Taiwanese company proposes $6.6 billion petrochemical investment in Odisha
Taiwan’s state-owned CPC Corp has proposed to invest USD 6.6 billion in petrochemical projects in Paradip in Odisha using feedstock from IOC, Oil Minister Dharmendra Pradhan said today. A Taiwanese delegation today discussed investment in the petrochemical cracker and downstream units. “Met with a delegation led by President of Taiwan’s state-owned petrochemical company, CPC Corporation. They propose to invest $ 6.6 billion in petrochemical projects in Paradip using feedstock from IOC,” Pradhan tweeted. He did not elaborate. The delegation led by Shun-Chin Lee, President of CPC Corporation “had detailed discussions with the Minister and senior officials of the Ministry and the oil industry on the proposed investment and identified the East Coast of India, and Odisha in particular, for the location of the cracker and downstream units,” and Indian Oil Corp (IOC) statement said. During the discussions, IOC’s 15-million tonnes per annum Paradip Refinery has emerged as a suitable location for investment in a greenfield cracker and downstream units at an estimated investment of USD 6.6 billion, it said. The delegation will be going to Odisha for a site visit to Paradip refinery and Paradip Port and for discussions with IOC and State Government officials. “The proposed cracker, based on different streams of feedstock, will have several downstream units for production of a diverse spectrum of petrochemical intermediates and end-products,” the statement added. Jaromir Jagr Authentic Jersey
Will private players go for shale gas?
As crude oil prices continue to remain at elevated levels, a recent notification by the government to undertake an inconspicuous change in the definition of petroleum have brought in the much-needed regulatory boost to the exploration of shale gas. This new age untapped source of fuel might bring to an end, to some extent, India’s dependency on crude oil imports. But what’s the fine print? Will the private sector, engaged in exploring and producing alternative sources of fuel like coal bed methane (CBM), be encouraged to start investing in shale gas and oil exploration? In its notification issued on July 24, definition of petroleum was changed to include shale by implication. The new description reads: “Petroleum means naturally occurring hydrocarbons, whether in the form of natural gas or in a liquid, viscous or solid form, or a mixture thereof, but doesn’t include coal lignite, and helium occurring in association with petroleum or coal or shale.” This amends the earlier definition of petroleum under clause K of Rule 3 of Natural Gas Rules 1959, which defined petroleum as follows: “Petroleum means naturally occurring hydrocarbons in a free state, whether in the form of natural gas or in a liquid, viscous or solid form, but does not include helium occurring in association with petroluem, or coal, or shale, or any substance which may be extracted from coal, shale or other rock by application of heat or by a chemical process.” That definition, which contained the phrase “free state” apparently prevented private players to explore shale, which was reserved for only government-owned entities like ONGC. “By removing the word free, it now means that hydrocarbons in absorbed state like shale can also be exploited,” Vilas Tawde, chief executive officer, Essar Oil and Gas Exploration, told DNA Money. In May, government felt the need to change this definition and accordingly floated a consultation paper with a draft definition. A section of the natural gas industry feels this will enhance domestic exploration and production of shale and other hydrocarbons raising India’s energy security and reducing dependency on imports. “The amendment of the definition of petroleum is a welcome move as it would open up exploration of all hydrocarbons in existing fields which is in line with the new Hydrocarbon Exploration Licensing Policy,” Prashant Modi, managing director and CEO, Great Eastern Energy Corp, which is one of the two companies that produce coal bed methane, told agencies. But a closer reading of the changes in the regulations reveals a different picture. “This notification doesn’t cover the CBM blocks. It redefines petroleum where all conventional blocks are allowed to go for all kinds of unconventional resources like shale or CBM that are there in those blocks. But its only for conventional blocks,” Tawde said. This means private sector players like Essar Oil and Gas and Great Eastern Energy would not be allowed to mine for unconventional sources like shale in their CBM blocks, which itself is an unconventional energy. “This opens up opportunities in western region and in Assam (where most of crude bearing blocks are there) but not in Bengal region which is devoid of conventional deposits but have rich CBM reserve and where we have producing CBM blocks,” Tawde explained. So, Essar will now have to look for shale in its Mehsana block in Gujarat where it doesn’t have estimates. “We have to work hard to get the date estimates for shale in Mehsana block which falls in the Cambay basin, so we are more upbeat on CBM where we pioneered CBM exploration in the early 90’s,” he said. While Essar will now have to look at Gujarat for shale, allowing shale production in the existing producing CBM blocks, all of which are located in Ranigunj