BP to quit Alaska after 60 years with $5.6 billion sale to Hilcorp
British oil major BP Plc on Tuesday agreed to sell all its Alaskan properties for $5.6 billion to privately held Hilcorp Energy Co, exiting a region where it operated for 60 years. The deal, which includes interests in the most prolific oil field in U.S. history at Prudhoe Bay, and the 800-mile (1,300-km) Trans Alaska Pipeline, is part of BP’s plan to raise $10 billion over the next two years through asset sales to further strengthen its balance sheet, it said. For years, BP has been reducing its role in Alaska, where oil production has fallen with declines at the Prudhoe Bay field. BP, which began working in Alaska in 1959, is the operator and holds a 26% stake in Prudhoe, where production began in 1977. In 2014, BP sold Hilcorp half its share of an Alaskan project. This year, the two were due to decide whether to go ahead with an ambitious $1.5 billion offshore project that requires the construction of a man-made island. The acquisition fits Hilcorp’s historical strategy of acquiring mature fields from major oil companies and slashing costs. The company, founded in 1990 by Texas oilman Jeffery Hildebrand, has operations across the United States. Hilcorp spokespeople did not reply to requests for comment. “This deal vaults Hilcorp to be the second-largest Alaska producer and reserves holder, behind only ConocoPhillips,” said Rowena Gunn, a Wood Mackenzie energy analyst. Hilcorp must show it can maintain output at Prudhoe Bay, where BP has been the operator, she said. Prudhoe has to date produced over 13 billion barrels of oil and is estimated to have the potential to produce more than one billion further barrels. BP’s net oil production from Alaska in 2019 is expected to average almost 74,000 barrels per day. The deal calls for a $4 billion initial payment to BP with the remaining $1.6 billion in earnout payments over time. “We are steadily reshaping BP and today we have other opportunities, both in the U.S. and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment,” BP Chief Executive Officer Bob Dudley said. The Alaska sale pushes BP closer to its goal of selling $10 billion of properties following the 2018 acquisition of BHP’s U.S. shale assets, a $10.5 billion deal that catapulted the London-based company into a major Texas shale producer. BP previously had said that most of the disposals would come from its shale assets, particularly natural gas fields. The sale would help BP reduce its debt, which rose to 31% of its market capitalization by the end of June. The sale faces regulatory approvals, including by the state of Alaska. State Senate Minority Leader Tom Begich said he expects the legislature to hold hearings and review Hilcorp’s environmental and safety record, which included a natural gas pipeline leak in Alaska’s Cook Inlet that lasted for months in the winter of 2016-17. “I want to make sure they’re not just pumping hard and walking away,” said Begich. “I don’t want to be left with a mess to clean up.” The divestment comes months after BP agreed to sell its interests in the Gulf of Suez oil concessions in Egypt to Dubai-based Dragon Oil for an undisclosed sum. It also has sought to sell U.S. shale assets in Colorado, Texas, Oklahoma and Wyoming. BP said about 1,600 employees are currently part of its Alaskan business, adding that it was “committed to providing clarity about their future as soon as possible as part of the transition process with Hilcorp.”
GAIL to spend Rs 751 crore to add new unit at petrochemical complex in Uttar Pradesh
GAIL (India) Ltd, the state-owned natural gas transportation and distribution utility, is planning to spend Rs 751 crore to add a new 60 Kilo Tonne Per Annum (KTPA) polypropylene unit at its Pata petrochemical complex in Uttar Pradesh. Polypropylene is a thermoplastic used in the making of consumer products, plastic parts for the automobile industry and textiles, apart from other applications. The complex produces low and high-density polyethylene from ethylene produced from the cracking of ethane and propane. In the process, the cracker also produces around 50 KTPA of polymer grade propylene which the company expects to use as a feed-stock for the proposed polypropylene unit. “GAIL is planning to utilize this propylene to set up a 60 KTPA Polypropylene unit in the existing complex at Pata. The proposed facility will be set-up along with the existing facilities at Pata,” the company said in an application seeking clearance from the environment ministry. The integrated gas-based petrochemical complex at Pata has been operational since 1999. It recovers ethane-propane from natural gas coming from Hazira-Vijaipur-Jagdishpur pipeline and converts it into petrochemicals. The polymer production capacity of the Pata petrochemical complex doubled to 810 KTA last financial year (2018-2019) from 410 KTA earlier, according to GAIL’s latest annual report. “Overall production from the Pata complex in 2018-19 was 751 KTA. The company exported 110 KTA of polymers to Asian markets. The company’s market share in the domestic polyethylene market has been maintained and is the second-largest player in the Indian market with a portfolio of over 1,000 KTA of polyethylene,” it said. The company’s board has also approved an Rs 8,800 crore project for the revival of an existing LPG plant at Usar in Maharashtra by converting it into 500 KTA Polypropylene complex. This would be a first-of-its-kind project in the country using propane dehydrogenation technology for production of Propylene integrated with the downstream Polypropylene unit. GAIL marketed around 1,000 KTA of polymers last financial year ended March 2019. Overall, the company’s revenue from the petrochemical segment increased 14.50 percent to Rs 6,704 crore last fiscal. In the first quarter ended June 2019, GAIL’s revenue from petrochemical operations declined 31 percent to Rs 1,113 crore.
