Vedanta Cairn Oil and Gas to invest Rs 2,142 crore in Rajasthan
Vedanta’s upstream arm Cairn Oil and Gas plans to drill 78 exploratory wells at a cost of Rs 2,142 crore in a block in Rajasthan, which it had won under the first round of Open Acreage Licensing Programme (OALP). The RJ-ONHP-2017/3 block is spread across Bhinmal, Bagoda, Raniwara, Sanchor and Chitalwana of Jaore districts of Rajashtan, the company said in an application to the environment ministry. A small part of the block is also located in Gujarat but no exploration activities have been planned by the company in the state for the block. The project will include setting up of Early Production Units (EPUs) for produced well fluid processing and production up to 32,000 barrel of oil per day (BOPD) and up to 4.8 Million Standard Cubic Feet per Day (MMSCFD) of natural gas. The company expects to ramp up its overall crude oil and natural gas production by 50 per cent to an average of 260-270 thousand barrels of oil equivalent per day (kboepd) by the end of the current financial year from its current production of 180 kboepd. The company expects 70 per cent of the increase in oil and gas production to come assets in Rajasthan, Vedanta group CEO Srinivasan Venkatakrishnan said in a stakeholder meeting recently. The company has commenced an investment of $3.2 billion to monetise 400 million barrels and has deployed 10 development rigs at the site currently. The work programme for the fiscal year includes drilling over 500 wells. Of these, it has already drilled 139 wells and hooked up around 46 wells. In order to increase production from all of its assets Cairn has tied-up with multiple oilfield service companies including Halliburton, Baker and Hughes GE (BHGE), Schlumberger, Petrofac, Megha Engineering, and L&T. The company has appointed Lloyd’s Register for integrated project management for the 41 blocks won under the first round of OALP and expects to award project contracts for the blocks soon.
Essar to double CBM gas production to 1 mmscmd
Mumbai’s Ruia family-owned Essar plans to double production of coal-seam gas from its Raniganj east block in West Bengal as a vital Urja-Ganga gas pipeline connecting users in eastern India gets commissioned by year-end, a company official said on Wednesday. Essar Oil and Gas Exploration and Production (EOGEPL) currently produces about 0.45 million standard cubic metres per day due to constraints of pipelines that could take the gas to consumers. The company plans to ramp up the production to more than 1 mmscmd, the official, who did not wish to be named, said. This would be the highest production of coal-seam gas or coal-bed methane (CBM) from any block in the country. The firm has already invested Rs 4,000 crore in the project, which encompassed drilling of 348 wells, setting up the supply infrastructure, and laying pipelines to Durgapur and nearby industrial areas. The current production from the Raniganj east CBM block is significantly lower than its capacity with the company having to throttle the output at about 0.45 mmscmd because of lack of a pipeline to take the gas to consumers. “We have already produced 1 mmscmd gas from this block, which is the highest by any player in the sector. However, sustaining production at that level is unfeasible without the GAIL pipeline being commissioned. This is why we are producing far lower quantities of gas than we are capable of,” the official said. The Pradhan Mantri Urja Ganga natural gas pipeline transverses from Jagdishpur in Uttar Pradesh to Haldia in West Bengal and Bokaro in Jharkhand and Dhamra in Odisha. The pipeline is being commissioned in phases and the last leg is scheduled for completion by December 2019. This will help gas supplies to reach four fertiliser plants in Gorakhpur, Sindri, Barauni and Panagarh, besides more than two dozen towns where city gas distribution rights have been awarded recently. The total demand in the region is envisaged at about 20 mmscmd. CBM is natural gas stored or absorbed in coal seams and contains 90-95 per cent methane. According to the Directorate General of Hydrocarbons, India has the fifth-largest proven coal reserves in the world and, therefore, holds significant prospects for exploration and exploitation of CBM. Raniganj east block is India’s most prolific CBM block, holding 1 trillion cubic feet of recoverable reserves. The official said EOGEPL is also planning to drill additional wells in accordance with the approved field development plan for the block. The additional wells will enable the company to ramp up production to a peak of 2.3 mmscmd in the next few years, he said. In August 2018, EOGEPL signed a gas sale and purchase agreement with GAIL, to formalise a 15-year gas supply contract between the two companies. The GSPA allows EOGEPL to monetise its entire CBM production at a globally competitive price. EOGEPL is a wholly-owned subsidiary of Essar Exploration and Production Ltd Mauritius (EEPLM). EEPLM is an early stage developer, focussed primarily on oil and gas exploration. Its global portfolio includes conventional acreages with a net resource of 1 billion barrels of oil equivalent (bboe), as well as unconventional hydrocarbon acreages that have a resource base of 15 Tcf (2.5 bboe) of gas. It has invested USD 1.1 billion in various acreages across the world. These investments include unconventional hydrocarbon acreages in India through EOGEPL, a joint venture with Eni in Vietnam and investments in an exclusive block OPL 226 in Nigeria. “EEPLM seeks to utilise its experience as a pioneer and leader in unconventional CBM gas development in India to explore and monetise its other acreages towards enhancing the country’s energy security. With a certified shale gas resource base, it is also poised to become a pioneer in this emerging energy frontier,” the official said.
