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About 60 blocks to be auctioned in second round of petro bids

The second round of bidding for discovered small and marginal fields (DSF) in the petroleum sector is set to take place in October. “We are eyeing start-ups and small national and international companies. About 60 blocks will be on offer for the II round,” said an official. According to sources, the Directorate General of Hydrocarbons (DGH) has shortlisted these blocks, now before the ministry of petroleum and natural gas for clearance. India is the third largest consumer of petroleum products, after America and China. The country’s share of global demand is expected to grow from the current 5.5 per cent to nine per cent by 2035. The DSF rounds and the Open Acreage Licensing (OAL) policy round are considered vital for reducing of import, in the schedule approved by the ministry. In the first round of DSF, blocks were awarded to 30 companies — 23 onshore and seven offshore ones. “The success of DSF Bid Round 2016 in the face of global economic slowdown and low oil prices manifests the benefits of the new E&P (exploration and production) regime for investors,” went a DGH presentation at the recent World Petroleum Congress in Istanbul. Highlights of DSF-I Number of e-bids: 134 Number of participants: 47 Contract areas awarded: 30 • 23 –Onshore • 7–Offshore New entrants to E&P industry: 13 India has 26 sedimentary basins over 3.14 million sq km. Crude oil and natural gas are being produced in seven basins. In the new rounds, 2.7 million sq km will be on offer, comprising 1.5 million sq km of onshore and 1.2 million sq km of offshore areas. In the new Hydrocarbon Exploration Licensing Policy, these are to be offered on a revenue-sharing model, providing pricing and marketing freedom to operators. On June 28, the government had launched a National Data Repository (NDR) for investors keen on the OAL round. In the NDR, sedimentary basins are divided into zones, with corresponding data. “We are getting a lot of demand for NDR with the launch of OAL. A lot of national and international players are keen. NDR is based on seismic and well data, and investors can identify areas with potential through this,” said another official. Investors will also have the option to go for a petroleum operations contract or reconnaissance contract. The latter will be valid for three years and the former will allow eight years for exploration and 20 years for development and production. There will also be an option to migrate from a reconnaissance contract to a petroleum operations contract after three years. Da’Shawn Hand Authentic Jersey

West Coast Refinery’s Complex To Cost Rs. 2700 billion: Dharmendra Pradhan

The world’s biggest oil refinery-cum-petrochemical complex planned in Ratnagiri district of Maharashtra will cost Rs. 2700 billion and take 60 months to build, Oil Minister Dharmendra Pradhan said on Monday. State-owned Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) are building the integrated complex with a refining capacity of 60 million tonnes per annum at Babulwadi, Taluka Rajapur, Ratnagiri district. “The proposed refinery will produce gasoline (petrol) and diesel suitable for BS-VI (equivalent to Euro-VI emission norms). The refinery will be designed with flexibility in processing wide varieties of crude as well as flexibility in product mix,” the minister said in a written reply to a question in the Lok Sabha. The three firms on June 14 signed a joint venture agreement to form a company, West Coast Refinery and Petrochemical Ltd for implementation of the project. “Order of magnitude of cost estimated for the project is Rs. 2700 billion and the share of IOC, BPCL and HPCL is in ratio of 50:25:25 respectively,” he said. The refinery will produce petrol, diesel, LPG, ATF and feedstock for making petrochemicals that are basic building blocks in plastic, chemical and textile industries. Pradhan said the project will take 60 months to complete from the date of approval and receipt of all statutory clearances. In addition, oil PSUs have also planned to increase the refining capacity in the country by 35 million tonnes (MT) in next few years to meet the domestic demand of petroleum products, he said without giving details. India, the world’s third largest energy consumer after US and China, has a refining capacity of 232.066 MT, which exceeded the demand of 194.2 MT in 2016-17. According to the International Energy Agency (IEA), this demand is expected to reach 458 MT by 2040. Besides the West Coast Refinery and brownfield expansion, a new 9 MT unit is planned at Barmer in Rajasthan. Fifteen million tonnes a year is the biggest refinery any public sector unit has set up in one stage. IOC recently started its 15 MT unit at Paradip in Odisha. Reliance Industries holds the distinction of building the biggest refinery in India till now. It built its first refinery at Jamnagar in Gujarat with a capacity of 27 MT, which was subsequently expanded to 33 MT. It has built another unit adjacent to it for exports, with a capacity of 29 MT. Lance McCullers Womens Jersey

