Govt Wants ONGC To Identify Areas For Involving Pvt Sector: Oil Secretary
The government is pushing the public sector behemoth ONGC to involve private sector companies and service providers wherever possible to help raise oil and gas production, Petroleum Secretary Tarun Kapoor said Thursday. Kapoor’s comments came days after the second-highest ranked official in his ministry asked Oil and Natural Gas Corporation (ONGC) to give away a 60 percent stake plus operating control in India’s largest oil and gas producing fields of Mumbai High and Bassein to foreign companies. “ONGC has to explore more so that it can discover more oil and gas reserves and bring them quickly to production to raise domestic output. The government is very clear that ONGC has to do more,” he told reporters here. India is 85 percent dependent on imports to meet its oil needs, and a way to cut the high import bill is to increase domestic production. “Naturally, when they do more work, there are areas where they can get experts in the fields… such as in deepsea,” Kapoor said. Discoveries that the company hasn’t been able to develop or areas that it hasn’t been able to explore are some of the examples where the ONGC can involve the private sector and foreign companies. ONGC, he said, should identify areas where it can get private sector expertise and efficiencies. These could range from technical collaboration to giving partially explored and undeveloped discoveries to private firms. The private sector can also be involved in enhancing production from existing fields. “We have only made suggestions to ONGC… the government cannot give directive to a Maharatna company. The ultimate decision has to be taken by the company board,” he said. Amar Nath, additional secretary (exploration) in the Ministry of Petroleum and Natural Gas, on October 28 wrote a 3-page letter to ONGC Chairman and Managing Director Subhash Kumar, saying productivity of the Mumbai High and Bassein & Satellite (B&S) offshore assets under state-owned firm was low, and international partners should be invited and given 60 percent participating interest (PI) and operatorship. This is the second time since April that Nath, who is part of the ONGC management as the longest-serving government nominee director on its board and often considered a potential candidate to replace Kumar next year, has written an official letter, painting a poor picture of the company’s performance. According to the letter, a copy of which was reviewed by PTI, he said the redevelopment projects will raise recovery of the mature and continuously declining Mumbai High field from 28 percent to 32 percent, “which is quite low”. Mumbai High, which was discovered in 1974, and B&S that was put into production in 1988 are Oil and Natural Gas Corporation’s (ONGC) mainstay assets, contributing two-thirds of its current oil and gas production. Without these assets, the company will be left with only smaller fields. Nath had on April 1 written to Kumar to sell stake in producing oil fields such as to Ratna R-Series to private firms, get foreign partners in KG basin gas fields, monetise existing infrastructure, and hive off drilling and other services into a separate firm to raise production. The two letters by Nath are the third attempt by the oil ministry to get ONGC to privatise its oil and gas fields under the Modi government. In October 2017, the Directorate General of Hydrocarbons, the ministry’s technical arm, had identified 15 producing fields with a collective reserve of 791.2 million tonne of crude oil and 333.46 billion cubic meters of gas, for handing over to private firms in the hope that they would improve upon the baseline estimate and its extraction. A year later, as many as 149 small and marginal fields of ONGC were identified for private and foreign companies on the grounds that the state-owned firm should focus only on big ones. The first plan couldn’t go through because of strong opposition from ONGC, sources aware of the matter said. The second plan went to the Cabinet, which on February 19, 2019, decided to bid out 64 marginal fields of ONGC. But, that tender got a tepid response, they said, adding that ONGC was allowed to retain 49 fields on the condition that their performance will be strictly monitored for three years. Nath in both April 1 and October 28 letters stated that two years have elapsed since the Cabinet decision but ONGC is yet to initiate the process for partnerships. ONGC produced 20.2 million tonne of crude oil in the fiscal year ending March 31 (2020-21), down from 20.6 million tonne in the previous year and 21.1 million tonne in 2018-19. It produced 21.87 bcm of gas in 2020-21, down from 23.74 bcm in the previous year and 24.67 bcm in 2018-19.
IIT-G, Oil India sign pact to develop new technologies in energy sectors
The Indian Institute of Technology (IIT), Guwahati, and Oil India Ltd will collaborate for the development and introduction of new technologies in energy and related sectors, a release issued by the educational institution said on Friday. The partnership will also focus on cooperation in the transfer of existing technologies, knowledge upgradation and innovation partnership, training and skill development, and other areas of mutual agreement, it said. An MoU to seal the collaboration was inked between the two organisations on Thursday, with IIT Guwahati director professor T.G. Sitharam and Oil India executive director Sasanka Pratim Deka signing the agreement. “This MoU will facilitate a new path for exploring various opportunities in applied and translational research for the sustainable energy sector with Oil India. IIT Guwahati is among the few top institutions in India that are dedicated to developing state-of-the-art technologies and skilled manpower in the field of petroleum and its allied industries,” Sitharam said. He said oil and gas industries would benefit as it would lead to the development of indigenous technologies. Deka said Oil India would look forward to more collaborations with IIT Guwahati and this coming together of the two institutions would enhance the efficiency of the industry and contribute to greater profitability.
