Now, GAIL to hive off its transportation business to address conflict
GAIL will not be split but will have to hive off its transportation business into a subsidiary to reduce the conflict of interest that arises with the same entity housing both the functions of marketing and transport of natural gas, according to people familiar with the plans of the oil ministry. The ministry and the Petroleum and Natural Gas Regulatory Board have considered the idea of splitting GAIL for some time now, hoping to ‘unbundle’ marketing and transportation of natural gas in the country, a necessary condition for the development of a competitive gas market. But strong resistance from GAIL, which owns most of the gas pipelines in the country, appears to have dissuaded the ministry from breaking up the company, the persons cited earlier told ET. The government appears to have bought GAIL’s argument of local gas market not being mature enough to prompt breaking of the firm, they said. Besides, the government isn’t willing to divert the company’s top management’s attention from laying a critical gas pipeline connecting the electorally-important eastern states and taking piped gas to several politically important cities on the pipeline’s route, they said. Now, the understanding between the government and GAIL is that the company will set up a subsidiary to house pipelines, and make its dealings with rival gas marketers more transparent by setting up a web portal to provide them with real-time data on availability of pipeline capacity, they said. It has been alleged that GAIL’s dominance in the pipeline business puts other gas suppliers as well as customers at a disadvantage. Planning to enhance their presence in the expanding local gas market, private and foreign companies have been pushing for the unbundling of marketing and transportation functions in the country. Unbundling and the government’s plan to set up a gas trading platform by the end of this year are seen as key steps towards developing India’s gas market. But without open access to pipelines and liquefied natural gas import terminals, the trading platform may not be fully effective in a country that imports about half of the natural gas it consumes. Last month, oil minister Dharmendra Pradhan had hinted at dropping the plan to split GAIL when he said his job was not to create more companies but to create more accessibility through policy. GAIL has also often reasoned that all its pipelines were self-funded and, therefore, other gas marketers should have only limited access to these assets. Jordan Mills Jersey
Now, GAIL to hive off its transportation business to address conflict
GAIL will not be split but will have to hive off its transportation business into a subsidiary to reduce the conflict of interest that arises with the same entity housing both the functions of marketing and transport of natural gas, according to people familiar with the plans of the oil ministry. The ministry and the Petroleum and Natural Gas Regulatory Board have considered the idea of splitting GAIL for some time now, hoping to ‘unbundle’ marketing and transportation of natural gas in the country, a necessary condition for the development of a competitive gas market. But strong resistance from GAIL, which owns most of the gas pipelines in the country, appears to have dissuaded the ministry from breaking up the company, the persons cited earlier told ET. The government appears to have bought GAIL’s argument of a local gas market not being mature enough to prompt breaking of the firm, they said. Besides, the government isn’t willing to divert the company’s top management’s attention from laying a critical gas pipeline connecting the electorally-important eastern states and taking piped gas to several politically important cities on the pipeline’s route, they said. Now, the understanding between the government and GAIL is that the company will set up a subsidiary to house pipelines, and make its dealings with rival gas marketers more transparent by setting up a web portal to provide them with real-time data on the availability of pipeline capacity, they said. It has been alleged that GAIL’s dominance in the pipeline business puts other gas suppliers as well as customers at a disadvantage. Planning to enhance their presence in the expanding local gas market, private and foreign companies have been pushing for the unbundling of marketing and transportation functions in the country. Unbundling and the government’s plan to set up a gas trading platform by the end of this year are seen as key steps towards developing India’s gas market. But without open access to pipelines and liquefied natural gas import terminals, the trading platform may not be fully effective in a country that imports about half of the natural gas it consumes. Last month, oil minister Dharmendra Pradhan had hinted at dropping the plan to split GAIL when he said his job was not to create more companies but to create more accessibility through policy. GAIL has also often reasoned that all its pipelines were self-funded and, therefore, other gas marketers should have only limited access to these assets. Alex Mack Authentic Jersey
On Iran oil crisis, India needs a long-term strategy