Low solar tariffs raise questions on viability of projects: Sajjan Jindal

Low solar power tariffs discovered in recent rounds of bidding for solar power projects has raised questions on the viability of projects, Sajjan Jindal, Chairman and Managing Director of private power producer JSW Energy, has said. “We are now seeing a lot of focus on solar power, with auction-based tariffs reaching all-time lows. Although a part of the reduction can be attributed to decline in equipment costs, it also raises questions on the long-term viability of projects at such low tariffs,” Jindal said in his speech at the company’s 23rd Annual General Meeting in Mumbai. He added the government has set ambitious targets for setting up renewable capacities and hence the viability of projects will be a crucial factor to achieve the long-term goal of energy security. “In this context, the recent draft proposal of the government to include hydropower as renewable energy and to stipulate a mandatory hydropower obligation is a welcome step,” he said. JSW Energy, part of the $11 billion JSW Group, is evaluating various opportunities involving next-generation technologies which are going to be disruptive in nature in the energy space, Jindal said. The current stress in the power sector could lead to consolidation which will offer good prospects for future investments, he added. Talking about the future of the energy sector, Jindal said India’s long-term energy appetite is enormous but a large proportion of the demand is latent. “The GST rollout is also likely to boost economic growth over the medium term as it improves efficiency of goods movement between states, avoids tax cascading as well as strengthens tax compliance and governance. This is likely to boost GDP growth rate to 8 per cent or above, consequently driving power demand,” he said. According to Jindal, the power sector is currently struggling with multiple issues including sluggish industrial demand, lack of long-term Power Purchase Agreements (PPAs) and ill financial health of distribution utilities. He, however, also noted the government has taken multiple policy initiatives and path-breaking measures to provide electricity for all at a fair and just price. Brad Richards Authentic Jersey

Analysis: First tech, now financing – U.S. shale firms get creative to pump more oil

U.S. shale producers survived an oil price crash and confounded OPEC’s efforts to drain a global glut by employing innovative drilling and production techniques. Now, some of these producers are turning to creative investments to pump more oil. Drilling joint ventures, called “DrillCos” for short, combine cash from investors like Carlyle Group LP with drillable-but-idle land already owned by producers. Investors get a pledge of double-digit returns within a few years, while producers can raise productivity without spending more of their own money. The total raised by these ventures – at least $2 billion in the last 24 months – is a small part of overall shale financing. But they represent another way for Wall Street and shale producers to increase the flow of oil, and frustrate plans by the Organization of the Petroleum Exporting Countries to prop up prices. Private equity this year has showered more than $20 billion on U.S. energy ventures. Driven by shale expansion, U.S. oil production this year is forecast to increase by 570,000 barrels per day (bpd) to 9.9 million bpd, the U.S. Energy Information Administration estimates. NO BALANCE-SHEET RISK Drillcos take control of drillable land and generally turn over 100 percent of the cash flow from oil and gas production to investors until they earn a 15 percent return. At that point, control reverts to the producer, with the investor’s stake shrinking to about 10 percent of remaining production. “It’s a type of surgical, temporary capital,” Mark Stoner a partner at private equity fund Bayou City Energy LP, said in an interview. Bayou City committed $256 million to an Oklahoma drillco with privately held Alta Mesa Holdings LP last year. “We get exposure to great, prolific oil basins, but don’t have to take on balance sheet risk.” Companies such as EOG Resources Inc, one of the financially strongest U.S. shale producers, are turning to drillcos. Two months ago, EOG struck a $400 million deal with Carlyle to finance wells in Oklahoma. The investment lets EOG focus its own cash on the Permian Basin, the largest U.S. oilfield, and lifts its production without increasing its spending. The venture also allows EOG to double or triple the value of land it held on its books, Lloyd Helms, EOG’s head of exploration and production, said an industry conference in May. Legacy Reserves LP, Exco Resources Inc, Alta Mesa and EOG are among 34 oil producers that since 2015 have formed drillcos worth more than $2.05 billion. The money has come from investors including Blackstone Group, Carlyle, KKR & Co, and others, according to 1Derrick Ltd, which tracks oilfield land deals. PUTTING IDLE LAND TO USE Historically, one way producers wrung more cash from financiers was to pledge future output for cash payments to finance drilling. There was no swap of land and no guaranteed return. Drillcos differ in that investors get control of land until a double-digit rate of return is met, providing insurance against a default. For producers, these ventures also help boost the total amount of oil they can eventually recover. Wall Street is rewarding those with strong production with share price gains at a time when OPEC and its allies have agreed to pull 1.8 million bpd off the global market. “This helped us drill acreage that we wouldn’t otherwise have been able to drill right away,” Mike McCabe, Alta Mesa’s chief financial officer, said in an interview. For investors, the potentially high rates of return, compared with commercial loan rates running about 5 percent to 7 percent, have spurred interest despite crude prices under $50 a barrel. “There’s a lot of money seeking a home, especially in this low interest rate environment,” Mingda Zhao of Vinson & Elkins LLP, a law firm that has negotiated drillco agreements, said in an interview. Drillcos are not risk free. If oil prices tumble, investors’ ability to grab high returns within a few years fades. Shale producers also must be willing to provide more information on the land than they would under more common loan agreements. Such detailed information “gives us well-level insight into what’s going on in a basin,” said Bayou City’s Stoner. For Carlyle, one of the world’s largest private equity funds, the drillco with EOG was a relatively low-risk way to invest in U.S. shale. “We were looking for very specific types of assets and drilling deals to make the risk-return work for us,” David Albert, co-head of Carlyle’s Energy Mezzanine Opportunities funds, said in an interview. The funds, with more than $4 billion under management, can still make money on its drillco investment even after oil prices slipped below $45 per barrel this month on oversupply concerns. “Even with current oil prices, there are still economic opportunities to be had out there,” Albert said. Ty Sambrailo Womens Jersey