Pakistan expected to be hit by major gas crisis in winter
The Pakistan government has decided to continue gas supply to the power and fertiliser sectors, while domestic and industrial consumers will suffer shortages amid a major gas shortfall in the country during the winter season, Geo News reported. This decision was made by the Cabinet Committee on Energy (CCoE) during a meeting on Thursday which was chaired by Federal Minister for Planning and Development Asad Umar. The CCOE decided supply of gas to “dedicated” consumers, including power and fertiliser plants, would remain stable, The News International reported. The power plants on SNGPL supply will be provided RLNG during 2021-22 with additional supply. The deficit of the power sector will be recouped through furnace oil. Any gas saved from captive power plants will be diverted towards export-oriented industries. Pakistan is expected to be hit by a major gas crisis this year like every year for several reasons, the Geo News report cited official sources as saying. One of the reasons is that local discoveries of gas have witnessed a dip, so the domestic gas reserves are depleting, the sources explained, adding that the local gas supply stood at 4,300 mmcfd a few years back but now it has depleted and stands at 3,300 mmcfd. The import of RLNG also faced snags and Pakistan used to add 1,200 mmcfd gas through RLNG a few years ago, but is now going to add just 1,000 mmcfd of gas. “There is a need to ascertain why two RLNG terminals could not be set up. If they were there, the country could have imported 1,200 mmcfd more gas through RLNG,” the official sources said.
Gujarat: PLL to invest Rs 17 billion to build third jetty at Dahej
Petronet LNG Ltd, which meets about 40% of the country’s total gas demand from its terminal at Dahej, is planning to invest Rs 17 billion to build a third jetty, said industry sources close to the development. “The company recently floated a tender to initiate construction work for the project. The expansion was stuck for some time due to the Covid pandemic,” said an industry expert, aware of the matter. As many as eight companies are in the race for the jetty project, he further said. With this project, the company aims to undergo diversification as it has chalked out plans to import liquid ethane and propane at the third jetty. Ethane is feedstock for the manufacturing of petrochemicals and is used to produce plastics, while propane is used as cooking gas and for home and water heating. Earlier this year, a senior company executive said they were exploring plans to set up a petrochemicals complex in Gujarat. PLL owns and operates LNG terminal at Dahej which commenced its commercial operations in April 2004. “Considering the increasing demand of natural gas in the country and proposed expansion of LNG terminal from 17.5 MTPA to 20 MTPA, PLL has now proposed to construct third berth (jetty) of 2.5 km adjacent to the existing second berth for unloading of LNG and transport to the storage tanks,” according to a pre-feasibility report for the third jetty. It will also act as a risk mitigation measure in case existing berths are unable to operate for an extended period or to cater to the anticipated number of ships at a time, the report states. LL is also planning to import and unload liquid ethane and propane at the third berth through carriers of parcel size of 1 lakh cubic metres. It is expected that 1.25 MTPA ethane will be handled initially and expandable to 2.5 MTPA in the future, as per the report. “There is a huge demand for ethane and propane by petrochemical industries available in the vicinity. Thus, it is proposed to import ethane and propane also through third berth and supply to the consumers,” it said. The onshore infrastructure for ethane and propane storage & regasification system shall be planned and installed at a later stage. Ethane and propane unloading shall only be done after construction/installation of onshore ethane and propane storage & regasification system, it said. A company official declined to comment on the matter.
India to seek higher volume, better price for Qatar LNG deal renewal
India’s top gas importer Petronet LNG (PLNG.NS) will seek higher volumes at better prices from Qatar Gas during negotiations for an extension of its long-term liquefied natural gas (LNG) deal beyond 2028, its head of finance said on Wednesday.
