Dilip Shanghvi’s Sun Oil buys out Niko stake in Hazira field
Billionaire Dilip Shanghvi’s Sun Oil and Natural Gas has bought a 33.3% stake in the Hazira oil and gas field from Canada’s Niko Resources Ltd and is in talks to buy the rest from Gujarat State Petroleum Corp. Ltd (GSPC), two officials aware of the development said. The deal value, however, could not be ascertained. Niko has operated the field for 22 years. Sun Oil and Natural Gas is a unit of Shanghvi’s Sun Petrochemicals Pvt. Ltd while GSPC is 87% owned by the Gujarat government. The Hazira field is part of 16 hydrocarbon assets in Gujarat’s Cambay basin where GSPC holds stakes. Niko Resources has sold its stake to Sun Oil and Natural Gas. If GSPC decides to sell its stake to Sun too, then Sun will be the 100% operator of the field,” said an official aware of the development, one of the two cited earlier. He spoke on condition of anonymity as he is not allowed to speak to reporters. Niko Resources and Sun Oil and Natural Gas did not reply to questions emailed on Monday. On 22 November, Mint had reported that Sun Oil was in talks with Niko Resources and GSPC to acquire their stakes. Currently, the Hazira field produces 1,300-1,400 barrels of oil per day (bopd) and 7-9 million standard cubic feet of gas per day . Niko is also a 10% partner in Reliance Industries Ltd’s (RIL) and BP Plc’s D6 block in the Krishna-Godavari (KG) basin. It has been facing financial headwinds owing to which on 9 November it said it would sell its stake. Last November, Niko relinquished its 10% stake in another block, NEC-25, off the Odisha coast, to its existing partners RIL (60%) and BP. An official from GSPC, the second person, said the company will be able to decide on selling its stake in a few days. “Sun Oil and Natural Gas has bid for our stake in the Hazira field. However, we are yet to open the technical bids and decide on who should the field go to,” the official added. GSPC has hired consulting firm EY to re-evaluate its onshore exploration and production assets as part of a business restructuring exercise. In addition to Hazira, GSPC has also signed agreements to sell stakes in some other assets including the Deen Dayal field, GSPC’s primary asset, located off the Niko Clarifies Article in Indian Press Niko Resources Ltd. (“Niko” or the “Company”) (NKO.TO) provides the following clarification with respect to various articles that appeared earlier today in the Indian press regarding the Company stake sale in Hazira Field. The Company has signed an asset purchase agreement with Sun Petrochemicals Pvt. Ltd. for divesting its 33.33% operating interest in Hazira Field. The sale is subject to various approvals including from the Government of India and Niko’s joint operating partner in the Hazira Field, Gujarat State Petroleum Corporation Limited. Niko does not consider the operations from Hazira Field to be material as Hazira Field was nearing the end of its life and an abandonment program was being planned for the near future. Marcus Martin Jersey
Producers’ output-cut pact was year’s defining moment for oil sector
The defining moment for the oil sector came towards the end of the year with the deal between OPEC and non-OPEC countries on cutting production, which immediately boosted crude prices, while in a move designed to increase domestic production, India unveiled a new revenue-sharing regime for producers looking to explore hydrocarbons. As the world’s third-largest oil consumer, which imports over 80 per cent of its requirements, India was naturally concerned about producers talking of cutting output to halt the continuous fall in crude prices that had gone on for nearly two years. Earlier this month, oil producers outside the Organisation of the Petroleum Exporting Countries (OPEC), led by Russia, agreed to reduce output by 558,000 barrels per day (bpd). This came in the wake of the 13-nation OPEC cartel’s November 30 decision to cut output by 1.2 million bpd for six months effective from January 1. This is the first time since 2001 that OPEC and some of its rivals have reached a deal to jointly reduce output to tackle the global oil glut. As a result, the Indian basket of crude oils gained more than $3 a barrel at $54.42 per barrel over the weekend of December 11-12, even as global prices surged to an 18-month high. The price on Wednesday, December 21, was $53.47. OPEC Secretary General Mohammed Sanusi Barkindo, who was here earlier this month, was conveyed India’s viewpoint by Petroleum Minister Dharmendra Pradhan that the interests of consuming countries should be kept in mind when the cartel decides on issues of output cut and pricing. Oil prices have fallen by more than 50 percent in less than two years, from levels of over $120 a barrel. “The fall in oil prices in the last two years came as a timely relief for the Indian economy and consumers, which has helped us increase the penetration of cleaner fuel,” Pradhan said, inaugurating the 12th Petrotech conference here earlier this month. “For the sustainability of the oil markets, we must strike a balance of interest between producers and consumers. In June last year at an OPEC event, I had submitted the viewpoint