Free LPG to 50 million poor homes: PM Modi’s pet scheme beats target
The government will complete the task of giving LPG connections free of cost to five crore poor households across 715 districts under the ‘Ujjwala’ programme on Friday, achieving the target originally set for one of PM Narendra Modi’s signature social schemes nearly eight months ahead of schedule. Sources said Speaker Sumitra Mahajan is expected to hand over the ‘Ujjwala Connection No. 5 Crore’ to the selected beneficiary at a function in Parliament in the presence of oil minister Dharmendra Pradhan, the main driver behind the scheme’s blistering pace. Ujjwala aims at bringing clean cooking fuel to poor households, identified according to the Socio-Economic Caste Consensus (SECC), and has proven to be one of the Modi government’s key platforms for political outreach. The scheme, together with the Centre’s village electrification plan, fuelled BJP’s rise in the run-up to the 2017 UP polls. The scheme was launched by the PM on May 1, 2016, in Ballia district in UP with a target of providing free LPG connections to five crore poor households by March 31, 2019, and a budgetary allocation of Rs 8,000 crore. Right from the word go, the scheme consistently progressed ahead of schedule. Encouraged by the rapid progress, the government in February raised the target to eight crore poor households by 2020 with an additional outlay of Rs 4,800 crore. This was done with the aim of going beyond the SECC to expand the list of Ujjwala beneficiaries, a move that will help widen the ruling party’s political reach as it heads for 2019 general elections. The expanded list now includes all SC/ST households, PM Awaas Yojana (Gramin), Antodaya Anna Yojana beneficiaries, forest dwellers, Most Backwards Classes, tea garden workers and island dwellers. Beyond politics, the scheme is yielding a social dividend by safeguarding the health of women and children in poor households. More than 44% of Ujjwala beneficiaries are currently are from SC/ST communities. Women from such households no longer have to suffer the drudgery of collecting firewood or dried dung-cakes, neither do they have to inhale smoke from such fuels — identified by the World Heath Organisation as a major cause of respiratory diseases and untimely deaths. India is home to more than 24 crore households, 10 crore of which are still deprived of LPG as a cooking fuel and have to rely on firewood, coal, dung-cakes etc as primary cooking fuel. Wayne Gallman Authentic Jersey
Malaysia’s Petronas delivers first LNG cargo to Japan’s Hokkaido Electric
Malaysian state-owned oil company Petroliam Nasional Bhd (Petronas) said on Thursday it had delivered its first liquefied natural gas (LNG) cargo to Japan’s Hokkaido Electric Power on August 1. The delivery marks the beginning of its supply to Hokkaido Electric via a 10 year agreement signed on 2 March 2017, according to a Petronas statement. The delivery was done via Malaysia LNG Sdn Bhd, a Petronas subsidiary, and the cargo was delivered from Petronas’ Bintulu LNG complex in the East Malaysian state of Sarawak, according to the statement. Duke Dawson Authentic Jersey
Sinopec’s Shandong LNG terminal expansion wins provincial approval
* Sinopec’s plan to expand its liquefied natural gas terminal in east China’s Shandong province has won a green light from the provincial government, the state energy firm said on Thursday * The terminal, in the port city of Qingdao, will add two tanks each sized 160,000 cubic metres, and will thus have annual handling capacity of 7 million tonnes, the company said, without giving a timeline for the expansion * Sinopec, a latecomer to the LNG business among state-run oil and gas firms, started operating the first phase of the Qingdao terminal at end-2014, with annual handling capacity of 3 million tonnes * The expansion is estimated to cost 2.3 billion yuan ($337 million) and will take three years to build, local media reported late last year * Sinopec operates two other terminals, one in Guangxi in the southwest and one in Tianjin, near Beijing. Marquel Lee Authentic Jersey
Natural gas pipeline explosion in Texas critically injures five
A series of natural gas pipeline explosions in Midland County, Texas sent five people to hospital with critical burn injuries, and interrupted energy pipeline operations in the area, officials said. The region is the home to the Permian Basin, the largest US oilfield, and is crisscrossed by oil and gas pipelines. The cause of the explosion and fire were not immediately known. Five workers with critical injuries were airlifted to University Medical Center in Lubbock, Texas, and were being treated at the center’s burn unit, said University Medical Center spokesman Eric Finley. Pipeline operator Kinder Morgan said on Wednesday it had isolated a portion of its El Paso Natural Gas Pipeline (EPNG) as a precaution, after being alerted to the fire near its line. One of its employees was injured and taken to hospital, spokeswoman Sara Hughes said. “There was a third-party pipeline involved that also experienced a failure, and preliminary indications are that the third-party line failure occurred before the EPNG line failure,” Kinder Morgan’s Hughes said in an email. The company is investigating the cause of the fire and evaluating any damage to its property. Regulatory agencies and customers were notified of the incident, she added. “Fire Department personnel suppressed the fire, however approximately one hour later a second and third small explosion followed,” said Elana Ladd, public information officer for the city of Midland, in emailed comments. Multiple pipelines are located near the site, Ladd said, adding that first responders were focusing on shutting off pressure and flow to the pipelines at the site. The pipeline explosion occurred on a rural road, FM 1379, about five miles south of Highway 158 at around 11:30 a.m. local time (1630 GMT), Ladd said, adding that the road had been closed. No further information on the injured was immediately available. Ladd identified one of the injured as a firefighter. Joe Berger Womens Jersey
