Essar to double CBM gas production to 1 mmscmd
Mumbai’s Ruia family-owned Essar plans to double production of coal-seam gas from its Raniganj east block in West Bengal as a vital Urja-Ganga gas pipeline connecting users in eastern India gets commissioned by year-end, a company official said on Wednesday. Essar Oil and Gas Exploration and Production (EOGEPL) currently produces about 0.45 million standard cubic metres per day due to constraints of pipelines that could take the gas to consumers. The company plans to ramp up the production to more than 1 mmscmd, the official, who did not wish to be named, said. This would be the highest production of coal-seam gas or coal-bed methane (CBM) from any block in the country. The firm has already invested Rs 4,000 crore in the project, which encompassed drilling of 348 wells, setting up the supply infrastructure, and laying pipelines to Durgapur and nearby industrial areas. The current production from the Raniganj east CBM block is significantly lower than its capacity with the company having to throttle the output at about 0.45 mmscmd because of lack of a pipeline to take the gas to consumers. “We have already produced 1 mmscmd gas from this block, which is the highest by any player in the sector. However, sustaining production at that level is unfeasible without the GAIL pipeline being commissioned. This is why we are producing far lower quantities of gas than we are capable of,” the official said. The Pradhan Mantri Urja Ganga natural gas pipeline transverses from Jagdishpur in Uttar Pradesh to Haldia in West Bengal and Bokaro in Jharkhand and Dhamra in Odisha. The pipeline is being commissioned in phases and the last leg is scheduled for completion by December 2019. This will help gas supplies to reach four fertiliser plants in Gorakhpur, Sindri, Barauni and Panagarh, besides more than two dozen towns where city gas distribution rights have been awarded recently. The total demand in the region is envisaged at about 20 mmscmd. CBM is natural gas stored or absorbed in coal seams and contains 90-95 per cent methane. According to the Directorate General of Hydrocarbons, India has the fifth-largest proven coal reserves in the world and, therefore, holds significant prospects for exploration and exploitation of CBM. Raniganj east block is India’s most prolific CBM block, holding 1 trillion cubic feet of recoverable reserves. The official said EOGEPL is also planning to drill additional wells in accordance with the approved field development plan for the block. The additional wells will enable the company to ramp up production to a peak of 2.3 mmscmd in the next few years, he said. In August 2018, EOGEPL signed a gas sale and purchase agreement with GAIL, to formalise a 15-year gas supply contract between the two companies. The GSPA allows EOGEPL to monetise its entire CBM production at a globally competitive price. EOGEPL is a wholly-owned subsidiary of Essar Exploration and Production Ltd Mauritius (EEPLM). EEPLM is an early stage developer, focussed primarily on oil and gas exploration. Its global portfolio includes conventional acreages with a net resource of 1 billion barrels of oil equivalent (bboe), as well as unconventional hydrocarbon acreages that have a resource base of 15 Tcf (2.5 bboe) of gas. It has invested USD 1.1 billion in various acreages across the world. These investments include unconventional hydrocarbon acreages in India through EOGEPL, a joint venture with Eni in Vietnam and investments in an exclusive block OPL 226 in Nigeria. “EEPLM seeks to utilise its experience as a pioneer and leader in unconventional CBM gas development in India to explore and monetise its other acreages towards enhancing the country’s energy security. With a certified shale gas resource base, it is also poised to become a pioneer in this emerging energy frontier,” the official said.
