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Centre proposes terms of reference for ONGC wells in Cauvery basin

At a time when Kadiramangalam village is witnessing a massive protest over leakage from wells belonging to the Oil and Natural Gas Corporation Limited (ONGC), the Ministry of Environment and Forest’s Expert Appraisal Committee (EAC) has recommended Standard Terms of Reference (ToR) to the ONGC’s proposal for the development and drilling of 110 oil and gas wells and establishment of a central processing facility in the Cauvery basin. Apart from the Standard ToR, the EAC has directed additional ToRs to be completed, including public hearings, to prepare Environment Impact Assessment (EIA) and Environmental Management Plan (EMP) reports, according to the minutes of the EAC meeting held last month. The ONGC has proposed to drill 110 wells in the Cauvery basin in Adichapuram, Kizhvelur, Kanjirangudi, Palk Bay Shallow, Periyapattinam, Perungulam, Tiruvarur, Mattur, Nannilam, Narimanam, Adiyakkamangalam, North Kovil Kalappal, Kuthalam, Kali, Madanam and Pandanallur. It has estimated the project cost to be Rs. 1.94 billion. The ONGC has submitted before the EAC that there are no national parks, wildlife sanctuaries, biosphere reserves, tiger/elephant reserves or any wildlife corridors within 10 km distance of the proposed drilling sites. “The Koduvaiyur river, the Odampokkiyar river, the Vellappar river, the Uppanar river, the Chittar river and the Vaigai river are located within 10 km distance of the drilling sites,” it said. The company said the total water requirement would be 25 cubic metres per day per well, “which will be sourced from nearby water source”. EAC directives Recommending the ToR, the first in a series of steps that would either lead to approval or rejection of the proposal, the EAC made it clear that no construction activity (other than for securing land) should be started without obtaining prior environmental clearance. While asking the company to earmark at least 2.5% of the total project cost towards social commitment, the committee said the ONGC should submit a five-year plan in this regard. The EAC has mandated that public hearing be conducted in all the districts where drilling sites are located. Anthony Brown Jersey

ONGC may not be required to pay premium for government stake in HPCL

Oil and Natural gas Corp (ONGC) need not pay a premium for government stake in Hindustan Petroleum (HPCL) since the latter is widely traded and fairy valued by the market and the transaction would involve no change in state control over the two companies, a senior executive at ONGC said. The government is planning to sell its entire 51.11% stake in the HPCL to ONGC, according to people familiar with the matter but hasn’t yet officially communicated its decision to companies. Stock markets are concerned about the price ONGC may have to pay for acquiring the refiner. The transaction would also influence the status of Mangalore Refinery and Petrochemical (MRPL), jointly promoted by ONGC and HPCL, the executive said. “After ONGC takes over HPCL, MRPL will be managed by HPCL. There is no logic for ONGC to have two companies in the same segment,” said the ONGC executive. “HPCL is rightly placed to handle MRPL since both operate refineries.” ONGC and HPCL own 71.63% and 16.96% respectively in MRPL, while the balance 11.42% is owned by the public. HPCL has in recent days pitched for taking control of MRPL. The terms of the ONGC-HPCL deal are still being finalised but speculations abound, including on how much premium ONGC may have to pay the government for HPCL shares. “HPCL is already fairly valued by the market. It has a very high free float and is very actively traded. In such a scenario, the question of premium just doesn’t arise,” the executive said. “Moreover, the point of control premium is not valid since the control of both companies would rest with the government after the transaction, as it does now,” he said. Of the public shareholding of 48.89% in HPCL, state-owned Life Insurance Corp owns just about 2% while the balance stake is owned by numerous foreign and domestic institutions and retail investors. To buttress his argument, the ONGC executive cited the sale of 10% stake in Indian Oil Corp in March 2014, when the government sold shares at 10% discount to then prevailing market price. Under its divestment programme, the government had then sold 5% stake each to ONGC and Oil India. The speculation about HPCL shares likely to be sold at a premium has sent stock up 16% in ten days. The stock is up 63% in a year. Paying a premium can drain away ONGC’s resources already needed for its planned capex of Rs 300 billion in 2017-18. The company has just about $2.5 billion of cash reserve, half of which would go into paying for the acquisition of KG Basin asset of GSPC. Acquisition of government’s 51.11% stake in HPCL would require ONGC to pay $4.7 billion at current market prices. Rougned Odor Authentic Jersey

