Oman signs oil agreement with Occidental Oman for Block 72: Ministry twitter
Oman signed an exploration and production-sharing agreement with Occidental Oman, its oil and gas ministry said in tweet on Thursday. Block 72 occupies an area of 3,530 square km, the ministry said. In December, Oman signed two agreements giving Occidental Petroleum the rights to explore for oil and natural gas in concessions 51 and 65.
No gas? No votes. Subsidy cuts imperil Ukraine leader’s reelection bid
Ukrainian pensioner Nadiya Ignatiy says she has had the plum and cherry trees in her garden cut down for firewood since the government raised gas prices late last year. In next month’s election, she will vote against President Petro Poroshenko in favour of an opponent who has pledged to restore the gas subsidies that were scaled back to secure an international bailout. “We cleared the garden,” she said in her house in the village of Skryhalivka, 80 km (50 miles) southwest of Kiev. “Not just me, other people are doing it now… previously you could heat with gas but now it’s a problem.” Such frustrations could tip the balance in the March 31 election against Poroshenko, whose market-oriented reforms have helped stabilise a country battling Russian-backed separatism and encouraged Western investors wary of pervasive corruption. Poroshenko was elected in 2014 after protests ousted a Kremlin-friendly president and sent the government and the West on a collision course with Russia: Russia annexed Crimea and supported the overthrow of government rule in eastern Ukraine. An influential businessman who had made a fortune from confectionery, he pledged to take the ex-Soviet country out of Russia’s orbit and restore control over the east in a matter of weeks. The latter has not happened, but he has overseen an uneasy stalemate with separatist-held regions and ended a steep recession, with around 3.4 percent growth last year. Living standards, however, have continued to decline. The average monthly wage has dropped the equivalent of almost $80 since 2013 and Ukrainians need more than three times as many local hryvnia to buy a dollar as they did then. Inflation peaked at 43 percent in 2015 and the price of a cubic meter of gas is almost 12 times what it was in 2013. Since the revolution, “nothing has changed substantially for the better,” said Nadiya Yurchenko, 79, who hoped for a higher pension, heating allowance and better healthcare as well as peace with Russia when she voted for Poroshenko in 2014. Poroshenko won the first round outright in 2014, but many polls have shown the election frontrunner this time to be Yulia Tymoshenko, a former prime minister and fiery campaigner who compares the gas price rise to “genocide”. Another candidate who has surged in February is comic actor Volodymyr Zelenskiy, a political novice and largely an unknown quantity. “For the IMF and most of Ukraine’s western partners, Poroshenko is a lesser evil, he is an acceptable partner,” said analyst Volodymyr Fesenko. However, “with their requirement for raising the price of gas and utility tariffs, the IMF paradoxically ends up giving political help to those whom it fears”, he said. CORRUPTION ISSUE Subsidised gas for households is a source of corruption in Ukraine because businesses divert it for their own use to avoid paying market prices, draining money from the state budget. The IMF, which has lent $14.7 billion to Ukraine since April 2014, has made gradually bringing household tariffs in line with market prices a condition for more funding. When gas prices were hiked in November, Poroshenko said there had been no choice. “The government was caught between the bad and the very bad, between tariff increases and a blow to macroeconomic stability.” IMF country head Gosta Ljungman has said price controls were ineffective at providing social protection, and led to overconsumption and corruption, while liberalising the market meant richer households paid more, freeing cash for poorer ones. “The most optimal approach is to give markets the right to determine the price, and then to provide well-focused subsidies to those who need them most,” Ljungman told Ukrainian news site FinClub this month in comments his office referred Reuters to. Government officials were not immediately available to comment on why some of the poorest Ukrainian households were not getting help to adjust to the new prices. Price rises are among