that falls in the Damodar basin, would have helped the operators as there is significant synergy between CBM extraction and shale fracking. “CBM extraction gives out water while shale fracking needs water. Again, CBM production can only be ramped up gradually after dewatering while in case of shale, production is high in the initial years. So, we can front-end shale production and back-end CBM production thereby achieving an optimum utilisation of infrastructure,” an Essar official said. Another impediment could be absence of recent data on actual reserve of shale in the country. “We are currently creating a database of shale gas reserve in the Damodar basin though the project has seen some delays,” said an official of Centre for Mine Planning and Design Institute (CMPDI), a subsidiary of Coal India that carries out most of exploration research and data analysis for coal and related minerals in the country. CMPDI had mandated National Geophysical Research Institute for carrying out the study titled ‘Shale gas potentiality evaluation of Damodar basin’ which involves 3D high resolution seismic survey for shale gas exploration and demarcation of shale horizons. That project, earlier slated for completion by March 2016, has got delayed till November 2018. In its absence, private sector players like Essar and others are dependent on a study done by the US government released in 2015 on “Technically Recoverable Shale Oil and Shale Gas Resources: India and Pakistan” which carried out Energy Information Administration (EIA), the statistical and analytical agency within the US Department of Energy. According to that report, India has technically recoverable shale gas resource of 96 trillion cubic feet (tcf) which, incidentally, is lower than Pakistan’s 105 Tcf. In Addition, India has 87 billion barrels of shale oil compared with 227 billion barrels in Pakistan. Essar’s Ranigunj CBM block has about 7 tcf of reserves of which around 1.5 tcf is recoverable, according to an estimate of the United States Trade and Development Agency (USTDA), Tawde said. Eric Lindros Authentic Jersey
Arbitration panel doesn’t find RIL at fault in ONGC row
An arbitration panel has issued an award in favour of Reliance-led consortium in the so-called gas migration dispute case, RIL said in a late evening filing to the stock exchange. The panel has rejected the government’s contention that Reliance and its partners unjustly gained by producing gas from ONGC’s fields in the KG basin and must return the gains by paying $1.55 billion to the government. “All the contentions of the consortium have been upheld by the majority with a finding that the consortium was entitled to produce all gas from its contract area and all claims made by the Government of India have been rejected. The consortium is not liable to pay any amount to the Government of India,” the company said. The tribunal also directed the government to pay $8.3 million, or Rs 56 crore, as the cost of arbitration to the consortium that includes BP Plc and Niko Resources. The arbitration tribunal was split two to one with GS Singhvi, the former Supreme Court judge and the government nominee on the panel, writing a long dissent note. Bernard Eder, a former UK High court judge nominated by Reliance, and Singapore-based Lawrence Boo were the other two arbitrators. As per the majority verdict, Reliance and its partners were well within their rights under the contract to produce the gas that had migrated from the ONGC fields in the KG Basin, and had not unjustly enriched themselves, according to people familiar with the arbitration award. The majority of the panel agreed with RIL’s view that the production sharing contract doesn’t prohibit the contractor from producing gas—irrespective of its source—as long as the producing wells were located inside the contract area, people familiar with the award said. The panel rejected the government’s plea that RIL had unjustly enriched itself on the ground that the company had made the required capex for extraction of gas and had also paid royalty and profit petroleum due to the government on all gas produced from the field, they said. In his dissent note, Singhvi cited two previous judgements on public trust doctrine and unjust enrichment. He also relied upon the reports by consultant D&M and the Shah panel, people cited above said. This is the second legal setback for the oil ministry in two months — Delhi High Court on May 31 ordered the government to extend Vedanta’s contract for the prolific Barmer block on the same terms as in the original contract. The government has appealed that order. GOVT REACTION The government is studying the gas arbitration award and may challenge it in court in the near future although no decision has yet been made, the people cited above said, adding that the dissent note by Singhvi will help in making an appeal in court. Any court appeal means the matter may drag on for many more months. An email sent to the oil ministry elicited no response till the time of going to press. The tribunal’s ruling contradicts the findings of an official panel led by retired judge AP Shah. The recommendations of that panel, published in 2016, formed the basis for the government’s demand of $1.55 billion from Reliance and its partners. Reliance had then called the government demand arbitrary and invoked arbitration proceedings. The dispute