Pratt engine fixes prompt IndiGo to ground seven airbus planes

India’s biggest airline grounded at least seven Airbus SE jetliners as it awaits fixes for balky Pratt & Whitney engines, joining several carriers around the world that have pulled the planes from service. IndiGo stopped using one A320neo aircraft this month after grounding four in June and two in May, according to data from flight-tracking website Flightradar24. Including IndiGo’s planes, there are 12 A320neos now out of service across five airlines worldwide, said a person familiar with the matter, who asked not to be named because the information isn’t public. “We are aware thata limited number of Pratt & Whitney GTF-powered A320 aircraft are temporarily out of service for engine upgrades,” the engine maker said in a statement. “We are working with Airbus and our airline customers to ensure that any disruption involved will be minimized.” Pratt, a unit of United Technologies Corp., has been working to fix durability issues and production snags that have hampered the roll-out of the engine, which was selected to power new jets from Airbus, Bombardier Inc. and Embraer SA. Airbus deliveries have been affected amid problems with engine parts, including the carbon seal and combustor liner. For IndiGo, a lack of spare parts for Pratt’s new geared turbofan has been compounded by a new Indian tax on goods and services, which has made importing products more difficult, said a separate person familiar with the matter. ‘Operational Disruptions’ The airline, which is the world’s biggest customer for the A320neo with 430 on order, said in a statement that it “faced some issues with the neo engine, causing operational disruptions.” Japan’s ANA Holdings Inc. and Hong Kong Express Airways Ltd. are also among airlines that have have grounded some aircraft recently. “The A320neo and its GTF engine option, being a new aircraft type as well as a new engine type, require time to mature in their operational reliability,” HK Express, which has had one of its three A320neos under maintenance since June, said in a statement. ANA is operating one aircraft while the other one is undergoing maintenance after issues with both its engines, Youichi Uchida, a company spokesman, said by phone. Airbus is working with the engine maker to ensure disruptions for airlines are minimized, it said in an emailed statement. Pratt said it received certification in April for a fix to the carbon seal issue. Kawann Short Womens Jersey

