Ratna and R-series fields to be developed by ONGC after a delay of 20 years
The board of state owned behemoth Oil and Natural Gas Corporation Limited (ONGC) last month approved the development of R-series fields with a capital cost of Rs 4,104.63 crore, petroleum minister Dharmendra Pradhan informed Rajyasabha. A Comptroller & Auditor General (CAG) report of 2015 had observed that keeping the discovered R-series fields idle without assigning production rights had led to a deferment of domestic production of crude oil and natural gas from the fields to the tune of Rs 26,200 crore. Production from these fields is targeted to start in 2019 with an output of 10,000 barrels per day initially. The Ratna and R-series oil fields hold an estimated 87 million barrels of oil and 1.2 billion cubic meters of gas reserves. The Ratna and R-series fields are medium-sized fields, located in the western offshore on the south west of Mumbai. ONGC had originally discovered these fields and created facilities in Ratna R-12, which is a part of Ratna and R-series, at a cost of Rs 472 crore. These facilities were used by the state-owned ONGC for production since 1983 before production was stopped in September 1994 after which the field was put up for auctions by the then PV Narasimha Rao led congress government. Subsequently these fields were awarded to a consortium led by Essar oil in 1996. However, production sharing contract (PSC) for the fields could not be finalized due to differences of rates of royalty and other issues. In March 2016, the Union cabinet chaired by PM Modi approved the cancellation of the letter of award given to the consortium led by Essar Oil Limited in 1996 and decided to revert the Ratna and R-series fields to ONGC. Vince Carter Womens Jersey
‘ONGC is in no way linked to the proposed hydrocarbon project at Neduvasal’
ONGC has no further role with the proposed hydrocarbon extraction project at Neduvasal and its surrounding villages in Pudukkottai district, said top officials from ONGC based in Karaikal. They further said that it was up to the Union government to decide whether the project would be implemented along with private players or be scrapped once and for all. The officials told reporters in Trichy that since the state government had not given approval for the project, it would be impossible to proceed further. Stating that several misconceptions are being spread, linking ONGC with the proposed hydrocarbon extraction project at Neduvasal, executive director for assets, manager of Cauvery asset, Kulbir Singh, and group general manager of Cauvery basin Pawan Kumar, addressed the media jointly to counter the spread of unwarranted rumours and fears, here on Thursday. Under the Discovered Small Field (DSF) bid round 2016, Government of India had awarded 31 contract areas to various companies. However, ONGC is not an awardee under DSF 2016 in Tamil Nadu, said Pawan Kumar. “In 1993, 2008 and 2009, ONGC tested 13 wells in and around Neduvasal for exploration purposes. However, out of 13 wells 10 had been abandoned due to non-availability of oil or gas sources and gradually all the acquired land was returned to farmers in their original condition. Meanwhile, the remaining three wells (Nallandarkollai, Kottaikadu and Pullanviduthi) were being considered for production purposes. However, it came to light that the project would not be financially viable. Thus, ONGC decided not to execute the project,” he said. Meanwhile, the Union government decided to handover the project to any private player in such a way to make use of the wells, he further stated. “Only five acres of land are with the possession of ONGC where the three wells are there as of now. So, it is up to the Centre to decide whether the project would be continued or not,” he further clarified. ONGC was neither carrying out nor does it have plans to carry out exploration of shale gas, shale oil or coal bed methane in the Cauvery basis, said Kulbir Singh. Moreover, the state government itself had banned both exploration projects, he added. There are no pending due to farmers for leasing of lands till now. Moreover, ONGC had restored all the lands acquired for exploratory purposes to a near original condition, as per the guidelines to enable farmers to cultivate again, officials said. In order to create awareness among the farmers and general public about the actual process involved in the extraction of natural oil and gas executed by ONGC, the corporation has planned to organize street plays and jingle shows, officials said. CM Punk Womens Jersey
US is swimming in crude oil: EIA data