began in 2014 when state-run ONGC approached the Delhi High Court, complaining that gas from its blocks was being produced by Reliance. The two companies appointed D&M, a US-based consultant, to examine the issue. The government, which was directed by the court to resolve the matter, appointed the Shah panel to study the D&M report and recommend ways to prevent such incidents in future. The panel said RIL had unjustly gained by producing gas that didn’t belong to the company and must return the gains to the government, which owns the gas that state-run ONGC was yet to extract from the two fields it operated. Reliance had produced gas that had migrated to its field in the KG basin from ONGC’s KG-DWN-98/2 block and Godavari PML, which share borders with the RIL’s block. The government accepted all recommendations of the Shah panel, which said RIL must compensate the government, not ONGC, the original petitioner in the case. With this, the government replaced ONGC in the dispute with Reliance. The $1.55-billion demand included the alleged benefit RIL received by drawing ONGC’s gas until March 2016, the accumulated interest on the amount, and $175 million by way of additional cumulative profit petroleum. Devin Street Womens Jersey
BP second quarter profit above expectations at $2.8 billion
Higher oil prices and increased output boosted BP’s second-quarter profit to $2.8 billion, four times that of a year ago. The company also confirmed it would increase its quarterly dividend for the first time in nearly four years, offering 10.25 cents a share. BP is turning a corner after the slump in oil prices and as it gradually shakes off a $65 billion bill for penalties and clean up costs of the deadly 2010 Deepwater Horizon spill. Underlying replacement cost profit, the company’s definition of net income, exceeded forecasts of $2.7 billion, according to a company-provided survey of analysts. It earned $0.7 billion a year earlier and $2.6 billion in the first quarter. First-half production rose to 3,662 million barrels of oil equivalent per day, including output at Rosneft, from 3,544 mboe/d a year ago. Benchmark Brent crude futures, currently over $74 a barrel, have risen around 16 percent over the first half of 2018 and around 60 percent since June 30 2017. In its biggest deal in nearly 20 years, BP last week agreed to buy U.S. shale oil and gas assets from global miner BHP Billiton, for $10.5 billion, expanding the British oil major’s footprint in oil-rich onshore basins. BP is also buying back shares to the tune of $200 million in the first half of this year. In the second quarter, it paid off $700 million for the spill on a post-tax basis. Gearing, the ratio between debt and BP’s market value, declined to 27.8 percent at the end of the quarter from 28.1 percent at the end of March. Net debt was $39.3 billion at the end of June compared with $40 billion at the end of March. Brandon McManus Womens Jersey
India’s natural gas production will double in four years: Oil Ministry
India’s natural gas production is expected to double to 72 billion cubic meter (bcm) in four years through 2022, the oil ministry recently told a Parliamentary panel. The government is currently working on a plan to shift the country towards a gas-based economy. The nation produced 35 bcm of natural gas last financial year (2017-18). Of this, state-owned explorer Oil and Natural Gas Corporation (ONGC) accounted for 24.2 bcm or 68 per cent, Oil India Ltd (OIL) produced 2.9 bcm and private firms and their joint ventures accounted for the rest 7.9 bcm. By 2021-22, this mix is expected to undergo a significant change with private JVs accounting for the largest chunk – 40.3 bcm – followed by ONGC’s production at 27.8 bcm and OIL contributing 3.7 bcm of gas. India’s natural gas production will double in four years: Oil Ministry The ministry told the Parliamentary Standing Committee on Petroleum and Natural Gas, the main reason for the shortfall witnessed in natural gas production during the 12thplan period (2012-17) was lower production from NELP deepwater block KG-DWN-98/3 operated by Reliance Industries (RIL) and the delay in production from ONGC-operated KG-DWN-98/2 coupled with the natural decline in ageing fields. The ministry added it has taken multiple policy initiatives to ramp up the country’s oil and gas production including gas pricing reforms, policy framework for early monetization of Coal Bed Methane (CBM), Discovered Small Field (DSF) policy, Hydrocarbon Exploration and Licensing Policy (HELP) and the operationalization of Open Acreage Licensing Policy (OALP). Asked how does ONGC plan to increase production, the company told the panel: “One of the biggest projects which we have undertaken, as on date, is going on schedule. From that discovery alone, we expect to get close to 4 million tonnes of oil which was only a gas discovery and almost 13-14 million cubic metre gas per day. This will take a while. This will come sometime around 2021-22.” RIL chief Mukesh Ambani, during the company’s recent Annual General Meeting, announced the firm plans to start natural gas production with its partner BP from its KG-D6 block by 2020, expecting to reach a peak of 30-35 Million Cubic Meter Per Day (MMSCMD) production by 2022. India’s natural gas production grew for the first time in six years in last financial year ended March 2018, primarily due to natural gas production from onshore blocks offsetting continuous decline from offshore blocks. Ja’Wuan James Authentic Jersey