of India,” he said. Meanwhile, the government last month received 134 e-bids from 42 companies for exploring small oil and gas fields under the Discovered Small Fields Bid Round 2016. The government had put up 67 small oil and gas fields for auction under the new Hydrocarbon Exploration and Licensing Policy (HELP) approved in March, which is based on a revenue-sharing model as opposed to cost-and-output-based norms earlier. The new model will replace the controversial production-sharing contract (PSC) that has governed the bidding under nine earlier NELP rounds. The PSC regime, which allows operators to recover all investments made from sale of oil and gas before profits are shared with the government, was criticised by India’s official auditor, who said it encouraged companies to keep inflating costs so as to postpone sharing of profits. Now under HELP, eventual operators will be issued a single licence for exploration of conventional and non-conventional hydrocarbons and will have the freedom to sell oil and gas at “arms length” market prices. The year also witnessed renewed emphasis on taking the country towards a gas-based economy. The government announced it plans to double India’s natural gas consumption from the current 120 million standard cubic metres a day (mscmd) to 240 mscmd in five years in a bid to boost India’s low gas consumption of six per cent in the energy mix, as compared to a world average of 24 per cent. “The biggest bottleneck in boosting India’s low gas consumption was the issue of who will decide the pricing. So the biggest policy measure in this sector has been the deregulation of gas pricing by our government,” Pradhan said here earlier this month. On the back of a major fall in global prices, the government, in October, cut the price to be paid to producers of natural gas by 18 per cent to $2.5 per million British thermal unit (mbtu) on gross calorific value (GCV). On net calorific value basis, the price is $2.78. The rate compares to an average cost of production of about $3.59 per mbtu for state-run explorer ONGC and $3.06 for Oil India. The Petroleum Ministry also announced a sharp reduction in cap price for undeveloped gas finds in difficult zones like deep-sea, high-temperature, high-pressure areas. The cap for October 1, 2016, to March 31, 2017, for gas from difficult areas will be $5.3 per mbtu, down from $6.61 in the preceding six-month period. A caveat to this decision said the gas price for difficult areas will not apply to Reliance Industries” (RIL) discoveries in their KG-D6 block unless the company withdrew its legal suit over gas pricing. Besides seeking arbitration on the gas price, RIL has sought arbitration over the government disallowing costs of $2.3 billion on grounds of shortfall in production by the company. While the demand-supply situation has been a factor in falling oil prices, the other is financial market equations. The oil market in recent years has been sustained by cheap dollars flowing out in response to US Federal Reserve’s quantitative easing programme. This situation, however, looks set to change as we move towards the new year, with the Federal Reserve increasing its key interest rate by 25 basis points in December, in the first rate hike in 2016 and just the second in a decade. Jack Doyle Authentic Jersey
Oil & Gas: Best Performance In 7 Years
The one sector that has remained unscathed by the government’s cash ban is oil and gas. The BSE Oil & Gas Index, which was trading with gains of 24.6 percent until November 8, is now up 24.9 percent year-to-date. And the index is set to make its biggest annual gain since 2009. On the other hand, Brent crude surged 48.5 percent this year. Oil and gas exploration companies like ONGC and Oil India benefitted from rising crude oil prices and lower subsidy burden. Brent crude prices will average $55 a barrel in 2017, according to the median of analyst estimates compiled by Bloomberg, compared to $44.8 in 2016. The BSE Oil & Gas Index is trading at an EV/EBITDA ratio of 6.03 for 2017, which is the lowest in more than 13 years, suggesting room for further upside. Like the P/E ratio, the EV/EBITDA ratio is a measure of how expensive a stock is. The ratio measures the price (in the form of enterprise value) an investor pays for the benefit of the company’s cash flow (in the form of EBITDA). Al Woods Authentic Jersey
GAS 2 LAST
The share of gas-based power in total generation plunged to 4 per cent in fiscal 2016 compared with 12 per cent in 2011, because of inadequate domestic supply and unviable LNG prices, it said. Prasad Koparkar, Senior Director, Crisil Research said: “Despite a subsidy-based revival scheme, plant load factors (PLFs) at gas-based power generation facilities are languishing at 20-25 per cent. Even those that received subsidy could operate at only at half their target PLFs (50 per cent in the first half of current fiscal).” This was because spot prices of electricity have fallen below Rs 3 per unit, while gas-based power costs Rs 4.7 per unit after subsidy. “Therefore, further policy support, in line with the tax and duty exemptions provided to renewables, and mandatory scheduling of gas-based power, would be critical to boost gas usage in the power sector,” he said. Another key sector with significant potential is city gas distribution (CGD). Allocation of domestic gas leads to cost savings up to 30 per cent, boosting its use in the transport sector. However, lack of curbs on furnace oil — a cheaper but more polluting fuel ? have resulted in industries continuing to use it. Vladimir Ducasse Authentic Jersey
