Essar Oil & Gas eyes new consumers for its CNG business in Unlock 1.0
Expecting an improvement in its business in June after lockdown norms have been relaxed, Essar Oil & Gas Exploration & Production Ltd (EOGEPL) is planning to acquire new consumers to grow its compressed natural gas (CNG) business further. The company set up a CNG facility in Durgapur in West Bengal in February 2020 with 50,000 standard cubic meters per day capacity (scmd). The facility can supply gas in a 150-km radius. “We have signed up with a new customer in Jamshedpur and are on the lookout to acquire new customers in Jamshedpur, Bokaro, Kolkata and others, to whom we can supply CNG”, Vilas Tawde, managing director and CEO at EOGEPL said. Currently, the company has around 20 consumers, based in and around Durgapur in West Bengal. While fertiliser, petrochemical and power projects are the major industrial consumers of CNG, the steel sector is fast emerging as a new consumer. “The demand is expected to grow, and we need to be ready with our set of consumers to increase this business further”, Tawde said. While the company’s sales volumes at present are 65 per cent as compared to the pre-lockdown levels in March, it expects volume to improve further to 80-85 per cent in June as factories open up and resume operations. Tawde expects companies to resume normal operations after July which will drive demand further. The West Bengal government has already allowed public as well as private companies to operate at their full workforce capacity which is driving optimism among various companies. However, as compared to pre-lockdown levels, the prices of CNG are down by 20 per cent. “On the revenue front, April was bad, but we recovered a bit in May and are expected to improve further in June”, Tawde said. With Coal India proposing a second round of commercial Coal Bed Methane (CBM) exploration and extraction, EOGEPL is currently studying the technical clauses. Although the Coal India leases are is expected to hold 90 TCF of CBM, Tawde said that the entire monetary risk has to be borne by the developer, which is substantial and the blocks on offer are smaller in size.
IOC seeks up to 24 million barrels of US crude for Oct 2020-March 2021 delivery: documents
Indian Oil Corp , the country’s top refiner, is seeking up to 24 million barrels of US crude for delivery over the fourth quarter this year and the first quarter of 2021, two tender documents seen by Reuters showed on Monday. IOC is seeking 2 million barrels of US crude per month with an optional volume of extra 2 million barrels per month for delivery to the Paradip terminal at the eastern cost of India, the document showed. The tender will close on June 12 with validity on the same date.
Govt extends oil block bid deadline to June 30
The government on Monday extended the last date of bidding for the 11 oil and gas blocks on offer in the fifth exploration bid round to June 30 in view of the COVID-19 lockdown in the country. The fifth bid round under Open Acreage Licensing Policy (OALP) opened in January and was to initially close on March 18. However, the bid date was first extended to April 16 and then to June 10. “Urgent Notice: In view of COVID-19 pandemic and its consequences of reduced movement, coupled with requests from potential bidders, the last date of India OALP Bid Round-V is extended to 30 June 2020,” the Directorate General of Hydrocarbons (DGH) said in a tweet. So far, the government has awarded 94 blocks in four OALP bid rounds in the last two-and-a-half years. These 94 blocks cover an exploratory area of about 1,36,800 square kilometer over 16 Indian sedimentary basins. In the latest bid round, about 19,800 sq km of area is on offer for bidding, according to DGH. Under OALP, companies are allowed to carve out areas they want to explore oil and gas in. Companies can put in an expression of interest (EoI) for any area throughout the year but such interests are accumulated thrice in a year. The areas sought are then