RIL to re-evaluate proposed stake sale deal with Saudi Aramco
Reliance withdraws plan to hive off O2C business Reliance Industries Ltd and Saudi Aramco have decided to re-evaluate the 2019 deal under which the Saudi Arabian company was expected to pick 20 per cent stake in Reliance’s oil to chemicals (O2C) business. Consequently, RIL has withdrawn its application with NCLT to hive off its O2C business. “Due to evolving nature of Reliance’s business portfolio, Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to re-evaluate the proposed investment in O2C business in light of the changed context. Consequently, the current application with NCLT for segregating the O2C business from RIL is being withdrawn,” RIL said. The two companies had signed a non-binding Letter of Intent in August 2019 for a potential 20 per cent stake acquisition by Saudi Aramco in the O2C business of Reliance. “Over the past two years, both the teams made significant efforts in the process of due diligence, despite Covid restrictions. This has been possible due to the mutual respect and long-standing relationship between the two organisations,” RIL said in a statement. New Energy & Materials businesses However, Reliance recently unveiled its plans for the New Energy & Materials businesses by announcing the development of Dhirubhai Ambani Green Energy Giga Complex at Jamnagar. It will be amongst the largest integrated renewable energy manufacturing facilities in the world. RIL and Aramco could thrash a new deal in the future. “The deep engagement over the last two years has given both Reliance and Saudi Aramco a greater understanding of each other, providing a platform for broader areas of cooperation. Saudi Aramco and Reliance are deeply committed to creating a win-win partnership and will make future disclosures as appropriate,” the statement said. RIL shall continue to be Saudi Aramco’s preferred partner for investments in the private sector in India and will collaborate with Saudi Aramco and SABIC for investments in Saudi Arabia. Saudi Aramco and RIL have a very deep, strong and mutually beneficial relationship, that has been developed and nurtured by both companies over the last 25 years. Both companies are committed to collaborate and work towards strengthening the relationship further in the years ahead, RIL said.
Domestic gas production in India expected to get a boost
India’s domestic gas production is expected to get a boost from KG Basin, from Motilal Oswal Financial Services (MOFSL). “Domestic gas production would get a further boost, primarily from RIL and ONGC’s assets in the KG Basin,” the brokerage house said in a report. Besides, the MOFSL cited that after remaining stagnant at 70mmscmd for the past five years, domestic gas available for commercial consumption has risen. It rose to 80mmscmd in the past few months. “Since domestic gas availability would not suffice the demand of 220mmscmd projected in FY27E, import infrastructure would remain key to growth in gas consumption.” “We expect India’s available LNG capacity to rise to 66.5mmtpa in the next 3-4 years from 42.5mmtpa.” Furthermore, the report said that key trunk pipelines like Jagdishpur-Haldia, Kochi-Bangalore, Mehsana-Bhatinda, and North East grid would facilitate better gas penetration. Additionally, it said that favourable gas prices would benefit domestic consumption and would benefit the overall gas sector in the country. “In light of commodity prices turning favorable again (higher spot prices in the medium term, increase in petchem margin in Q3FY22, and better LPG price realization) and the reality of de-risking US Henry Hub contracts coming to light, we reiterate GAIL as our top pick in the largecap space,” the brokerage said.
96% of India’s population to be covered under CGD network after 11th rounds
After the completion of 11th city gas distribution (CGD) round, 96% of India’s population and 86% of its geographic area would be covered under CGD network, said petroleum and natural gas minister Hardeep Singh Puri. “The expected investment because of the concluded CGD bidding rounds is nearing a total of ₹1.2 lakh crore,” Puri told investors at the Indian pavilion at EXPO2020 Dubai virtually during a roadshow on Saturday, ahead of the 11th CGD round, according to a statement. The latest bidding round will offer 65 geographical areas spread over 19 states and one Union territory, which would cover around 25% of India’s population. “Natural gas is the future, and it will be the most important component of India’s energy bouquet to realize our vision of net-zero by 2070,” said Shrikant Madhav Vaidya, chairman, Indian Oil Corp. Ltd (IOCL) in the statement. With India pushing for a gas-based economy, 50 geographical areas (GAs) in 123 districts were offered in the 10th round. Gas accounts for around 6.2% of India’s primary energy mix as compared to a global average of 24%. The National Democratic Alliance (NDA) government plans to increase its share to 15% by 2030. India’s gas demand is expected to be driven by the fertilizer, power, city gas distribution and steel sectors. India is dependent on imports for as much as 85% of its oil needs and 55% of its natural gas demand. The country’s consumption has also been 15-16% higher than the pre-covid level.
Oil Ministry Proposal To Privatise Biggest Oil Field Upsets Union
The union, which represents ONGC’s 17,000 officers, said the company and its employees are completely aligned with government objective of raising domestic production to cut imports. The petroleum ministry’s proposal to give away ONGC’s biggest oil and gas fields to foreign companies has met with strong resistance from the officers union of the company, which has said that the government should empower and give the company a level-playing field rather than giving away its prime assets to the private sector on a platter. The Association of Scientific & Technical Offices of ONGC petitioned Oil Minister Hardeep Singh Puri against a proposal put by Amar Nath, additional secretary (exploration) in the Ministry of Petroleum and Natural Gas, for giving away 60 per cent stake and operatorship of Mumbai High and Bassein & Satellite (B&S) offshore assets to international partners for raising output. The union, which represents ONGC’s 17,000 officers, said the company and its employees are completely aligned with the government objective of raising domestic production to cut imports, and for this to happen ONGC should be given the same fiscal and regulatory regime as the private sector enjoys for exploring and producing oil and gas. The government-dictated below market price gas price fixation for ONGC fields should be reviewed to make production from smaller and remote fields viable, it wrote to Puri on November 11. Also, ONGC should be given freedom to market small pools of natural gas which in present price regime are unviable. Statutory clearances and authorities for ONGC need to be optimised and procedural aspects rejigged to help the firm take faster decisions. Farming out stake in “existing fields shall not yield the desired results of enhancing domestic production, instead it will provide a level playing field and empower ONGC to further enhance productivity,” the union wrote. “We would therefore request you that handing over producing fields on a platter to the private operator will not be successful and therefore, in our opinion, should not be pursued,” it added. It said exploration of oil and gas is a highly risky endeavour where very few like to participate. “This is evident from the tepid response to the bids invited under OALP (bid rounds), where only ONGC and to some extent OIL are the only bidders.” Private and foreign operators are unwilling to take the risk of investing millions of dollars in surveying and drilling wells to establish reserves. They instead want to enter into established fields. “The private operators most probably are giving priority to commercial aspects, the prevailing business climate and therefore may not be taking the risk that ONGC is willing to take,” the union wrote. The data of the last 3 years shows that ONGC has been consistently drilling more than 100 exploratory wells every year even when the international crude prices had hit an all-time low. During the low price regime most of the international and private E&P companies had stopped their exploratory plans and had drastically reduced their development investments. “ONGC, however, bucked the trend and continued to aggressively invest in exploration and development activities,” it said, adding private exploration and production (E&P) companies have been very quick to give up fields with falling commercial returns.