Oil minister Pradhan meets Rosneft CEO, discusses buying Russian crude
Oil minister Dharmendra today met Chief Executive Officer (CEO) of Russian oil and gas company Rosneft and the former deputy Prime Minister of Russian Federation here. The delegation discussed ongoing energy projects between the two countries and discussed plans to signing a term contract for the supply of Russian crude to India, the ministry said in a statement. Pradhan also emphasised the need to increase sourcing of Russian crude for Indian refiners in the light of the recent drone attacks on Saudi oil facilities. “The ongoing joint projects in Russia between Indian oil & gas PSUs and Rosneft were also reviewed, specifically Sakhalin-1, Taas-Yuryakh and Vankor fields. In the presence of Minister Pradhan, the Indian Consortium of four oil & gas PSUs (BPRL, IOCL,OVL and OIL) and Rosneft today exchanged a non-binding cooperation agreement, reiterating their interest in the participation of the Indian companies in the Eastern Cluster project of Russia,” the statement said. The Russian delegation also discussed plans of further expanding Nayara Energy’s operations in the country. “The consortium is reviewing an option of a two-fold increase of the refining throughput at the Vadinar Refinery. The first stage consortium commits to the investment of USD 850 million towards the building of a petrochemical unit inVadinar within two years. The consortium is also planning to expand NayaraEnergy’s retail presence, which currently has over 5300 retail outlets across the country,” the ministry said. Today’s meeting follows the visit of Prime Minister Narendra Modi to Vladivostok as Chief Guest at the Eastern Economic Forum and the 20th Annual Bilateral Summit between Modi and Russian President Vladimir Putin. India and Russia issued a joint statement for cooperation in the hydrocarbon sector between 2019 and 2024 during Modi’s visit to Russia earlier this month. Indian companies ONGC Videsh, Oil India (OIL), Indian Oil Corporation (IOC) and Bharat Petroresources (BPRL) own 49.9 percent of a Vankorneft subsidiary. That company is located in Krasnoyarsk province and is developing Vankor oil and gas condensate field – the largest among the fields discovered in Russia in the past twenty-five years. A consortium of Indian companies including OIL, IOC and BPRL own 29.9 percent of the company Taas Yuryakh Neftegazodobycha which holds licenses for the areas of the Central Block of Srednebotuobinskoe Field and Kurungskiy license area. OVL has also been a shareholder of Sakhalin-1 Project since 2001.