The United States has got a lot of crude oil on its hands right now. According to data released by the US Energy Information Administration (EIA), stockpiles swelled by a further 4.95 million barrels to 533.1 million barrels. That was near double the 2.8 million inventory build expected, and left stockpiles at the highest level on record. That’s a lot of crude, not only in absolute levels, but also based on current consumption levels. “US oil stockpiles trended lower through most of last year because of the fall in US supply, but this trend is reversing as US oil production increases,” said Vivek Dhar, mining and 2 energy commodities analyst at the Commonwealth Bank. “US oil output lifted to around 9.1 million barrels per day (mbd) last week, and is now only around 0.5mbd be low peaks reached in June 2015.” Even with murmurings about a possible extension to production cuts implemented by Opec and non-Opec members in the first half year, Dhar says that the risk to his average crude price of $50-60 per barrel this year appear slanted to the downside due to the ongoing lift in US supply. Brian Gibbons Jersey
ONGC to invest $10 billion in deepwater projects off India’s east coast
India’s Oil & Natural Gas Corp. is wading into deep waters, where energy giants BP Plc and Reliance Industries Ltd. found a sea of trouble. State-run ONGC plans to invest in a region off India’s east coast to help boost natural gas output and raise crude flows, said Tapas Kumar Sengupta, its director for offshore operations. The nation’s top explorer will spend about 648 billion rupees (about $10 billion) in deepwater projects in the Krishna-Godavari basin, according to Oil Minister Dharmendra Pradhan. ONGC is betting that it can pry more out of the resource-rich area by studying hurdles faced by other companies. Reliance and partner BP have a project in the basin that’s producing only 9% of its target. Unearthing deposits from the region, where the depth of water is comparable to those in the U.S. Gulf of Mexico, are critical to Prime Minister Narendra Modi’s plans to cut energy imports and help narrow a budget deficit. “The east coast is our future because western offshore fields are in a heavy declining trend,” Sengupta said in an interview in his office in New Delhi. “To keep India’s gas production alive, the east coast needs to make a tremendous contribution in the next two decades.” The country’s biggest hydrocarbon producer expects the area, including its KG-DWN-98/2 block, will add about 40 MMscm to daily gas production within five years, according to Sengupta. That’s almost half of India’s net gas production of 84 MMscmd from April 2016 to February this year. Oil output could rise by 77,000 bpd, he said. ONGC’s block lies next to Reliance’s KG-D6, one of the biggest discoveries of the year when it was found in 2002. Production there has tumbled about 85% since hitting a peak in 2010 as the private Indian company and BP found the reservoir is more difficult to produce from than they had initially estimated. Shut wells Gas production at the KG-D6 block was 2.64 Bcm during the 11 months to February, compared with a target of 29.32 billion for the fiscal year ending March 31, Oil Minister Pradhan said in parliament on March 20. Reliance, controlled by India’s richest man Mukesh Ambani, and BP were forced to shut most of the wells producing gas from the KG-D6 block after water and sand started entering them. Production also declined because of low flow pressure and natural decreases of deposits in the wells. Technological developments over the past few years may help ONGC avoid similar pitfalls. “We have confidence the technology can mitigate the risks of developing such high-risk areas,” Sengupta said, adding that the company has also learnt from the problems that have afflicted others. The company has done “extensive” appraisals in the area, which has helped it analyze the reservoir’s characteristics, he said. To test the rates of hydrocarbon flows, ONGC has started early production from a deepwater well in the area that’s near the Reliance-BP block. Deepwater challenges “The well has been producing 1 MMcmd since May without any decrease in flow,” Sengupta said. The energy deposit lies in the Bay of Bengal below up to 2,900 m of water, making it comparable to some of the deepest areas in the world, including Royal Dutch Shell’s Stones and Perdido projects in the Gulf of Mexico. “Challenges are huge in deepwaters and the biggest challenge was to establish the flow assurance,” Sengupta said. “Unless and until you are confident about the volume, you cannot propose something to your stakeholders.” ONGC will hire consultants