Govt reappoints A K Sharma as IOC Director-Finance ahead of elections
The government has reappointed A K Sharma as the Director (Finance) of Indian Oil Corp (IOC) – a first under Prime Minister Narendra Modi when a PSU director has been reemployed in the same position after retirement. Sharma, who superannuated as Director (Finance) of IOC on January 31, has been appointed for three months in the same position, IOC said in a regulatory filing. The reappointment is with effect from February 18, the company said without giving reasons for the reemployment. Officials said Sharma, who as the finance head of IOC was also in charge of pricing of petrol, diesel and other fuels, has been reemployed keeping in mind the impending general elections. The government, they said, does not want to take chances with retail prices and has preferred an old and experienced hand to handle it. Sources said a proposal was moved to reemploy Sharma for six months but Oil Minister Dharmendra Pradhan curtailed it to three months before forwarding it to the Appointments Committee of Cabinet(ACC). The ACC approved his reemployment for three months. This is the first time that a PSU director has been reemployed in the same position after attainment of superannuation age of 60 years. The government has also not given any PSU director an extension after 60 years in the last few years. Last time, such a phenomenon happened on December 31, 2013, when B Prasada Rao was given a two-year extension as Chairman and MD of state-owned power equipment maker BHEL on the day he attained the superannuation age. “It is hereby notified that in terms of a letter by ministry of petroleum and natural gas dated February 15, 2019, the Board of IOC has appointed A K Sharma as Additional Director and designated as Director (Finance) of the company with effect from February 18, 2019, for a period of three months,” IOC said in the regulatory filing. Sharma, it said, is a commerce and law graduate and a Chartered Accountant. He “has rich and varied experience in the petroleum industry and has handled various assignments in finance function both in marketing as well as the refinery division of Indian Oil.” As the Head of Treasury, he was credited for issuing the first ever Foreign Currency Bonds (USD500 million) of IOC in the international markets in 2010. “Sharma brings with him the vast experience of project appraisal, project finance, and treasury operations,” it said. He was appointed Director (Finance) of IOC in October 2014. He superannuated from the position on January 31 this year.
Gazprom sees its gas price in Europe at $230-250 per 1,000 cubic metres in 2019
Russian gas giant Gazprom expects its gas export price in Europe to reach $230-$250 per 1,000 cubic metres this year, Elena Burmistrova, the head of Gazprom Exports, told a meeting with investors in Hong Kong on Tuesday. In 2018 the average price was $245.5 per 1,000 cubic metres.
Access to pipelines a key issue in unlocking India’s natural gas potential: Ajay Shah, VP, Shell Energy Asia
India will have to address key issues pertaining to access to natural gas pipelines and ensure a level-playing field by including natural gas into the ambit of Goods and Service Tax (GST) if it wants to unlock the country’s natural gas potential, Ajay Shah, Vice President, Shell Energy Asia told ETEnergyWorld. “Countries like US and Europe were able to increase the use of natural gas in their overall energy mix primarily due to unbundling of natural gas marketing and transportation services. While India does have open access to its pipeline and a regulator in place the practical reality is it is difficult to access natural gas pipeline infrastructure for a variety of reasons,” Shah said in an interview. He added that the company was a bit disappointed because natural gas was being left out of the ambit of GST. According to Shell’s Liquefied Natural Gas (LNG) outlook 2019, India’s natural gas share in the overall energy mix will remain between 5-10 per cent by 2035. The projection made have been an interpretation of Wood Mackenzie’s data, the company said. Shah told ETEnergyWorld that the company’s 5 Million Tonne Per Annum (MMTPA) Hazira LNG terminal plans to have a truck loading unit which will allow transportation of natural gas through trucks and the facility can also be used to fuel heavy-duty vehicles run on natural gas. Shell had last month acquired 26 per cent equity interest in the Hazira LNG and Port from Total. According to data available on Petroleum Planning and Analysis Cell (PPAC), Hazira LNG recorded a capacity utilization of 87.6 per cent in the April-January period of 2018-2019 “We are excited about our journey in India. We may in the future think about expanding our Hazira terminal. We may also in the coming years choose to invest in India’s City Gas Distribution (CGD) network, get into gas-based electricity generation and are also eyeing the possibilities in using natural gas in the transportation sector. Petronet has already started a project for setting up LNG fuel stations across the country, which is a good move,” Shah said. Shah said that while China currently has over 300,000 heavy-duty vehicles running on natural gas and is taking big strides towards the use of natural gas in the transportation sector, India currently has none. China currently uses 6.7 Million Tonne of LNG for road transport and has close to 2,552 LNG fuel stations across the country. According to Shell, LNG’s share of India’s total gas supply mix exceeded 50 per cent for the first time in 2018. “India is also using LNG to meet its increasing needs for a secure energy supply. Domestic gas production dropped and the resulting increase in demand for imported gas was met by LNG (up 10% year on year). LNG’s share of India’s total gas supply mix exceeded 50% for the first time in 2018,” the report read. It adds that in 2019, 35 million tonnes of additional LNG supply is expected to come on line with Europe and Asia being the major demand centres for the additional supply. According to the report, more than 70 per cent of energy demand growth by 2035 is estimated to be met by gas and renewables combined, with natural gas supplying more than 40 per cent of the additional demand and major LNG importing countries like China and India are putting policies in place which drive preference for gas over coal.