India signs pact expressing interest in taking stake in Far East Russian oilfields
India on Tuesday signed a non-binding cooperation agreement with Russia that reiterated interest of Indian firms in taking stake in oilfields in Far East region of the former Soviet Republic. Oil Minister Dharmendra Pradhan discussed investment opportunities when he met Igor Sechin, chief executive of Russian oil major Rosneft, here on Tuesday. “We discussed elaborately for raising oil imports from Russia,” he told reporters after the meeting. During the talks, the two sides reviewed existing stake of Indian firms in Russian oilfields such as Sakhalin-1, Taas-Yuryakh and Vankor fields. “In the presence of Minister Pradhan, the Indian consortium of four oil and gas PSUs (Bharat PetroResources Ltd, Indian Oil Corp, ONGC Videsh Ltd and Oil India Ltd) and Rosneft exchanged a non-binding cooperation agreement, reiterating their interest in participation of the Indian companies in the Eastern Cluster project of Russia,” an official statement said. A separate statement issued by Rosneft said the two sides “reiterated their interest in a potential participation of the Indian partners in the Vostok oil project.” Both the Eastern Cluster and Vostok project refer to the cluster of oilfields near the Vankor project in Arctic/Far East Russia. Rosneft said the Vostok project will enable development of the unique resource potential of the Arctic Cluster. “It is planned that the project will incorporate the assets of Vankor group of fields (including Vankor, Suzun, Tagul and Lodochnoe fields), Payakha group of fields, West-Irkinskiy license area as well as a number of other high-potential exploration projects in Krasnoyarsk province,” it said. By 2030, the cluster oil production might come to 100 million tons. India already imports a small quantity of oil from Russia, but is looking to raise it through a new sea navigation channel between Vladivostok and Chennai. “We are confident, we will have some deal,” Pradhan said. During the meeting with Sechin, who Indians see as Mukesh Ambani of Russia, Pradhan renewed pitch for a consortium of Indian companies led by ONGC Videsh (OVL) taking about 49 per cent stake in Russia’s Vankor cluster oilfields. India had expressed deep interest in oil and gas exploration in Russian Far East during Prime Minister Narendra Modi’s visit to Vladivostok earlier this month and Sechin’s visit was a follow up of that, officials said. “During the meeting of Minister Pradhan with CEO, Rosneft, a detailed review of the ongoing cooperation between Indian oil and gas PSUs with Rosneft was undertaken. The developments in energy markets, including global crude oil supplies, in the light of the recent attacks on Saudi Aramco’s facilities, was also discussed. In this context, a special focus was on increase of crude oil supplies from Russia to Indian refineries,” the official statement by the Indian oil ministry said. Also discussed during the meeting was Rosneft-backed Nayara Energy reviewing an option of a two-fold increase of the refining throughput at the Vadinar refinery in Gujarat. “The first stage consortium commits to investment of USD 850 million towards the building of a petrochemical unit in Vadinar within two years,” it said. “The consortium is also planning to expand Nayara Energy’s retail presence, which currently has over 5,300 retail outlets across the country.” Sechin indicated Rosfnet’s readiness to intensify cooperation, aimed at strengthening of energy security in India and in supplying of high-quality feedstock and crude oil to India. “The parties agreed to intensify their cooperation aimed at the strengthening of energy security in India and supplying of high-quality feedstock and crude oil products to Indian customers. The focus was made on bilateral cooperation and the establishment of an efficient energy bridge based on the vertical integration concept. This includes participation of Indian partners in production projects and investments in refining as well as joint operations on the global and regional markets,” Rosneft said. OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), may hold 26 per cent stake in Suzunskoye, Tagulskoye and Lodochnoye fields — collectively known as Vankor cluster, while Indian Oil Corp (IOC), Oil India Ltd and Bharat PetroResources Ltd (a unit of Bharat Petroleum Corp Ltd or BPCL) would hold another 23 per cent. Rosneft, Russia’s national oil company that owns the fields, wants to retain a majority stake and is keen to sell only up to 49.9 per cent stake. Energy-hungry India is keen on sourcing one million barrels per day of oil and oil-equivalent gas from Russia and has identified Sakhalin-3 in the Far East, Vankor in East Siberia, and Terbs and Titov oilfields in Timan Pechora region as fields for potential collaboration. But for Vankor, it has so far not been successful in its attempts. OVL also has 20 per cent stake in Sakhalin-1 oil and gas field in Far East Russia, and in 2009 acquired Imperial Energy, which has fields in Siberia, for USD 2.1 billion. Besides, the OIL-IOC-BPRL consortium has taken another 29.9 per cent stake in a separate Taas-Yuryakh oilfield in East Siberia for USD 1.12 billion. The investments had taken the total outlay in Russia in that year to USD 5.46 billion.
