Chandigarh robbing its states of fuel revenue: Petroleum dealers
The administration of the capital of Punjab and Haryana is responsible for revenue losses to the two states from the sale of fuel — a charge levelled by the Mohali and Panchkula petrol dealers’ associations battling losses owing to difference in the rates in the Tricity. The Chandigarh administration has continuously slashed VAT (value added tax) rates since October 2017, leading to a total shift of petroleum trade from the bordering districts of Punjab to Chandigarh, according to the Petrol Pump Dealers Association, Mohali. The Punjab government had reduced VAT on petrol by Rs 5 and diesel by Rs 1 per litre on February 18, but petrol in Mohali is still expensive by Rs 4.54 per litre and diesel by Rs 2.74 per litre as compared to Chandigarh. Dealers have suggested an increase in the VAT rates in Chandigarh — being the capital of Punjab— to bring them at par with the state, or a dual pricing within Punjab, with VAT rates in neighbouring districts, like Mohali and Rupnagar, being at par with Chandigarh. “In both cases, there will be revenue growth for the Punjab government and the beleaguered petroleum trade will be revived. It will also go a long way in curbing illegal activities like smuggling, pilfering and selling fuel at lesser rates,” said Ashwinder Mongia, president, Mohali Petrol Dealers Association. He claimed a drop of almost 70% in sales at petrol pumps in Mohali since October 2018. Chandigarh dealers have gained 45% from the sale of diesel during this year and 17% from petrol as compared to their counterparts in Mohali and Panchkula, the associations have claimed. Dealers in Mohali alleged they have lost 28% in diesel sale, while there has been no change in the sale of petrol. Petroleum trade in Punjab, more so in the areas adjoining other states, has witnessed a downfall from five years. Mohali and Rupnagar are the worst-affected districts. A huge discrepancy in rates between Mohali and Chandigarh and Rupnagar and Himachal exist. “The rate difference has prompted Chandigarh dealers to resort to unscrupulous means of sales and they are indulging in rampant smuggling of petroleum products from Chandigarh to neighbouring districts of Punjab,” Mongia said.
OVL seeks 2-year extension for exploring Vietnamese oil block
ONGC Videsh Ltd (OVL), the overseas arm of Oil and Natural Gas Corp (ONGC), has sought yet another two-year extension to explore a Vietnamese oil block in the contested waters of the South China Sea. Officials said OVL has applied for a sixth extension to explore Block-128, the licence for which was valid till June 15, 2019. 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. The officials said OVL had in May applied to the Vietnamese authorities for the sixth extension of the exploration licence for the deep sea block and is likely to get it. “We have a commitment to drill one well on the block and to fulfill that we have sought an extension,” one of the officials said. Another official said the company had a couple of years ago drilled a well on the block but it could not reach the target depth and so it now has to drill the well all over again. “If we don’t drill, we are liable to pay penalties,” he said. OVL had signed production sharing contract (PSC) for the 7,058 sq km Block 128 in offshore Phu Khanh Basin, Vietnam, on May 24, 2006. The Ministry of Planning and Investment (MPI), Vietnam, issued an 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 in 2016. It got the fifth extension for two years in 2017. The company has so far invested USD 50.88 million in the block. The block lies in the part of the 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 made a foray into Vietnam as early as 1988, when it bagged the exploration licence for Block 6.1. Last month, China sent its coast guard ships into Block 6.01. “Their (Chinese) vessel came 5 nautical miles near the oil rig on the block on August 13. They withdrew after a couple of days,” the official said adding that operations in the block were not affected. This, he said, was the third instance of Chinese vessel intruding into the block, where Russia’s Rosneft is the operator. OVL owns 45 per cent stake in Block 6.01 and its share of production was 2.023 billion cubic metres of gas and 0.036 million tonnes of condensate. The 955 sq km Block 06.1 located in Nam Con Son basin has two producing fields — Lan Tay and Lan Rosneft — and has 35 per cent stake while the remaining 20 per cent is with PetroVietnam. The firm had in 2006 got two exploration blocks – Block 127 and Block 128. While Block 127 was relinquished due to poor prospects, the other block was retained. The first extension for Block 128 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.