Heartburn for ONGC: For HPCL, majority owner is still the President of India with 0% stake
Though oil refiner-retailer Hindustan Petroleum Corporation (HPCL) was taken over by Oil and Natural Gas Corporation (ONGC) in January this year, the former is yet to recognise the upstream major as its promoter in the mandatory quarterly filings with the stock exchanges. In the filings for Q4FY18 and Q1FY19 on both the BSE and NSE, HPCL clubbed ONGC which owns its 51.11% share among “public shareholders” while still mentioning the President of India (read the Union government) as its promoter with 0% stake. The “deviation” has caused much heartburn in ONGC and it has already approached the government for a resolution of the issue, sources said. The explorer had to fork out `36,915 crore to acquire a majority stake in the oil marketing company on being prodded by the government, which wanted to boost its non-debt capital receipts. An ostensible purpose of the deal was to further the government’s policy of creating an integrated oil major to compete with global and domestic private players. According to the sources, minority shareholders of ONGC could also raise the matter with the oil explorer’s board. “The matter is creating a lot of confusion,” an official said. HPCL’s move has no immediate precedent. After Indian Oil Corporation (IOC) bought a majority stake (51.89%) )in Chennai Petroleum Corporation in 2000-01, CPCL showed IOC as the promoter. Emails sent by FE to ONGC and HPCL remained unanswered till the time of going to press. Having acquired a controlling stake in HPCL, ONGC should be classified as promoter of the oil retailer according to Securities and Exchange Board of India rules, said Prithvi Haldea, chairman, PRIME Database. Though ONGC was not the original promoter, after it acquired a controlling stake in HPCL, it is deemed as promoter, he added. According to government sources, HPCL’s reluctance to identify ONGC as a promoter could be the outcome of a battle of egos at the helms of the two state-run entities. Prior to acquisition, HPCL was on the Fortune Global 500 list ranked 384 (2016) while ONGC was not on the list. Thanks to its majority stake in HPCL, ONGC is now ranked 197 (2017) on the list. The Fortune Global 500 is an annual ranking of the top 500 corporations worldwide as measured by revenue and the list is compiled and published annually by Fortune magazine. Dominique Easley Jersey
OMCs make provisions for PMUY losses
State-run oil marketing companies (OMCs) classified a section of loans provided to beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY) in FY18 as ‘doubtful’ as recipients did not ask for LPG refill for a year. While Indian Oil has made a provision of Rs 162 crore for inactive beneficiaries at the end of FY18, HPCL and BPCL have also made provisions of almost half that amount each. Indian Oil is the leader in providing almost 50% of around 4.95 crore liquefied petroleum gas (LPG) connections released till date under the government’s flagship scheme. “Companies have already made provision in the accounts of (FY18) for those beneficiaries who have not taken refills for at least a year. If these beneficiaries continue the trend and do not come back for refills, these provisions will be classified as bad debt,” said a source, adding that this provision has been made on auditors’ insistence. Under the scheme, of an LPG connection cost of around `3,200 — including stove, refilled cylinder and safety hose — the government pays `1,600 as one-time assistance. The rest is to be borne by beneficiaries. The beneficiary can pay her share upfront, or opt for a loan, wherein the amount is realised by not repaying the beneficiary the amount of subsidy — transferred as a direct benefit to bank account — on subsequent refills till the loan amount is recovered. While the scheme was launched in May 2016 with an initial target of providing clean cooking fuel to 5 crore women beneficiaries belonging to the below-poverty-line category as per the Socio Economic Caste Census (SECC) 2011 list, the target has been increased to 8 crore. The initial allocation towards the scheme was `8,000 crore, but `4,800 crore was later added and the scope of the scheme has also been extended beyond the SECC. Data show that Indian Oil released around 62 lakh LPG connections under the PMUY in FY17. Of this, close to 9.5 lakh did not come back for refill by March 31, 2018. In FY18, Indian Oil released 48 lakh connections, of which around 27 lakh did not return for refill by the end of the year. Similarly, BPCL released close to 29 lakh LPG connections under the PMUY in FY17, of which 4.7 lakh beneficiaries were still using the installation refill by March 31, 2018. In FY18, BPCL issued around 30 lakh connections, of which 17 lakh did not return for a single refill by March 31, 2018. As per government figures, a PMUY beneficiary on an average takes four refills a year, compared with the national average of 7.2. The government claims that the dropout from the scheme is 20%, and that the rest 80% beneficiaries have at least come back for one refill. To promote more refills, OMCs stopped collection of payment from beneficiaries for six months starting end-March 2018. “The companies will have to decide whether to extend the scheme (non-collection of loan repayment) or not, once trends after six months are clear. The loan amount will be recovered once people start refilling,” the source said. Jeff Locke Authentic Jersey
