GAIL chairman denied third extension
GAIL (India) Chairman and Managing Director (CMD), B C Tripathi has been denied a third extension at the helm of the public sector undertaking (PSU). Sources say that Tripathi who is on his second extension as the CMD till July end has been denied another extension that would have lasted him till February 1, 2020. Tripathi has been the CMD since August 1, 2009 and has been a member of the company’s Board of Directors since July 2007. GAIL was elevated to the stature of a ‘Maharatna’ public sector enterprise during his tenure. The company has strengthened its core businesses across natural gas midstream and downstream chains during the last decade by doubling gas transmission capacity, tripling petrochemicals marketable portfolio. It has also forayed into newer game-changing opportunities by securing over 8.0 million tonne per annum long-term LNG supply commitments. Tripathi is a Mechanical Engineer from MNNIT, Allahabad. He has over 35 years of experience in the natural gas value chain.
Essar makes natural gas discovery in Vietnam
Ruias-led Essar Exploration & Production Ltd on Friday said the company and its partner ENI have made natural gas and condensate discovery in a block offshore Vietnam. “Essar Exploration & Production Ltd (EEPL) and ENI have jointly announced that their exploration well located at Block 114, Song Hong Basin, Offshore Vietnam, has established the presence of gas and condensates in the Ken Bau prospect,” the company said in a statement. ENI is the operator of the block with 50 percent participating interest. EEPL has the remaining 50 percent stake. The exploration well Ken Bau 1X has been drilled at a depth of 95 meters below water level, and reached a total depth of 3,606 meters, encountering several intervals of gas and condensate sandstone interbedded with Miocene age shale, with an estimated net reservoir thickness in excess of 100 meters. “Ken Bau 1X well was plugged and abandoned ahead of the original plan due to certain technical issues, prior to reaching deeper levels that could hold significant additional resources,” the statement quoted ENI as saying. ENI is already planning to start a drilling campaign early next year to fully assess the substantial upside of the discovery. “Ken Bau 1X results represent a significant breakthrough for evaluating the exploration potential in the Song Hong Basin,” it said. EEPL is a global oil & gas exploration & production company based in Mauritius. It has invested over USD 1.1 billion in the exploration & production business to date. Besides venture in Vietnam, it has investments in an exclusive block OPL 226 in Nigeria and holds unconventional hydrocarbon acreages in India through wholly-owned subsidiary Essar Oil and Gas Exploration and Production Ltd (EOGEPL). EOGEPL’s Raniganj coal-bed methane (CBM) block in West Bengal produces 1 million cubic metres per day of gas.
BPCL to produce 100 KL ethanol using paddy straw near Bhandara
Bharat Petroleum Corporation Limited (BPCL) will produce 100 kilolitres (KL) second generation bio-ethanol per day using paddy straw near Bhandara. The project will be a role model for the entire state, as BPCL will get ethanol to blend in petrol, while burning of paddy straw will stop, and farmers will get alternate revenue source. Guardian minister of Bhandara and Gondia Parinay Fuke told TOI the plant will run on solar power and would be the first-of-its-kind in the entire state. “We are about to hand over 74 hectare land to BPCL soon. The project will come up at Makhardokda, between Bhandara and Lakhani. BPCL will invest around Rs1,300-1,500 crore in the project, which will generate around 15,000 employment,” he said. Fuke added that construction of biogas plant will be done after completion of ethanol plant. “We are planning to hand over a hillock situated near the project site to BPCL to install solar power plant. Around 70% power for the plant will be met from solar energy. Ethanol will be produced using paddy straw. Biogas will be produced using waste of sugarcane, forest and other crops,” he said. Expressing gratitude to CM Devendra Fadnavis and petroleum minister Dharmendra Pradhan, Fuke said it will be the first plant of petroleum companies to be commissioned in the entire country. “Pradhan had approved 12 such plants, with three each for four petroleum companies. BPCL has proposed three at Bhandara, Bina in MP, and Bargarh in Odisha. Plan is to commission Bhandara plant within a year,” he said. It is mandatory for petroleum companies to blend 10% ethanol in petrol. The central government is planning to increase it to 20%. For last few years, petroleum companies have been purchasing ethanol from private manufacturers. After the success of Bhandara plant, BPCL can meet its requirement of entire Nagpur division on its own. Fuke said the best available technology will be selected through global tender. “I was pursuing the project since I was elected MLC three years ago. I came to know about BPCL planning to construct plant at Khamgaon. I requested Fadnavis and Pradhan, and brought it to Bhandara as farmers burn 80% of paddy straw, losing money as well as causing pollution. Some 3.84 lakh tonne paddy straw is available in Bhandara district and 3.46 lakh tonne in Gondia district. Farmers use around 20% paddy straw for feeding cattle. Plant will consume around 4 lakh tonne. We can expand the plant in case it begins to get more paddy straw. Farmers will earn Rs2,000 per tonne from paddy straw,” he said.