Essar Oil to double petrol pumps to 5,600 in 18 months
Essar Oil, India’s largest private fuel retailer, plans to double the number of petrol pumps it has in the country to 5,600 in 12-18 months, the firm’s Chairman Prashant Ruia said. The company, which operates a 20 million tons a year oil refinery at Vadinar in Gujarat, will invest Rs 12 billion in upgrade of certain units of the refinery to help boost margins by USD 1.5 per barrel. “Essar Oil has the largest private sector retail fuel network in India with over 2,800 operational outlets across the length and breadth of the country and over 2,800 at various stages of implementation to capitalise on the rising demand of transportation fuel”, Ruia said in its latest annual report. The sales from retail operations grew by 127 per cent from 590,000 tons in financial year 2014-15 to 1.34 million tons in 2015-16. “This growth was mainly on account of expansion of company’s retail network as well as the opportunity presented to the private players in the retail segment by deregulation of diesel prices, thereby linking the price of diesel to the global market,” the annual report said. Ruia said Essar Oil has set new benchmark in the private sector retail sale network in just about two years. “You may recall that Essar Oil was the first private sector company in India to open a retail fuel outlet back in 2003. Since then, the company kept its network operation despite the turbulent times right up till 2014, close to the complete de-regulation,” Ruia said. In October this year, the promoters signed pact to sell 98 per cent stake in Essar Oil to Russia’s Rosneft and its partners for about USD 13 billion. “In line with Essar’s philosophy to incubate, nurture, and scale up ideas to landmark valuations, the promoters decided to sell 98 per cent of your company stake to world’s leading oil and gas companies,” he said, adding that the deal will close within the current fiscal. Essar Oil CEO L K Gupta said the company is targeting to earn around USD 1.50 (per barrel of crude) incremental Gross Refinery Margin (GRM) as an outcome of its Rs 16 billion of investment in low cost and high margin. A.J. Green Authentic Jersey
MP Kateel takes NHAI to task for tardy four-laning work on NH 66
Dakshina Kannada Lok Sabha member Nalin Kumar Kateel on Wednesday took the National Highways Authority of India (NHAI) officials to task for the tardy work while four-laning the Talapady-Kundapura section of National Highway 66. Presiding over a review meeting here, Mr. Kateel said, “I cannot tolerate this tardy work progress which is going on for over seven years. I would immediately intimate the matter to Union Minister for Road Transport and Highways Nitin Gadkari.” He was particularly unhappy with NHAI’s failure to demolish buildings that have already been acquired by paying compensation for widening NH 66 as well as NH 75 (Mangaluru-Bengaluru Road). Mr. Kateel also took NHAI to task for its failure to provide service roads wherever required. An NHAI official present told the MP that acquired buildings off NH 75 near B.C. Road would be razed within a week. He also said that the entire work on four-laning NH 66 would be completed by June next. The issue of construction of a flyover at Pumpwell (Bhagavan Mahaveer) Circle at the junction of NH 66 and NH 75 in the city appears to be facing yet another hurdle. A technical advisor to Mangaluru City Corporation has said that the design would obstruct free flow of traffic. To this, Mr. Kateel asked NHAI and the corporation to hold a joint inspection and sort out the issue at the earliest for the speedy completion of the flyover. He warned the authority not to resort to toll collection till it completed all work related to four-laning of the road. Lawrence Guy Authentic Jersey
Demonetisation pushes electronic toll collection by 540 times
Demonetisation of old Rs 500 and Rs 1,000 notes has pushed toll payment through electronic mode rather than in cash, something the highways ministry failed to do in the past two years. In the past 20 days, toll collection through electronic mode increased by at least 540 times, according to NHAI data. Even the sale of FASTags, a common tag that can be used across all toll plazas on NHs, has increased from only 1,462 on December 1 to 5,635 on December 20. The average daily sale of these tags is around 3,223. Since its launch two years back, the banks responsible for popularising the use of these tags had sold only 1.08 lakh tags till November 30. The toll collection through electronic mode went up from Rs 65,897 on December 3 to nearly Rs 3.58 crore on December 21, NHAI said. “The numbers will increase significantly next month. Now four banks – ICICI, Axis, IDFC and SBI – are selling tags. They will reach out to bulk