ONGC Videsh gets 2-year extension for exploring Vietnamese oil block
ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corp (ONGC), has got a two-year extension to explore a Vietnamese oil block in the contested waters of the South China Sea. This is the fifth extension for OVL to explore Block-128, the licence for which is now valid till June 15, 2019, sources said on condition of anonymity as the information is not public yet. While India wants to maintain its strategic interest in the South China Sea, Vietnam wants an Indian firm to counter China’s interventions in the contested waters. Sources said OVL had in May applied to the Vietnamese authorities for a fifth extension of the exploration licence for the deepsea block. Vietnam’s national oil company PetroVietnam last week granted the extension, they said. OVL had signed Production Sharing Contract (PSC) for the 7,058 square km Block 128 in offshore PhuKhanh Basin, Vietnam on May 24, 2006. Ministry of Planning and Investment (MPI), Vietnam issued investment licence for the block on June 16, 2006, being effective date of the PSC. The company has not found any hydrocarbon in the block but is continuing to stay invested to maintain India’s strategic interest. OVL first took a two-year extension of the exploration period till June 2014 and then another one year. A third extension was granted on May 28, 2015 and a fourth last year. The company has so far invested USD 50.88 million in the block. The block lies in the part of South China Sea over which China claims sovereignty. In 2011, Beijing had warned OVL that its exploration activities off the Vietnam coast were illegal and violated China’s sovereignty, but the company continued exploring for oil and gas. OVL forayed into Vietnam as early as 1988, when it bagged the exploration licence for Block 6.1. The company got two exploration blocks – Block 127 and Block 128 – in 2006. While Block 127 was relinquished due to poor prospectives, the other Block was retained. The first extension followed China putting the area under Block 128 for global bidding. China claims sovereignty over most of the South China Sea where the two Blocks are located and had warned the Indian arm from drilling in the region. OVL continues to own 45 per cent stake in Vietnam’s offshore Block 6.1 and its share of production was 2.023 billion cubic metres of gas and 0.036 million tonnes of condensate. Ron Hextall Jersey
Ground breaking ceremony of Rs 6,000 crore Dhamra LNG Terminal held
Ground breaking ceremony of the Rs 6,000 crore LNG Terminal was held at Dhamra port in Odisha’s Bhadrak district. Petroleum Minister Dharmendra Pradhan performed the Bhumi Pujan in the absence of Odisha Chief Minister Naveen Patnaik. The 5 MMTPA capacity LNG terminal would play a major role in accelerating the process of development and economic growth in eastern India, Pradhan said. Construction of the LNG import terminal would involve an investment of Rs 6,000 crore, while a 2539 km long network of pipeline to transport gas would be laid at a cost of Rs 13,000 crore, the petroleum minister said. The network would connect 13 districts of Odisha and states like Jharkhand and Uttar Pradesh, Pradhan said. Stating that the country now has only one gas terminal in Gujarat, Pradhan said that natural gas would now be brought to Bhadrak from countries like America, Canada and Qatar. The natural gas from the terminal would also be supplied to various city gas distribution networks in the eastern India. While households in various cities would get piped gas, motor vehicles and industries would get cheaper and clean fuel, the Petroleum Minister said adding it would create vast employment opportunities for the the youth of Odisha. Odisha Chief Minister Naveen Patnaik, who was supposed to perform “Bhumi Pujan”, skipped the programme. So did the BJD MP and MLAs from the area. In Patnaik’s absence, Pradhan conducted the “Bhumi Pujan”. Pradhan said the chief minister had been invited to the function but it was learnt last night that he would not be attending it. Since the gas infrastructure project is set to boost economic growth in Odisha and the entire eastern region, the chief minister’s presence would have been proper, Pradhan said. BJD spokesperson and MP Pratap Keshari Deb said the chief minister had given consent to attend the function as it was a government programme. However, he decided to stay away when it was understood that it would become a political event. Teemu Selanne Jersey
GST Bill: Allow input tax credit on five products, oil ministry says