Government taking steps to ease crude oil import cost: Dharmendra Pradhan
The Government is taking various measures, including focusing on biofuels, to ease the cost of crude oil import, Union minister Dharmendra Pradhan said today. He told the Lok Sabha that the government is focusing on biofuels such as first and second generation ethanol, biodiesel and bio-CNG as part of efforts for “import reduction, environmental benefits and increased income to farmers”. Besides, efforts are on for increasing domestic production of oil and gas, capitalising untapped potential in bio-fuels and other alternate fuels, and implementing measures for refinery process improvements, Pradhan said during the Question Hour. The Petroleum and Natural Gas Minister also said the government has notified the National Policy on Biofuels 2018, which allows use of damaged food grains for production of ethanol for blending with petrol. “There is also a provision to allow surplus food grains for ethanol production during the surplus phase as decided by the National Biofuel Coordination Committee,” Pradhan said. Multiple sources have to be there for energy, he said, adding the government continues to modulate the effective price of domestic LPG supplies to domestic consumers under the Direct Benefit Transfer of LPG. “The domestic price of LPG in the country is based on international price of LPG (ie. Saudi contract price) and is not linked to the cost of crude oil,” the minister said. Deion Sanders Womens Jersey
Ukraine has 12.7 bcm of gas in storage, shows data
Ukraine had 12.7 billion cubic metres (bcm) of gas in storage as of July 28 compared with 13.01 bcm at the same date in 2017, data from gas transport operator UTG showed on Monday. Ukraine is seeking to store at least 17 bcm of gas in readiness for the winter season which starts in mid-October, the government said last week. For the past heating season from October to April, Ukraine had 16.8 bcm of gas in reserve. Ukraine consumed 32.2 bcm of gas in 2017 and imported 14.1 bcm. Ukraine, which used to rely on Russian gas imports has not bought gas directly from Russia since November 2015 and instead now imports from Europe. Relations between Russia and Ukraine have suffered since Russia’s annexation of Crimea in 2014. Brandon Marshall Jersey
Govt to launch second oil and gas field auction on August 9
The government plans to launch the auction of 60 oil and gas fields being offered in the second round of bidding for Discovered Small Field (DSF) on August 9, regulator DGH said. DSF-II was supposed to be launched around mid-June, but it was deferred. “Launch of Discovered Small Field (DSF) Bid Round-II on August 9, 2018, in New Delhi,” the upstream regulator tweeted. The 60 discoveries have been clubbed into 26 contract areas spread over 3,100 sq km spread over eight sedimentary basins, it said. The fields are being offered in Rajasthan, Gujarat, Kutch & Cambay shallow waters, Mumbai offshore, Assam and Tripura, Mahanadi shallow water, Andhra Pradesh onland and KG offshore. DGH said the main features of DSF-II include a single license for conventional and unconventional hydrocarbon, prior technical experience not a pre-qualification criterion, no upfront signature bonus and full pricing and marketing freedom. “Royalty rates further reduced as compared to DSF-I,” it added without elaborating. The fields on offer hold an estimated 1.4 billion barrels of oil and oil equivalent gas. The government had in 2016 brought a new DSF policy, offering “idle” small discovered fields of state-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) in an auction on liberalised terms including marketing and pricing freedom and lower taxes. The Union Cabinet had in February approved the second round of DSF auctions, under which the government is offering a total of 60 discovered small fields with an estimated 194.65 million tonnes of oil equivalent (MMtoe). These discoveries have been clubbed into 26 contract areas spread over 8 sedimentary basins. Of the 60 fields which will be up for auctions, 22 fields belong to ONGC, five to OIL and 12 are relinquished discovered fields from the New Exploration and Licensing Policy (NELP) blocks. In DSF-I launched in May 2016, 46 contract areas consisting of 67 discovered fields spread across nine sedimentary basins were auctioned. The auctions attracted 134 e-bids for 34 contact areas of the 46 offered. Later, 22 companies were shortlisted for 31 contract areas of which 15 companies were new entrants with no prior experience in the sector. As many as 21 fields which did not receive any investor interest in DSF-I will also be part of the second DSF round. Post the February decision of the Cabinet, an Empowered Committee of Secretaries (ECS) comprising of Secretary (Petroleum & Natural Gas), Secretary (Expenditure) and Law Secretary have finalised and approved Model Revenue Sharing Contract, Notice Inviting Offer (NIO) and other documents for DSF Round-II. To expedite award, the Cabinet had authorised Minister of Petroleum and Natural Gas and Minister of Finance to approve of the winners based on the recommendations of the ECS. Brian Poole Authentic Jersey