Vedanta to invest $2.3 billion in ‘near term’ on oil and gas
Vedanta Limited has said it will be investing USD 2.3 billion towards capital expenditure on its oil and gas activities in the “near term” to increase the reserve base by around 375 million barrels. According to its latest annual report, Vedanta aims to increase production from the current 200,000 barrels of oil equivalent per day to 300,000 Barrels of oil equivalent per day (boepd), over the next few years. “In the near-term, we are investing gross capex of USD 2.3 billion to increase our resource and reserve base by around 375 million barrels. Our rich project portfolio is comprised of enhanced oil recovery projects, tight oil and gas projects and exploration prospects. As well as boosting production, this investment will generate sustainable employment opportunities, directly and indirectly, and bring cutting-edge solutions to community needs,” the metals and mining giant said. For FY2019, it expects to achieve a significant growth in production with total volumes in the range of 220-250 kboepd through executing growth projects, with opex of sub-USD 7/boe (Barrel of Equivalent). “We estimate the net capex commitment at USD 600-800 million (for FY 19),” it said. Kuldip Kaura, Chief Executive Officer of Vedanta, said the company’s vision was to contribute 50 per cent of the country’s domestic crude oil production by increasing their gross production to 500,000 boepd. “Working towards this goal, we announced growth projects, including Enhanced Oil Recovery (EOR), tight oil and gas projects, upgrade of liquid handling facilities and exploration, for which key contracts have been awarded to world-class partners. These projects, along with an exit run rate of 200,000 boepd in March 2018, will pave the way to achieve 300,000 boepd in the near-term and 500,000 boepd in the medium-term,” he said. As the largest private sector producer of crude oil in India, and with a strong track record and growth pipeline in exploration and development, Vedanta is well positioned to benefit from the Governments desire to boost domestic production and to leverage Indias oil and gas resource potential, it said. Vedanta had recently bid for all 55 blocks on offer in the first round of oil and gas auctions under the Open Acreage Licensing Policy (OALP) auction. The Anil Agarwal-led Vedanta is likely to bag as many as 40 oil and gas exploration blocks in India’s maiden open acreage auction, official sources had earlier said. Joshua Dobbs Womens Jersey
Oil Prices are down, prices at pumps aren’t!
It’s not just a looming global trade war. As I’ve written, not only will tariffs and retaliatory measures stifle the activity that normally stokes consumption, they’ll squeeze economies everywhere. That’s a good way to stifle demand. But that’s not the only problem the market faces. Recovering oil prices and weaker emerging-market currencies have combined to hit consumers’ pockets. The result could be a significant slowdown in the very countries expected to be the powerhouses of global growth. And this adds up to another reason for thinking growth in demand for oil is set to cool. Although dollar-denominated crude prices are currently around 40 percent below their level just before the 2014 price crash, the same is not true of retail gasoline or diesel prices, not even in the U.S. American average premium gasoline prices peaked in June 2014 at a little over $4 a gallon before sliding below $2.50 in early 2015 and as low as $2.20 a year later. But since then they have staged a steady recovery, coming within a whisker of $3.50 in the run-up to this summer’s driving season. That was enough to prompt angry tweets from President Donald Trump and promises from Saudi Arabia and its allies in OPEC, as well as from Russia, to boost oil supply. And though crude prices reacted sharply, gas prices eased only a little, remaining around $3.40 a gallon through the height of the driving season. The highest summer gas prices in four years have hit demand, and the picture has shifted from one of strong growth in the first three months of the year to a much more ambiguous picture in the second and third quarters. The more-accurate, though less-timely monthly numbers from the Department of Energy bolster this view. Stubbornly high gas prices have darkened the outlook for U.S. demand. Elsewhere, the headwinds are even stronger. Here, the strengthening greenback has made oil more expensive when converted into local currencies. The knock-on effect on pump prices has been dramatic. In China, motorists never saw the full benefit