Surging heat may limit aircraft takeoffs globally: Study

Rising temperatures due to global warming will make it harder for aircraft around the world to take off in coming decades, according to a study. During the hottest parts of the day, 10 to 30 per cent of fully loaded planes may have to remove some fuel, cargo or passengers, or else wait for cooler hours to fly, researchers said. “Our results suggest that weight restriction may impose a non-trivial cost on airline and impact aviation operations around the world,” said Ethan Coffel from Columbia University in the US. As air warms, it spreads out, and its density declines. In thinner air, wings generate less lift as a plane races along a runway, researchers said. Thus, depending on aircraft model, runway length and other factors, at some point a packed plane may be unable to take off safely if the temperature gets too high. Weight must be dumped, or else the flight delayed or cancelled, they said. Average global temperatures have gone up nearly one degree Celsius since about 1980, and this may already be having an effect. Worldwide, average temperatures are expected to go up as much as another three degrees Celsius by 2100, they said. However, heat waves will probably become more prevalent, with annual maximum daily temperatures at airports worldwide projected to go up four to eight degrees Celsius by 2080, according to the study. It is these heat waves that may produce the most problems. “This points to the unexplored risks of changing climate on aviation,” said Radley Horton, a climatologist at Columbia University. “As the world gets more connected and aviation grows, there may be substantial potential for cascading effects, economic and otherwise,” said Horton, coauthor of the study published in the journal Climatic Change. Most studies so far have focused on how aviation may affect global warming (aircraft comprise about 2 per cent of global greenhouse-gas emissions), not vice versa. However, a handful of studies have warned that warming climate may increase dangerous turbulence along major air routes, and head winds that could lengthen travel times. The new study projects effects on a wide range of jets at busiest airports in the US, Europe, the Middle East, China and south Asia. The researchers estimate that if globe-warming emission continues unabated, fuel capacities and payload weights will have to be reduced by as much as four per cent on the hottest days for some aircraft. If the world somehow manages to sharply reduce carbon emissions soon, such reductions may amount to as little as 0.5 per cent, they said. For an average aircraft operating today, a four per cent weight reduction would mean roughly 12 or 13 fewer passengers on an average 160-seat craft. This does not count the major logistical and economic effects of delays and cancellations that can instantly ripple from one air hub to another, said Horton. Some aircraft with lower temperature tolerances will far worse than others, and certain airports – those with shorter runways, in hotter parts of the world or at higher elevations, where the air is already thinner – will suffer more. Benoit Pouliot Womens Jersey

Kerala airports handle more international passengers than domestic

The growth in India’s domestic air travel is among the key benchmarks the sellers of global commercial jets would keenly track. But, curiously, some airports in the peninsula cater to more international than domestic passengers, illustrating the traffic potential from the Gulf and the ASEAN cities in the South. Data from the state-run aviation property company Airports Authority of India (AAI) show that Kochi, Trivandrum, Kozhikode, and Tiruchirappalli hosted more outbound passengers than those travelling within the country in the fiscal year ended March 31, 2017. “These international airports have more international flights. Look at the case of Tiruchirappalli airport, which is connected by five international destinations directly, but only one domestic destination,” said Habeebullah Ubaidullah, a Trichy-based aviation analyst. This airport, with flights to Colombo and connected domestically to Chennai by ATR aircraft, has 14 narrow-bodied international departures per day with 15,078 weekly seat capacities and more than 90% of load factor. There are only three ATR local departures to Chennai. “Tiruchirappalli International Airport has clearly been neglected by Indian carriers and South East Asian airlines have benefited from that,” adds Ubaidullah. This trend is in sharp contrast to the passenger break-up at the nation’s two biggest cities and aviation hubs — Delhi and Mumbai — where domestic passengers outnumber those going overseas three to one. Delhi airport catered to 42 million domestic and 15 million international passengers in FY17: For Mumbai, home to Bollywood and India’s top bankers, the figures were 32 million and 12 million, respectively. Last fiscal, Indian airports catered to about 100 million domestic passengers and 59 million international passengers. Semyon Varlamov Jersey