ConocoPhillips shuts down Suban gas field for planned maintenance
ConocoPhillips Grissik Ltd, a unit of U.S. oil and gas company ConocoPhillips, shut down the Suban gas field in Indonesia on Feb. 23 until March 1 for a planned maintenance, Indonesia’s upstream oil and gas regulator SKK Migas said on Monday * ConocoPhillips is making adjustments to its gas distribution during the shut down, SKK Migas said in a statement to Reuters * ConocoPhillips will maintain gas supply to Singapore’s Gas Supply Pte Ltd (GSPL) at minimum requirement of 170 billion British thermal units per day, and will reallocate some of its supply to GSPL for other buyers during the maintenance * Some of the gas supply for GSPL will be allocated to state-controlled PT Perusahaan Gas Negara for electricity supply in Batam, SKK Migas said * The Suban field is part of the Corridor Block in South Sumatra, Indonesia’s third-largest gas block, which is targeted to produce 145,000 barrels of oil equivalent per day of gas in 2019
Indian oil Corporation seeks LNG cargo for April delivery
Indian Oil Corp is seeking a liquefied natural gas (LNG) cargo for delivery in April, two industry sources said on Monday. The company is seeking the cargo for delivery into the port of Dahej on April 20, one of the sources said. The tender closes on March 27 and is valid for a day, the source added. Energy companies do not typically comment on such commercial matters.
Goldman Sachs says near-term oil view modestly bullish on tightening market
The near-term outlook for oil is modestly bullish as the market continues to tighten significantly, Goldman Sachs said on Monday, helped by the impact of output cuts by producers in the Organization of Petroleum Export Countries (OPEC) and Russia. The upside potential for benchmark Brent crude prices exceeds the near-term outlook of $67.50/bbl and could easily trade between $70 and $75 per barrel, the U.S. bank said in a research note. OPEC and its allies, including Russia, agreed in December to cut oil production steeply under a global supply deal to prevent a glut this year. The OPEC-led cuts as well as U.S. sanctions against Iran’s and Venezuela’s oil exports pushed oil prices to 2019 highs last week. International Brent crude oil futures were at $66.96 a barrel at 0806 GMT, down 0.2 percent, from their last close. They ended Friday little changed after touching their highest since Nov. 16 at $67.73 a barrel. However, the bank said, bullishness needs to be tempered looking into the second half of 2019, anticipating an impact from U.S. shale exports and OPEC potentially relaxing production curbs. “Saudi (Arabia) has been vocal in suggesting markets will be re-balanced before June, implying further supply cuts are not needed during second half of 2019,” Goldman analysts wrote. “Long-dated oil prices will likely remain under pressure below $60/bbl Brent and $55/bbl WTI due to the (output cut) exit strategy,” the bank said.
Bengal city gas race heats up
H-Energy East Coast Private Limited and HPCL has emerged as the top bidder for the city gas and CNG licensing bids in Bengal. In the 10th bid round, the consortium bid for all the four geographical areas in the state put up for auction — Darjeeling, Jalpaiguri and Uttar Dinajpur districts; Howrah and Hooghly; Nadia and North 24-Parganas; and South 24-Parganas. Indian Oil Corp and Bharat Gas bid for one area in the state, while GAIL India and Adani Gas bid for two. Other bidders were Sholagasco Private Limited and a consortium comprising Think Gas Investments Pte Ltd and Think Gas Distribution Pvt. Ltd — for one area in Bengal. Hiranandani group-promoted H-Energy is keen to win the city gas projects in Bengal as it has lined up an LNG and a pipeline project to meet the needs of the state and export gas to Bangladesh. The company has lined up an investment of Rs 3,700 crore to set up a 3-million-tonne (mt) regasification plant and a pipeline in West Bengal, which will carry gas not just to Bengal but also export to Bangladesh. An investment of Rs. 1,500 crore will be made to set up the terminal and the plant, while another Rs 2,200 crore will be invested in the pipeline which will transport the gas from offshore Digha to Khulna. Overall, Indian Oil Corp (IOC) has emerged as the biggest bidder for city gas licences by placing bets in 35 out of 50 cities on offer, according to oil regulator PNGRB. It has bid for seven other cities in partnership with Adani Gas. Adani Gas bid for 19 cities on its own and seven in partnership with IOC. HPCL, a subsidiary of state-owned Oil and Natural Gas Corp (ONGC), emerged as the third largest bidder, with offers for 24 towns and cities, while Gujarat-based Torrent Gas applied for 20 areas. Indraprastha Gas Ltd, which retails CNG and piped cooking gas in Delhi, put in bids for 15 areas, while Bharat Gas Resources Ltd, a subsidiary of state-owned Bharat Petroleum Corp Ltd (BPCL), bid for 14 cities. State-owned GAIL India Ltd, which is the country’s biggest gas marketer and transporting company, put in bids for just 10 areas through its subsidiary GAIL Gas Ltd. The licences would be awarded by the month-end after the finalisation of the winners, the regulator said. The government is targeting to raise the share of natural gas in the primary energy basket to 15 per cent from 6.2 percent.