About 60 blocks to be auctioned in second round of petro bids

The second round of bidding for discovered small and marginal fields (DSF) in the petroleum sector is set to take place in October. “We are eyeing start-ups and small national and international companies. About 60 blocks will be on offer for the II round,” said an official. According to sources, the Directorate General of Hydrocarbons (DGH) has shortlisted these blocks, now before the ministry of petroleum and natural gas for clearance. India is the third largest consumer of petroleum products, after America and China. The country’s share of global demand is expected to grow from the current 5.5 per cent to nine per cent by 2035. The DSF rounds and the Open Acreage Licensing (OAL) policy round are considered vital for reducing of import, in the schedule approved by the ministry. In the first round of DSF, blocks were awarded to 30 companies — 23 onshore and seven offshore ones. “The success of DSF Bid Round 2016 in the face of global economic slowdown and low oil prices manifests the benefits of the new E&P (exploration and production) regime for investors,” went a DGH presentation at the recent World Petroleum Congress in Istanbul. Highlights of DSF-I Number of e-bids: 134 Number of participants: 47 Contract areas awarded: 30 • 23 –Onshore • 7–Offshore New entrants to E&P industry: 13 India has 26 sedimentary basins over 3.14 million sq km. Crude oil and natural gas are being produced in seven basins. In the new rounds, 2.7 million sq km will be on offer, comprising 1.5 million sq km of onshore and 1.2 million sq km of offshore areas. In the new Hydrocarbon Exploration Licensing Policy, these are to be offered on a revenue-sharing model, providing pricing and marketing freedom to operators. On June 28, the government had launched a National Data Repository (NDR) for investors keen on the OAL round. In the NDR, sedimentary basins are divided into zones, with corresponding data. “We are getting a lot of demand for NDR with the launch of OAL. A lot of national and international players are keen. NDR is based on seismic and well data, and investors can identify areas with potential through this,” said another official. Investors will also have the option to go for a petroleum operations contract or reconnaissance contract. The latter will be valid for three years and the former will allow eight years for exploration and 20 years for development and production. There will also be an option to migrate from a reconnaissance contract to a petroleum operations contract after three years. Da’Shawn Hand Authentic Jersey

West Coast Refinery’s Complex To Cost Rs. 2700 billion: Dharmendra Pradhan

The world’s biggest oil refinery-cum-petrochemical complex planned in Ratnagiri district of Maharashtra will cost Rs. 2700 billion and take 60 months to build, Oil Minister Dharmendra Pradhan said on Monday. State-owned Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) are building the integrated complex with a refining capacity of 60 million tonnes per annum at Babulwadi, Taluka Rajapur, Ratnagiri district. “The proposed refinery will produce gasoline (petrol) and diesel suitable for BS-VI (equivalent to Euro-VI emission norms). The refinery will be designed with flexibility in processing wide varieties of crude as well as flexibility in product mix,” the minister said in a written reply to a question in the Lok Sabha. The three firms on June 14 signed a joint venture agreement to form a company, West Coast Refinery and Petrochemical Ltd for implementation of the project. “Order of magnitude of cost estimated for the project is Rs. 2700 billion and the share of IOC, BPCL and HPCL is in ratio of 50:25:25 respectively,” he said. The refinery will produce petrol, diesel, LPG, ATF and feedstock for making petrochemicals that are basic building blocks in plastic, chemical and textile industries. Pradhan said the project will take 60 months to complete from the date of approval and receipt of all statutory clearances. In addition, oil PSUs have also planned to increase the refining capacity in the country by 35 million tonnes (MT) in next few years to meet the domestic demand of petroleum products, he said without giving details. India, the world’s third largest energy consumer after US and China, has a refining capacity of 232.066 MT, which exceeded the demand of 194.2 MT in 2016-17. According to the International Energy Agency (IEA), this demand is expected to reach 458 MT by 2040. Besides the West Coast Refinery and brownfield expansion, a new 9 MT unit is planned at Barmer in Rajasthan. Fifteen million tonnes a year is the biggest refinery any public sector unit has set up in one stage. IOC recently started its 15 MT unit at Paradip in Odisha. Reliance Industries holds the distinction of building the biggest refinery in India till now. It built its first refinery at Jamnagar in Gujarat with a capacity of 27 MT, which was subsequently expanded to 33 MT. It has built another unit adjacent to it for exports, with a capacity of 29 MT. Lance McCullers Womens Jersey