Oil minister Pradhan meets Rosneft CEO, discusses buying Russian crude
Oil minister Dharmendra today met Chief Executive Officer (CEO) of Russian oil and gas company Rosneft and the former deputy Prime Minister of Russian Federation here. The delegation discussed ongoing energy projects between the two countries and discussed plans to signing a term contract for the supply of Russian crude to India, the ministry said in a statement. Pradhan also emphasised the need to increase sourcing of Russian crude for Indian refiners in the light of the recent drone attacks on Saudi oil facilities. “The ongoing joint projects in Russia between Indian oil & gas PSUs and Rosneft were also reviewed, specifically Sakhalin-1, Taas-Yuryakh and Vankor fields. In the presence of Minister Pradhan, the Indian Consortium of four oil & gas PSUs (BPRL, IOCL,OVL and OIL) and Rosneft today exchanged a non-binding cooperation agreement, reiterating their interest in the participation of the Indian companies in the Eastern Cluster project of Russia,” the statement said. The Russian delegation also discussed plans of further expanding Nayara Energy’s operations in the country. “The consortium is reviewing an option of a two-fold increase of the refining throughput at the Vadinar Refinery. The first stage consortium commits to the investment of USD 850 million towards the building of a petrochemical unit inVadinar within two years. The consortium is also planning to expand NayaraEnergy’s retail presence, which currently has over 5300 retail outlets across the country,” the ministry said. Today’s meeting follows the visit of Prime Minister Narendra Modi to Vladivostok as Chief Guest at the Eastern Economic Forum and the 20th Annual Bilateral Summit between Modi and Russian President Vladimir Putin. India and Russia issued a joint statement for cooperation in the hydrocarbon sector between 2019 and 2024 during Modi’s visit to Russia earlier this month. Indian companies ONGC Videsh, Oil India (OIL), Indian Oil Corporation (IOC) and Bharat Petroresources (BPRL) own 49.9 percent of a Vankorneft subsidiary. That company is located in Krasnoyarsk province and is developing Vankor oil and gas condensate field – the largest among the fields discovered in Russia in the past twenty-five years. A consortium of Indian companies including OIL, IOC and BPRL own 29.9 percent of the company Taas Yuryakh Neftegazodobycha which holds licenses for the areas of the Central Block of Srednebotuobinskoe Field and Kurungskiy license area. OVL has also been a shareholder of Sakhalin-1 Project since 2001.
India signs pact expressing interest in taking stake in Far East Russian oilfields
India on Tuesday signed a non-binding cooperation agreement with Russia that reiterated interest of Indian firms in taking stake in oilfields in Far East region of the former Soviet Republic. Oil Minister Dharmendra Pradhan discussed investment opportunities when he met Igor Sechin, chief executive of Russian oil major Rosneft, here on Tuesday. “We discussed elaborately for raising oil imports from Russia,” he told reporters after the meeting. During the talks, the two sides reviewed existing stake of Indian firms in Russian oilfields such as Sakhalin-1, Taas-Yuryakh and Vankor fields. “In the presence of Minister Pradhan, the Indian consortium of four oil and gas PSUs (Bharat PetroResources Ltd, Indian Oil Corp, ONGC Videsh Ltd and Oil India Ltd) and Rosneft exchanged a non-binding cooperation agreement, reiterating their interest in participation of the Indian companies in the Eastern Cluster project of Russia,” an official statement said. A separate statement issued by Rosneft said the two sides “reiterated their interest in a potential participation of the Indian partners in the Vostok oil project.” Both the Eastern Cluster and Vostok project refer to the cluster of oilfields near the Vankor project in Arctic/Far East Russia. Rosneft said the Vostok project will enable development of the unique resource potential of the Arctic Cluster. “It is planned that the project will incorporate the assets of Vankor group of fields (including Vankor, Suzun, Tagul and Lodochnoe fields), Payakha group of fields, West-Irkinskiy license area as well as a number of other high-potential exploration projects in Krasnoyarsk province,” it said. By 2030, the cluster oil production might come to 100 million tons. India already imports a small quantity of oil from Russia, but is looking to raise it through a new sea navigation channel between Vladivostok and Chennai. “We are confident, we will have some deal,” Pradhan said. During the meeting with Sechin, who Indians see as Mukesh Ambani of Russia, Pradhan renewed pitch for a consortium of Indian companies led by ONGC Videsh (OVL) taking about 49 per cent stake in Russia’s Vankor cluster oilfields. India had expressed deep interest in oil and gas exploration in Russian Far East during Prime Minister Narendra Modi’s visit to Vladivostok earlier this month and Sechin’s visit was a follow up of that, officials said. “During the meeting of Minister Pradhan with CEO, Rosneft, a detailed review of the ongoing cooperation between Indian oil and gas PSUs with Rosneft was undertaken. The developments in energy markets, including global crude oil supplies, in the light of the recent attacks on Saudi Aramco’s facilities, was also discussed. In this context, a