Oil slips after Saudi Arabia says to restore output but risks remain
Oil prices slipped on Wednesday, extending losses from the previous session after Saudi Arabia’s energy minister said the kingdom will restore lost oil production by the end of the month. But investors remained cautious about Middle East tension after the United States said it believes the attacks that crippled Saudi Arabian oil facilities last weekend originated in southwestern Iran. Iran has denied involvement in the strikes. Brent crude oil futures fell 15 cents, or 0.2%, to $64.40 a barrel by 0253 GMT, after tumbling 6.5% the previous session. U.S. West Texas Intermediate (WTI) crude futures declined 35 cents, or 0.6%, to $58.99 a barrel, after sinking by 5.7% on Tuesday. “The risk of further escalation of conflict in the Middle East remains over the energy market and wild swings will likely resume when we see tit-for-tat responses from a Saudi-U.S. led the coordinated effort,” said Edward Moya, senior market analyst at OANDA in New York. “The situation with the oil market will remain tense, but the initial fears of a sustained disruption with world oil supplies have been alleviated in the very short-term.” Saudi Arabia sought to reassure markets after the attack on Saturday halved its oil output, saying on Tuesday that full production would be restored by month’s end. Energy Minister Prince Abdulaziz bin Salman said on Tuesday that average oil production in September and October would be 9.89 million barrels per day and that the world’s top oil exporter would ensure full oil supply commitments to its customers this month. Saudi Aramco has informed some Asian refiners that it will supply full allocated volumes of crude oil in October, albeit with some changes. Relations between the United States and Iran have deteriorated since U.S. President Donald Trump pulled out of the Iran nuclear accord last year and reimposed sanctions on its oil exports. Tehran rejects the charges it was behind the strikes and on Tuesday ruled out talks with Trump. Shell Petroleum Development Company of Nigeria declared force majeure on exports of Bonny Light crude oil, which put a floor on price losses on Wednesday. In a note late on Tuesday, BNP Paribas’ Harry Tchilinguirian said “In view of the vulnerability of Saudi’s supply chain and the likelihood that such attacks could be repeated in the future, we expect the market to reprice the geopolitical risk premium in oil.” But Moya said oil prices “will continue to struggle to maintain any sustained rally as global growth weakness continue to drive demand concerns”. U.S. crude inventories rose by 592,000 barrels in the week ended Sept. 13 to 422.5 million, data from industry group the American Petroleum Institute showed on Tuesday. Analysts had expected a decrease of 2.5 million barrels. Official U.S. government data will be released on Wednesday.
Opal pipeline complies with order to curb gas flows, reviewing next steps
The Opal gas pipeline in Germany said on Monday it had complied with an order to cut some 40 percent of gas shipments in a case involving Russian supply to Europe and was reviewing its next steps. Opal – which connects to the Russian-designed Nord Stream pipeline to Germany – was last week ordered to curb flows after Europe’s top court overruled an EU decision allowing Russian gas giant Gazprom to ship more gas via the pipeline. “OPAL Gastransport (OGT) currently reviews all further steps. Please understand that there is no further comment possible at this point in time,” a note on the Kassel-based operating company’s website said. Gas market participants are watching cuts on Opal, the onshore link for supplies from the Nord Stream 1 pipeline under the Baltic Sea, to assess how much gas from other sources, such as liquefied natural gas (LNG), may be needed to replace them. Germany’s energy regulator, the Bundesnetzagentur, on Friday required OGT to stop auctioning 15.9 million kilowatt-hours (kWh) per hour, which OGT started doing Saturday. That came after the European Court of Justice halved previously allowed volumes after Poland successfully argued that its supply security is infringed by Russia diverting huge volumes directly into Germany. “(OGT) is not able to specify the consequences on the market,” the statement from Opal, which is controlled by Gazprom and Wintershall DEA. It also said the court ruling was between the EU and member states so Opal as a company could not challenge it and that it did not know whether its owners were considering challenging it. Refinitiv Eikon data showed that gas flows into Greifswald, near the landing point of Nord Stream 1, at 1200 GMT were down 19 percent from the level at the same time last Friday, before the cuts, standing at 859 gigawatt-hours (GWh). Flows on Nel, a second pipeline connected to Nord Stream 1 which feeds north Germany and huge underground storage facilities, were up by 11 percent at 777 GWh.
