RIL sells south western Pennsylvania shale gas assets for $250 million to Northern Oil and Gas
Reliance Industries’ arm Reliance Marcellus has signed an agreement with Delaware-based Northern Oil and Gas for sale of shale gas assets in south western Pennsylvania for a consideration of $250 million cash and warrants, the Mukesh Ambani-led company said Thursday. The deal includes an unadjusted cash purchase price of $175 million plus equity warrants that will be issued to RIL upon closing of the transaction. The deal is expected to be closed in April 2021, subject to customary purchase conditions, Northern Oil and Gas said. “The valuation metrics speak for themselves; it’s a very compelling deal. It’s accretive across all the key metrics,” Nicholas O’Grady, chief executive officer, Northern Oil and Gas said in a web call after signing the deal. The assets include certain non-operated assets in the Appalachian Basin from that were operated by various affiliates of EQT Corporation. Northern Oil and Gas said that Arch Energy has partnered with for the acquisition and the latter will get 30% interest in the assets for a cash purchase price of $75 million Citigroup Global Markets, Inc. acted as financial advisor to Reliance and Gibson, Dunn & Crutcher LLP served as its legal counsel.
Govt mopped up 80 per cent more from fuel cess than expected
The government has mopped up nearly 80% more road and infrastructure cess levied on petrol and diesel compared to what it had estimated for 2020-21. According to the Budget documents, the receipts on this account increased to nearly Rs 2.3 lakh crore in the revised estimates compared to the nearly Rs 1.3 lakh crore, which was projected in the Budget. While this increased flow of revenue has pinched vehicle owners, it has come as a big help to the government to increase expenditure in some sectors. For example, the entire allocation of Rs 50,000 crore for Jal Jeevan Mission in rural areas for 2021-22 will come from road and infrastructure cess. The government has hiked the allocation by five times for this scheme to ensure tap water connection to every rural household. Similarly, around 65% of the entire budgetary allocation for the road transport and highways ministry will come from this cess. Earlier the cess from fuel, known as Central Road Fund, was primarily used for development of highways and rural roads. But since the government renamed this fund as Central Road and Infrastructure Fund in 2019, it has been earmarking portions of the fund for other infrastructure sectors such as ports, shipyards, inland waterways, airports, railways, urban public transport, energy, water and sanitation, communication infrastructure.
India warns rising oil prices may dampen global economic recovery
India’s oil minister Dharmendra Pradhan warned on Thursday that rising oil prices could hurt global economic recovery in the aftermath of the COVID-19 pandemic that caused most economies to shrink last year. Global crude oil prices rose to their highest in about a year this week as production cuts by the Organization of the Petroleum Exporting Countries and their allies including Russia tilted the market balance towards a deficit. [O/R] [x] That has propelled gasoline prices to record levels in the world’s third biggest oil consuming and importing nation. “Efforts at artificially distorting prices will have a dampening effect on the fragile global economic recovery that is underway,” Indian oil minister Dharmendra Pradhan said at the South Asia Commodities Forum of S&P Global Platts. Last month also, the minister blamed OPEC+ for high oil prices. “While we do not favour too low prices, we also do not support high prices, which deny energy access to millions in India,” he said. India imports about 85per cent of its oil needs and half of gas demand. “If the world has to grow as a whole, there has to be a mutually supportive relationship between producers and consumers. It is in the interests of producers that oil-dependent economies keep growing steadily,” Pradhan said. India has been diversifying its energy sources to cut dependence on Middle Eastern producers, he said, adding the nation sees ‘enormous potential’ to strengthen its relations with the U.S., mainly on imports of liquefied natural gas (LNG). The U.S. is one of the top ten oil suppliers to India, he said. To meet its growing energy needs India is also investing $143 billion in domestic projects to boost local outputs and build oil and gas infrastructure including an 80per cent jump in refining capacity to 9 million barrels per day, he said. Pradhan said the country is adopting cleaner energy sources to fuel its economic expansion but baseload will continue to be met by oil and gas.
GAIL bifurcation plan put on hold; co to monetise pipelines through InvIT
The Oil Ministry has put on hold a plan to bifurcate state-owned gas utility GAIL (India) Ltd so as not to dilute the firm’s ability to finance the massive infrastructure building plan, a top official said on Thursday. GAIL is India’s biggest natural gas marketing and trading firm and owns 60 per cent of the country’s 26,284-km gas pipeline network, giving it a stranglehold on the market. To resolve the issue, it was proposed that GAIL’s pipeline business should be hived off into a separate entity. “GAIL has massive plans to double its pipeline network to 34,000-km and there is a realisation that its ability to borrow funds to fund these should not be hampered,” the ministry official involved in the decision-making process said. The plan was to transfer pipeline business into a subsidiary, while GAIL was to hold the core business of marketing natural gas and petrochemical production. “The subsidiary may not have been able to raise the funds at rates which a combined balance sheet of GAIL can get,” the official, who wished not to be named, said. Creating pipeline infrastructure, which will take the environment-friendly fuel to unconnected places in the country, is key to the government objective of making India a gas-based economy. The government is targeting raising the share of natural gas in its energy basket to 15 per cent by 2030 from the current 6.2 per cent. The official said GAIL will monetise some of its pipelines by selling a minority stake through instruments like Infrastructure Investment Trust (InvIT). “The idea is transfer pipelines with steady revenue stream into a trust whose units can be sold to investors and the same can be traded on the stock exchange,” he said, adding GAIL will upfront get money from such a sale that can be used for capital expenditure. To start with, GAIL plans to monetise Dahej-Uran-Panvel-Dabhol pipeline and Dabhol-Bengaluru pipeline. InvITs are like a mutual fund, which enables direct investment of small amounts of money from possible individual / institutional investors in infrastructure to earn a small portion of the income as a return. GAIL will retain a majority stake in the pipelines that run from Dahej in Gujarat to Dabhol in Maharashtra and from there to Bengaluru in Karnataka. The InvIT may involve selling a 10-20 per cent stake initially, he said. GAIL owns and operates a natural gas pipeline network that spans 15,673.3 kilometres, mostly in the western, southern and northern parts of the country. It is building more pipelines in the eastern part of the country. The official said the bifurcation of GAIL was planned to address complaints of natural gas users about not getting fair access to the GAIL pipeline network to transport their fuel. The conflict arising out of the same entity owning two jobs will get resolved with the setting up of an independent transport system operator (TSO), which will manage the common carrier capacity of GAIL and other pipelines in the country, he said. The government has a 54.89 per cent stake in GAIL India.