ONGC to spend $400 million over four years to develop blocks awarded under OALP
Oil and Natural Gas Corporation (ONGC) will be investing close to $400 million in the next four years to develop the blocks it has won under the Open Acreage License Programme (OALP) bid rounds. ONGC has been awarded five blocks including operatorship in two blocks, under OALP Round-1. In the second and third rounds, ONGC has been awarded eight blocks. “We have started the seismic survey on the blocks acquired under OALP I,II and III. This will be costing around 3 to 4 per cent of the total exploration spend of these blocks. This will be followed by exploratory drilling. In all, we intend to spend close to $400 million to develop these blocks,” an ONGC official told BusinessLine. “The spends on OALP blocks will reflect in the financial year 2020-2021,” he added. On the capital expenditure (capex) plans for the year, an ONGC presentation stated that capex target for financial year 2019-2020 has been set at ₹329.21 billion, capex in fiscal 2018-2019 stood at ₹294.49 billion and ₹284.27 billion in fiscal 2017-2018. The spends are part of ONGC’s efforts to boost domestic oil and gas production. According to an investor presentation, the company is investing around ₹860 billion in 27 major projects to boost oil and gas production, which has plateaued over the last few years. This is largely because most of ONGC’s blocks are ageing and not producing as much hydrocarbons as they once did. To incentivise exploration and production, the centre formulated and approved a new exploration and licensing policy titled Hydrocarbon Exploration and Licensing Policy (HELP) on March 30, 2016. In order to operationalize the HELP framework, the OALP bid rounds were launched. This allowed upstream operators to put in offers for blocks of their choice for contracting based on the data available in the National Data Repository.
BPCL stake sale likely
From the govt planning to offload its Rs 400 billion stakes in BPCL to four- and two-wheeler sales falling by almost half in Aug from the equivalent month last year. Govt may sell entire stake in BPCL worth Rs 400 billion, IOCL likely suitor The Centre is planning to offload its entire stake worth a little more than Rs 400 billion in Bharat Petroleum Corporation (BPCL), most likely to fellow state-owned oil-marketing company Indian Oil Corporation (IOCL), a deal that will go a long way in the Narendra Modi government meeting its highest-ever disinvestment target of Rs 1.05 trillion. If it goes through, an IOCL-BPCL merger will be the third mammoth amalgamation of state-owned companies, excluding banks, in three years — after Oil and Natural Gas Corporation (ONGC)-Hindustan Petroleum Corporation (HPCL) in 2017-18 and REC (formerly Rural Electrification Corporation)-Power Finance Corporation (PFC) in 2018-19. Both deals had a major role in helping the Centre garner record divestment proceeds.
Govt increases grant for NMC’s bio-CNG, compost projects to Rs 155 crore
The state government has increased financial grant for the Nagpur Municipal Corporation’s (NMC) bio-CNG and compost projects proposed under Swachh Bharat Mission (SBM). The grant has been increased to Rs155 crore. The state’s high-power committee headed by chief secretary Ajoy Mehta in the meeting held on Friday revised the NMC’s grants under SBM. The committee also approved the civic body’s proposal seeking to replace Waste to Energy project with bio-CNG and compost projects. Municipal commissioner Abhijit Bangar, additional municipal commissioner Ram Joshi and deputy engineer Rajesh Dufare were present in the meeting and stressed the need for more funds and replacement of Waste to Energy Project with bio-CNG and compost projects. The NMC had sought a financial grant of Rs267 crore under SBM a couple of years ago. The state had sanctioned Rs96.22 crore of which Rs70 crore was reserved for Waste to Energy project and remaining funds were for procurement of road sweeping machine and other machineries for solid waste management. Now, the grant has been increased by Rs58.78 crore. Thus, grant of Rs128.78 crore will go for bio-CNG and compost projects. The NMC will work out exact cost of the two projects and will ask private operators to bear the remaining cost. The proposal is to produce bio-CNG using 500-tonne garbage and compost through 300-tonne garbage. The civic body will use bio-CNG in running its vehicles and city buses. The central government’s Rashtriya Chemicals and Fertilizers Limited (RCF) is likely to procure compost. The Nagpur Solid Waste Processing and Management Private Ltd (NSWPMPL), a joint venture of Noida’s Essel Infraprojects Limited and Japan’s Hitachi Zosan India Private Ltd, was awarded Waste to Energy project. But the company delayed the project to a great extent. With the chances of project bleak, the NMC had issued a show-cause notice to terminate the contract with the company and proposed to replace it with bio-CNG and compost projects. With clearance from the government, the civic body is likely to issue a final termination notice to the company soon.