put on auction. The fifth cycle of submitting EoIs closed on November 30, 2019. This was followed by the sixth cycle that began on December 1, 2019, and was to last till March 31, 2020. It was to be followed by the seventh cycle from April 1, 2020, until July 31, 2020. DGH has merged the sixth and seventh cycle of EoIs. The EoI cycle for Round VI (ended March 31, 2020) and Round VII (ending July 31, 2020) stand merged, DGH said, adding the EoIs received between December 1 and July 31 will be clubbed and put on offer as a combined bid round. The last bid round, OALP-IV, saw just eight bids coming in for seven blocks on offer. State-owned Oil and Natural Gas Corporation (ONGC) walked away with all the seven oil and gas blocks on offer. OALP-IV was the first round on revamped terms approved in February 2019. Unlike previous rounds where blocks were awarded to companies offering a maximum share of oil and gas to the government, blocks in little or unexplored Category-II and III basins are now awarded to companies offering to do maximum exploration programme. The 11 blocks under OALP Round-V are spread across 8 sedimentary basins and include eight on land blocks (six in Category-I Basin and one each in Category II and III Basins), two shallow-water blocks (one each in Category-I and II Basins) and one ultra-deepwater block (Category I Basin). At the time of the launch of OALP-V, DGH had stated that the round is expected to “generate immediate exploration work commitment of around USD 400-450 million”. “An area of 1,36,800 sq km has already been awarded under OALP Bid Round I, II, III, and IV. These OALP Bid Round-V Blocks would add further 19,800 sq km. Overall Exploration Acreage of India would then increase to 2,36,600 sq km,” it had said at that time. Of the 94 blocks awarded in the first four rounds of OALP, Vedanta has won the maximum at 51. Oil India Ltd has got 21 blocks and ONGC another 17. All 11 blocks in OALP-V are based on EoIs received during EoI Window-V from May 16, 2019, to November 30, 2019, according to DGH.
BS 6 compliant vehicles to display green sticker
The government has mandated a one cm green sticker, providing registration details, in all BS 6 compliant motor vehicles. The order will come into force from October 1, 2020. “Vehicles complying with BS 6 emission norms shall have 1 cm green strip at the top in the third registration plate,” as per a notification issued by the Ministry of Road Transport and Highways. The order was issued amending the Motor Vehicles (High Security Registration Plates) order, 2018. Earlier, the government has said that from April 1, 2019, all motor vehicles will be fitted with tamper-proof, high security registration plates (HSRP). This HSRP or third number plate will be fitted on the inside of the windshield of each new manufactured vehicle by the manufacturers. Under the HSRP, a chromium-based hologram is applied by hot stamping on the top left corner of the number plates both at the front and back besides laser-branding of a permanent identification number with a minimum of 10 digits into the reflective sheeting on the bottom left of the registration plate. The third number plate will also have colour coding for the fuel used in the vehicle. The colour coding is done in order to detect polluting vehicles from the non-polluting ones. A Road Transport and Highways Ministry official said it has been brought-forth that the BS 6 emission standards, which have been mandated from April 1, 2020, provide for strict emission norms, and requests were to made to have distinct identification for such vehicles as is being made in other countries. “Accordingly, a feature in form of a unique strip of green colour of 1 cm wide on top of the existing third registration sticker for the purpose of BS 6 vehicles of any fuel type i.e. — for petrol or CNG, which have a light blue colour sticker and a diesel vehicle which is of orange colour sticker will have a green strip of 1 CM on top has been mandated,” he said.
