India’s first ever U.S. crude purchase to arrive in Sept.
India’s first ever purchase of crude oil from the U.S. will be delivered in September, according to an Indian Oil Corporation (IOC) official, who added that the company’s deal with the U.S. resulted in cheaper oil for India than even Basra Light because the U.S. could sell at highly competitive rates, and the company transporting the shipment — PetroChina — had provided ‘very favourable’ terms of trade. High-sulfur grade IOC reportedly bought 1.6 million barrels of high-sulfur grade U.S. Mars crude oil and 400,000 barrels of Western Canadian Select. “The prices we are getting from America are very competitive, even when compared to the prices of Basra Light,” the IOC official told The Hindu on the condition of anonymity. “Added to that, this deal has PetroChina as the trader, which will transport the oil to India and the price of transport is also very low. Each order has specific dimensions to it, and this order has a Chinese company doing the transport. The delivery of the order is around September.” The deal with the U.S., signed earlier this month, comes at a time when India’s oil imports from Iran have fallen to their lowest levels in more than a year due to tensions between the two countries over the awarding of the Iranian Farzab B gas field. Iran has also cut short the credit period it offers Indian companies for oil they buy, from 90 days to 60 days. The IOC officials, however, did not mention Iran as the reason why Indian companies are now looking to other sources for their oil imports. “As long as the price is low from these other sources, we will continue considering them for supply,” he said. Bharat Petroleum Corporation also announced in July that it had become the second Indian company to buy oil from the U.S. Nevin Lawson Womens Jersey
ONGC seeks market freedom to open India’s 8th sedimentary basin
Oil and Natural Gas Corp (ONGC) has sought pricing and marketing freedom to help bring to production a one-trillion cubic feet gas discovery that will open up a new sedimentary basin after over three decades. ONGC, which has opened for commercial production six out of India’s seven producing basins, has made a significant natural gas discovery in the Gulf of Kutch of Gujarat coast that can produce about three million standard cubic meters per day, a senior company official said. This will open up the country’s eighth sedimentary basin – the first in over three decades – for oil and gas production in two years. “We can bring to production the find in 2-3 years time,” he said. ONGC reviewed the project with Oil Minister Dharmendra Pradhan last week and set out conditions that will help monetise the gas reserves. “The present government-mandated gas price of USD 2.48 per million British thermal unit does not make the discovery commercially viable. Since the find is in shallow waters, it does not qualify to get the USD 5.56 per mmBtu cap price set for difficult fields,” the official said. The current rates of gas are uneconomic, he added. “We have asked the government to give us pricing and marketing freedom. What sense does it make to use precious foreign exchange to pay USD 6-7 for importing gas and not pay an equivalent amount to domestic producers. Afterall, any domestic production would only aid government’s Make-in-India initiative,” he said. India has 26 sedimentary basins, of which only seven have commercial production of oil and gas. Except for the Assam shelf, ONGC opened up for commercial production all the other six basins, including Cambay, Mumbai Offshore, Rajasthan, Krishna Godavari, Cauvery and Assam-Arakan Fold Belt. The official said the discovery made in the Gulf of Kutch is in shallow waters, but cannot be tied to either the production facilities in Mumbai High fields or Hazira and may require a new landfall point. The BJP-led government had in October 2014 evolved a new pricing formula using rates prevalent in gas surplus nations like the US, Canada and Russia to determine rates in a net importing country. Prices have halved to USD 2.48 per mmBtu since the formula was implemented. India’s largest natural gas producer is demanding a floor or minimum price of natural gas be fixed at USD 4.2 per mmBtu and rates freed in a years time. “We hope the government listens to us,” the official said. “We should be able to bring the new find to production within 2-3 years from the date they give us for the requisite approvals,” he said.