French oil major Total signs asset transfer deals with Qatar Petroleum
French oil major Total said it had signed deals to transfer some of its assets in Kenya, Guyana and Namibia to Qatar Petroleum. In Namibia, Total will transfer to Qatar Petroleum a 30% interest in Block 2913B while keeping a 40% interest. Total will also transfer 28.33% in Block 2912 while retaining a 37.78% stake. In Guyana, Qatar Petroleum will have 40% of the company holding Total’s existing 25% interests in the Orinduik and Kanuku blocks. In Kenya, Total and Eni will transfer a combined 25% interest in Blocks L11A, L11B and L12 to Qatar Petroleum.
India offers 7 oil, gas blocks for bidding under OALP-IV
India on Monday offered for bidding seven new areas for prospecting of oil and natural gas on revamped exploration terms that look to expedite cut in import dependence by raising domestic output. Five blocks offered are in little-explored Vindhyan sedimentary basin, while one block is in Bengal Purnea basin. The remaining block is the proven basin of Rajasthan, according to a press statement by the Directorate General of Hydrocarbons (DGH). In all, 18,509.69 square kilometre of area for exploration of oil and gas has been offered in the fourth bid round of Open Acreage Licensing Policy (OALP). The government has under the previous three OALP rounds awarded 87 blocks covering an area of 1.18 lakh sq km. OALP-IV is the first round being held on revamped terms approved in February 2019. DGH said, unlike previous rounds where blocks were awarded to companies offering a maximum share of oil and gas to the government, blocks in little or unexplored Category-II and III basins will be awarded to companies offering to do maximum exploration programme. While Vindhyan is Category-II basin block, Bengal Purnea is Category-III area where no exploration has happened so far. The revamped policy also provides for “shorter exploration period, concessional royalty rates to expedite oil and gas production and introduction of alternative dispute resolution mechanism,” the statement said. Under OALP, companies are allowed to carve out areas they want to explore oil and gas in. Companies can put in an expression of interest (EoI) for any area throughout the year but such interests are accumulated thrice in a year. The areas sought are then put on auction. DGH said the last date for bidding for OALP-IV blocks is October 31. “It is expected that OALP Round IV would generate immediate exploration work commitment of around USD 200-250 million,” it said. The 5th cycle of submitting EoIs is currently going on till November 30, 2019, and would be followed by the 6th cycle from December 1, 2019, till March 31, 2020, DGH said. The Vindhyan basin covers areas under the Son valley, Bundelkhand and Rajasthan, while the Bengal Purnea basin is in West Bengal and extends into the offshore region of the Bay of Bengal. Under the revamped policy, Category-1 basin areas, where production has already been established, are bid out on a combination of exploration work programme and revenue share to the government in 70:30 ratio. The seven category-I explored basins in India are Cambay, Mumbai Offshore, Rajasthan, Krishna Godavari, Cauvery, Assam Shelf, and Assam-Arakan Fold Belt.
BP, Chevron among approved bidders for Brazil October oil auction
BP, Chevron Corp and China’s CNOOC are among 12 companies cleared to bid in an October exploration rights auction in Brazil, oil regulator ANP said on Monday. Exxon Mobil Corp, Colombia’s Ecopetrol SA, Norway’s Equinor ASA, Australia’s Karoon, Qatar’s QPI, Spain’s Repsol SA, Royal Dutch Shell PLC , France’s Total SA and Brazil’s state-controlled Petroleo Brasileiro SA also won approval to bid in the auction.