Oil ministry has urged finance ministry to put in place a temporary system to allow oil companies to claim input tax credit until crude oil, natural gas, diesel, petrol and jet fuel are covered under the goods and services tax (GST) regime. GST, which came into effect this month, covers most goods and services across the country but temporarily excludes the five key oil products that are the biggest source of revenue for oil companies. Other oil products such as cooking gas, kerosene and naphtha are part of GST. Oil companies, therefore, are dealing with two parallel systems of taxation. While they pay GST on equipment and services they use for operations, they cannot set this off against excise duty and value added tax they pay on output such as crude oil, gas, petrol, diesel and jet fuel, resulting in stranded taxes, which, according to one estimate, could be nearly Rs 25,000 crore a year. Following a representation by the oil industry, oil ministry has told finance ministry that stranded tax would become a major burden on oil companies and must be addressed quickly, an oil ministry official said. Finance ministry has been asked to offer some means to set off input tax credit against tax liability of products not yet part of GST, the official said. At present, tax credit cannot be transferred between the old and the new taxation system. The GST Council is aware of stranded taxes, but couldn’t do much earlier as it was busy launching the new tax regime, the official said. However, these issues will now get the attention they need, the person said. Another issue the oil ministry has raised is that of tax on equipment such as rigs used in exploration and production. GST has been proposed on the value of service a rig provides, instead of the full value of rig, which is currently the case, leading to huge tax burden on oil companies, the official said. Similarly, tax implication on the movement of rigs between states has also been flagged. GST has raised tax burden on offshore contracts. Earlier, service tax was applicable on only 40% of the total contract value but GST is applicable on 100% of the contract value in an offshore contract. Torry Holt Jersey
IndiGo says Air India ‘very important’ to meet long-haul goals
IndiGo, the only carrier that has made a pitch to purchase Air India Ltd., sought to allay investor concerns about the budget operator buying the unprofitable national carrier, saying a deal would help speed up plans for long-distance flights. Spelling out the rationale for their interest in the highly indebted airline in a conference call with analysts Thursday, billionaire owners Rahul Bhatia and Rakesh Gangwal said IndiGo would gain access to workers and overseas routes through the purchase, which otherwise would take a long time to replicate. “Air India’s international operations would bring a very important element to our network,” IndiGo’s co-founder Bhatia said. “It will provide a rapid entry into restricted, and in some cases, closed international markets.” Bhatia and fellow co-founder Gangwal held the call to justify IndiGo’s interest after the company’s announcement to bid for Air India wiped out more than $500 million in market value for IndiGo, the nation’s biggest and most profitable airline. Surviving on a taxpayer bailout, Air India hasn’t made a profit for about a decade and has piled up debt of about 500 billion rupees ($7.7 billion). Shares of IndiGo’s operator, InterGlobe Aviation Ltd., have recouped most of the losses this week since the 8 percent two-day drop at the end of June. The stock rose 1.3 percent to 1,232.25 rupees on Thursday in Mumbai before the conference call. A combination with Air India would help consolidate IndiGo’s position as the country’s biggest airline with a domestic market share of 54.2 percent and a total fleet of 283 registered planes. For a successful bid, IndiGo will have to buy out either the international or the entire airline operations of Air India, without a partnership with the government, Gangwal and Bhatia told analysts. Economic Sense Even without a deal, IndiGo will look to start long-haul operations as it makes “fundamental economic sense,” said Gangwal, a former chief executive officer of U.S. Airways. Bhatia, a former travel agent, and Gangwal teamed up to start IndiGo, which has become India’s biggest airline in just a decade, luring customers with on-time performance, new aircraft, cheap fares and a tight grip on costs. Buying into inefficient businesses has a history of success, Gangwal said. It is “questionable” if United Airlines would have become one of the world’s largest airlines today if it hadn’t acquired Pan Am’s Pacific operations and London routes a few decades back, Bhatia said. American Airlines followed the same model in buying Trans World Airline’s London routes, providing a proven road-map for such an approach, he said. “IndiGo is a natural player to take advantage of the significant and lucrative international market opportunity that India offers,” Gangwal said. “It is about time that IndiGo enters the long-haul international market.” Fiscal Burden An Indian ministerial panel gave preliminary approval on June 28 to sell the national flag carrier, reviving earlier attempts to dispose of the state asset that has strained public finances for decades. Though Prime Minister Narendra Modi’s administration has given its consent, it has yet to decide on the contours of the sale — especially the fate of the debt. A committee had recommended privatizing the airline by possibly asking the buyer to absorb more than $3 billion of loans linked to aircraft purchases, a person with direct knowledge of the matter told Bloomberg last month. The uncertainty over a potential deal structure will be a near-term overhang on IndiGo’s stock, Citigroup Inc. wrote in a note to clients June 29. “If the deal does fructify, management will need to make significant efforts to replicate IndiGo’s operational efficiency at Air India, which will continue to be burdened by legacy issues,” Citigroup’s