Jet Airways may virtually merge with KLM-Air France
Within 24 hours of KLM-Air France, Virgin Atlantic and Delta announcing a blockbuster global deal, ET NOW exclusively learns the Indian skies may also soon be a part of this grand alliance. Sources tell ET Now that Jet Airways is in advanced talks with KLM-Air France for a strategic cooperation that could function as a virtual merger of the two airlines. Simultaneously, Jet is in talks with the US-based carrier Delta for an equity stake sale, and the talks are on to finalise the valuations. The stake sale to Delta may follow the virtual merger with KLM-Air France These two separate transactions will enable Jet to join the mega alliance announced on Thursday July 27 i.e. Delta buying a 10% stake in KLM-Air France, and KLM-Air France buying a 31% stake in Virgin Atlantic. Sources say Jet and KLM-Air France are hoping to sign a “metal neutrality”pact next month that would entail flight scheduling, pricing and revenue management. As per a metal neutrality pact, the airlines concerned are indifferent to whose planes are used to carry passengers. The Jet Airways stock jumped nearly 4% on the news-break. Responding to ET Now, Jet Airways spokesperson said, “Jet Airways enjoys and continues to develop its codeshare partnerships with KLM Royal Dutch Airlines and Air France, over its European gateways in Amsterdam and Paris, to cater to growing traffic flows to/from Europe and North America. As a policy, the airline does not comment on speculation.” Jim Otto Jersey
Aviation industry says bye bye to YY Fares
One of the earliest relics of the global aviation industry will soon be buried. YY Fares, the multilateral interlineable fares from the International Air Transport Association (IATA) will be rescinded from October 31, 2018. The Association, which represents 275 airlines across the world, said in early July that “the rescinding of YY fares reflects the dramatic transformation that continues to take place in the distribution of airline products.” YY Fares were established in 1945, enabling a flier to travel anywhere in the world on a single ticket in a single currency. This facility threw open the world as a travel destination for the customer as he could now fly on different airlines and have his luggage checked through to final destination. That was the essence of multilateral interlineable fares. “It was like an open ticket,” says an official from a leading travel company. “Those times, till the 1990s, an airline would only fly to a limited number of destinations. YY fares would help a flier to travel on multiple airlines using a that open ticket,” he adds. For instance, a flier from Mumbai would take an Air India flight to Frankfurt; and use the same ticket to fly onward to, say Paris, on a Lufthansa flight. YY Fares were honoured by all member-airlines of IATA, which used to submit coordinated international fares and rates to governments for approval. These fares later came to be known as IATA YY Fares. It was a big achievement in enabling global travel. “YY fares were the backbone of global airfares for much of the last 70 years,” said Alexandre de Juniac, IATA’s Director General and CEO in a press release. Technology evolves But as the IATA Director General and CEO notes, the relevance of YY Fares has been overtaken by changing markets and consumer demands. Over the seven decades as the world economy opened and competition increased, airlines began opting out of the system. One, these carriers were expanding their own market presence, flying to newer destinations. Also, instead of an umbrella agreement, airlines began focusing on code-sharing agreements and joint ventures. Code-sharing is an arrangement when two or more airlines share the same flight. For instance, recently Jet Airways signed a codeshare agreement with Aeromexico, allowing one airline to book its passenger on the partner’s flight. As the usage of YY Fares reduced, the IATA in 2006 converted the coordination of YY fares from physical meetings to a web-based system known as e-Tariffs and generates Flex fares. In Flex fares a premium was added to the average of the highest carrier fares for the complete flexibility that the YY Fares offered. But as competition increased, fewer and fewer airlines were using YY Fares. Lufthansa for instance stopped accepting YY Fares in 2007. In India, there are few at present who are aware of YY Fares. “In fact very few in our office even know about YY Fares,” exclaimed the official from the travel company quoted earlier. Little wonder that YY fares today account for just 0.03 per cent of tickets sold. Francois Beauchemin Authentic Jersey
As divestment looms, Air India’s Boeing order to end by Mar 2017 as 6 planes join fleet