India’s biggest PSUs sale plan to attract China-wary oil majors
The growing disquiet over China could see oil investors headed to India, said a top executive at a refiner that Prime Minister Narendra Modi’s government has put up for sale. “The choices of investing in oil sector will be limited when the world becomes normal and India will be the only happening alternative,” N. Vijayagopal, finance director at Bharat Petroleum Corp. said in an interview from Mumbai. “Most of the Western countries will be very afraid of getting into China. So, where else they can go?” Many nations, including the U.S. are coming together to counter what they say is China’s growing threat to global trade, security and human rights. That gives an opportunity for India to attract investments and push some of its state-run assets such as Bharat Petroleum, known as BPCL, to global investors when the world emerges from the coronavirus pandemic. “Global companies are cutting down on capex, preserving cash now, but Exxon Mobil, Shell, BP or Saudi Aramco aren’t going to perish,” Vijayagopal said. “When they come back after demand picks up, they would have cash available with them to invest.” India, the world’s third-biggest oil consumer with a population of over 1.3 billion, offers an attractive alternative to China for big oil companies looking for a stable market to expand. Some have already indicated interest in BPCL. Still, almost every big oil company from Exxon Mobil Corp. to Royal Dutch Shell Plc have investments across China’s energy chain, with newer commitments coming in from companies such as Saudi Aramco to tap the world’s biggest energy consumer. In India, a nation feted for its ever-rising oil appetite, fuel demand took a major hit from a national lockdown, declared in March, to control the virus outbreak. However, a series of relaxations helped it recover much of the lost demand within a short span although a return to growth is still a long way off. Refineries, including BPCL, that had slashed processing are now ramping up capacities. “My refineries are running at almost 83% of normal capacities and our sales were about 76% of normal sales in May,” he said. “So, there’s no reason for us to be pessimistic about our capability to come back to normal.” Indian refiners, which came under the twin assaults of oil price volatility and demand destruction due to the pandemic, saw their share prices tumble. The value of BPCL was about $7.4 billion in early February has now fallen to about $5.7 billion. Vijayagopal, however, doesn’t see that as a problem. Suitors will assess the company by its assets and resilience to jump back from the crisis, he said. The government, meanwhile, has deferred the deadline for submitting initial bids for the company twice to July 31 now. BPCL is the third-biggest refiner in India and second-largest fuel retailer. It had a market share of 21% in the financial year which ended March 2019. “When somebody gives a value, they are not going to give a value for six months,” he said. “We have a 100-year history and we will live for another 100 years as an energy company, even if petrol and diesel are not there.”
Assam gas leak: Placement of blow out preventer huge challenge, says OIL
As Oil india limited is battling to stop gas flow from the oil well in Baghjan in Tinsukia district, placement of blow out preventer has become a huge challenge. OIL stated, “With very limited space and non-availability of open space above the well head, placement of Blow Out Preventer (BOP) is a huge challenge as it entails huge risk. It is planned to place the BOP on the wellhead through a hydraulically driven mechanical transporter. The design and fabrication of the hydraulically driven mechanical transporter requires high degree of precision, strength and safety features as this will be operated against very high pressure of the gas in a hazardous environment. Safety of the people and the surroundings has been considered utmost priority while controlling the well. The structure for vertical movement of hydraulically driven mechanical transporter has been completed and tested. Fabrication job of horizontal structure is in progress.” The company added that in order to subdue (kill) the well, drilling mud will have to be pumped immediately after capping the well by the BOP. The area for placement of the well killing (subdue) equipment and preparation of requisite well killing mud is underway. Huge quantity of water will be required while executing the actual operation of the well for creation of a water jacketing/ umbrella to facilitate the operating crew to approach the well safely. A water reservoir near the well site plinth has been made & preparation of the area for placement of two numbers 2500 gallons capacity pump is in progress. But due to wind direction and inclement weather condition, the level of gas concentration is above the safe limit of operation in that area. The Crisis Management Team decided to shift the water reservoir to an alternate area in opposite direction of the present reservoir for safety reasons. OIL is working on the alternate area for creation of water reservoir and placement of the pumps. A new pipeline is required to be laid to the well plinth. But due to heavy rain for last couple of days, the area needs huge amount of civil work to make it ready. Preparation of area for placement of high capacity pumps at alternate location is in progress. Arrangement for collection of required quantity of water from the river source is in progress. Testing of water pumps for collecting water from the river is in progress. Laying and connection of delivery line from the water pump stationed at River bank to the water reservoir is in progress. Job hampered due to difficulty in Right of Way (ROW). Testing of equipment to be used for well control operation is in progress. To safe guard the environment, OIL has engaged a NABET accredited consultant to carry out Environment Impact Assessment study in and around Dibru-Saikhowa National Park, Maguri Motapung Beel and the surrounding villages to assess the effects of blow out on Terrestrial and Aquatic Ecosystems and Socio-Economic Impact Assessment in consultation with the stakeholders and the job is in progress. OIL has engaged M/s TERI for Bio-remediation for impact of blowout on environment and site assessment was carried out jointly by Officials from TERI and oil. Further, OIL engaged local fishermen with boat to identify oil spill, if any, in Maguri Matapung Beel so that immediate remedial action may be taken up as required. Three experts of Singapore based firm “M/s Alert Disaster Control” will reach Duliajan, late evening on 7th June, 2020. The delay in their arrival is due to clearances of official formalities at Singapore. The team will supplement the OIL and ONGC team in executing the control of the blowout. Removal of equipment from the well plinth is in progress. Poor weather condition is hampering the work progress for removal of equipment from well plinth. Continuous rainfall necessitated further development of the approach road for removing equipment from the well site, which is in progress.