Modi, Putin likely to sign 25 trade, defence, energy pacts
Russian President Vladimir Putin will host Prime Minister Narendra Modi for a one-on-one dinner on Wednesday in Vladivostok in the backdrop of the 20th edition of an annual bilateral summit where both sides are expected to ink 25 pacts across sectors including defence, trade, investments, industrial cooperation, energy and connectivity corridors. At the dinner, the two leaders will look to further deepen their strong personal chemistry and explore steps to effectively coordinate on key global issues including the Af-Pak hotspot, ET has learnt. “During such conversations, the main international and regional problems, coordination in the international arena are discussed very frankly, confidentially,” Russian presidential aide Yuri Ushakov told Russian media at the Kremlin on Saturday. It may be recalled that in October, when Putin visited New Delhi for the annual summit, Modi had hosted him for a one-on-one dinner at his residence. In April 2018, when Modi visited Sochi for the informal summit, both spent time one-on-one and Putin, in a rare gesture, accompanied the PM to the airport before his departure. The two share a strong personal chemistry, which has contributed to qualitative improvement in the bilateral partnership over the last few years, according to informed sources. Russia was the first P-5 nation to support India’s recent moves on Kashmir. At the September 4 summit, the two leaders will also adopt a joint statement titled “Through trust and partnership to new heights of cooperation”, which will set the mood for deepening bilateral ties, including closer foreign policy coordination, according to Ushakov. On the same occasion, the Russian President, in a unique gesture, will hand over to Modi a stamp dedicated to the 150th anniversary of the birth of Mahatma Gandhi. The proposed agreements will also cover education and culture which would increase the intake of Indian students in top Russian educational institutes. Delhi and Moscow could also conclude a pact that will employ Indians at projects in the resource-rich Far East. “The very fact that the annual summit is being organized in Vladivostok (hub of Far East Russia) coinciding with the Eastern Economic Forum where the Indian PM is the Chief Guest showcases the importance given by both Delhi and Moscow to the region as part of their respective Indo-Pacific and Asia-Pacific strategies. The partnership in resource-rich Far East Asia is also critical to push bilateral trade volumes,” a source said. The two sides plan to conclude a roadmap for increasing investments and trade volume during the PM’s visit. The economic partnership so far lacks the depth of a strong strategic partnership. Before the summit, the two leaders will also jointly visit Zvezda shipbuilding complex — the ships built there in future can be used to deliver Russian oil and LNG to India, ET has learnt.
CNG price in Delhi raised by 50 paise per Kg, third hike since April
CNG price in Delhi and its suburbs was on Sunday hiked for the third time since April due to rise in input cost following appreciation of US dollar against the rupee. “This revision in prices would result in an increase of Rs 0.50 per kg in the consumer prices of CNG in Delhi, Rewari, Gurugram and Karnal, and Rs 0.55 per kg in Noida, Greater Noida and Ghaziabad,” Indraprastha Gas Ltd (IGL), the city gas operator in the national capital region, said in a statement. The new consumer price will be Rs 47.10 per kg in Delhi and Rs 53.50 per kg in Noida, Greater Noida and Ghaziabad. The price of CNG sold to automobiles in Gurugram and Rewari would be Rs 58.95 per kg and in Karnal it would be Rs 55.95, IGL said. This is the third increase in rates since April and the eighth since April 2018. Rates were last revised upwards by 90 paise per kg in July. Prior to that, CNG price was hiked in April by Re 1 per kg because of a rise in the price of domestic natural gas and fall in rupee’s value against the dollar. In all, rates have gone up by Rs 7.39 per kg since April 2018. IGL, however, did not raise the price of piped natural gas (PNG) it supplies to households in these cities for cooking purposes. Rates of CNG and PNG vary in different cities due to the incidence of local taxes. IGL said it will continue to offer a discount of Rs 1.50 per kg in the selling prices of CNG for filling between 12.00 am to 6.00 am at select outlets in Delhi, Noida, Greater Noida, and Ghaziabad. “Thus, the consumer price of CNG would be Rs 45.60 per kg in Delhi and Rs 52.00 per kg in Noida, Greater Noida & Ghaziabad during 12.00 am to 6.00 am at the select CNG stations,” it said. Explaining the reasons for the CNG price hike, an official spokesperson of IGL said the marginal revision has been necessitated due to the recent appreciation of US dollar against rupee and increase in operational expenses since the last price revision. The base price of natural gas being procured by IGL from all sources is dollar linked, thereby making the entire input price totally dependent on price of dollar vis-a-vis rupee. “However, this increase would have a marginal impact on the per km running cost of vehicles. For autos, the increase would translate to just over 1 paisa per km, for taxi it would be 2 paisa per km,” IGL said. “With the revised price, CNG would still offer over 52 per cent savings towards the running cost when compared to petrol driven vehicles at the current level of prices. When compared to diesel driven vehicles, the economics in favour of CNG at revised price would be over 27 per cent,” it said. IGL sells CNG to over 10.5 lakh vehicles in the national capital region through a network of over 500 CNG stations. It also supplies PNG to over 11.20 lakh households in Delhi and NCR cities.