Air India will take delivery of six more planes from Boeing by March, marking the completion of the orders the state-owned carrier had placed with the world’s largest aerospace company as far back as December 2005, according to a company official. The company is going ahead with the purchase of the planes even as the government explores options to sell its stake in the loss-making airline. There will be three Boeing 777-300 ER and as many 787-8 planes delivered to the national airline by the end of the current financial year. “The airline may be making losses but it will be sold on a going concern basis. The purchase of the planes is a contract that needs to be honoured,” the official said. Under the first contract, eight Boeing 777-200LR and 15 Boeing 777-300ER planes were ordered. While all planes of the first type were delivered, three of 777-300ER remain. Of the eight Boeing 777-200LR planes, Air India sold five in order to rationalise the fleet and reduce operational losses. Similarly, as many as 27 Boeing 787-8 Dreamliner planes were ordered under the second win for the US company in 2005. Of these, 24 have been delivered. Air India has a fleet of 119 planes with 44 wide-body Boeing planes and 65 narrow-body Airbus planes. The rest are smaller ATR planes that fly on regional routes. The government’s plan to sell its stake in the airline is on track with the group of five ministers, appointed to look into the divestment, holding its first meeting on June 21. While Interglobe Aviation, the company behind India’s largest airline IndiGo, has expressly stated its intent to buy Air India, reports say Tata Sons and private equity firms KKR and Warburg Pincus have also shown interest in buying the airline. From commanding a 35 percent share in the mid-2000s, Air India’s domestic market share has reduced to just 14 percent. The airline stands behind IndiGo and Jet Airways in the pecking order. On the overseas traffic to and from India, it has a 17 percent share. The airline, surviving on a Rs. 30,231-crore government bailout package, has accumulated losses of around Rs. 52,000 crores and as much debt. The package, approved by the previous government in 2012, called for staggered equity infusion over nine years. It has so far received Rs. 23,993 crores under the package. The airline reported an operating profit of Rs. 105 crores in 2015-16 though this was contested by Comptroller and Auditor General which said it was actually an operating loss of Rs. 321 crores. The national carrier hasn’t made a net profit in at least a decade. Emmanuel Sanders Authentic Jersey
Tigerair-Scoot deal may push India-Singapore fares down by 15%
Indian international fliers can expect fares on the India-Singapore route and beyond to fall by about 15% with the merger of Tigerair and Scoot, both budget carriers owned by Singapore Airlines. Nine months after Scoot and Tigerair announced their intention to pursue a single brand and operating licence under the Scoot brand, all Tigerair flights out of India started operating under Scoot on Tuesday. “There will be two key things for a consumer — first, fares are expected to come down by 15% due to merged operations of both the airlines and passengers will also be saved from the hassle of flying and connecting through the network of two different airlines,” Bharath Mahadevan, country head, India, at Scoot, told ET on Tuesday. Xavier Ouellet Womens Jersey
CAG seeks details of plan to float trust for UDAN
The Comptroller and Auditor General (CAG) has sought details of the aviation ministry’s plan to create a trust to fund the government’s regional connectivity scheme (RCS), which was launched three months ago. “They wanted to know about the composition of the trust and other details about the trust, which has been created to keep it out of the tax ambit,” said an official who did not want to be named. “A trust ensures that there is no tax element in the subsidy payments made to airlines.” CAG officials visited the aviation ministry to make their inquiries, according to three people with knowledge of the matter. The government offers subsidies under RCS to airlines for connecting unserved and underserved airports at a fare of Rs 2,500 per hour of flight. The government has created a Regional Connectivity Fund (RCF) that collects money from airlines to pay for the scheme. The subsidy will be paid through a Regional Connectivity Trust (RCT), which is what the CAG is asking about. The CAG team was informed that the trust is headed by the Airports Authority of India (AAI) chairman and members include others from the agency, said the people cited above. AAI is the nodal body for payment of the RCS subsidy to airlines operating regional flights. When contacted, CAG sources told ET they don’t comment on any audit until it is complete and the report has been submitted. The aviation ministry and AAI didn’t respond to emails seeking comment. The first flight under RCS or Ude Desh ka Aam Nagrik (UDAN) scheme was launched with Air India’s Shimla-Delhi flight in April. In the first phase, flights will be launched on 128 regional routes that will connect 43 airports across the country, the government has said. However, ratings agency ICRA has estimated that UDAN’s impact will be marginal at 0.4% of total passenger traffic in FY2018. Harold Landry Jersey
ONGC, directors pulled up for plan to skip tendering