with experience on similar projects for developing its deepest discoveries that are located about 150 km from the coast. “Some of the top engineering consultants mainly from the U.S. and Australia with experience in the Gulf of Mexico and Western Africa have shown interest in helping us,” according to Sengupta. Companies also require prices that can justify production. Reliance and BP, which discovered additional gas pools near the biggest reserves in their block, are awaiting assurances on pricing from the Indian government before they start developing the new deposits, the British company’s chief executive officer, Bob Dudley, told analysts Feb. 28. Gas pricing ONGC is confident its projects are viable at current prices. The cap now for fields that are located in deepwater, ultra-deepwater and high pressure-high temperature areas is $5.30/MMbtu. India sets gas prices every six months using a formula based on U.S., Canadian, UK and Russian rates, with the next revision due on April 1. “The government direction for a different kind of gas pricing is helping us to make these fields viable,” Sengupta said. “ONGC is already gearing up for the big work to be done for the import reductions.” Adam Joseph Duhe Jersey
World’s top LNG buyers form alliance to push for flexible contracts
The world’s biggest liquefied natural gas (LNG) buyers are clubbing together to secure more flexible supply contracts in a move that further shifts power to buyers rather than producers. Korea Gas Corp (KOGAS) said on Thursday it had signed a memorandum of understanding in mid-March with Japan’s JERA and China National Offshore Oil Corp (CNOOC) to exchange information and “cooperate in the joint procurement of LNG.” Japan, China and South Korea are the world’s biggest LNG importers, accounting for about 55 percent of global purchases, according to data from energy consultancy Wood Mackenzie. The countries’ biggest respective buyers are joining together to extract concessions from producers that would give them supply flexibility such as having the right to re-sell imports to third parties, something they are not allowed to do under so-called destination restrictions. “We have created a platform to share, discuss and solve our common issues such as traditional LNG business practices, including destination restrictions,” JERA spokesman Atsuo Sawaki said. The unusual alliance of three buyers across three countries will pressure exporters like Qatar, Australia and Malaysia, who prefer to have clients locked into decades-long fixed supply contracts that oblige buyers to take fixed amounts of monthly volumes irrespective of demand, with no right to re-sell unneeded supplies to other end-users. BIG CHANGE The LNG market is in the midst of huge changes as the biggest ever flood of new supplies is hitting the market, with volumes coming mainly from Australia and the United States. New production has resulted in global installed capacity of over 300 million tonnes a year, while only around 268 million tonnes of LNG were traded in 2016, according to Thomson Reuters data in Eikon. That has helped pull down Asian spot LNG prices by more than 70 percent from their 2014 peaks to $5.65 per million British thermal units (mmBtu). It has also given importers more suppliers to choose from, putting pressure on major producers like Royal Dutch Shell , Chevron, ExxonMobil and Woodside Petroleum to grant more flexible contract terms. Lee Seung-hoon, KOGAS chief executive officer, said in a recent interview with Reuters that his company was looking for flexible LNG contracts. Jera’s Co-President Yuji Kakimi made similar statements in an interview earlier this month. “Through this MOU deal, Korean, Chinese and Japanese LNG buyers are expected to play an active role in the LNG market,” Lee said in the statement announcing the agreement. KOGAS is the world’s No.2 LNG buyer behind Jera, which is a joint venture between Chubu Electric Power and Tokyo Electric Power. “Flexibility is becoming critical for LNG buyers … as the rise of solar capacity is going to make consumption of LNG more seasonal,” said Kerry Anne Shanks, head of LNG research for Asia/Pacific at Wood Mackenzie. Alex Killorn Womens Jersey
NTPC beats 12th Plan target by adding 12,840 MW