No effect on oil supply in India following attacks on Aramco centres: Pradhan
Petroleum minister Dharmendra Pradhan on Tuesday expressed confidence that there will be no effect on oil distribution and supply in the country following attacks on the oil stabilization centres of Saudi oil giant Aramco. “It is unfortunate that the oil stabilization centres of Aramco have been attacked. Following the attacks, top executives of Aramco have been contacted. Indian ambassador in Riyadh contacted the senior management of Aramco to ensure a steady supply to India,” Pradhan said. “We have reviewed our overall crude oil supplies for the month of September with our oil marketing companies (OMCs). We are confident there would be no supply disruption to India. We are closely monitoring the evolving situation,” he added. Pradhan further said that Aramco officials have ensured that there will be no impact on distribution. “September offtake of oil has been completed. We will have to wait to see what actual impact it will have on Indian markets. For continued supply we have kept all options open,” he said.
Saudi Aramco offers alternative crude oil grade to Indian Oil Corp
Saudi Aramco has offered Indian Oil Corp Arab Heavy crude oil instead of Arab Light following an attack on its oil facilities over the weekend, an industry source told Reuters on Tuesday. IOC will receive full allocated volumes from Saudi Aramco in September and October, the source said, declining to be named as he was not authorised to speak with the media. However Aramco has said they would give some volumes of Arab heavy instead of Arab mix oil, the source added. This indicates that Saudi is offering heavy grade instead of light as Arab Mix is a combination of Arab light and heavy. No immediate comment was available from IOC.
Indian Oil Corp seeks LNG cargo for second half of October delivery
Indian Oil Corp is seeking a liquefied natural gas (LNG) cargo for delivery in the second half of October, two industry sources said on Monday. The cargo is sought for delivery at the Ennore terminal on India’s east coast. The tender closes on Sept. 19, the sources said.
Aramco less optimistic on output recovery
Saudi Aramco officials are growing less optimistic about a rapid recovery in oil production after an attack on the giant Abqaiq processing plant on Saturday, a person with knowledge of the matter said. All eyes are on how fast the kingdom can recover from the weekend’s devastating strike, which knocked out roughly 5 percent of global supply and triggered a record surge in oil prices. Initially, it was said that significant volumes of crude could begin to flow again within days but it may now take longer than previously thought to resume operations at the plant, the person said, asking not be named before an official announcement. Saudi Aramco is firing up idle offshore oil fields – part of their cushion of spare capacity – to replace some of the lost production, they said. The loss of Abqaiq, which handles 5.7 million barrels of oil a day, is the single worst sudden disruption to the oil market. Aramco customers are being supplied using stockpiles, though some buyers are being asked to accept different grades of crude oil. The massive drone strike has global ramifications, particularly for countries in Asia. The region consumes more oil than anywhere else, with China, India, Japan and South Korea among the world’s top buyers. The strike knocked out roughly 5 percent of the global supply. Oil prices surged the most on record Monday, with Brent crude seeing its biggest gain in dollar terms since futures started trading in 1988. The attack halved Saudi output and is crimping the availability of lighter grades such as Arab Extra Light and Arab Light. Those less sulfurous grades are already in high demand due to new rules mandating a switch to cleaner shipping fuel. Aramco has told customers it’s likely to replace the lighter grades with heavier oil, said the people, who asked not to be identified as the information is private. A North Asian refiner was notified it may get Arab Medium or Arab Heavy crude cargoes instead of the lighter varieties. Aramco also told some Chinese buyers that volumes won’t be affected but grades may differ.