BP offloads oil cargo to Shandong refiner after two-month delay on water: Sources
Oil major BP has started discharging about 1 million barrels of Angolan crude to a Chinese independent refiner, after holding the oil on water for two months due to slowing demand from private refiners, sources said on Thursday. The Mercury Hope supertanker, chartered by BP and carrying about 2 million barrels of Angolan oil, offloaded part of the cargo in late May at Qingdao and has since been at sea in nearby waters, said the sources with knowledge of the matter. The tanker began offloading the remaining part of its cargo to Shandong Qingyuan Group, a privately-controlled refiner based at Linzi, Shandong province, late on Wednesday. The group, which operates a 104,000 barrels per day refiner, is a regular customer of BP which has expanded its crude oil marketing to Chinese independent refiners since 2015 after China opened crude oil imports to nearly 40 local plants. Mercury Hope is one of four supertankers that BP brought to China carrying Angolan oil several months ago, but which have been held up or delayed off China’s east coast, unable to fully discharge oil due to slowing buying from private refiners. BP did not respond to a request for comment. An official at Shandong Qingyuan’s management office said she was not in a position to comment. In early July, BP discharged nearly 1 million barrels of oil from Texas, another of the four tankers, also to Qingyuan. Qingyuan, one of China’s largest independently run lubricant producers, has received an annual crude import quota of 4.04 million tonnes for the last two years. Shippers and oil traders said it was not unusual for producers like BP to ship cargoes before finding a buyer, but having cargoes orphaned for two months was less common. Bradley McDougald Authentic Jersey
Deepwater, unconventional gas figure in India ONGC’s growth blueprint
India’s Oil and Natural Gas Corp. is pursuing a two-fold strategy of pushing deepwater projects and venturing into gas production from unconventional sources, as lower upstream costs provide an opportunity to spark growth. Shashi Shanker, ONGC’s chairman and managing director, told S&P Global Platts in an exclusive interview that some of the oil and gas sector reforms undertaken in recent years — both on production and pricing issues — would also open up more opportunities. “We think it is a good time to lock in the cost savings because of the services sector’s cost deflation, particularly in deepwater. This will be crucial for development of the Krishna-Godavari offshore fields,” he said. After many years of either stagnant or declining production, ONGC, which accounts for more than 70% of India’s oil and gas output, is witnessing a revival in production. While its crude oil and condensate production rose marginally to 22.31 million mt in 2017-18 (April-March), from 22.25 million mt in the previous fiscal year, its total gas production rose 5.8% year on year to 24.61 Bcm in 2017-18, from 23.27 Bcm in the previous year, Shanker said. The company aims to spend about $4 billion annually over the next few years to speed up upstream projects. “The problem of high import dependency is a real worry for all stakeholders in the energy sector. We can mitigate the situation through higher domestic production. This will go a long way towards meeting the ambitious target of reducing hydrocarbon imports by 10% by 2022,” Shanker said. KEY FOCUS He said that ONGC was aggressively venturing into deepwater and high-pressure, high temperature (HP-HT) areas. “Our single largest project is Cluster 2 development of KG-DWN 98/2, which is under the advance stage of execution,” Shanker said. The Cluster 2 fields lie in deepwater KG-DWN-98/2 Block, which is located off the shore of the Godavari Delta and covers an area of nearly 7,300 sq km off the KG basin. Shanker added that the development of the Nagayalanka block was under implementation, while it was actively working on the Madanam block. The Daman Development project had started contributing gas output, which is expected to increase further this year. “Also, the exploitation of gas from coal bed methane and other unconventional sources are key focus areas. ONGC has already started development of CBM Blocks in Jharkhand. It is expected to commence commercial production shortly,” Shanker said. He added that the initiative of the government to introduce the Open Acreage Licensing Policy would also help the company to boost its production prospects. “We will also need to accelerate the development of discovered fields. In addition, the alternate gas pricing approach will also help in monetization of many discoveries, which are held up because of adverse economics,” Shanker said. In 2017, India announced its new Open Acreage Licensing Policy that allows bidders to carve out areas where