State-run power giant NTPC has exceeded the target of generation capacity addition of 11,920 MW set for the 12th Plan (2012-17) by adding 12,840 MW. NTPC Group’s power generation capacity has increased to 49,943 MW so far in the plan period, which would end on March 31, 2017. “With commissioning of 800 MW Unit at Kudgi in Karnataka, 250 MW Unit at Bongaigaon in Assam and 20 MW at Bhadla Solar in Rajasthan today, the total installed capacity of NTPC group has become 49,943 MW,” a senior official said. NTPC has exceeded the 12th Plan capacity addition target of 11,920 MW by adding 12,840 MW, the highest-ever capacity addition in any 5 year plan by the company, the official said. The NTPC Ltd and Group NTPC also achieved highest ever daily generation of 784.74 million units (MUs) and 870.11 MUs respectively on March 22, 2017 surpassing previous best of 782.95 MUs and 866.47 MUs achieved on September 9, 2016. NTPC coal stations clocked highest-ever daily generation of 749.63 MUs on March 22, 2017 over previous highest of 742.51 MUs in 2016. The NTPC has achieved the highest ever generation of 243.326 BUs on March 22 2017 in FY17 against previous best of 241.976 BUs achieved in FY 2016 from sources like coal, gas, hydro and solar. The official said that the higher generation from coal based stations indicates uptrend in electricity demand in the grid. NTPC has a total installed capacity of 49,943 MW from its 19 coal-based, 7 gas-based, 10 solar PV, one Hydro and 9 subsidiaries/joint venture power stations. The company has capacity of over 22,000 MW under implementation at 23 locations across the country including 4,300 MW being undertaken by joint venture and subsidiary companies. NTPC’s first coal mine, Pakri-Barwadih at Hazaribagh, became operational in December 2016. The first wind power project — Rojmal Wind Energy Project of 50 MW — is being set up in Gujarat. Mario Lemieux Authentic Jersey
Monetisation of 75 highways likely to fetch Rs 40,000 crore: Crisil
The first 75 operational highway projects, which will be monetised by the NHAI under the toll-operate-transfer (TOT) model, are likely to fetch around Rs 40,000 crore, much lower than the government estimates, says CrisilBSE 0.73 %. According to the rating agency, investors would factor in the freight-heavy nature of national highway traffic, the associated volatility, and reduction in road freight growth expected after the implementation of the Dedicated Freight Corridor (DFC) before placing bids. Further, implementation of the Goods and Services Tax (GST) regime, while not necessarily negative for road traffic, may alter the type of vehicles that would be used on certain routes, it said. “Variation and volatility in traffic can reduce returns. Investors would take a hard look at this, including the impact of DFC and GST, when placing bids. They would also be wary of latent defects in roads that are not detected during technical examination,” Crisil Research Senior Director Prasad Koparkar said in a statement. He pointed out that there could arise issues pertaining to competing roads. “If an alternate route is built and is longer than the original stretch by 20 per cent, then it is not treated as a competing route,” Koparkar said. In TOT model, the National Highways Authority of India (NHAI) transfers ownership and the right to collect toll of operational highways to private entities for 30 years in return for a one-time upfront payment. According to Crisil, the calculation assumes annual toll revenue growth of 7-8 per cent and return on equity of 14-16 per cent. “Theoretically, Rs 40,000 crore can fund the construction of 2,800 km of four-lane national highways, which would be equal to the execution expected in fiscal 2017,” it said. Crisil estimates that between fiscals 2018 and 2020, construction of highways would require investments of Rs 2.2 lakh crore, or more than twice the Rs 1 lakh crore set to be spent between fiscals 2015 and 2017, with higher execution of publicly funded projects. “TOT could achieve the dual objective of releasing both the bandwidth of public agencies, otherwise used up for road maintenance activity, and funds for road construction. While traffic risk does exist in this model, offering bundles of diversified stretches – both by geography and traffic composition – could mitigate some of this risk,” its Director Ajay Srinivasan said. DeMar DeRozan Authentic Jersey
Highway sector headed for consolidation; M&A activity seen picking up, says ICRA