The Central Vigilance Commission (CVC) has asked Oil and Natural Gas Corp (ONGCBSE 0.00 %) and its directors to individually explain why the state firm had planned to hire rigs without tendering, taking a harsh view of the company’s plan that was dumped after media reports highlighted it. ONGC had planned to hire nine rigs through nomination, apparently to save time in the hiring process, in 2015, but didn’t go ahead after ET reported this. Oil rigs are large structures capable of drilling wells and extracting oil and natural gas, and come for a few lakh dollars a day on rent. A rig is the biggest cost component in producing oil or gas and a sub-optimal decision in hiring rigs can upset the production cost for an oil company. Following the report, the CVC sought explanation from ONGC. “The CVC has taken a harsh view of the matter,” said a source with direct knowledge of the matter. “ONGC’s initial explanation has cut no ice with the CVC. The company said it was just a plan that remained unexecuted. But CVC wants to know why ONGC drew such a plan in the first place.” This back and forth of CVC queries and ONGC’s explanation has consumed almost two years. The CVC has now sought explanation from each functional director who was part of the executive procurement committee that had decided in favour of hiring rigs through nomination in 2015. The oil ministry is also part of this investigation and has sought more information from ONGC on this. ONGC did not respond to ET’s email query till the time of going to press. State oil firms are supposed to use the nomination route only in exceptional circumstances. The plan to bypass tendering attracted attention because in 2015 rigs were easily and cheaply available as many companies abandoned or deferred drilling because oil prices had crashed in 2014. As a result, surplus rigs were available cheap. For Indian projects too, tenders for rigs in the past three years have attracted interests from several rig companies from across the globe and at rates that are substantially lower than the previous contracts. There is a cut-throat competition among rig owners to grab contracts. ONGC deploys dozens of rigs at any point in time on land and at sea. In 2017-18, it plans to make a capital spending of Rs 30,000 crore, most of which would go into its offshore projects off the eastern and western coast. Zach Brown Womens Jersey
ONGC is pumping in Rs 3104 Crore for drilling of wells and creation of surface facilities in Tripura
In line with Hydrocarbon Vision 2030 for North-East Region, ONGCBSE 0.06 % management has approved additional investment of Rs 3104 Crore for drilling of wells and creation of surface facilities to produce gas from Tripura gas fields. According to ONGC, the objective of the scheme is to produce & supply total gas of 5.1 MMSCMD to various consumers of state for another 20 years through drilling of 153 new wells and creation of new / augmentation of surface infrastructural facilities, laying of 282 km pipe lines of gas grid network & 600 km of well flow lines. ONGC Tripura Asset has also prepared 5 years (target) master plan of Exploration & Production activities planned for both Western & Eastern part of Tripura. This plan involves year wise drilling plan, identification of requirement of rig resources, surface facilities revamping, work-over inputs, technology inputs etc. Action plan is in place. A total of 221 wells have been drilled by ONGC in the state till April 2017 and 116 wells are found to be gas bearing which corresponds to the success ratio of 2:1. Presently around 76 wells are available for production with the gas production potential of around 4.3 -4.5 MMSCMD. ONGC‘s average sales in Tripura has increased from 1.7 MMSCMD (Million Metric Standard Cubic metre per day in 2012-13 to 3.92 MMSCMD In 2016-17, doubling the average gas sale rate and achieved Highest ever annual Gas production of 1427 MMSCM during 2016-17. Charles Clay Womens Jersey
‘Uday’ gets discoms back in shape, boosts power supply
The Modi government’s prescription for ailing state power distribution companies is slowly putting them back in shape and reducing the duration of blackouts in the nearly two years since the treatment began. Data presented during last week’s review of ‘Uday’, the revival plan for discoms, by the PM show major improvements in the key parameters on which health of discoms are judged. The government approved Uday on November 5, 2015, when all state discoms were gasping under a collective debt of Rs 3.95 lakh crore. Some 90% of this debt, or Rs 3.82 lakh crore, belonged to states that were ready to swallow the pills being proposed in Uday. Almost two years down the line, the participating states now have found relief for their debt pain by floating bonds worth Rs 2.32 lakh crore, or nearly 87% of the burden. The next step was to regain operational strength by reducing AT&C (aggregate transmission and commercial) loss — a euphemism for power theft — through widespread metering and improve revenue through robust billing and collection. Tests have been positive on both counts, with 12 states reporting a reduction in AT&C losses and 15 states shrinking the gap between their aggregate cost of supply (ACS) and aggregate rate of realisation. At an overall level, the ACS-ARR gap has reduced from 59 paisa per unit in 2016-2017 to about 45 paisa per unit at present. Simultaneously, the average AT&C loss for all states that have signed up for UDAY has come down to 20% this fiscal. No wonder, the average annual loss of discoms have come down from Rs 51,340 crore in fiscal 2016 to Rs 40,295 crore in 2017. So what does all this mean for average consumers? Well, longer supply hours, for one. A recent government statement said the average duration of power cuts declined 61% to 7.45 hours a month in May this year from 19.38 hours in the year-ago period. Herman Edwards Jersey