voters’ main concerns and gas prices came out top in an opinion poll by the Kiev International Institute of Sociology in October and early November, when Poroshenko slipped from second into third place behind Tymoshenko and Zelenskiy. Poroshenko moved back to second place after Ukraine’s Orthodox Church won independence from the Russian Church in January and the government plans pension increases on Friday that his opponents say are designed to bolster his ratings. But Fesenko said any gains may be offset by the arrival this month of the first higher gas bills and then those for other utilities. Tymoshenko and other candidates like Yuriy Boyko, a former energy minister popular mainly in Ukraine’s Russian-speaking east, have used rising prices to attack the president. Tempers flared at a lawmakers’ meeting on Monday when Tymoshenko accused Poroshenko and his associates of funnelling money gained from the price rises to offshore bank accounts, an allegation swiftly denied by the leader of Poroshenko’s faction. After a Feb. 16 meeting with Tymoshenko, IMF chief Christine Lagarde stressed the urgency for Ukraine to continue reforms and safeguard its return to economic stability. Tymoshenko says she wants to keep cooperation with the IMF but change the terms of the deal. She has also promised sharp hikes in salaries and pensions and to change central bank policy to provide cheap loans to small businesses. How she would act on those promises if she wins is unclear, but it is enough to make many investors uncomfortable. Poroshenko helped build foreign direct investment back up to $4.4 billion in 2016, but it fell to $1.87 billion in 2017 amid concern about Ukraine’s finances, far off the $5.46 billion under former president Victor Yanukovich. “The threat that cooperation with the IMF will be disrupted, and the threat that the country will again return to the prospect of default, is much higher if other candidates win,” said Serhiy Fursa, a Kiev-based investment banker at Dragon Capital. Shoring up state finances means little to voters left out of pocket. Liubov Spychak, 73-year pensioner from the town of Cherkasy, fought back tears as she described how expensive it had become to heat
Softer crude to pull petrochemical prices down in 2019: CRISIL
A slowdown in global demand is likely to keep crude oil prices under check in 2019 which, in turn, would hurt petrochemical prices, according to research and ratings agency CRISIL. “We expect the prices to range $63-$68 per barrel in 2019, considering the impact of any production cuts from the OPEC to arrest a further decline in crude oil prices, which are currently hovering at $60 per barrel. Naphtha prices are expected to decline at a similar pace as those of oil prices,” the agency said in a report. In 2018, crude oil prices increased 31 per cent to $71 per barrel, with naphtha prices increasing at a similar pace. The ongoing tensions in Libya, sanctions on Iran and falling output from Venezuela has resulted in a spike in crude oil prices. Petrochemical prices increased in 2018, too, because of a rise in feedstock prices but higher capacity addition put a brake on the pace of rise. Rising global supply is also exerting downward pressure on petrochemical prices, with demand momentum not keeping pace. “With softening crude oil prices, increasing global supply, lower forecasts for global economic growth, and US-China trade war, petrochemical prices could see some trouble ahead. This decline in product prices is also likely to have a direct impact on cracker margins and product spreads,” CRISIL said. Demand for petrochemicals is linked to the gross domestic product growth, as petrochemicals find application in most of the key end-user sectors, such as automobiles, consumer durables, construction and irrigation. With the International Monetary Fund cutting its forecasts for global economic growth in 2019 to 3.5 per cent, global demand for petrochemicals is likely to get impacted. For India, the volume growth of petrochemicals over the next two years is likely to remain healthy, growing 7-9 per cent. However, capacity addition in the global market, subsequent competition from imports, and lower crude oil prices restrict the ability of domestic players to keep product prices high. With cracker margins coming under pressure, profitability of players could shrink as compared to the strong margin growth in the past two years.