Global LNG trade to rise 11 per cent this year: Shell
Global liquefied natural gas (LNG) trade will rise 11 per cent to 354 million tonnes this year as new facilities increase supplies to Europe and Asia, Royal Dutch Shell said in an annual LNG report on Monday. Shell, the largest buyer and seller of LNG in the world, said trade rose by 27 million tonnes last year, with Chinese demand growth accounting for 16 million tonnes of those volumes. Shell’s forecasts, which see LNG demand climbing to 384 million tonnes next year, reflect a burgeoning industry with new production facilities opening in Australia, the United States and Russia and more countries becoming importers by constructing receiving terminals. Asia dominates the market with Japan remaining the top buyer. China became the second largest in 2017 as demand soared due to a government-mandated push for power stations to switch from coal to cleaner-burning gas to help reduce pollution. Due to the uneven progress of developing liquefaction-export facilities on the one hand and regasification-import terminals on the other, many analysts see the global market becoming oversupplied if not this year then next year. But most also see a supply crunch around the mid-2020s because, at the moment, there are not enough liquefaction facilities being planned, financed and built. Such projects are underpinned by long-term supply contracts struck years in advance by their operators. Between 2014 and 2017 buyers were signing shorter-duration contracts for smaller volumes, making financing difficult to complete. However, Shell said the duration of contracts signed last year had on average more than doubled to 13 years. “A rebound in new long-term LNG contracting in 2018 could revive investment in liquefaction projects,” Shell said. “Based on current demand projections, Shell still expects supplies to tighten in mid-2020s.” Spot trade amounted to 1,400 cargoes in 2018 which was close to 30 per cent of the global market compared to 25 per cent in 2017, Shell said. Spot trade, the buying and selling of cargoes for immediate delivery, signals a more flexible, mature market.
Petrol dealers: Fuel tanks have larger capacity than is claimed
In an attempt to increase public awareness, the Federation of All Maharashtra Petroleum Dealers Association (FAMPEDA) on Saturday stated that the actual capacity of a fuel tank is more than what is mentioned on the manufacturer’s catalogue or the user manual that comes along with the vehicle. To substantiate their contention, the association members cited several reports and scientific reasons behind the same. The need to take up the issue arises after recent incidents of customers taking objections to the fuel stations filling the fuel tank more that what has been mentioned in the catalogue provided by vehicle manufacturers. Recalling recent incidents, the association members said that whenever a customer raises suspicion over getting a higher reading on the fuel dispensing machine than the capacity of the fuel tank described in the catalogue, the fuel dealers summon a mechanic, empty the fuel tank and then again fill it up to convince such a customer that the fuel tank actually has a larger capacity than what is mentioned in the user manual. The association’s Hiten Patel said, “Vehicle manufacturers set the ‘full’ indicator at a level just below the tank’s actual capacity. There have been tests carried out in different parts of the country, only to find that a fuel tank assumed to be carrying 40 litres, ended up accommodating around 50 litres.” The association members even placed a letter from Maruti Udyog Limited’s letter on record to further substantiate their claim. ‘The quantity of gasoline that can actually be filled is more than the specified capacity,’ read the letter. The letter further states that ‘as per the international standards, the actual capacity of the tank is more than the specified capacity. This is done to take care of the evaporative volume of the gasoline vapours.’ The quantity of gasoline that can be filled also depends on the atmospheric temperature at the time of the filling. Another member of the association, Aqil Abbas said, “The capacity provided in a fuel tank has multiple segments, including usable volume, dead volume and expansion volume. Due to all of this, it is only the ‘usable volume’ that is mentioned as the fuel tank capacity in the catalogue.” The association members blamed the vehicle manufacturers as well as the government agencies for failing to make citizens aware of this fact. Ignorance about the same often results in friction at the fuel stations.