they want to drill. The auctions are part of an overhauled exploration licensing policy that allows pricing and marketing freedom for operators, and is a move to a revenue-sharing model, under which the government gets a share of the revenue from the moment production begins. SYNERGY This year ONGC agreed to buy the government’s 51.11% stake in state-run Hindustan Petroleum Corp Ltd. Shanker said the combined entity would help to absorb shocks arising out of market fluctuations. “There are two major advantages of having integrated supply chains. The combined entity will have exposure across commodity cycles wherein downturn in one could be offset by upswing in the other,” he added. The combined entity is expected to produce about 35 million mt of crude oil. In addition, it will also have a combined annual refining capacity of 40 million mt as well as 15,000 retail outlets, he added. After Rosneft in 2016 transferred an 11% share in Vankorneft to ONGC Videsh in a deal valued at $930 million, OVL’s stake in the project rose to 26%. And earlier this year, Abu Dhabi National Oil Company awarded a 10% stake in Lower Zakum concession to an Indian consortium led by OVL. “Our overseas operations are also on a strong footing especially after we had acquired important stakes in Vankorneft Russia and Zakum field in UAE,” Shanker said. Commenting on the market outlook, Shanker added that although crude oil prices had recovered from very low levels on the back of OPEC-driven output cuts, there were still a lot of factors that could contribute to volatile prices. “There is still no certainty on the level of prices. Supply disruptions in Libya, Venezuela and Iran have kept the price volatility high. Other factors like the US trade war with China and rising US production could change the dynamics of the market,” he added. Pavol Demitra Jersey
India’s dependency on LNG imports growing
India Ratings and Research (Ind-Ra) has published the July 2018 edition of its credit news digest on India’s oil and gas sector. The report highlights the trends in the sector, with a focus on domestic production, import, consumption, refining and gross under-recovery, regulatory changes and recent rating actions. India’s dependency on imported LNG has increased, indicated by stagnant domestic natural gas (NG) production and increased imports since 2008, opines Ind-Ra. The average imported LNG share was 45% of the overall domestic NG consumption in FY18, compared with 25% in FY08. LNG imports increased at a CAGR of 9.2% to 73 million m3/d in FY18 from 30 million m3/d in FY08 due to sustained demand. The increased use of NG in fertilizer and power sectors coupled with growth of city gas distribution network has driven domestic NG consumption. On the other hand, domestic NG production has been stagnant at 90 million m3/d with a CAGR of 0.1% since FY08. This has led to increased reliance on the import of LNG, as domestic consumption has been gradually increasing. Ind-Ra notes that LNG imports continue to increase despite the rise in Asian spot LNG prices since April 2016, thus indicating strong demand for NG and dependence on LNG imports to fulfil the same. Furthermore, In June 2018, NG production was 2.8% y/y lower and NG consumption was 15.9% higher. During the month, production volumes of Oil & Natural Gas Corp. Ltd, Oil India Ltd and private/joint venture fields declined 1.1% y/y, 7.1% y/y and 7.1% y/y, respectively. The increase in consumption was on account of an increase in domestic demand. The domestic demand was met by a 39.0% y/y increase in LNG imports during June 2018. On a cumulative basis, LNG imports were up 19.1% y/y in 1Q19. India’s crude oil production decreased 3.4% y/y in June 2018. During the month, the production volumes of Oil & Natural Gas Corp., Oil India Ltd and fields under production sharing contracts declined 4.6% y/y, 0.1% y/y and 1.7% y/y, respectively. Crude oil import volume increased 6.4% y/y during June 2018. India’s crude oil import dependency was 84.1% in June 2018 and 83.9% in 1Q19. Petroleum Planning & Analysis Cell (PPAC) estimates crude imports at 227 million metric t for FY19 (FY18: 220 million metric t). In June 2018, refining throughput was 21.9 million metric t, up 9.1% y/y. The refining throughput was up 5.0% y/y in 1QFY19. Public sector refineries processed higher volumes on a y/y basis, supporting the overall increase in the throughput. During the month, India’s petroleum product output increased 12.0% y/y to 22.7 million metric t. On a cumulative basis, the production was 6.6% y/y higher in 1Q19. Nathan Peterman Authentic Jersey
India’s cabinet approves uniform licensing policy for oil, gas exploration
India’s cabinet on Wednesday allowed oil and gas producers to explore for shale oil and gas and coal bed methane under the existing contracts, a move aimed at unlocking the unconventional hydrocarbon potential of the world’s third-biggest oil importer. The policy would help reduce India’s dependence on imported oil and save foreign exchange, India’s interim finance minister Piyush Goyal said at a press conference. Dan Orlovsky Authentic Jersey
Centre, industry want petro products in GST ambit: Dharmendra Pradhan