Torrent Group plans Rs 3,000 cr investment for gas pipeline network in UP
The Torrent Group on Sunday said it is planning to invest Rs 3,000 crore for laying a gas pipeline network in Uttar Pradesh. “In coming years, gas pipeline network will be established for domestic, commercial and industrial consumers, and a plan to invest Rs 3,000 crore is being made,” Torrent Group chairman Sudhir Mehta said at the second groundbreaking ceremony here. He further said that there is also a plan to set up 200 CNG stations in the state. These investments will bring environment-friendly natural gas to Uttar Pradesh, he said.
IOC/BPCL-GAIL M&A deal on govt’s agenda this fiscal
The government after successfully merging fuel retailer Hindustan Petroleum with Oil and Natural Gas Corporation (ONGC) last year, has now set its eye on merging gas-utility giant GAIL with Indian Oil Corporation (IOC) or Bharat Petroleum (BPCL), a news report said today. According to a report by new agency IANS, the government is looking to split GAIL’s gas marketing and transportation business and intends to merge the marketing business with either IOC or BPCL. The government is also mulling to sell GAIL’s transportation business to a strategic partner. Both the fuel retailers — IOCL and BPCL — had approached the petroleum ministry in 2017 to acquire the government’s stake in GAIL. Oil minister Dharmendra Pradhan had last week told ETEnergyWorld that the ministry has instructed GAIL to come up with a plan for bifurcating its marketing and transmission business. “Marketing and laying of pipelines or transmission are two different segments, the ministry has always been of the opinion that these two job functions being done by GAIL should be separated. Yes, we have told them to prepare a road map for this,” Pradhan said. He added that as of now no timeline on the split has been decided. Interestingly, the long-standing plan of splitting GAIL may now finally reach completion considering the government also needs to meet its higher disinvestment target of Rs 1.05 lakh crore. Finance Minister Arun Jaitley in his Budget 2017-18 speech had expressed the government’s intention to strengthen central public sector enterprises through consolidation, mergers and acquisitions, saying that the possibilities of such restructuring were visible in the oil and gas sector. Under the proposal, the government intends to create an integrated public sector “oil major” which would match the performance of international and domestic private sector oil and gas companies. The government has expressed its resolve to continue with public sector undertaking consolidation with Finance Minister Nirmala Sitharaman making a case for it in her Budget speech this year. IOC is the country’s second-largest gas marketer.
Pradhan, Saudi oil minister discuss enhancing bilateral hydrocarbon cooperation
Union Petroleum Minister Dharmendra Pradhan on Thursday held discussions here with his Saudi Arabian counterpart Khalid Al-Falih to further enhance bilateral hydrocarbon cooperation between the two countries and also deliberated on the prevailing global oil market scenario. The leaders discussed enhancing cooperation in hydrocarbon sector to make it a strong pillar of the existing overall strategic partnership between India and Saudi Arabia. During the meeting, Pradhan discussed the current developments in the global oil and gas markets and raised India’s concerns on the recent increase in Asian Premium. Issues like disturbances in the Strait of Hormuz impacting the movement of oil/LNG tankers and the decision of OPEC Plus members on extending production cuts, leading to oil price volatility were also discussed at the meeting. “He also highlighted the adverse impact that these developments are having on the Indian economy. He also highlighted the need for responsible and reasonable crude pricing in the larger interest of both consuming and producing countries,” the government said in a press release. Pradhan highlighted the long-term energy partnership between the two countries and reiterated its invitation to Saudi’s state oil company ARAMCO to participate in the country’s Strategic Petroleum Reserve Program. Saudi minister Al-Falih emphasized the need for capitalizing on the growing momentum in bilateral hydrocarbon cooperation. Both the leaders also reviewed the progress on Saudi’s investments in Indian oil and gas sector, including the West Coast refinery.