of lower crude prices passing through to the pump. Though the international market dropped by more than 70 percent from mid-2014 to 2016, retail gasoline prices in Beijing fell by about a quarter. And while crude is still down around 35 percent from pre-crash levels, gasoline prices are back close to where they were at that time. The International Energy Agency says China’s gasoline consumption in the second quarter dropped by 200,000 barrels a day, or around 7 percent, compared with the same period last year. Demand could continue to shrink, with rising sales of alternative-fuel vehicles and the growing popularity of bike-sharing arrangements for short-distance travel both denting demand for gasoline, according to Bloomberg Intelligence. In India, drivers have been hit even harder. Here, retail gasoline prices are around 8 percent higher than they were in June 2014. Rising vehicle sales and steady economic growth are helping to underpin Indian gasoline demand, according to OPEC. But the IEA notes that year-on-year growth rates in 2018 have been flattered by comparisons with weakness in 2017, which resulted from demonetization and the introduction of a new tax. The agency already sees growth slowing next year. That doesn’t bode well for global demand, given that India has overtaken China as the world’s fastest-growing oil market. The market has plenty of support on the supply side, from renewed sanctions on Iran to the continuing slide in Venezuelan production, uncertain stability in Libya, and an erosion of the world’s spare production capacity. With all these factors coming alongside solid growth in consumption, oil prices would be pretty well underpinned. But cracks in demand are starting to appear. Pat Tillman Authentic Jersey
Hoegh LNG to supply floating LNG terminal to Australian import project
Norway’s Hoegh LNG has won a tender to supply a floating LNG import terminal for a consortium aiming to import liquefied natural gas to Australia’s east coast from 2020 in a push to boost local supply. Australian Industrial Energy, a consortium that includes Japan’s JERA and Marubeni Corp, said on Monday it signed an agreement giving it the right to lease one of Hoegh LNG’s floating storage and regasification units (FSRU), to be docked at Port Kembla. The project needs approvals from the state of New South Wales, which is evaluating the proposal on a fast track as “critical state significant infrastructure”, amid pressure to drive down gas prices. “We remain on schedule to deliver gas to our industrial customers during early 2020,” Australian Industrial Energy (AIE) Chief Executive James Baulderstone said in a statement. Wholesale gas prices have nearly tripled over the past two years following the opening of three LNG export plants on Australia’s east coast that have sucked gas out of the domestic market. To help fill the supply gap, Australian Industrial Energy (AIE) and AGL Energy have advanced plans to import LNG. ExxonMobil Corp, the dominant gas supplier to the southeastern market over the past several decades from gas fields in the Bass Strait, and a private firm are also considering importing LNG from around 2021 or 2022. The gas import projects are moving ahead as politicians wrangle over an energy policy that was meant to end a decade of climate wars but looks set to fall apart amid leadership tension ahead of a federal election. Patric Hornqvist Jersey
GAIL awards contract for 108 km of Barauni-Guwahati gas pipeline
GAIL (India) Limited has awarded the first contract for purchase of 108 km 24-inch diameter line pipes under the Barauni-Guwahati segment of the Jagdishpur-Haldia and Bokaro-Dhamra Natural Gas Pipeline (JHBDPL) project. The contract for purchase of line pipes of 108 km was awarded to M/s Ratnamani at a total cost of Rs 125 crore. Line pipe procurement activities for the rest of the 600 km trunkline up to Guwahati is at an advanced stage of tender process, a senior official of the M/s Ratnamani said on Thursday. The Barauni-Guwahati pipeline section executed on a capital outlay of Rs 3,300 crore is an integral part of the prestigious 3,405 km-long JHBDPL project, popularly known as ‘Pradhan Mantri Urja Ganga’, executed by GAIL, and envisages to connect eastern and north-eastern India to the existing natural gas grid. This project is planned to cover eastern Uttar Pradesh, Bihar, Jharkhand, West Bengal, Odisha and Assam. GAIL officials said that JHBDPL project is progressing in full swing and the first phase is scheduled for completion by December 2018. The project will usher industrial development in eastern part of India by supplying environmentally clean natural gas to fertilizer units, power plants, refineries, steel processing plants and other industries. It will also provide clean energy to households and transportation through the city gas distribution networks through the pipeline. City Gas distribution projects have been commissioned at Varanasi, Bhubaneswar and Cuttack while project activities are in progress at other cities of eastern India. Jaleel Scott Jersey