buyers such as truck fleet owners and cab operators in a big way. What we need to do is increase the number of lanes that can process the tags to deduct toll,” said an NHAI official. Though at present, highway operators are also collecting user charges using point of sale machines, the aim is to convert more people to use FASTags, which enable vehicles to pass through toll lanes without stopping. According to estimates, toll plazas in India will be congestion-free when 60-70% users pay toll through electronic mode. The proposal of large scale use of smart tags was first mooted in June 2010 and a pilot run was conducted in August 2012. But it did not get enough attention until recently. Besides reducing the processing time at toll plazas, use of smart tags ensures no leakage in toll collection as all records are captured electronically. These can also be used for tracking movement of stolen vehicles or in case of any emergency. Aleksander Barkov Jersey
AAP govt proposes road-design cell to counter traffic woes; plan awaits L-G nod
To overcome the menace of traffic snarls and ensure optimum use of road space in the capital, the Aam Aadmi Party-led Delhi government has proposed for formation of a separate body which will work to redesign the city road system. The road design cell, will aim to revamp the congested roads and make them friendly towards pedestrians and cyclists. The makeover goal also includes plan to demarcate dedicated zones for street vendors, provisions for foot over bridges with glass lifts and staircases among other elaborate features. The cell which will have road safety expert, architects and PWD officials as members, will study the traffic pattern of all the major roads and finalise the design of roads in the city. Sources said Delhi PWD minister, Satyendar Jain, has proposed more space for pedestrians and cyclists on the city roads and they will be redesigned keeping that in mind. Last year, the government had proposed to revamp the design of ten roads in Delhi while giving preference to bicycle riders and roadside walkers but the project could not take off. “The proposal is pending with the L-G and we hope to get approval from him for a new body so that we can restart the project. The road-design cell will be formed for two years for the makeover of the city,” said a PWD official. Sources said that the department is persuading L-G to approve the proposal. Several flyovers have come up in the city over the past decade, but the problem of congestion continues to plague Delhi roads partly because the existing network of 33,260 km of roads is not being used properly. According to the transport department officials, despite enormous growth in vehicular population, Delhi has the capacity to handle traffic if lane driving is implemented properly. Read| Capital chaos: Delhi’s traffic has slowed down and doubled time spent on roads “An ideal road is where everyone has the designated space, from pedestrian to cars, public transport and cyclists. In future, movement for pedestrians will be made smooth by removing all obstacles and there will be provision of foot over bridges with glass lifts and staircases, keeping in mind the comfort of pedestrians,” the official added. In Delhi, about 35% of the commuters ‘walk only’ as means of transport. These commuters are different from the ones who walk to catch the public transport. “Inspite of the enormous motorization, the highest share of people still ‘walk’. Naturally, we need to improve the facility for pedestrians. Then to decongest roads, we need to give more importance to public transport so there is going to be dedicated lane for buses at majority of roads,” the official further said. In congested areas, Delhi government plans to have dedicated lanes for cycles and non-motorised vehicles and in market areas, there will be dedicated zones for street vendors. Experts claim that roads in Delhi have been primarily designed to increase the speed and ease of movement of car users. “Car-oriented design priority and discouragement of walking through inadequate design – has discouraged people from walking and in turn encouraged car-dependency. In ideal condition, preference should be given to non-motorized vehicles. In coming days, pedestrians will have space in every road but space for cars and bikes will be reduced. We will create dedicated cycle lanes too,” the official further said. Through redesigning, government is also planning to provide space for feeder vehicle for comfortable last mile connectivity from metro stations. Since only 1,200km of roads come under PWD, the Delhi government is planning to spend around Rs 5,000 crore to redesign wide roads of the city. Delhi’s Chief Minister Arvind Kejriwal had said that Delhi’s traffic problem is linked to flaws in road designs rather than space problem and his government was trying to rectify them. Government feels majority of road space have been occupied by cars across the city and that motorists constitute around 1.5% of the total road users. To improve public transport, government would ensure buses at an interval of 1-2 minutes at specific localities initially. Government may keep certain roads only for public