HPCL buys over 120,000 T gasoline for Sept-Oct delivery, seeks more
India’s Hindustan Petroleum Corp Ltd is seeking more gasoline after having purchased more than 120,000 tonnes of the fuel for September to early October delivery from the spot market to plug a supply gap, industry sources said on Tuesday. The state-owned refiner has been actively seeking gasoline from the spot market this year as Indian refiners undergo maintenance and up-gradation to produce cleaner fuels. HPCL recently bought the cargoes for September to early October arrival at Visakhapatnam (Vizag) and Mundra from BP, Emirates National Oil Co and Trafigura, but the premiums were not immediately available. This however could not be confirmed as the buyer and its sellers do not typically comment on their deals. HPCL’s latest tender is for 30,000 tonnes of gasoline scheduled for Oct. 5-8 arrival at Vizag and offers are to be submitted by Aug. 28. It is not the only Indian refiner looking to import gasoline. Bharat Petroleum Corp Ltd and Indian Oil Corp have also been seeking the fuel. This has pushed India’s gasoline imports in July to the highest in at least 8 years, official data showed. But India’s gasoline exports were at a two-month high of 1.16 million tonnes in July, or about 16% below May’s export volumes when they were at a two-year high, the data showed. August data will be available next month.
Jharkhand PNG pipeline hits forest clearance, land acquisition hurdle
GAIL India Limited’s plan for supply of Compressed Natural Gas (CNG) and domestic Piped Natural Gas (PNG) in Jharkhand has hit the forest clearance and land acquisition hurdle. GAIL officials said the company plans to commission 22 stations for supply of CNG to 1.25 lakh vehicles in Ranchi and Jamshedpur. It also plans to lay down a 551-km pipeline for supply of piped natural gas (PNG) to 10.46 lakh households across 12 districts, including Ranchi, Chatra, Giridih, Hazaribagh, Bokaro, Ramgarh, Dhanbad, Saraikela, Khunti, Gumla, Simdega and East Singhbhum. “Initially the natural gas will reach in special containers which will be transported by road from Patna. Later, the natural gas will be supplied through Jamshedpur-Haldia and Bokaro-Dharama pipeline popularly known as Pradhan Mantri Urja Ganga. The pipeline under construction will be completed by December 2020,” said K.B.Singh, Executive Director of GAIL eastern region, at the inauguration of two CNG stations in Ranchi on Thursday. “The CNG supply plan is a major step towards the fulfillment of Prime Minister’s dream of developing a gas-based economy and linking Eastern India to the country’s natural gas grid through PMUGY, which will pass through six states, including Uttar Pradesh, Bihar, Jharkhand, West Bengal, Orissa and Assam,” said Singh. Work has started on the Rs 4,366-crore project. “But forest clearance and land acquisition remain major issues in its completion, though we are getting full support from the state government,” Singh admitted on Thursday. “The forest laws are very tight and getting clearances is tough for us. So there are clearance issues with around 114 kms of forest land,” a source in GAIL told IANS. “Land acquisition is another big problem. We find difficult to acquire land and compensate the owners as the land records are as old as 1916 and it is tough to demarcate raiyati land from government land. In many places, a single piece of land has so many claimants. We cannot compensate anyone for land without verifying facts,” said the source. Asked about the state’s single window clearance system to help investors and industries, the source said: “The single widow clearance system exists in Bihar, Jharkhand, Chhattisgarh and Odisha as well, but the ground realities are different.” The GAIL source also spoke about the Maoist menace prevailing in Chatra, Khunti, Gumla and East Singhbhum.