India bans petcoke import for use as fuel
India on Friday banned the import of petcoke for use as fuel, but said shipments for use as feedstock in some industries was allowed. Usage of petcoke, a dirtier alternative to coal, in the energy-hungry country has come under scrutiny due to rising pollution levels in major cities. “Import of Petcoke is allowed for only cement, lime kiln, calcium carbide and gasification industries, when used as the feedstock or in the manufacturing process on actual user condition,” the directorate general of foreign trade said. As the world’s largest consumer of petcoke, India imports over half its annual petcoke consumption of about 27 million tonnes, mainly from the United States. Local producers include Indian Oil Corp, Reliance Industries and Bharat Petroleum Corp. India is the world’s biggest consumer of petroleum coke, which is a dark solid carbon material that emits 11 per cent more greenhouse gases than coal, according to the Carnegie-Tsinghua Center for Global Policy. Gary Zimmerman Authentic Jersey
Sudan wants India’s ONGC Videsh to withdraw arbitration over oil payment dues
Sudan wants India’s ONGC Videsh Ltd (OVL) to withdraw arbitration proceedings against the African nation as it is making efforts to mitigate default on payment of dues, OVL said in a statement on Friday. OVL, the foreign acquisition unit of Oil and Natural Gas Corp’s (ONGC), filed an arbitration claim earlier this year against the government of Sudan in a London court seeking to recover dues pending for years from a project hit by the breakaway of South Sudan in 2011. Earlier this week, a Sudanese delegation including its finance and foreign affairs minister met ONGC officials seeking withdrawal of the arbitration proceedings. OVL, however, said it would continue with the arbitration process and work simultaneously with Sudan to find out a suitable mechanism of resolving the issues. At the centre of the dispute is ONGC’s 25 percent stake that the company had acquired in the Greater Nile Oil Project (GNOP) in Sudan in 2003. Other stakeholders include China’s China National Petroleum Corp with a 40 percent stake and Malaysia’s Petronas with a 30 percent share. Will Clark Womens Jersey
India to test gas-fired plants as ‘peakers’ to smooth power grid
India will test a plan to operate its underutilized natural gas-fired power generators as “peaker” plants that can switch on quickly when there’s high demand, according to the country’s power planning body. The project will start with four NTPC Ltd. plants with a combined capacity of 2.3 gigawatts that will run only in the evenings, Central Electricity Authority Chairman Pankaj Batra said in New Delhi. The agency envisions 20 gigawatts of gas-fired capacity being used as peaking stations to even out supply fluctuations from the large amount of renewable energy that’s set be built by 2022, he said. “The government will start testing the plan this month by operating one of NTPC’s gas-based power plants as a peaking station” for nearly four hours in the evening, Batra said in an interview last week, adding that the three other plants will be online by the end of the year. State-owned GAIL India Ltd. has agreed to supply gas to the four plants, he said. India has an ambitious goal of installing 175 gigawatts of renewable energy by 2022, or a little more than the country’s current peak demand, as part of its Paris climate pledge to cut carbon emissions. Gas-fired power plants can play a role balancing the grid by maintaining uninterrupted electricity supply, especially when solar-fired generation peters out in the evenings and coal plants take time to ramp up. The gas facilities will be run on fuel produced in India, which is in short supply, and running them as peakers will optimize use of the fuel, Batra said. A shortage of domestic gas has kept the utilization of India’s 25 gigawatts of gas-fired plants at about a fifth of total capacity, according to CEA data. The cost of gas imports for India makes the fuel uncompetitive with other sources of baseload power. Chris Long Authentic Jersey
Will HPCL be on par with ‘parent’ ONGC?