Mumbai-based analyst Arvind Sharma wrote in the note. IndiGo has made an annual profit since at least the year starting April 2009, compared with the combined $10 billion in losses for the Indian airline industry in about the same period. Gulf Carriers IndiGo has long advocated a single-aircraft-type model to bring costs under check, and has ordered 530 of Airbus SE’s A320 family jets, becoming one of the world’s top customers for the Europe-based planemaker. Gulf carriers like Emirates Airline and Etihad Airways PJSC have captured a large share of the Indian traffic on transcontinental flights. Another challenge IndiGo may face, if it manages to buy Air India, is having a mixed fleet. A potential buyout of Air India would throw Boeing Co.’s 737, 777, 747 and 787 jets in the mix. Air India, which is known for its Maharajah brand icon, traces its roots to Tata Airlines, founded in the 1930s by the then-patriarch of Tata Group, J.R.D. Tata. A member of the global Star Alliance, it has rights to fly to and land in most of the global airports, as well as a trained workforce of 27,000. Alex Cappa Womens Jersey
Vietnam renews India oil deal in tense South China Sea
Vietnam has extended an Indian oil concession in the South China Sea and begun drilling in another area it disputes with China in moves that could heighten tensions over who owns what in the vital maritime region. The moves come at a delicate time in Beijing’s relations with Vietnam, which claims parts of the sea, and India, which recently sent warships to monitor the Malacca Straits, through which most of China’s energy supplies and trade passes. Vietnam granted Indian oil firm ONGC Videsh a two-year extension to explore oil block 128 in a letter that arrived earlier this week, the state-run company’s managing director Narendra K. Verma told Reuters. Part of that block is in the U-shaped ‘nine-dash line’ which marks the vast area that China claims in the sea, a route for more than $5 trillion in trade each year in which the Philippines, Brunei, Malaysia and Taiwan also have claims. A senior official of ONGCBSE 0.03 % Videsh, who asked not to be named because of the sensitivity of the matter, said interest in the block was strategic rather than commercial, given that oil development there was seen as high-risk with only moderate potential. “Vietnam also wants us to be there because of China’s interventions in the South China Sea,” the official said. Vietnam’s state-run PetroVietnam declined to comment on the concession, which was first granted to India in 2006 but had been due to expire in mid-June. Conflicting territorial claims over the sea stretch back many decades but have intensified in recent years as China and its rivals have reinforced their positions on the rocks and reefs they hold. Far to the south of block 128, drilling has begun in a block owned jointly by Vietnam’s state oil firm, Spain’s Repsol and Mubadala Development Co of the United Arab Emirates. Deepsea Metro I, operated by Odfjell Drilling Ltd. , has been drilling in the region since the middle of last month on behalf of Spain’s Repsol SA, which also has rights to neighbouring block 07/03, Odfjell said. Odfjell declined to comment on the specific location of its vessel, but shipping data from Thomson Reuters Eikon showed it was in oil block 136/3, which also overlaps China’s claims. Odfjell’s Eirik Knudsen, Vice President for Corporate Finance and Investor Relations, referred further queries to Repsol, which declined to comment. PetroVietnam made no comment. COMPETING MARITIME CLAIMS When asked about the activity, Chinese foreign ministry spokesman Geng Shuang said China opposes anyone “carrying out unilateral, illegal oil and gas activities in waters China has jurisdiction over”. “We hope the relevant country can act on the basis of maintaining regional peace and stability and not do anything to complicate the situation,” he told a briefing in Beijing. Chinese General Fan Changlong cut short a visit to Vietnam and a friendship meeting at the China-Vietnam border was cancelled around the time the drilling began. The centuries-old mistrust between China and Vietnam is nowhere more evident than in their competing maritime claims, despite their shared communist ideology and growing trade. Asked about the most recent drilling, Vietnamese officials said their Chinese counterparts have started raising concerns about cooperation with both Repsol and ExxonMobil Corp. of the United States, which is developing the $10 billion “Blue Whale” gas concession off central Vietnam. They said Chinese officials also expressed concern at Vietnam’s evolving security relationships with the United States and Japan, both of which have offered moral support for its South China Sea claims and help for Vietnam’s coastguard. Tensions with China were being contained, however, and had not yet reached crisis proportions, they said. “We know they are unhappy again, but we are resisting the pressure – it is a traditional part of our relations with Beijing,” one official said privately. “Other parts of the relationship remain strong.” Underlining the relationship between India and Vietnam, Vietnamese deputy prime minister Pham Binh Minh told a forum in New Delhi this week that India was welcome to play a bigger role in Southeast Asia – and