The Centre and the industry favour inclusion of petroleum products in the Goods and Services Tax (GST) but the GST Council will take a final call on it, Oil Minister Dharmendra Pradhan said on Wednesday. Whatever the GST Council decides on including petroleum products within GST ambit, “we would stand by that,” Pradhan said in reply to a question in the Rajya Sabha. Five petroleum products– petrol, diesel, natural gas, crude oil and ATF — are still out of the ambit of GST. He informed the House that “in principle, the Government of India and the Petroleum Ministry are of the view that petroleum products should come under the GST regime.” “The GST Council will take an appropriate action and at an appropriate time with due deliberation,” he said. “When the GST Council framework was set up, at that time notionally all petroleum products were kept under the tax regime. But all states were of the view that their (tax) slabs and (implementation) dates would be decided by them,” he said. On including Aviation Turbine Fuel (ATF) in the GST, he said, “The GST Council is the competent authority”. Bringing petroleum products under the GST regime is expected to rationalize pricing across the country which would provide relief to farmers and commoners. At present different state levies on these products have resulted in different pricing. Once these products are brought under the GST regime, there would be uniform pricing across India, the minister said. Jason Croom Authentic Jersey
Reliance wins case govt should never have filed
Given the way the issue played out in the media, it can be argued that the government had no option but to press ONGC to claim Reliance Industries Limited (RIL) had ‘stolen’ its gas and that it needed to pay $1.6bn in damages for this. But while the media can be accused of sensationalizing the matter, calmer heads should have prevailed in both the government and ONGC. For one, even if it were true that part of the gas – 0.3 trillion cubic feet (tcf) – that RIL had extracted from its KG Basin fields actually belonged to ONGC’s 98/2 field that is adjacent to RIL’s, the cost of this gas and the losses to ONGC were always dramatically different. After all, ONGC would have had to invest several billion dollars to take out in gas, so ONGC’s claim for damages would have to be restricted to the profits it could have made from this 0.3 tcf of gas after taking into account the capex and opex it would have had to make. Not surprising then, that the international arbitration panel that was examining the claim has not just refused to grant ONGC its claim, it has asked it to pay RIL for legal fees incurred. Chances are, the government/ONGC will challenge the award, but that is a bad idea. Indeed, given the report on gas reserves by international consultant DeGolyer and MacNaughton (D&M) has dramatically lowered the reserves of gas in the fields, it would appear ONGC may have made big losses had it invested in the field – for the record, the government/ONGC have not contested the findings. More important, however, this is not the first time in the history of global oil and gas exploration that reserves have migrated from one field to another due to the fact that the underlying reservoirs were connected. The way that such issues have been resolved, however, has been joint development of fields, not filing claims for damages. Had ONGC and RIL jointly developed the fields once the reservoirs were found to be connected, the PSU would have paid its share of the capex and opex, including the royalty paid to the government. And while ONGC/government were quick to blame RIL and claim it knew the reservoirs were connected – that’s where the concept of theft/pilferage came from – the facts show ONGC and the regulator in a poor light as well since neither realized the reservoirs were interconnected though they had data on it for years before RIL started extracting gas. In retrospect, this is not surprising since RIL didn’t know either. Indeed, it upped its original estimates of gas in the field from 7 tcf to 12 tcf while D&M later estimated the reserves were just 2.9 tcf. Though Tuesday’s arbitration ruling is not related, it will have important implications for the government’s larger case against RIL for artificially inflating its capital costs. While the CAG’s audit report had first talked of RIL’s capital costs being too high, when the government finalized its stance, it took a different tack. Rather than getting into whether the capex was padded since this would have been difficult to prove, the government said RIL had promised a certain gas output for the capex and since it had not delivered on that, part of the capex would be disallowed – under the profit-petroleum rules, as the capex rises, the government gets less profits; so by disallowing part of the capex, the government said RIL had to pay it a higher profit-petroleum. Till now, around $3.2bn of capex has been disallowed. In FY15, for instance, the oil ministry disallowed $2.8bn of such expenses, or 59% of the capex incurred by RIL as the gas produced was 59% less than what RIL had supposedly promised; in FY16, the disallowed expenses rose to $3.1bn or 65% of capex. This was a tenuous argument since the production sharing contract (PSC) doesn’t link capex with output, but it seemed reasonable since the argument was that RIL wasn’t producing the gas because it wanted to wait till prices rose – at that point, prices were $4.2 per mmBtu while RIL was lobbying for around doubling of that price. But now that the D&M report has shown there is very little gas left in the RIL fields, the government can no longer argue RIL was hoarding gas; and if it can’t do that, it may not be possible to justify disallowing $3.2bn of capex. Earl Thomas Authentic Jersey