A bumper profit of over ?60 billion for the second straight year has helped State-run oil refiner Hindustan Petroleum Corporation Ltd (HPCL) stake its claim for the coveted ‘maharatna’ status. However, the ‘maharatna’ status will also put HPCL and its holding company ONGC (already a ‘maharatna’) on a par on decision-making powers. This would further complicate a disinvestment deal from earlier this year when the State-run oil and gas explorer acquired 51.11 per cent of the government’s stake in HPCL for ?369.15 billion. HPCL is yet to recognise ONGC as its promoter. ONGC is shown to be a public shareholder with 51.11 per cent stake in HPCL, in its most recent share-holding pattern submitted to the Bombay Stock Exchange. ONGC has only one member on HPCL’s board. For HPCL, a ‘maharatna’ status will potentially curtail ONGC’s powers to take business decisions for the oil marketing company, in which the explorer holds a controlling stake, say oil industry sources. The ‘maharatna’ status bestows greater freedom from government control for the PSU to incur capital expenditure on purchase of new items, or for replacement, without any monetary ceiling, and to forge technology joint ventures (JVs) or strategic alliances. The status also allows the PSU to make equity investment to establish financial JVs and wholly-owned subsidiaries, undertake mergers and acquisitions (M&As) in India or abroad, subject to a ceiling of 15 per cent of the net worth of the PSU, and limited to ?50 billion in one project. The board of directors of a ‘maharatna’ PSU will also have powers for mergers and acquisitions, subject to the conditions that it should be as per the growth plan and in the core area of functioning of the PSU and the Cabinet Committee on Economic Affairs (CCEA) is informed in case of investments abroad. Mumbai-based HPCL posted a net profit of ?63.5707 billion for the financial year 2017-18. In fiscal years FY17 and FY16, it had net profits of ?62.0880 billion and ?37.2616 billion, respectively, thereby enabling the firm to show an average annual net profit of more than ?50 billion for the last three years, one of the six criteria required to become a ‘maharatna’ central public sector enterprise. The lack of an average annual net profit of more than ?50 billion for the last three years was the only qualification criteria holding up its pursuit of a ‘maharatna’ status. “HPCL has applied for maharatna status,” a company official said. HPCL is already a ‘navratna’ PSU with an annual average turnover and net worth for the last three years way above the limit set for ‘maharatna’ companies. In fiscal years 2016, 2017 and 2018, HPCL’s turnover from operations was ?1970 billion, ?2130 billion and ?2430 billion, respectively. To become eligible for ‘maharatna’ status, a PSU must have an average annual turnover of more than ?250 billion for 3 years. The oil refiner also meets the criteria for having an average annual net worth of more than ?150 billion for the last 3 years, besides having significant global presence. HPCL’s imminent anointment as a ‘maharatna’ PSU will put it in an elite PSU club that includes oil and gas sector compatriots such as Oil and Natural Gas Corporation Ltd, Gas Authority of India Ltd, Indian Oil Corporation Ltd, and Bharat Petroleum Corporation Ltd. National Thermal Power Corporation Ltd, Bharat Heavy Electricals Ltd, Coal India Ltd and Steel Authority of India Ltd are the other ‘maharatna’ companies. J.R. Richard Jersey
Government notifies incentives to state-owned oil firms in pre-NELP blocks; new rule applies to 11 fields
The government has notified a new policy requiring state-owned Oil and Natural Gas Corp Ltd (ONGC) and Oil India Ltd (OIL) to pay royalty and cess tax only to the extent of their equity holding in certain pre-1999 oil and gas fields. The ‘Policy Framework for Streamlining the Working of Production Sharing Contracts in respect of Pre-NELP and NELP Blocks’ was notified in the Gazette of India on Tuesday. Till now, ONGC and OIL had to pay a 100 percent royalty and a cess tax on 11 pre-New Exploration Licensing Policy (NELP) fields that were given to private firms prior to 1999. The government had awarded some discovered oil and gas fields to private firms in the 1990s with a view to attracting investments in the country. To incentivise such investments, the liability of payment of statutory levies like royalty and cess was put on state-owned firms, who were made licensees of the blocks. ONGC and Oil India Ltd were allowed right to back in or take an interest of 30-40 percent