Saudi Arabia aims to expand pipeline to reduce oil exports via Gulf
Saudi Arabia aims to raise the capacity of its east-west pipeline by 40% in two years so more of its oil exports can avoid passing through the Strait of Hormuz, the energy minister said on Thursday. Khalid al-Falih also told Reuters that importers should, as a first immediate step, secure shipments through the strategic waterway at the mouth of Gulf, after attacks on oil tankers in the area and the seizure of a British-flagged ship by Iran. Falih said the international community should take swift action to protect oil supplies and secure the Strait, through which about a fifth of the world’s oil passes. Oil importers “have to do what they have to do to protect their own energy shipments because Saudi Arabia cannot take that on its own,” he said in an interview during a visit to India. The United States, which has imposed economic sanctions on Iran to halt its exports of oil, is trying to rally support for a global coalition to secure Gulf waters. Britain has called for a European-led naval mission to protect shipping. “India also needs to do its part in securing free navigation of sea links transporting energy to the rest of the world,” Falih said after meeting Indian Oil Minister Dharmendra Pradhan. India has deployed two warships in the Strait. Saudi Arabia already exports some of its oil through the Red Sea using a 1200-km (750-mile) pipeline that runs from the east of the kingdom, where much of its oil production is based, to the Red Sea port city of Yanbu in the west. Saudi Arabia aimed to maximize exports through the 5 million barrels per day (bpd) east-west pipeline if required, he said. “We are hoping to increase it to 7 (million bpd),” Falih said, although he said the expanding capacity of the east-west pipeline, called Petroline, would take two years. Routing oil supplies away from the Strait is more difficult for countries like Kuwait and Iraq, whose only coastline is on the Gulf, or the United Arab Emirates and Iran, which have major oil export terminals on the Gulf. But exporters are looking at alternatives, such as Iraq which plans to export more oil to Turkey’s port of Ceyhan and to build new pipelines to ports in Syria, Lebanon and Saudi Arabia. In his talks in India, Falih said Saudi Arabia was prepared to supply additional oil to India. He also said state-run Saudi Aramco’s talks about buying a minority stake in the refining assets of India’s Reliance Industries had not stalled after sources told Reuters this week they had hit a roadblock. On Saudi plans to list Aramco, Falih said the kingdom was “absolutely ready” for launching an initial public offering, adding that the share sale was “possible” next year depending on global economic and financial conditions. The minister said global oil demand was reasonably healthy but was lower than estimates had put it at the start of 2019. The International Energy Agency is revising down its 2019 global oil demand growth forecast to 1.1 million bpd and may cut it again if the global economy slows further amid a U.S.-China trade spat. “I am not concerned at all,” Falih said, adding that the U.S.-China trade row was not “impacting demand to a measurable degree” as Asia oil demand was healthy.
ONGC’s crucial offshore rig conversion project facing further delays
An age-old project of Oil and Natural Gas Corporation (ONGC), India’s state-owned petroleum explorer, that aims at converting oldest offshore rig Sagar Samrat to a Mobile Offshore Production Unit (MOPU) has been delayed again and is now likely to be commissioned by December this year, a status report by Ministry of Statistics and Programme Implementation (MOSPI) showed. An ONGC executive confirmed the delay and added that the commissioning time had to be extended due to rains and the company, after terminating the original contract with Mercator last year, has now appointed United Arab Emirate (UAE)-based Gulf Piping Company to undertake the project. The project, crucial for raising output, has been delayed by 79 months so far and is facing cost overruns to the tune of Rs 715 crore, the report showed. The rig is proposed to be deployed in WO-16 cluster fields close to Mumbai High. The conversion of the off-shore rig Sagar Samrat was approved on March 2011 and was intended to be commissioned by May 2013 at an original cost of Rs 861.79 crore. ONGC had originally awarded the rig conversion project to Mumbai-based Mercator Ltd’s oil and gas subsidiary. However, that contract had to be terminated due to delays in execution. Post the award of contract to Gulf Piping Company, ONGC had projected to commission the project by March 2019. The delay in deployment of MOPU has been one of the main reasons for the company’s shortfall in crude oil production for financial year 2016-2017 and 2017-2018, according to a report by the oil ministry. ONGC has been under pressure from the government to arrest and increase its domestic crude oil production. Following the recommendations of a high-level committee headed by Niti Aayog Vice Chairman Rajiv Kumar, the company had to invite strategic partners to help enhance production from 64 fields. ONGC’s crude oil production in June this year declined 5 per cent to 1,686 Thousand Tonne. Cumulatively, the oil and gas explorer’s domestic oil production during the first three months of the current financial year decreased 5 per cent to 5,137 TMT from 5,392 TMT produced in the corresponding period last fiscal. The company has managed to win 10 oil and gas blocks under the first three rounds of Open Acreage Licensing Programme (OALP).