Indian Oil Corp says Unlock 1.0 to revive fuel sales soon
Weeks after the coronavirus lockdown led to fuel sales nosediving to record lows, Indian Oil Corp (IOC), the nation’s largest oil firm, sees demand returning with the resumption of economic activities. The company said though it is on track to spend the approved capital expenditure for 2020-21, it has “critically examined all capex proposals for rationalisation of cost and time frame.” “The company is also conscious of the costs and has also undertaken rationalisation measures in this direction,” it said without giving details. Fuel sales had dropped in April after Prime Minister Narendra Modi announced a nationwide lockdown to control the spread of COVID-19 infections. The lockdown shut factories and offices, took most vehicles off roads, stopped train movement and suspended air travel. “The demand for the petroleum products dropped by 46 per cent in April 2020. The sales of petrol, diesel and jet fuel (ATF) in April 2020 were down by 61 per cent, 56.7 per cent and 91.5 per cent respectively as compared to April 2019,” it said in a regulatory filing on impact of COVID-19. Due to certain relaxations by the Centre and some state governments starting last month, sales for the products improved in May as compared to April 2020. “However, the sale for these three products was still lower by 38.9 per cent as compared to May 2019.” India will see more opening up from June 8 with malls and markets resuming operations. “It is expected that with the opening up of lockdown and revival of the economy on the strength of the economic package, the sales would soon get revived,” it said. “Further, the recent increase in international prices of crude oil and petroleum products as well as rupee appreciation has to some extent already offset the inventory losses and forex losses.” IOC said though there was no closure of any of its refineries due to drop in demand of petroleum products, their operations were curtailed to the level of 39 per cent in April. However, the improved demand for petroleum products in May 2020 resulted in higher capacity utilisation of refineries to the extent of 75-80 per cent and is further being ramped up. “The drop in sale of petroleum products resulted in a significant fall in revenue collections for the company. In order to meet its contractual and statutory obligations, the company had to borrow funds which resulted in substantial increase in borrowings. “However, since then the borrowings have reduced significantly with increase in sales and lower crude oil prices,” it said, but did not give specific figures. Stating that COVID-19 had severely impacted businesses across the world, IOC said the oil industry in general and the company in particular came under the twin assault of drop in crude oil prices as well as demand destruction. The government announced the nationwide lockdown in the last week of financial year 2019-20 (April 2019 to March 2020) and therefore it did not have a significant impact on sales and operations for the fiscal. Petroleum product sales had witnessed a demand growth of 1.9 per cent in 2019-20 till February 2020. “However, the same declined by 18 per cent in March 2020 due to the lockdown, dragging down the growth for the full year to 0.22 per cent,” it said. COVID-19 impacted the crude oil and product prices across the world, which saw a significant fall by March 31, 2020. “The company being the largest PSU oil marketing company in the country having its refineries and marketing infrastructure spread across the country, maintains a significant level of inventories for its operations. “The drop in the prices of crude oil and products impacted the financial statements for 2019-20, due to inventory loss,” it said, adding the financial statements for 2019-20 are presently under finalisation. IOC said to manage the crude oil inventory, planned crude import was either deferred or cancelled with mutual consent. “Some crude cargoes meant for our refineries were even sold for the Strategic Petroleum Reserves of the Government of India.” With all domestic and international flights being suspended, civil aviation business was badly affected, it said. “The situation has been closely monitored by the top management of the company on daily basis since the price crash and subsequent lockdown, to take prompt actions for continuity of business operations in an optimised manner, keeping the market well supplied as well as to ensure safety of the employees and frontline personnel engaged in production/delivery of petroleum products,” IOC added.