transport as is done in many European cities and build cycle track along with metro stations. Key features of the road redesigning plan • Roads to be redesigned with focus on giving more space to pedestrians by widening the footpaths • Pedestrians Movement to be made smooth by removing all obstacles • Provision for foot over bridges with glass lifts and staircases, half-subways, at-grade zebra crossings • Footpaths with street furniture • Footpaths to be made friendly for differently-abled people • Dedicated lanes for cycles and non-motorised vehicles • Dedicated bus lanes wherever possible • Estimated cost: Rs. 1.25 crore per lane per km • Total length of lanes on selected roads: 200 km • Dedicated zones for street vendors • CCTV cameras for monitoring • Rain water harvesting units under the green area and the central median Marcel Dionne Jersey
Put aviation sector in lowest slab of proposed GST: Business Aircraft Operators Association
Private and Business jets operators’ body BAOA today said that industry needs greater fiscal support from the government in view of the jet fuel prices expected to move northwards and demanded that the aviation sector be put in the lowest slab of the proposed GST regime. The Goods and Services Tax (GST), which the government intends to roll out from April 1, 2017, is to subsume central excise, service tax and state VAT among other indirect levies on manufactured goods and services. The GST Council has finalised a four-tier tax structure — 5, 12, 18 and 28 per cent. “Business Aircraft Operators Association (BAOA) expects the finalised GST structure to treat aviation in the most favourable way by classifying it in the lowest slab,” the Association said in its budget wish-list to the Government today. The lowest tax rates in the GST would help the industry optimally meet the ever growing demand from Indian public for affordable air travel options, it said. “With ATF prices likely to go northwards due to the recent decision of OPEC to cap production output, the industry needs greater fiscal support from the government to optimally meet the ever growing demand from Indian public for affordable air travel options,” it said. BAOA, which claims to be the unified voice of business and general aviation, has, among others, Reliance Industries, Tata Group, Aditya Birla Group, DLF, and Essar Group as its members. As many as 78 non-scheduled operator permit holders are part of this grouping. The Association, in report, titled Business Aviation in India, released early this month had said that business aviation in India continued to perform below its potential. “In sharp contrast to the growth of scheduled airlines, business aviation has registered a meagre 2 per cent growth over the last 5 years…a vibrant business aviation industry would lead to overall economic prosperity by way of superior efficiencies and faster growth leading to new jobs and higher incomes,” it has stated. The report had also urged the Government to accord the business aviation industry its rightful place, and thereby reap manifold economic benefits. Stating that the aviation sector in India remains most challenging due to high cost inputs in every activity, the Association today said it looks forward to government rationalising duty structure for all public air transportation system inclusively by not treating non-scheduled operators differently. Michael Rasmussen Authentic Jersey
Govt defends in HC its stand to levy Rs 7500-8500 per flight
The proposal to levy Rs 7500 to Rs 8500 per flight operated by Indian carriers to create a fund to develop regional airports was defended today by the Ministry of Civil Aviation and Director General of Civil Aviation (DGCA) in the Delhi High Court. Terming as “misconceived” a plea challenging the scheme, a bench of Chief Justice G Rohini and Justice Sangita Dhingra Sehgal were further told that the policy would eventually lead to the growth of the civil aviation sector as whole. “The government has proposed to take flying to the masses by making them affordable and convenient. For example, if every Indian in the middle class income bracket takes just one flight in a year, it would result in a sale of 35 crore tickets, a big jump from seven crore domestic tickets sold in 2014-15,” the ministry and the DGCA said in a joint affidavit. “This will be possible if air fare, especially on the regional routes, are brought down to an affordable level.” The reduction in costs will require concessions by the central and state governments and airport operators, the affidavit said. The ministry and DGCA’s response came in the backdrop of a plea by Federation of Indian Airlines (FIA) which has said that while the scheme allows it to pass on the levy to the passengers, it cannot do so as it is not a fee for which the carriers are rendering any service to the flyers. The FIA, which represents scheduled carriers like Indigo, GoAir, Spicejet and Jet Airways, has sought quashing of the October 21 notification inserting the rule for imposing the levy as well as the November 9 order declaring rates of levy and the categories of the scheduled flights on which they would be imposed. Steve Grogan Authentic Jersey