Global oil consumption stagnates leaving prices under pressure
Global oil consumption has stalled since the middle of 2018, making lower oil prices inevitable despite the best efforts of Saudi Arabia and its allies to reduce production. The world’s top 18 oil-consuming countries, each using more than 1 million barrels per day (bpd) of petroleum products, account for almost two-thirds of world consumption, so they make a useful proxy for global demand. Consumption in the top 18 rose by just 0.7% in the three months to March compared with the same period a year earlier, figures from the Joint Organisations Data Initiative show. Most of these countries report consumption figures with a delay of two months, with data now available through May, but China, India, and Thailand report more slowly. If late reporters are excluded, consumption in the top 15, accounting for 45% of world consumption, fell 2.2% in the three months to May compared with 2018, the fastest decline since the recession of 2008/09. Since 2006, consumption growth in the top 15 has been a reliable leading indicator for the top 18 and demand more generally, which is not surprising given the interconnectedness of the global economy. Decelerating oil consumption growth since the second and third quarter of 2018 has corresponded closely with the slowdown in global manufacturing activity and freight movements. Given the slackening in oil consumption, a sharp fall in prices was inevitable, notwithstanding action by Saudi Arabia and its allies in the expanded OPEC+ group of oil exporters. Previous decelerations in 2006/07, 2008/09, 2011/12, and 2014/15 were all accompanied by sharp price falls to force consumption and production back to balance. In 2019, production restraint has averted an even sharper fall in prices but could not avert the need for lower prices to help buy back some of the lost consumption growth. Prices will start to rise sustainably if, and only if, the global economy avoids recession and consumption growth starts to accelerate again.
Thrust on CNG leads to 50% growth in fuel’s demand
Demand for compressed natural gas (CNG) has expanded by 50% in four years due to a combination of the Modi government’s thrust on popularising the less-polluting fuel, expansion of filling stations, lower gas prices and multiple CNG vehicle launches by automakers. CNG sales rose to 3,076 thousand metric tonnes in 2018-19 from 2,037 thousand metric tonnes in 2014-15. Consumption of petrol and diesel, which have a much larger market, rose 48% and 20%, respectively, in the same period. “The government’s strong commitment to the natural gas sector has been the biggest demand driver. This has helped expand fuel supply and boosted automakers’ confidence in CNG vehicles,” said ES Ranganathan, managing director of Indraprastha Gas Ltd (IGL), a gas utility active in Delhi and its suburbs. “Automakers have launched CNG variants of several passenger and commercial models in the past few years, increasing vehicle sales and fuel demand.” Ford, Honda, Mahindra and Eicher have in recent years launched CNG variants of passenger cars and commercial trucks joining Maruti and Hyundai, which had mostly dominated the factory-fitted CNG vehicles category for years. As automakers spent more resources on manufacturing CNG vehicles, they also pushed their dealerships to drive up sales. The share of factory-fitted CNG vehicles has rapidly expanded in the past few years. Previously, vehicle owners would mostly retrofit their cars after their warranties had expired. Unavailability of land for setting up filling stations had hampered expansion for years but oil minister Dharmendra Pradhan prompted state-run oil companies to provide space for CNG dispensers at their petrol pumps, helping boost the number of CNG stations by 71% in 4 years to 1,730.