55 per cent stake in the block while PetroVietnam of Vietnam held the remaining 35 per cent. RIL said it is awaiting formal assignment of its interest to the existing partners. The company now is left with just two exploration blocks in Myanmar — M17 and M18. RIL holds 96 per cent stake in each of the two blocks with the remaining 4 per cent being with a local company. For Block M17, the company has sought an “extension for study period” from Myanma Oil and Gas Enterprise or MOGE, the annual report said. RIL’s domestic oil and gas business portfolio, which at one point of time comprised of 42 blocks or fields, has shrunk to five conventional oil and gas assets and two coal-bed methane (CBM) blocks. As part of its upstream (hydrocarbons exploration and production) portfolio rationalisation, the company has been exiting those assets which it feels are not going to give good return on investment. According to the annual report, the company’s present domestic portfolio comprises the flagging KG-D6 block in the Krishna Godavari basin, Mahanadi basin block of NEC-25, CB-10 in Cambay and GS-01 in Saurashtra basin. Besides, it also has stake in Panna/Mukta and Tapti oil and gas fields in the Arabian Sea. However, Mid and South Tapti fields have been abandoned after production tapered, it said. Also, it has two CBM blocks in Madhya Pradesh. RIL had in February 2011 announced a “transformational” deal when UK’s BP picked up 30 per cent stake in its 23 oil and gas blocks for USD 7.2 billion. However, in August that year the government allowed them to form a partnership in only 21 blocks. Since 2012, RIL and BP have been pruning their portfolio, shedding not so viable acreage. They are now left with just three blocks — the producing KG-DWN-98/3 or KG-D6 block in Bay of Bengal, gas discovery areas of NEC-OSN-97/2 (NEC-25) and CB-ONN-2003/1 in Cambay basin. In US, it also has stake in three shale gas producing properties. Kyle Emanuel Womens Jersey
ONGC Videsh gets 2-year extension for exploring Vietnamese oil block
ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corp (ONGC), has got a two-year extension to explore a Vietnamese oil block in the contested waters of the South China Sea. This is the fifth extension for OVL to explore Block-128, the licence for which is now valid till June 15, 2019, sources said on condition of anonymity as the information is not public yet. While India wants to maintain its strategic interest in the South China Sea, Vietnam wants an Indian firm to counter China’s interventions in the contested waters. Sources said OVL had in May applied to the Vietnamese authorities for a fifth extension of the exploration licence for the deepsea block. Vietnam’s national oil company PetroVietnam last week granted the extension, they said. OVL had signed Production Sharing Contract (PSC) for the 7,058 square km Block 128 in offshore PhuKhanh Basin, Vietnam on May 24, 2006. Ministry of Planning and Investment (MPI), Vietnam issued investment licence for the block on June 16, 2006, being effective date of the PSC. The company has not found any hydrocarbon in the block but is continuing to stay invested to maintain India’s strategic interest. OVL first took a two-year extension of the exploration period till June 2014 and then another one year. A third extension was granted on May 28, 2015 and a fourth last year. The company has so far invested USD 50.88 million in the block. The block lies in the part of South China Sea over which China claims sovereignty. In 2011, Beijing had warned OVL that its exploration activities off the Vietnam coast were illegal and violated China’s sovereignty, but the company continued exploring for oil and gas. OVL forayed into Vietnam as early as 1988, when it bagged the exploration licence for Block 6.1. The company got two exploration blocks – Block 127 and Block 128 – in 2006. While Block 127 was relinquished due to poor prospectives, the other Block was retained. The first extension followed China putting the area under Block 128 for global bidding. China claims sovereignty over most of the South China Sea where the two Blocks are located and had warned the Indian arm from drilling in the region. OVL continues to own 45 per cent stake in Vietnam’s offshore Block 6.1 and its share of production was 2.023 billion cubic metres of gas and 0.036 million tonnes of condensate. Ron Hextall Jersey
Ground breaking ceremony of Rs 6,000 crore Dhamra LNG Terminal held
Ground breaking ceremony of the Rs 6,000 crore LNG Terminal was held at Dhamra port in Odisha’s Bhadrak district. Petroleum Minister Dharmendra Pradhan performed the Bhumi Pujan in the absence of Odisha Chief Minister Naveen Patnaik. The 5 MMTPA capacity LNG terminal would play a major role in accelerating the process of development and economic growth in eastern India, Pradhan said. Construction of the LNG import terminal would involve an investment of Rs 6,000 crore, while a 2539 km long network of pipeline to transport gas would be laid at a cost of Rs 13,000 crore, the petroleum minister said. The network would connect 13 districts of Odisha and states like Jharkhand and Uttar Pradesh, Pradhan said. Stating that the country now has only one gas terminal in Gujarat, Pradhan said that natural gas would now be brought to Bhadrak from countries like America, Canada and Qatar. The natural gas from the terminal would also be supplied to various city gas distribution networks in the eastern India. While households in various cities would get piped gas, motor vehicles and industries would get cheaper and clean fuel, the Petroleum Minister said adding it would create vast employment opportunities for the the youth of Odisha. Odisha Chief Minister Naveen Patnaik, who was supposed to perform “Bhumi Pujan”, skipped the programme. So did the BJD MP and MLAs from the area. In Patnaik’s absence, Pradhan conducted the “Bhumi Pujan”. Pradhan said the chief minister had been invited to the function but it was learnt last night that he would not be attending it. Since the gas infrastructure project is set to boost economic growth in Odisha and the entire eastern region, the chief minister’s presence would have been proper, Pradhan said. BJD spokesperson and MP Pratap Keshari Deb said the chief minister had given consent to attend the function as it was a government programme. However, he decided to stay away when it was understood that it would become a political event. Teemu Selanne Jersey
GST Bill: Allow input tax credit on five products, oil ministry says
Oil ministry has urged finance ministry to put in place a temporary system to allow oil companies to claim input tax credit until crude oil, natural gas, diesel, petrol and jet fuel are covered under the goods and services tax (GST) regime. GST, which came into effect this month, covers most goods and services across the country but temporarily excludes the five key oil products that are the biggest source of revenue for oil companies. Other oil products such as cooking gas, kerosene and naphtha are part of GST. Oil companies, therefore, are dealing with two parallel systems of taxation. While they pay GST on equipment and services they use for operations, they cannot set this off against excise duty and value added tax they pay on output such as crude oil, gas, petrol, diesel and jet fuel, resulting in stranded taxes, which, according to one estimate, could be nearly Rs 25,000 crore a year. Following a representation by the oil industry, oil ministry has told finance ministry that stranded tax would become a major burden on oil companies and must be addressed quickly, an oil ministry official said. Finance ministry has been asked to offer some means to set off input tax credit against tax liability of products not yet part of GST, the official said. At present, tax credit cannot be transferred between the old and the new taxation system. The GST Council is aware of stranded taxes, but couldn’t do much earlier as it was busy launching the new tax regime, the official said. However, these issues will now get the attention they need, the person said. Another issue the oil ministry has raised is that of tax on equipment such as rigs used in exploration and production. GST has been proposed on the value of service a rig provides, instead of the full value of rig, which is currently the case, leading to huge tax burden on oil companies, the official said. Similarly, tax implication on the movement of rigs between states has also been flagged. GST has raised tax burden on offshore contracts. Earlier, service tax was applicable on only 40% of the total contract value but GST is applicable on 100% of the contract value in an offshore contract. Torry Holt Jersey