OVL, partners buying 49% stake in Vankor cluster oilfields
A preliminary pact for a consortium of Indian companies led by ONGC Videsh (OVL) for acquiring about 49 percent stake in Russia’s Vankor cluster oilfields may be signed during Prime Minister Narendra Modi’s annual summit with Russian President Vladimir Putin this week. Oil Minister Dharmendra Pradhan was in Moscow last week in preparation for the Prime Minister’s visit. Modi will be the chief guest at this year’s Eastern Economic Forum in Vladivostok between September 4 and 6 and would also meet the Russian President for their annual summit. A host of agreements is expected to be signed during the visit and one of them could be on cooperation in oil and gas, sources with direct knowledge of the matter said. This cooperation agreement may include Indian state-owned firms picking up 49 percent stake in Vankor cluster oilfields, they said. Indian firms have been in dialogue with Russia since 2017 for a possible stake in the oilfields that will consolidate their presence in the energy-rich Arctic region. Mid-way through the negotiations, Rosneft had offered to club five more fields in the same region to the three that were already on the table, the sources said. OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), may hold 26 percent 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 split the rest 23 percent, they said. 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 percent stake. Energy-hungry India is keen on sourcing one million barrels per day of oil and oil-equivalent gas from Russia and had 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 already 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. Russia is wooing Indian investments in its Far East region ahead of Modi’s Vladivostok visit to balance China’s expanding presence in the resource-rich region. OVL’s stake in Vankor cluster will be in proportion to 26 percent stake in had bought in the main Vankor oilfield. OIL-IOC-BPRL have 23.9 percent in the main Vankor field. Vankorneft, a subsidiary of Rosneft, is developing the Vankor oil and gas condensate field, situated in the northern part of Eastern Siberia. In 2013, Vankorneft was chosen as an operator on development of new fields of Vankor cluster — Suzunskoye, Tagulskoye and Lodochnoye fields, located close to the Vankor field. The reserves of Suzunskoye field exceed 56 million tonnes of oil and condensate, and 35 billion cubic metres of gas. In 2016, OVL first acquired 15 percent stake in Russia’s second-biggest oilfield of Vankor for USD 1.268 billion and then bought another 11 percent for USD 930 million. The 26 percent stake would give OVL 7.31 million tonnes of oil. The consortium of OIL-IOC-BPRL acquired 23.9 percent stake in the field at a cost of USD 2.02 billion, giving them 6.56 million tonnes of oil. Rosneft continues to hold the remaining 50.1 percent shares of JSC Vankorneft. The field has recoverable reserves of 2.5 billion barrels. Besides, the OIL-IOC-BPRL consortium has taken another 29.9 percent 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. These investments will give India 15.18 million tonnes of oil equivalent. The investment made compares to USD 28.48 billion investment by Indian oil and gas companies overseas in the past 50 years, giving it about 10 million tonnes of oil equivalent. While Vankor produces about 442,000 barrels of oil per day (4 percent of Russian crude oil production), Taas currently produces about 21,000 barrels per day of oil, and a peak of 1,00,000 bpd is expected by 2021.