specifically the South China Sea. Hanoi’s growing defence and commercial ties with India are part of its strategy of seeking many partnerships with big powers while avoiding formal military alliances. The pace has picked up since Indian Prime Minister Narendra Modi’s administration took office in 2014 and sought to push back against China’s expanding presence in South Asia by raising its diplomatic and military engagement in Southeast Asia. India is providing naval patrol boats, satellite cover to monitor Vietnam’s waters and training for its submarines and fighter pilots – more military support than it is giving to any other Southeast Asian country. On the agenda are transfers of naval vessels and missiles under a $500 million defence credit line announced last year. Next week, the navies of India, the United States and Japan will hold their largest joint exercises in the Bay of Bengal. KJ McDaniels Womens Jersey
Qatar charts second natural gas boom as Saudis try to tighten the noose
Qatar’s neighbors are trying to isolate it from the outside world by cutting off transport and diplomatic links. There’s one major area where their ostracism campaign is falling short: energy. Qatar is the world’s fourth-biggest energy supplier and wealthiest country by per capita income. It pumps more oil and gas than Rosneft PJSC or Exxon Mobil Corp. and is the biggest producer and seller of liquefied natural gas. Saudi Arabia and its allies accuse the sheikhdom of funding terrorism and maintaining overly cordial ties with regional rival Iran. The allegations, which Qatar denies, pit Saudi Arabia, the world’s largest crude exporter and biggest supplier in the Organization of Petroleum Exporting Countries, against the group’s smallest Arab producer. Now Qatar is doubling down on its main asset, the North Field, announcing plans to boost production at the world’s largest offshore gas deposit. Located in the Persian Gulf, the field straddles Qatar’s maritime border with Iran, which refers to its side of the reservoir as South Pars. Paris-based Total SA, which has stakes in Qatari LNG projects and will develop the nation’s Al Shaheen oil field, signed a contract on Monday to boost output at South Pars. State-owned Qatar Petroleum will boost its production by 30 percent to 100 million tons a year within seven years from about 77 million tons currently, Chief Executive Officer Saad Sherida Al Kaabi said Tuesday. Qatar has more than tripled output of gas over the last decade even as its oil production slumped. If the country adds all the planned new LNG capacity, it will be the world’s top seller of the fuel in spite of expected increases in the U.S. and Australia. Gas, condensate, crude make Qatar the world’s fourth-biggest energy supplier Qatar Petroleum has partnered with Exxon Mobil, Royal Dutch Shell Plc, Total and ConocoPhillips — as well as with Japanese customers Mitsui & Co. and Marubeni Corp. — to build 14 plants that chill gas into a liquid for shipment to Asia and Europe. Qatar Petroleum, through its LNG-producing divisions Qatargas and RasGas and other investments in related businesses, holds stakes in companies that extract, process, ship and receive gas. This integrated supply chain helps make Qatari LNG the cheapest in the world to produce, an advantage QP plans to exploit as competitors in Australia and the U.S. try to dethrone it as the top producer by volume. Qatar supplies 30 percent of the world’s LNG, according to the International Group of Liquefied Natural Gas Importers. It’s the main supplier to India, second-biggest to China, and third-largest to Japan, according to customs and trade data compiled by Bloomberg. Qatar also sells natural gas in the Middle East, including to the U.A.E. and Egypt, two countries targeting it in their regional dispute. Shipments of LNG to Egypt have continued during the crisis, as have supplies of gas via pipeline to the U.A.E. and Oman. Qatar’s crude production dropped to about 620,000 barrels a day from a peak of 880,000 barrels daily in 2008, according to data compiled by Bloomberg. The sheikhdom is now the fourth-smallest producer in OPEC. However, Qatar’s production of other liquids including condensate, a light oil found in hydrocarbon reservoirs, surpassed its output of crude in 2010. These gains — in addition to LNG, pipeline exports of gas to the United Arab Emirates and Oman, and gas-to-liquids fuels produced in partnership with Shell and Sasol Ltd. — far exceeded the decline in crude output and have generated financial surpluses that make Qatar one of the world’s top global investors. Qatar churned out 632,300 barrels a day of refined products including naphtha and jet fuel in 2016, mostly for export, according to OPEC’s annual report. The country exported 503,400 barrels a day of crude last year, mostly to Asia, and all of the 568,100 barrels a day of refined products it sold went to the region, the OPEC data show. The country is also the single largest exporter of helium — a gas with uses ranging from balloons to magnetic resonance imaging equipment — and supplies about 30 percent of the global market, according to an IHS Markit report emailed on June 23. The regional dispute disrupted its normal export route for helium to buyers in Asia: by truck across the land border with Saudi Arabia and then to Dubai’s Jebel Ali port in the U.A.E. for onward shipment by sea. Qatar is now shipping helium on tankers, QP’s Al Kaabi said. Peter Holland Jersey