India’s October fuel demand surges, gasoline sales hit record
India`s fuel demand rose in October to a seven-month peak, with gasoline sales surging to an all-time high, government data showed on Tuesday, as festivals boosted mobility and economic activity in the world`s third biggest oil consumer. Fuel consumption, a proxy for oil demand, rose over 12% to 17.87 million tonnes last month from September. It was up 0.8% from the corresponding period last year and 3% from October 2019, data from the Petroleum Planning and Analysis Cell (PPAC) showed. Consumption got a boost from the start of the festival season in October, offsetting the impact of high prices, Refinitiv analyst Ehsan Ul-Haq said. October`s sales of gasoline, or petrol, were 8.3% and 3.4% higher than in 2019 and 2020 respectively and at 2.75 million tonnes, was the highest-ever monthly figure recorded as per data going back to 1998. Improving vaccination coverage and the opening up of schools, colleges and offices helped demand, said Prashant Vasisht, vice president and co-head, corporate ratings at ICRA. Diesel sales, which typically rise ahead of the Diwali festival, rose nearly 20% from September to 6.61 million tonnes, helped along by the quickest monthly expansion in the country`s factory activity in eight months. Consumption of diesel, which accounts for about 40% of India`s refined fuel sales, was also up 1.5% from October 2020, but down 5.6% year-on-year. India, Asia`s third-largest economy, reduced excise duty on petrol by 5 rupees ($0.0674) per litre, and that on diesel by 10 rupees ($0.1348) per litre, last week. The lower prices and an uptick in economic activity should also aid diesel demand, ICRA`s Vasisht added. Compared to last year, sales of cooking gas, or liquefied petroleum gas (LPG), increased nearly 3% to 2.49 million tonnes, while naphtha sales fell 5.2% to 1.28 million tonnes.
Gautam Adani looks to join race for BPCL
Gautam Adani is said to be in talks with two private equity firms for a potential partnership to enter the race to buy state-run oil refiner and marketing company Bharat Petroleum Corporation Ltd (BPCL), sources said. The Adani Group is understood to be negotiating with Apollo Global Management Inc and I Squared Capital; the two private equity firms are separately doing a due diligence for BPCL, one of the sources said. Major deal The two bidders have been scouting for partners to share the risks given the huge deal size, estimated at $12-13 billion. But a global shift towards renewable energy to combat climate change concerns has made the task of finding partners difficult. Qualified bidders for BPCL can change and/or bring in new partners before placing the financial bid, according to the sale terms stipulated by the Department of Investment and Public Asset Management. Adani’s move is seen as an afterthought as the billionaire stayed away from putting in an EoI (expression of interest) for BPCL when the deadline ended in November last year. The energy clash A few months down the line, though, the scenario has changed dramatically with Adani and Reliance Industries Ltd’s Mukesh Ambani engaged in a clash over green energy related businesses. In June, Mukesh Ambani announced that Reliance Industries would make a massive ₹75,000-crore investment in a green energy giga complex in Jamnagar, Gujarat. On July 30, Adani responded by setting up Adani Petrochemicals Ltd to “carry on the business of setting up refineries, petrochemicals complexes, speciality chemical units, hydrogen and related chemicals plants and other such similar units,” Adani Enterprises Ltd, the Ahmedabad-based conglomerate’s flagship company said in a regulatory filing, without offering any details. Oil industry sources said that Adani’s foray into petrochemicals business lacked vision without a refinery in its fold. In the refining business, the availability of petrochemicals in the product portfolio hedges against a drop in price/demand of fuels. Besides, integration of refining and petrochemicals leads to better profit margins. BPCL, hence, would fit well into Adani’s petrochemical ambitions without impacting the Group’s sustainability goals. However, there is no certainty that a partnership will fructify, and the talks could collapse, said one source. Adani Group and I Squared Capital did not respond to emails seeking comments. Apollo Global Management said it has “no comments” to offer. Disinvestment plan The government has decided to privatise BPCL by selling its 52.98 per cent stake to a strategic buyer. BPCL runs refineries in Mumbai, Kochi and Bina (in Madhya Pradesh) and is India’s No 2 oil marketing company and third largest by refining capacity. Anil Agarwal-led resources giant Vedanta Ltd is the third contender for BPCL.