Government asks ONGC, OIL to sell out 66 fields to private firms
The government has asked state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) to sell out 66 of their small oil and gas fields to private firms as it brought in a new policy to boost domestic production and cut imports, Petroleum Minister Dharmendra Pradhan said Thursday. To quickly bring all sedimentary basins under oil and gas exploration, the government dumped a two-year-old model of bidding out acreage or blocks to firms offering highest share of revenue, and brought in a new system of bidding them out on the basis of work programme such as drilling of wells and shooting of seismic with the winner’s only liability being payment of statutory duties like royalty and cess, he told reporters here. ONGC and OIL, who are battling stagnation in output from largely ageing fields, have a total of 184 fields. The national oil companies have been asked to provide enhanced production profile for 66 of these fields, which contribute 95 per cent of the 36 million tonne of annual oil production in the country, and given freedom to induct private and foreign partners or technology providers. They have been allowed to retain another 52 fields (49 by ONGC and 3 by OIL) where enhanced oil recovery or improved oil recovery programmes are already under implementation and they were put on production in the last four years. For the remaining 66 fields (64 belonging to ONGC and 2 to OIL), which currently contribute about 5 per cent of total output, will be bid out or privatised with revenue share going to the two firms. Giving details of the decisions taken by the Cabinet earlier this week, Pradhan said companies will be given pricing and marketing freedom for yet-to-be-developed discoveries and will levy a lesser royalty in case of state-owned firms raising production from existing fields. Marketing and pricing freedom will be given to those new gas discoveries whose field development plan (FDP) or investment proposal is yet to be approved. This would apply to both state producers like ONGC and private ones like Reliance. ONGC is sitting on two dozen discoveries which it had not been able to produce because of the current government-mandated price being less than the cost of production. Reliance also has discoveries in east coast block NEC-25 where it can produce after the new freedom. An incentive to produce additional gas from APM or nomination fields of state-owned firms like ONGC and OIL will be given in form of royalty reduction at the rate of 10 per cent on additional production over and above business as usual (BAU) scenario, which will be approved by the upstream regulator, DGH. Pradhan said the alongside, the government has decided to award future exploration acreage based on exploration work commitment, which will replace a two-year-old method of awarding them to companies offering the highest revenue share to the government. Exploration blocks in Category-I basins, where commercial production of hydrocarbon has already been established, will be bid out on the basis of a mix of work commitment and revenue share in the ratio of 70:30, he said. Exploration blocks in Category II and III basins will be awarded purely based on the exploration work programme, he said adding winning company’s only liability would be to pay royalty and cess and there would be no profit share. “There will be no revenue or production sharing in these contracts but the government will get a share in case of windfall gains,” he said adding that the trigger for such a sharing has been fixed at USD 2.5 billion in a financial year from the block. Pradhan said the focus of the new policy is to raise output from the existing fields and bring newer areas under production quickly. “Revenue or profit is no longer the priority. Production will be,” he said. “Fiscal incentive is being given for early monetisation of discoveries.” National oil companies (NOCs) have been given freedom to bid out fields and induct technology partners. “Bidding process will be decided by the NOCs,” he said adding the process is expected to be completed in four months. The BJP-led NDA government had two years ago moved from production-sharing contracts, where acreage for exploration of oil and gas was allocated to firms offering the largest work programmes (such as carrying out seismic survey and drilling of wells), to revenue sharing contracts, where the firm offering highest revenue to the government was given the blocks. In the older system, the explorer was guaranteed that his entire cost will be allowed to be recovered once commercially exploitable oil and gas is found. But in revenue sharing contract, the cost has no bearing and the companies are supposed to bid the revenue or production that they would give to the government at different levels of output and price. The move to revenue sharing was despite several industry players stating that prospectivity in the country was poor and there was a need to give incentives to companies for exploration. India has 26 sedimentary basins measuring 3.14 million square kilometers. These are classified into four categories: Category-I basins where commercial production has been established like Cambay, Mumbai Offshore, Rajasthan, Krishna Godavari, Cauvery, Assam Shelf and Assam-Arakan fold belt; Category-II basins with known accumulation of hydrocarbons but no commercial production so far such as Kutch, Mahanadi-NEC (North East Coast), Andaman-Nicobar and Kerala-Konkan-Lakshadweep. The category-III basins have hydrocarbon reserves that are considered geologically prospective such as in Himalayan Foreland basin, Ganga Basin, Vindhyan basin, Saurashtra basin, Kerela Konkan basin, Bengal basin; and Category-IV which are the ones having uncertain potential which may be prospective by analogy with similar basins in the world. These include Karewa basin, Spiti-Zanskar basin, Satpura–South Rewa–Damodar basin, Chhattisgarh basin, Narmada basin, Deccan Syneclise, Bhima-Kaladgi, Bastar basin, Pranhita Godavari basin and Cuddapah basin.