BPCL to invest Rs 1,500-1,700 cr in floating LNG terminal in AP
Bharat Petroleum Corp Ltd (BPCL) plans to invest Rs 1,500-1,700 crore in building a floating liquefied natural gas (LNG) import terminal at Krishnapatnam in Andhra Pradesh by 2022, its chairman D Rajkumar said on Monday. BPCL, the country’s second-biggest state-owned oil refining and fuel marketing company, is betting big on gas business in anticipation of energy consumption basket undergoing change as focus shifts to cleaner sources. The company will hold 74 per cent interest in the project while the remaining 26 per cent will be with Petronet LNG Ltd, he said here. “Initially it will be a 1 million tonne per annum FSRU based terminal which can be scaled up to 3 million tonne or 5 million tonne in future,” he said. The project is likely to be commissioned by 2022. “It (the project) may cost Rs 1,500 crore to Rs 1,700 crore,” he said. The global oil and gas market is going through a transformation as mounting climatic concerns drive changes in the energy mix in favour of natural gas and renewables. In India, natural gas demand is slated to grow at a rate much faster than oil as the share of environment-friendly fuel rises in the energy basket. To tap this opportunity, BPCL has made a foray into city gas distribution (CGD) and is now looking to set up an LNG import terminal of its own. Krishnapatnam will be the sixth LNG terminal to be announced, on the coast. Petronet had previously signed a firm and binding term sheet for developing a land-based Liquified Natural Gas (LNG) terminal at Gangavaram Port in Andhra Pradesh with an initial capacity of 5 million tonne with Gangavaram Port Ltd (GPL) but later dropped it. State-owned GAIL too had planned a facility at Paradip in Odisha but it also dropped the plans. This space was quickly taken up by Adani Group which is building a 5 million tonne facility at Dhamra in Odisha. GAIL as also Indian Oil Corp (IOC) has booked capacity on the Dhamra terminal. IOC recently commissioned a 5 million tonne per annum import facility at Ennore. GAIL had also previously announced plans for setting up an LNG terminal at Kakinada in Andhra Pradesh but the project has not taken off. Hiranandani Group-promoted H-Energy is executing a Rs 3,500-crore project in West Bengal. Rajkumar said BPCL is transferring its gas business to a new subsidiary, Bharat Gas Resources Ltd (BGRL). The company on its own or in a joint venture with other companies now has CGD licence for 37 geographical areas (GAs), he said. Also, BGRL has entered into a long-term sales and purchase agreement to buy 1 million tonne per annum of LNG from Mozambique for 15 years, he said. The company owns 10 per cent interest in Mozambique LNG1 Company Pvt Ltd – the joint venture which is developing a giant gas field offshore Mozambique and converting the gas into LNG for shipping to consuming nations. Anadarko Petroleum Corp of the US is the Operator of the field that holds about 75 trillion cubic feet of recoverable natural gas. In the initial phase, 12.88 million tonne per annum of LNG will be made from the field. The supply is likely to start from Financial Year 2024-25. BPCL is also a co-promoter of Petronet LNG Ltd, along with IOC, GAIL India and Oil and Natural Gas Corp (ONGC). It is also a co-promoter of four city gas distribution companies — Indraprastha Gas in Delhi with GAIL; Sabarmati Gas in Gujarat with Gujarat State Petroleum Corp Ltd (GSPL); Maharashtra Natural Gas and Central U.P. Gas with GAIL.
Pradhan says Rs 1.2 lakh cr investment planned for city gas network expansion
India will see an investment of about Rs 1.2 lakh crore in the roll out of city gas network in almost 300 districts by 2030 as a massive expansion is planned for CNG dispensing stations and pipelines supplying cooking gas to household kitchens, Oil Minister Dharmendra Pradhan said on Monday. With a licence to retail CNG and piped gas to household kitchens given out for 136 geographical areas or GAs in last one year, the coverage of city gas network would be 70 per cent of country’s population, he said here. Pradhan was speaking at an event organised to mark the commencement of work on 50 GAs awarded in the 10th bid round to firms such as Indian Oil Corp (IOC), Adani Gas and Bharat Gas earlier this year. “Five years ago, city gas distribution (CGD) network spanned 34 GAs and now it has expanded to 228 GAs covering 406 districts,” he said. CNG stations retailing the environment-friendly fuel to automobiles has expanded from 938 (five years ago) to 1,769 and will further be expanded to 10,000 by 2030, he said adding that CNG-run vehicles are expected to cross 2 crore, up from about 34 lakhs now. Household kitchens getting piped cooking gas has doubled to nearly 52 lakh and licences awarded would take the number to 5 crore by 2030, he said. Oil regulator Petroleum and Natural Gas Regulatory Board (PNGRB) has, in one year, awarded licences for setting up city gas distribution networks in 136 GAs. While Rs 70,000 crore investment was committed in 86 GAs awarded in the 9th city gas bid round in August last year, another Rs 50,000 crore was committed in the 50 GAs awarded in the 10th round in March this year. “The investment proposed is about Rs 1.2 lakh crore,” he said. “Less than 20 percent of the population