in the fields, but were liable to pay 100 percent of the statutory levies. The new rule, approved by the Cabinet last month, will apply to 11 fields like the Dholka field in Gujarat that is operated by Joshi Oil and Gas. It will also apply to the Hindustan Oil Exploration Company (HOEC)-operated PY-1 field in the Cauvery basin. “In pre-NELP exploration blocks, the National Oil Companies, as Licensee are liable for payment of royalty, cess and other statutory charges on entire production of oil and gas. “To facilitate further investments, the Government has decided that the contractors in pre-NELP exploration blocks will be allowed to share the liability of the statutory levies including royalty, cess and any other charges in proportion to their respective participating interests (PIs) in the block,” the notification said. All the constituents of the blocks would become licensees and payments made towards such statutory levies shall be eligible for cost recovery. It means that like capital and operating expense, the statutory levies can now be first recovered from the sale of hydrocarbons before sharing the profits with the government. These are the same conditions that ONGC had insisted upon in 2010 when Vedanta bought Cairn Energy Plc’s 70 percent stake in the prolific Barmer basin oil block in Rajasthan. ONGC, which held a 30 percent stake in the block, gave approval to the deal only when Vedanta agreed to pay a royalty and cess on its 70 percent share. Royalty for an on-land block is presently 20 percent. An equivalent amount of cess is also levied. Also, the notification extended the time period given to oil and gas companies to develop hydrocarbon blocks in the northeast. Production from these blocks will be linked to market prices of natural gas. It also extended tax benefits under Section 42 of Income Tax, 1961 prospectively to operational blocks under pre-NELP discovered fields for the extended period of the contract. Section 42 of Income Tax allows the companies to claim 100 per cent of expenditure incurred under a production sharing contract (PSC) as tax deductible for computing taxable income in the same year. While signing PSC of pre-NELP discovered fields, 13 contracts out of 28 contracts did not have provision for tax benefit under Section 42 of Income-tax Act. Now, this will bring uniformity and consistency in PSCs and provide an incentive to the contractor to make an additional investment during the extended period of PSC, it said. The approvals given are expected to help in ensuring the expeditious development of hydrocarbon resources. Matt Moulson Jersey
BP Bets On India’s Gas Demand
BP plc is smart to increase its presence in the global upstream gas space, as these are the types of investments that make growing a ~5.7% yield possible. BP plc has been increasingly shifting its investments towards natural gas in a bid to make its upstream production base gassier. The general idea is that natural gas demand is set to grow at a faster pace worldwide than oil over the coming decades, and the logistical constraints placed on the natural gas industry are significantly more onerous than the logistical constraints facing the oil industry. It is relatively easy to pick up a barrel of crude oil and send it across the world via a marine crude carrier, but relatively hard to do so with natural gas due to the need to cool the gas down so it becomes liquefied. This is primarily why LNG supplies tend to trade at material premium to gas supplies moved through pipeline systems, and why major LNG importers are always looking for ways to diversify their gas supplies via domestic investments. BP plc partnered up with India’s Reliance Industries (OTC:RLNIY) to help address this issue. Let’s dig in. Macro overview For starters, let’s take a look at the size of the opportunity BP plc is targeting. In BP’s 2018 Energy Outlook report, the firm notes that India consumed 5 Bcf/d of natural gas per day in 2016. India only produced 3 Bcf/d of natural gas that year, with the remainder filled primarily via LNG imports. Looking out to 2040, BP expects India will consume 14 Bcf/d of natural gas, a trajectory-based largely on what one’s assumptions for the nation’s GDP growth rate are. That seems quite reasonable based on India’s current economic trajectory; if anything, it very well might consume a lot more natural gas than that by 2040. In BP’s press release, the firm noted that India “aspires to double gas consumption by 2022.” That implies a goal of consuming 10 Bcf/d by the early 2020s. Vinny Curry Womens Jersey