special focus was on increase of crude oil supplies from Russia to Indian refineries,” the official statement by the Indian oil ministry said. Also discussed during the meeting was Rosneft-backed Nayara Energy reviewing an option of a two-fold increase of the refining throughput at the Vadinar refinery in Gujarat. “The first stage consortium commits to investment of USD 850 million towards the building of a petrochemical unit in Vadinar within two years,” it said. “The consortium is also planning to expand Nayara Energy’s retail presence, which currently has over 5,300 retail outlets across the country.” Sechin indicated Rosfnet’s readiness to intensify cooperation, aimed at strengthening of energy security in India and in supplying of high-quality feedstock and crude oil to India. “The parties agreed to intensify their cooperation aimed at the strengthening of energy security in India and supplying of high-quality feedstock and crude oil products to Indian customers. The focus was made on bilateral cooperation and the establishment of an efficient energy bridge based on the vertical integration concept. This includes participation of Indian partners in production projects and investments in refining as well as joint operations on the global and regional markets,” Rosneft said. OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), may hold 26 per cent stake in Suzunskoye, Tagulskoye and Lodochnoye fields — collectively known as Vankor cluster, while Indian Oil Corp (IOC), Oil India Ltd and Bharat PetroResources Ltd (a unit of Bharat Petroleum Corp Ltd or BPCL) would hold another 23 per cent. Rosneft, Russia’s national oil company that owns the fields, wants to retain a majority stake and is keen to sell only up to 49.9 per cent stake. Energy-hungry India is keen on sourcing one million barrels per day of oil and oil-equivalent gas from Russia and has identified Sakhalin-3 in the Far East, Vankor in East Siberia, and Terbs and Titov oilfields in Timan Pechora region as fields for potential collaboration. But for Vankor, it has so far not been successful in its attempts. OVL also has 20 per cent stake in Sakhalin-1 oil and gas field in Far East Russia, and in 2009 acquired Imperial Energy, which has fields in Siberia, for USD 2.1 billion. Besides, the OIL-IOC-BPRL consortium has taken another 29.9 per cent stake in a separate Taas-Yuryakh oilfield in East Siberia for USD 1.12 billion. The investments had taken the total outlay in Russia in that year to USD 5.46 billion.
Oil slips after Saudi Arabia says to restore output but risks remain
Oil prices slipped on Wednesday, extending losses from the previous session after Saudi Arabia’s energy minister said the kingdom will restore lost oil production by the end of the month. But investors remained cautious about Middle East tension after the United States said it believes the attacks that crippled Saudi Arabian oil facilities last weekend originated in southwestern Iran. Iran has denied involvement in the strikes. Brent crude oil futures fell 15 cents, or 0.2%, to $64.40 a barrel by 0253 GMT, after tumbling 6.5% the previous session. U.S. West Texas Intermediate (WTI) crude futures declined 35 cents, or 0.6%, to $58.99 a barrel, after sinking by 5.7% on Tuesday. “The risk of further escalation of conflict in the Middle East remains over the energy market and wild swings will likely resume when we see tit-for-tat responses from a Saudi-U.S. led the coordinated effort,” said Edward Moya, senior market analyst at OANDA in New York. “The situation with the oil market will remain tense, but the initial fears of a sustained disruption with world oil supplies have been alleviated in the very short-term.” Saudi Arabia sought to reassure markets after the attack on Saturday halved its oil output, saying on Tuesday that full production would be restored by month’s end. Energy Minister Prince Abdulaziz bin Salman said on Tuesday that average oil production in September and October would be 9.89 million barrels per day and that the world’s top oil exporter would ensure full oil supply commitments to its customers this month. Saudi Aramco has informed some Asian refiners that it will supply full allocated volumes of crude oil in October, albeit with some changes. Relations between the United States and Iran have deteriorated since U.S. President Donald Trump pulled out of the Iran nuclear accord last year and reimposed sanctions on its oil exports. Tehran rejects the charges it was behind the strikes and on Tuesday ruled out talks with Trump. Shell Petroleum Development Company of Nigeria declared force majeure on exports of Bonny Light crude oil, which put a floor on price losses on Wednesday. In a note late on Tuesday, BNP Paribas’ Harry Tchilinguirian said “In view of the vulnerability of Saudi’s supply chain and the likelihood that such attacks could be repeated in the future, we expect the market to reprice the geopolitical risk premium in oil.” But Moya said oil prices “will continue to struggle to maintain any sustained rally as global growth weakness continue to drive demand concerns”. U.S. crude inventories rose by 592,000 barrels in the week ended Sept. 13 to 422.5 million, data from industry group the American Petroleum Institute showed on Tuesday. Analysts had expected a decrease of 2.5 million barrels. Official U.S. government data will be released on Wednesday.