The highway sector in the country is poised for a wave of consolidation, mergers and acquisitions given the positive vibes the sector has seen lately due to the pace of implementation, changes in regulatory environment and accelerated investment flows. While developers are seeking to divest some of the projects to cut debt and free up equity for redeployment into new projects, investors are scouting for projects with right valuation. Aided by the regulatory changes, the sentiment has become positive in the sector with new investments triggering consolidation as also mergers and acquisitions, according to Shubham Jain, Sector Head Corporate Ratings, ICRA. Jain told Business Line that sponsors in 17 projects, involving a total cost of ?9,800 crore, have monetised their assets. These include 10 National Highway projects, 4 NH annuity and three State toll road projects. Early investors The interesting aspect of the acquisitions in the road sector made three years ago is that some of the first batch of investors such as Brookfield, Cube Highways, Aberis Infraestructuras and IDFC among others, are considering exiting having made good returns. Among the infrastructure sector, the road projects have been the direct beneficiaries of the policy decision on relaxation of the exit policy for projects awarded before 2009. The hybrid annuity model has seen 27 projects worth ?24,300 crore totalling 1,522 km being awarded by December 2016. Developers have received this model favourably as it has similarities with the EPC mode projects. The BOT mode annuity projects had a number of issues which the developers were forced to contend with. The pace of road project implementation has also gone up to about 16.5-17 km per day as against 14 km per day last year. While NHAI is aiming at 20 km per day, the Ministry of Transport is looking at 40 km per day, Jain explained. About 16 construction companies have a combined business of ?80,000 crore of road construction, with a visibility of projects for 3-3.5 years. With the Budget laying special focus on infrastructure and roads and bridges getting an allocation of ?64,900 crore, more projects will be on offer. A number of completed projects will come up for sale. This time around the buyers will be from operations and maintenance business who will base their purchases on increased returns from the sector. Returns on projects During the 2009-2013, return on roads was below expectation. But better returns would lead to a wave of mergers and acquisitions where specialised investors will come in, he explained. Jain said given the large number of infrastructure projects which are operational or nearing completion there could be churn in the sector. The opportunities in the road sector are highest with over 100 operational national highway projects. With financing traditionally being bank-centric, there is sustained effort to defocus from the banking system by encouraging other investment modes. Jameis Winston Jersey
94 infra projects worth Rs 150 cr and more facing delay, cost overrun: Govt
Big infrastructure projects worth Rs 150 crore and above are running behind schedule and have cost overrun, Parliament was informed today. As many as 1,186 such projects were under the monitoring of the ministry at the end of December 2016, Minister of Statistics and Programme Implementation D V Sadananda Gowda said in a written reply in Lok Sabha. “Of these 1,186 projects, 94 projects are delayed and showing cost overruns. The reasons for delay are project specific,” Gowda said. Ministry of Statistics and Programme Implementation monitors ongoing central sector infrastructure projects costing Rs 150 and above on time and cost overruns. Law and order, delay in land acquisition, geological conditions, delay in environment and forest clearances, rehabilitation and resettlement, local body permissions, utility shifting, contractual issues are among major reasons behind the delay and cost override, he said. At times these factors also result in non-utilisation of funds fully, the minister said this in a response to a query on number of such projects, cost and time overruns and measures taken to avoid them. Nick Martin Jersey
DGCA deregisters 2 aircraft of grounded carrier Air Costa
The aviation regulator DGCA has deregistered two aircraft left with the grounded airline Air Costa. According to sources, the Directorate General of Civil Aviation (DGCA) wrote to the airline that its two Embraer aircraft have been removed from the Civil Aircraft Register. The Vijaywada—based airline has not flown since February and had cancelled bookings till May because of cash crunch and financial issues with the aircraft lessors. The latest action by the DGCA will effectively allow lessors to take back the aircraft from Air Costa, the sources said. The airline has also not paid salary to its 450 employees since January resulting in an exodus of employees, including 40 pilots. The employees are also planning a protest at the airline’s headquarters in Vijaywada demanding payment of their salary. The airline’s monthly wage bill stands at around Rs. 4 crore, the sources said. John Lynch Authentic Jersey