ONGC to pay over Rs 220 cr in arrears to Mumbai Port Trust on pipelines way leave fees
Oil and Natural Gas Corporation Ltd (ONGC), weighed down by the government-directed acquisition of HPCL in 2018, is piling up further agony after the rate regulator for major port trusts approved a proposal brought by the Mumbai Port Trust to levy special way leave fees on ONGC pipelines passing through port limits and rent for a land parcel, including arrears of over Rs 220 crore. The Tariff Authority for Major Ports (TAMP), the rate regulator for the 11 major port trusts, had separately ordered ONGC in October 2018 to pay arrears of Rs 173.69 crore to Mumbai Port Trust as wharfage compensation for transportation of crude oil and gas from the Mumbai High field to the Uran terminal through pipelines it had laid within the limits of the state-run port. ONGC laid the pipelines for crude oil and gas evacuation from Mumbai High to the Uran plant in 1978. About 19.5 km of these pipelines pass through the limits of Mumbai Port Trust. ONGC paid the special way leave fees and land rent to Mumbai Port Trust on 11 pipelines and one parcel of land at Jawahar Dweep till 2014, after which the payment was discontinued by the state-run oil explorer, citing the levy did not have the backing of TAMP. ONGC further said it would not make the payment till Mumbai Port Trust secured TAMP’s approval for the levy. ONGC also contended that the pipelines are laid under the seabed and far off from operational areas of the port, thereby not impacting other developmental activities of the port. Besides, Mumbai Port Trust was not rendering any service to the pipelines. Hence, ONGC was of the view that the “Mumbai Port Trust should not levy any way leave charges on ONGC”. “The way leave charge is a levy, levied for the use of the property of the port within the port limits. In the instant case, the way leave charge is for the pipelines of ONGC passing through the Mumbai Port Trust limits,” TAMP said in its order. Responding to ONGC’s grievance that it signed the agreement with Mumbai Port Trust under duress and without full consent, TAMP said that “ONGC was not obliged to accept such agreement if it did not want to”. “Having signed the agreement, the ONGC cannot, at this stage, argue that it signed the agreement under duress and without consent. Agreement has been made between both the parties who have intended to bind together to serve the interest of both the parties. When a binding agreement is not honoured by one party to the agreement by non-performance, there is breach of agreement. The other party is discharged from its obligation under the agreement and it is entitled to rescind the agreement, which would affect the oil industry. The Mumbai Port Trust, being a responsible public authority, has chosen not to rescind the agreement. The proposal of the Mumbai Port Trust for recovery of way leave charges and rent for the parcel of land at Jawahar Dweep leviable as per the agreement between ONGC and MBPT dated 28 January 2005 is approved with retrospective effect from 01 October 2009 to 30 September 2018, as proposed by Mumbai Port Trust,” TAMP wrote in a February 8 gazette notification. BusinessLine has reviewed a copy of the gazette notification. For cash-strapped Mumbai Port Trust, the TAMP orders on wharfage compensation, special way leave charges and land rent on ONGC pipelines means a bonanza of more than Rs 400 crore in arrears alone.
ONGC Videsh JV enters into LNG sale and purchase pact
ONGC Videsh Limited (ONGC Videsh) – a wholly owned subsidiary of ONGC, announced that Mozambique LNGl Company Pte Ltd., the jointly owned marketing entity of ONGC Videsh and joint venture partners of Mozambique Rovuma Offshore Area 1 project has entered into long-term LNG Sale and Purchase Agreement (SPA) with Tokyo Gas Co. Ltd. (Tokyo Gas) and Centrica LNG Company Ltd., a subsidiary of Centrica pie (Centrica) through a co-purchasing agreement. The two companies have signed a deal for sale of 2.6 mn tonnes per annum (MMTPA) from the start-up of production until the early 2040s. These latest deals build upon previously executed deals for long term offtake of LNG from Rovuma Offshore Area 1 project and take long-term sales to more than 9.5 MMTPA. The state run oil major has also signed an MOU with CNOOC gas and power (CNOOC) for 1.5 MMTPA for a term of 13 years, Shell International Trading Middle East Ltd. (Shell) for 2 MMTPA for a term of 13 years, Bharat Gas Resources Ltd. a wholly owned subsidiary of Bharat Petroleum Corporation Ltd. for 1 MMTPA for a term of 15 years and Pertamina, an Indonesian PSU for 1 MMTPA for a term of 20 years. The exchange filing also mentioned that with the approval of the development plan in February 2018, ongoing resettlement implementation activities, site preparation and execution of these SPAs, the project is poised to take off in H1 2019. ONGC Videsh holds 16% interest in the Mozambique Rovuma Area-1 Offshore Project out of which 10% PI is held directly by ONGC Videsh and another 6% interest is held through its 60% shareholding in ‘Beas Rovuma Energy Mozambique Limited’ (“BREML”). The remaining 40% shares in BREML are held by Oil India Limited (“OIL”). Anadarko Mozambique is the operator of the project with 26.5% PI and the other partners are Mitsui E&P Mozambique Area 1 Ltd. (20%), ENH (15%), BPRL (10%) and PTTEP (8.5%). ONGC Videsh is a wholly owned subsidiary of Oil and Natural Gas Corporation Limited (ONGC), the National Oil Company of India, and is the largest international oil and gas E&P Company of India. At present, ONGC Videsh has 41 projects in 20 countries including Azerbaijan, Bangladesh, Brazil, Colombia, Iraq, Israel, Kazakhstan, Libya, Mozambique, Myanmar, Namibia, New Zealand, Russia, South Sudan, Sudan, UAE, Venezuela and Vietnam.