US President Donald Trump’s decision to renege on the US-Iran deal had created considerable disquiet in India, given its implications on our energy security. Iran is a major exporter of petroleum to India, and the US will want India to cut back and eventually eliminate its oil imports from Iran within less than four months. This newspaper had taken a position that the US cannot push India into cutting back its oil imports from Iran. Recent data from the petroleum ministry is bound to worsen these worries. In response to a Lok Sabha question, the petroleum ministry has given statistics which show that oil imports from Iran accounted for almost one-fourth of our total oil imports form the West Asian countries in the first quarter of this fiscal year. The share of Iran in total oil imports from the region has jumped by almost ten percentage points in this period compared to what it was in the fiscal years 2016-17 and 2017-18. While oil trade is extremely crucial for Iran’s economy, India also stands to gain from it. Price of oil imports from Iran has always been less than that of Saudi Arabia since 2016-17. If India were to stop its oil trade with Iran, it would face a double whammy: lose a supplier of cheap oil and face even greater price because of the supply shock, which Iran’s exit from the global oil markets will create. To be sure, it is still not clear whether India will cease its oil imports with Iran. The government’s reply in the Lok Sabha has steered clear of answering the question whether refiners have been asked to prepare for such eventualities. This could be a manifestation of the government still being undecided or not wanting to show all its cards at the moment. An oil shock will hurt even more at a time when the global economy is staring at the prospect of a trade war, inflation is worsening, and a depreciating rupee is threatening to jeopardise macroeconomic stability. Having said all this, we also need to understand that India’s high import-dependence on its energy needs mean that it is always vulnerable to sudden shocks — geopolitical or otherwise — in the global petroleum markets. Our import dependence in oil is a big reason why India cannot exploit policies such as currency devaluation to make its export competitive, as increased oil bills offset gains in exports. While diplomatic efforts must be made to find an interim solution to the crisis at hand, there are no substitutes to pursuing the long-term goal of self-sufficiency in energy. Jordie Benn Womens Jersey
Petroleum definition changed for uniformity in operations: Government
Further easing the oil and gas exploration norms in India, the government has now redefined ‘petroleum’, thereby giving operators the option to explore all hydrocarbons — including traditional oil and gas, shale, coal bed methane and hydrates — in the same field. In a notification dated July 24 amending the Petroleum and Natural Gas Rules of 1959, the ministry of petroleum and natural gas said that petroleum means “naturally occurring hydrocarbon in the in the form of natural gas or in a liquid, viscous or solid form, or a mixture thereof.” However, it will not include coal, lignite and helium occurring in association with petroleum or coal or shale. The move is likely to benefit not just state-run companies like Oil and Natural Gas Corporation (ONGC) and Oil India, but also private sector majors like Vedanta Cairn. “The amendment would open up exploration of all hydrocarbons in existing fields which is in line with the new HELP. This should help in enhancing domestic exploration and production of hydrocarbons, thereby increasing India’s energy security and reducing our dependency on imports,” said Prashant Modi, Managing Director and chief executive officer of Great Eastern Energy Corporation. This comes after the new Hydrocarbon Exploration and Licensing Policy (HELP) cleared by the Union Cabinet in March 2016, which allowed uniform license for exploration and production of all forms of hydrocarbon. The move will open up more revenue opportunities for many of the 117 companies that were operating in India after the conclusion of the ninth round of NELP. After the nine rounds of NELP, at least 11 public sector undertakings, 58 private and 48 foreign companies marked their presence in India. Even though India is not known for its shale reserves, it is believed to have at least 91.8 trillion cubic feet of CBM reserves. Already the government has conducted discovered small field (DSF I) and Open Acreage Licensing Policy (OALP-I) in which the blocks were allotted under a uniform licensing policy. However, both the rounds did not attract the interest of foreign players to India. Early this month, the Cabinet rolled out sops for companies like ONGC and Oil India by relaxing production sharing contracts (PSC) of Pre-Nelp and New Exploration Licensing Policy (NELP) blocks. This includes giving relief to companies like ONGC and Oil India on sharing of royalty and cess in pre-Nelp exploration blocks. This is after a series of measures to boost exploration, including the government relaxing rules for state-owned Coal India Ltd for extraction of natural gas lying below coal seams in its blocks in a bid to quickly boost production. Earlier, Coal India Ltd had to apply to oil ministry for a licence to extract coal-bed methane (CBM) from its coal blocks. Now, the world’s largest coal producer does not need such permission. Wilt Chamberlain Jersey