India to open ‘Russian energy corridor’ to cut reliance on traditional suppliers
India and Russia will unveil a comprehensive energy co-operation agreement next week when Prime Minister Narendra Modi and Russian President Vladimir Putin meet at Vladivostokthat seek to open a “far east energy corridor” intended to reduce India’s dependence on traditional fuel suppliers. The framework, to be inked at the Modi-Putin summit, aims for an alternate route for oil, gas, and coal from the Russian far east, an area marked out by both nations for enhanced cooperation and investment. “A joint statement on comprehensive energy co-operation will be issued. A five-year complete roadmap will be signed. Several issues will be mentioned in the roadmap. Discussions are at a final stage. A new dimension is coking coal. MoUs will be signed at company level also,” oil minister Dharmendra Pradhan told TOI. India is preparing to begin regular imports of Russian crude and coking coal, both from the far eastern region of Russia, where Indian state-run oil companies have invested billions of dollars in oil and gas projects. In this context, it is fitting that the plan is revealed at Vladivostok, a major terminal of the Trans-Siberian railway. Modi is chief guest at this year’s Eastern Economic Forum, Putin’s annual gig of world leaders and captains of industry, to promote investments in the natural resource-rich far eastern region. Pradhan’s visit is the third successive by an Indian minister- after commerce minister Piyush Goyal and foreign minister S Jaishankar – aimed at preparing the groundwork for the Modi-Putin summit. Top executives of state-run oil companies such as IndianOil accompanying Pradhan are discussing terms of oil imports. Russian crude, benchmarked to expensive North Sea Brent, has so far found its way here only occasionally due to price issues and difficulty in shipping from the far east. Supply deal for Russian crude will send a strong signal to oil-exporting cartel OPEC and its West Asian members, India’s main suppliers. “Russia is a close partner of OPEC. It is also a big producer and exporter of oil and gas. Term contract will show it is possible to reduce India’s dependence on OPEC. It helps our negotiations with OPEC,” a senior executive told TOI. The Russia agreement also balances India’s growing energy ties with the US. IndianOil earlier this year signed a term contract for US crude, a first for India, to make up volumes lost after New Delhi stopped buying Iranian oil due to US sanctions. Other refiners too are looking at term contracts for US crude. Also, state-run gas utility GAIL also has long-term LNG contracts.
India keen to import more LNG from Australia but wants affordable pricing: Pradhan
India is looking to raise import of liquefied natural gas(LNG) from Australia but wants the fuel at affordable price to meet the energy needs of the world’s fastest-growing economy. Oil Minister Dharmendra Pradhan on Wednesday met with Australian Minister for Resources Matthew Canavan to discuss bilateral energy cooperation, an official press statement said here. “Both ministers stressed on the importance of energy and resources in the bilateral relationship and agreed to expand the scope of cooperation given that India offers a large energy market and Australia is rich in natural resources particularly coal and LNG, apart from uranium,” it said. India already imports 1.44 million tonne per annum of LNG from Australia on a long-term contract. “Given India’s major initiatives to move into a gas-based economy, there is significant scope for expanding LNG imports from Australia,” the statement said. India has set a target of raising the share of natural gas in the overall energy basket to 15 per cent by 2030 from the current 6.2 per cent. This shift would cut down the usage of polluting hydrocarbon fuels. The statement said Pradhan mentioned to the Australian Minister that “Indian consumer is price sensitive, and therefore affordability of LNG imports from Australia will be an important factor in enhancing cooperation in this area.” It did not elaborate. The comment assumes importance as there is a growing chorus for renegotiating pricing of its long-term LNG import contracts from suppliers such as Australia to help reflect falling rates of the spot market. Besides Australia, India imports 8.5 million tonne per annum of LNG from Qatar under two long-term contracts and has tied up 5.8 million tonne a year supplies from the US. It also has a 2.5 million tonne import contract with Gazprom of Russia. While long-term LNG comes for USD 8-9 per million British thermal unit, the same gas is available in the spot market for less than half the price. India has in the past used its status as Asia’s third-largest LNG buyer to renegotiate deals with Qatar, Australia, and Russia. In 2015, it renegotiated the price of the long-term deal to import 7.5 million tonne per year of LNG from Qatar, helping save Rs 8,000 crore. In 2017, it got Exxon Mobil Corp to lower the price of Gorgon LNG to save Rs 4,000 crore in import bill and last year convinced Gazprom to lower rates too. “Minister Canavan underlined Australia’s commitment to expanding its ties with India, and highlighted its position as a reliable partner in meeting India’s energy security needs,” the statement said. “Pradhan called for greater investment flow from Australia to India and sharing of best practices.” The Indian Minister also called for greater cooperation between the two nations on coking coal. There is a need, he said, for coordination between two countries by bringing together ministries responsible for coal, mines, petroleum and natural gas and steel of each side to achieve greater synergy and enhance bilateral energy cooperation. “India being the largest importer of Australian metallurgical coal, a favourable differential pricing mechanism should be worked out,” the statement quoted Pradhan as saying. “Pradhan also pointed out that opportunities for collaboration will continue to expand as India’s energy mix evolves.” The two ministers agreed to build further cooperation on a wide range of energy resources, which have a multiplier effect on the economy, in the coming months so that the energy pillar of bilateral engagement can be strengthened.