Praj Industries gains on MoU with India Oil Corp
Praj Industries rose 1.81% to Rs 359.95 after the company said that it has inked an MoU with Indian Oil Corporation for exploring avenues in the Biofuels industry. The avenues include the production of Alcohol to Jet (ATJ) fuels, 1G & 2G Ethanol, Compressed Bio-Gas (CBG) and related opportunities. The Indian Aviation sector is at the cusp of exponential growth. At the same time, it is also identified as one of the significant sources of Green House Gas (GHG) emissions. This MOU will boost ATJ fuel production capacity and its use in India which will in turn help curb emissions emanating from the airplanes as per IATA’s (The International Air Transport Association) mandate. As per the MoU, IndianOil and Praj will also collaborate to set up Biofuel production facilities, including CBG, Biodiesel and Ethanol. The two companies would also work together to facilitate the sales and marketing of various co-products and intermediates produced from these facilities. Praj and IndianOil would explore and jointly work towards forming a 50:50 Joint Venture and identify partners to form special purpose vehicles (SPVs) under the proposed alliance. Shrikant Madhav Vaidya, Chairman of IndianOil, said, “Our alliance with Praj will augment the share of biofuels in India’s energy portfolio. Alcohol-to-Jet Fuel presents a great opportunity that must be leveraged to comply with the CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) guidelines to substantially reduce carbon emissions in the aviation sector. Dr Pramod Chaudhari, Founder Chairman, Praj Industries, said, “We are delighted to partner with IndianOil to increase the share of biofuels in India’s transportation fuel mix. Objectives of this overarching MoU are strategic in nature and encompass socio-economic-environmental aspects related to the nation’s growth. Praj Industries is an industrial biotech company. The company’s diverse portfolio comprises bio‐energy solutions, critical process equipment & skids, breweries, zero liquid discharge systems and high purity water systems. The company’s consolidated net profit surged to Rs 33.33 crore in Q2 FY22 from Rs 11.39 crore in Q2 FY21. Sales rose 104.58% to Rs 532.41 crore in the quarter ended September 2021 as against Rs 260.24 crore during the previous quarter ended September 2020.
HC issues notice to GST council over non-inclusion of petrol, diesel prices
The Kerala High Court on Monday issued notice to the Goods and Services Tax (GST) Council on a plea seeking to include petrol and diesel prices under the purview of GST. A division bench headed by Chief Justice S Manikumar asked the council to respond within 10 days. The court asked the council to inform it why petrol and diesel prices were not included in the purview of the GST. The court’s order came on hearing a Public Interest Litigation. The GST council had on September 17 decided to continue keeping petrol and diesel out of the GST purview, saying that subsuming the current excise duty and Value Added Tax into one national rate would impact revenues.
Reliance exits shale gas business in US
As Reliance Industries Ltd (RIL) aims for a net-zero carbon emissions future by 2035, the company is exiting its conventional oil and gas businesses. While RIL sold all its conventional oil and gas exploration blocks outside India in 2017, on Monday it sold the last shale gas asset that it held for nearly 11 years. Reliance Eagleford Upstream Holding, LP (REUHLP), a step-down subsidiary of Reliance Industries Ltd (RIL), has divested its interest in certain upstream assets in the Eagleford shale business in Texas, US, to Ensign Operating III, LLC (Ensign), a Delaware limited liability company. “With this transaction, Reliance has divested all its shale gas assets and has exited from the shale gas business in North America,” RIL said in a press statement. The agreement was signed between REUHLP and Ensign on 5 November for this sale. The sale is at a consideration “higher than the current carrying value of the assets”, RIL said. This February RIL sold its entire stake in the Marcellus shale gas asset in south-western Pennsylvania for $250 million. The assets, controlled by RIL’s unit Reliance Marcellus LLC and operated by affiliates of EQT Corporation, a US energy company, were sold to Northern Oil and Gas (NOG) Inc. RIL had bought stakes in three upstream oil exploration joint ventures with Chevron, Pioneer Natural Resource and Carrizo Oil and Gas, and a midstream joint venture with Pioneer between 2010 and 2013, as the company was bullish on shale gas. However, the drop in crude oil prices since late 2014 hit valuations of oil and gas assets, and shale gas blocks suffered far more than conventional oil and gas as they are economically viable only when prices are above a certain threshold. In June 2015, the company sold its Eagle Ford midstream joint venture with Pioneer Natural Resources in the US for $1 billion. RIL had spent $46 million in acquiring a 49.9% stake in Eagle Ford and invested a further $208 million. In 2017, RIL sold the first of its shale gas businesses, upstream Marcellus shale gas assets in north-eastern and central Pennsylvania, for $126 million. The Mumbai-based firm had in 2010 bought a 60% stake in the assets for $392 million. This February, the company sold its entire stake in the Marcellus shale gas asset in south-western Pennsylvania in the US for $250 million. The assets, controlled by RIL’s wholly-owned unit Reliance Marcellus LLC and operated by affiliates of EQT Corporation, a US-based energy company engaged in hydrocarbon exploration and pipeline transport, was sold to Northern Oil and Gas (NOG) Inc.