Can’t blame petrol dealers for theft, says association
The Petroleum Dealers Association (PDA), Aurangabad, on Wednesday said the actual ownership and maintenance of fuel stations are with petroleum companies and the proprietors are just custodians. The association’s reaction was in view of the series of recent raids on fuel stations conducted by the Thane police’s crime branch, which found malpractices at those places. “It is inappropriate to blame the pump owners generally for unethical and illegal practices,” the PDA office bearers said. “Technicians appointed by the oil marketing companies (OMCs) maintain the fuel stations without the knowledge of dealers.” Aqeel Abbas, secretary of PDA, said, “We appreciate the initiative of the Thane crime branch and support them, but the alleged theft committed by some should not be used as a tool to harass us and tarnish our image.” He said that during the annual calibration of the dispensing units, the technician issues an audit report after thorough inspection. PDA office bearer Viren Patel said that though the weights and measures department relies on the report of the technicians, they also verify the delivery by the dispensing unit using 5 litres as a standard mark. The PDA members on Wednesday reached out to the DSO and made a representation stating that directives be issued to the OMCs for installation of additional seals on the dispensing pumps, making it impossible for anyone to even open it. The PDA said that reverification of the dispensing unit should be made free of cost, as the dealers have to unnecessarily face a financial burden. The dispensing units come with an approved error-factor of 0.5%. The PDA reiterated that the petrol dealers follow business ethics and that they should not be harassed just because a handful of them have been caught indulging in malpractices. Tyler Graovac Jersey
Anti-ONGC stir continues in TN; no pipeline crack, says DC
Amid continuing protest against ONGC’s oil exploration project in a village near here, the district administration today said there was no crack in the oil pipeline and offered to hold talks with the locals. The clarification from district Collector A Annadurai came even as shops in Kathiramangalam remained closed for the sixth day protesting the alleged leak in the ONGC pipeline. The Collector said there was no crack in the ONGC pipeline and added that officials were checking if oil had leaked and got mixed with drinking water. He also offered to hold talks with the locals over the issue. Meanwhile, around 500 villagers blocked a main road and alleged that water in one of the streets was contaminated and smelt of petrol, police said. Deputy Superintendent of Police Venkatesan rushed to the spot and held talks with them, following which the protest was withdrawn. In a related development, around 300 weavers from the village, undertook a protest fast, seeking release of those arrested in connection with the violence on June 30, police said. They also demanded that ONGC stop exploration work in the the village and its workers leave the place. About 50 college students also participated in the fast. Residents in Kathiramangalam have been up in arms against the leak in an ONGC pipeline and a protest had turned violent on June 30, leading to use of “minimum force” by police, which was criticised by opposition parties in the state. Bobby Wagner Authentic Jersey
GEECL To Invest $1BN IN Indian CBM Sector
India’s oldest coalbed methane producer Great Eastern Energy Corporation (GEECL) plans to invest $1bn in the next five years to further tap into the unconventional energy resources of India, the UK-listed company’s CEO Prashant Modi said in a statement July 5. Arizona Cardinals Jersey
Indian shipping body issues new rules for LNG vessels
Indian Register of Shipping (IRClass), an independent ship classification society providing ship classification and certification, has released a new set of rules for LNG (liquefied natural gas) fuelled coastal and inland vessels in addition to its already established rules for ocean going ships. In a significant move, which underscores the increasing importance of using cleaner fuels, these rules will help the maritime stakeholders to promote environment friendly fuels for coastal as well as inland vessels, said a statement from IRClass. The rules for gas fuelled vessels have been developed based on a study of the various international requirements such as the European Standard laying down Technical Requirements for Inland Navigation Vessels (Estrin), the IMO IGF Code and consultations with various stakeholders, it said. IRClass has also developed rules for pleasure crafts above 24 m length which are in addition to its rules for pleasure crafts below 24 m length already published earlier. These new rules are developed based on several national standards as well as ISO standards, it added. In view of the growing ownership of pleasure crafts (yachts) in India there was a pressing need to address the regulatory aspects of such crafts. With the development of these rules, IRClass is also planning to target key markets in Europe, it stated. Connor Barwin Jersey