GAIL evaluating buying stake in Adani’s East Coast LNG terminal
The chairman of India’s GAIL said on Wednesday the company was evaluating buying a stake in the Adani Group’s proposed 5 million tonnes per annum Dhamra liquefied natural gas (LNG) terminal on India’s eastern coast. GAIL has sold about 70 percent of U.S. LNG in deals with terms extending up to 20 years to Indian buyers, and the rest to global firms in deal terms extending to up to five years, he said. GAIL has 20-year deals to buy 5.8 million tonnes a year of U.S. LNG, split between Dominion Energy’s Cove Point plant and Cheniere Energy’s Sabine Pass site.
CNPC to build new shale oil field by end of year
* China’s state-owned CNPC has started to develop a new offshore shale gas field near the Bohai Rim Basin, the company said via its official newspaper. * CNPC aims to produce 50,000 tonnes of shale gas from the Bohai Rim Basin in 2019 and to achieve production capacity of 1 million tonnes by 2028 * CNPC also said it will prioritize shale gas-related exploration at the Songliao Basin, Ordos Basin, and Jungar Basin
ONGC to drill 406 wells in Gujarat oil and gas asset at a cost of Rs 2,403 crore
Oil and Natural Gas Corporation (ONGC), India’s largest producer of oil and gas, has applied for Environmental Clearance (EC) for drilling 406 wells in its Mehsana asset in Gujarat at a cost of Rs 2,403 crore to tap into 13.65 Million Tonne of crude oil. “The proposed project will be covering an ML area of 1114 square km wherein 406 wells are proposed to be drilled for development. Likely cost of the project works out to be Rs 2,402.83 crore. It is planned that 195 wells will be in Non-EOR field area and 211 wells in EOR field area. Total oil production is about 13.6 MT to be produced over 6 years,” the company said in its EC application. The Expert Appraisal Committee is expected to take up the application soon. The company plans to drill 211 wells in its Enhanced Oil Recovery (EOR) field at a cost of Rs 6.73 crore per well and 195 wells in the Non-EOR field at a cost of Rs 5.04 crore per well. “The drilling process will involve a number of skilled and unskilled workers. There is possibility that local people will be engaged for the purpose and hence improve the existing employment scenario of the region. The drill site construction would be done largely by employing local labor. At each drill site local employment for 600 people will be generated,” ONGC said. The firm’s crude oil production from Gujarat during April-January 2018-2019 period increased 0.72 per cent to 3,751 thousand tonnes while natural gas production from the state dropped 16 per cent to 1,116 Million Cubic Meter. ONGC was recently given an environmental clearance to drill 200 wells across various fields in Sivasagar district of Assam at a cost of Rs 6,000 crore. It has notified 11 new oil and gas discoveries in the current fiscal so far.
5,000 compressed bio gas plants to come up by 2023: Pradhan
Around 5,000 compressed-bio gas (CBG) plants will be set up in the country by 2023, while a city gas distribution system covering 400 districts will provide a ready market for the CBG, Petroleum Minister Dharmendra Pradhan said on Wednesday. Speaking at the handing over event of Letters of Intent (LOI) to private producers for setting up CBG plants under the government’s Sustainable Alternative Towards Affordable Transportation (SATAT) scheme, Pradhan said the marketing of this environment-friendly fuel produced from waste would be facilitated through the City Gas Distribution (CGD) network which would become available in 400 districts. The SATAT initiative, launched in October 2018, aims to produce CBG from agricultural residue for use in the vehicular sector in order to reduce polluting emissions. “We have already issued LoIs for setting up 100 CBG plants, and we have kept a target of 5,000 such units of various capacity to be set up across the country by 2023,” Pradhan said. This “waste-to-wealth” scheme is lucrative for prospective entrepreneurs as it provides a guaranteed rate of return, assured 100 per cent offtake by state-run oil marketing companies and abundant raw material, he said. “Given this situation of viability, the banks have said they are quite agreeable to give loans, and the minimum standard of investment is Rs 3 crore. “The government is in also talks with the UN Environment Fund and the Japanese government for providing soft loans for such projects,” he added. A Petroleum Ministry statement said SATAT was launched with a four-pronged agenda of utilising over 62 million tonnes of waste generated every year in the country, cutting down oil imports, job creation and reducing vehicular emissions and pollution from burning of agricultural and organic waste. CBG production also provides an additional source of revenue for farmers.