Government to form panel to monitor National Energy Policy

The government will soon constitute a committee, headed by Prime Minister Narendra Modi, to oversee implementation of the proposed National Energy Policy which aims to promote energy independence. The National Energy Policy, prepared by government think tank NITI Aayog after extensive consultations over the last one-and-a-half years, will replace the Integrated Energy Policy of the UPA regime, and lay the road map for the government push aggressively towards clean energy and reduce fuel import. “The National Energy Policy envisages interventions across multiple ministries over an extended period of time till 2040. This will call for a standing arrangement for overseeing its implementation,” a senior NITI Aayog official told ET, adding that the idea is to monitor progress of the proposals contained in the National Energy Policy and also coordinate the efforts of different ministries. The top-level steering committee will include ministers of the relevant ministries and will be serviced by the NITI Aayog. Asecond panel, comprising secretaries of concerned ministries and headed by NITI Aayog’s CEO Amitabh Kant, will help in inter-ministerial coordination for smooth implementation of the proposals. According to the draft NEP, which is up for public view, the period 2017-2040 is expected to witness a quantum leap in the uptake of renewable energy, drastic reduction in energy intensity, doubling of per capita energy consumption and tripling of per capita electricity consumption. “It is expected that implementation of the NEP would cater to wider consumer choices, and provide level playing field, competitive economy and energy security to India by 2040,” the draft policy has said. The overarching policy recommendations are based on India’s energy targets for 2040. The policy has proposed early action to achieve Modi’s bold announcements in the energy sector for the year 2022, as well as India’s NDCs (nationally determined contributions) for which the target year is 2030. The broad objectives of the NEP are enhanced energy independence, increased access at affordable prices, greater sustainability and higher economic growth. The policy has proposed interventions across sectors to rapidly reduce the gap on energy consumption parameters between the rural and urban areas, including 100% electrification and clean cooking coverage by 2022. The policy recommends increased commerciality for energy producers, transporters and distributors, and envisages reduction in energy prices through efficient markets. The policy also lays emphasis on energy efficiency, technology, regulatory oversight, effective overseas engagements, air quality considerations and human resource development in the energy domain. Joel Iyiegbuniwe Womens Jersey

India building natural gas trading hub: Dharmendra Pradhan

India’s natural gas sector will see more market-friendly reforms which will help create a trading hub in the country, Oil Minister Dharmendra Pradhan told a gathering of investors at the 22nd World Petroleum Congress in Istanbul, Turkey. “We are in the process of reforming the gas market in India where you can sell your gas through a gas trading hub,” said Pradhan. ET had reported on June 15 that the government was working on a plan to build a natural gas trading hub that could aid better price discovery for domestic as well as imported gas, and could eventually become Asia’s pricing hub competing with Singapore, Shanghai or Tokyo. India is the 4th biggest liquefied natural gas (LNG) importer in the world, sourcing nearly half of its gas requirements from overseas. Rates of most of its long-term LNG contracts are linked to crude oil and those of domestic gas decided by the government-set formula. A market-driven pricing is considered necessary for the domestic market to mature, and a local trading platform could help in that. An electronic trading platform is expected to be ready by early 2018 which will allow only physical trading, according to people familiar with the plan. The country has four LNG terminals with a combined capacity of 27 million tonnes per annum. The capacity is expected to rise to 47.5 million tonnes by 2022. The gas pipeline network is also expected to double to 30,000 km in the next few years. Pradhan also invited investors to participate in the country’s exploration and production sector, where a new policy allows companies the freedom to carve their own blocks, use just one licence to exploit all forms of hydrocarbons, and the liberty to price their gas. “We have opened up 2.8 million sq km of area for your investment, and I extend the commitment of the government of Prime Minister Modi that you will receive a red carpet welcome if you decide to invest in it,” Pradhan said. The rising middle class of emerging Asian countries like India will drive the demand for energy both in terms of electricity and cooking and transportation fuel, Pradhan said, adding that India is the only country where the demand will continue to rise for more than a decade. The minister said that in the current oversupplied market, it is important for producers to understand the perspective of consumers and demand centres and the changes that have taken place in these demand centres. Pradhan held bilateral talks with Turkish Energy Minister Berat Albayrak, discussing issues of bilateral energy cooperation, including in renewable energy. Patrick Maroon Jersey

Author: Diligentia News