was covered by city gas distribution network in 2014 and now after award of 10th bid round, this will reach 70 per cent.” While 86 GAs, made up of 174 districts, were offered for bidding in the 9th round that concluded in August last year, 50 GAs, comprising of 124 districts, were offered in the 10th round. The massive expansion of city gas distribution network is a part of government efforts to raise the share of natural gas in the energy basket to 15 per cent by 2030 from current 6.2 per cent. Natural gas is cleaner and environment-friendly fuel and is intended to replace some of the polluting coal and liquid fuels consumed currently. With the completion of 10th bidding round, CGD would be available in 228 GAs comprising 406 districts spread over 27 states and Union Territories covering approximately 70 per cent of India’s population and 53 per cent of its geographical area. As many as “225 bids from 25 entities were received up to February 5, 2019 – the bid closing date (for the 10th round). And the PNGRB finalised the bids in a record time of 21 days,” PNGRB Chairman D K Sarraf said. Prior to this, CGD licences had been given for 178 GAs covering 280 districts (263 complete and 17 part) spread over 26 states and UTs. These covered about 50 per cent of India’s population (as per 2011 census) and 35 per cent of its geographical area. State-owned IOC won licences to retail gas in 10 cities, while HPCL won rights for nine towns in the 10th city gas bid round. IOC won city gas distribution licences for nine cities, most of them in Bihar and Jharkhand, on its own and one in a joint venture with Adani Gas. HPCL, a subsidiary of state-owned Oil and Natural Gas Corp (ONGC), won licences to retail CNG to automobiles and piped natural gas to households in nine cities in Uttar Pradesh and West Bengal. A consortium of LNG Marketing Pte Ltd and Atlantic Gulf & Pacific Company of Manila Inc won rights for nine cities in Andhra Pradesh, Karnataka, and Kerala. Gujarat Gas Ltd won rights for six cities, while state gas utility GAIL India’s unit GAIL Gas Ltd won rights for four. Indraprastha Gas Ltd and Torrent Gas won rights for three cities each, while Adani Gas and Bharat Gas Resources Ltd, a subsidiary of state-owned Bharat Petroleum Corp Ltd (BPCL), bagged two cities each. In the 10th bid round, 2 crore piped natural gas connections have been committed to be given and 3,500 CNG stations will be set up. Besides, a 58,000-inch kilometer of steel pipeline will be laid for the supply of gas.
Multiple time-consuming clearances creating hurdles for CGD players: D K Sarraf, chairman, PNGRB
City Gas Distribution (CGD) players in the country are facing serious difficulties in getting permissions and clearances from state governments and municipal corporations for setting up CGD business, D K Sarraf, Chairman of downstream oil sector regulator Petroleum Natural Gas Regulatory Board (PNGRB) has said. “Let me confess that what has been done by team PNGRB is far easier than what remains to be achieved by CGD companies. Our CGD entrepreneurs are facing difficulties in getting Right of Use and permissions for laying pipelines from Indian Railways, NHAI, forest department and state governments,” Sarraf said at an event on the commencement of work of projects under the tenth City Gas Distribution (CGD) round. “(There is) uncertainty created by push towards EVs, though it has been clarified to some extent,” he added. He also said the industry is fully charged and committed to make an additional investment and create jobs and any encouragement given by the government will go a long way in the development of the gas industry in India. The winning companies under the tenth CGD round have committed work program of more than 3,500 Compressed Natural Gas (CNG) stations, 2 crore Piped Natural Gas connections and 58,000 inch KM of steel pipeline over 8 years, with a likely investment of Rs 50,000 crore. “The entities are required to pay very high charges to the state governments and municipal corporations for permissions to lay pipelines. The policies for CGD sector and single-window clearance mechanism is in-place in a few states. Multiple and time-consuming permissions and clearances are required for starting CNG stations, availability of land for stations is another challenge. Most importantly, GST remains to be applicable on natural gas,” Sarraf said, adding the regulator and the industry are confident the petroleum ministry will resolve the bottlenecks. Post the completion of the tenth CGD round, natural gas will be available in 228 Geographical Areas, covering 27 states and union territories, which will result in access to gas for 70 per cent of the country’s population and 50 per cent of its geographical area. The former Chairman of state-run petroleum explorer Oil and Natural Gas Corporation (ONGC) highlighted multiple initiatives being taken by the regulator including bringing in competition in CGD after end of market exclusivity, revising the bidding model for natural gas pipelines, determining the tariff of natural gas pipelines and starting of a gas trading platform. He said the regulator has cleared pipeline projects of over 9,000 KM across the country and is now commissioning a study to identify the gaps in the availability of natural gas infrastructure.