Analysis: First tech, now financing – U.S. shale firms get creative to pump more oil

U.S. shale producers survived an oil price crash and confounded OPEC’s efforts to drain a global glut by employing innovative drilling and production techniques. Now, some of these producers are turning to creative investments to pump more oil. Drilling joint ventures, called “DrillCos” for short, combine cash from investors like Carlyle Group LP with drillable-but-idle land already owned by producers. Investors get a pledge of double-digit returns within a few years, while producers can raise productivity without spending more of their own money. The total raised by these ventures – at least $2 billion in the last 24 months – is a small part of overall shale financing. But they represent another way for Wall Street and shale producers to increase the flow of oil, and frustrate plans by the Organization of the Petroleum Exporting Countries to prop up prices. Private equity this year has showered more than $20 billion on U.S. energy ventures. Driven by shale expansion, U.S. oil production this year is forecast to increase by 570,000 barrels per day (bpd) to 9.9 million bpd, the U.S. Energy Information Administration estimates. NO BALANCE-SHEET RISK Drillcos take control of drillable land and generally turn over 100 percent of the cash flow from oil and gas production to investors until they earn a 15 percent return. At that point, control reverts to the producer, with the investor’s stake shrinking to about 10 percent of remaining production. “It’s a type of surgical, temporary capital,” Mark Stoner a partner at private equity fund Bayou City Energy LP, said in an interview. Bayou City committed $256 million to an Oklahoma drillco with privately held Alta Mesa Holdings LP last year. “We get exposure to great, prolific oil basins, but don’t have to take on balance sheet risk.” Companies such as EOG Resources Inc, one of the financially strongest U.S. shale producers, are turning to drillcos. Two months ago, EOG struck a $400 million deal with Carlyle to finance wells in Oklahoma. The investment lets EOG focus its own cash on the Permian Basin, the largest U.S. oilfield, and lifts its production without increasing its spending. The venture also allows EOG to double or triple the value of land it held on its books, Lloyd Helms, EOG’s head of exploration and production, said an industry conference in May. Legacy Reserves LP, Exco Resources Inc, Alta Mesa and EOG are among 34 oil producers that since 2015 have formed drillcos worth more than $2.05 billion. The money has come from investors including Blackstone Group, Carlyle, KKR & Co, and others, according to 1Derrick Ltd, which tracks oilfield land deals. PUTTING IDLE LAND TO USE Historically, one way producers wrung more cash from financiers was to pledge future output for cash payments to finance drilling. There was no swap of land and no guaranteed return. Drillcos differ in that investors get control of land until a double-digit rate of return is met, providing insurance against a default. For producers, these ventures also help boost the total amount of oil they can eventually recover. Wall Street is rewarding those with strong production with share price gains at a time when OPEC and its allies have agreed to pull 1.8 million bpd off the global market. “This helped us drill acreage that we wouldn’t otherwise have been able to drill right away,” Mike McCabe, Alta Mesa’s chief financial officer, said in an interview. For investors, the potentially high rates of return, compared with commercial loan rates running about 5 percent to 7 percent, have spurred interest despite crude prices under $50 a barrel. “There’s a lot of money seeking a home, especially in this low interest rate environment,” Mingda Zhao of Vinson & Elkins LLP, a law firm that has negotiated drillco agreements, said in an interview. Drillcos are not risk free. If oil prices tumble, investors’ ability to grab high returns within a few years fades. Shale producers also must be willing to provide more information on the land than they would under more common loan agreements. Such detailed information “gives us well-level insight into what’s going on in a basin,” said Bayou City’s Stoner. For Carlyle, one of the world’s largest private equity funds, the drillco with EOG was a relatively low-risk way to invest in U.S. shale. “We were looking for very specific types of assets and drilling deals to make the risk-return work for us,” David Albert, co-head of Carlyle’s Energy Mezzanine Opportunities funds, said in an interview. The funds, with more than $4 billion under management, can still make money on its drillco investment even after oil prices slipped below $45 per barrel this month on oversupply concerns. “Even with current oil prices, there are still economic opportunities to be had out there,” Albert said. Ty Sambrailo Womens Jersey

India building natural gas trading hub: Dharmendra Pradhan

India’s natural gas sector will see more market-friendly reforms which will help create a trading hub in the country, Oil Minister Dharmendra Pradhan told a gathering of investors at the 22nd World Petroleum Congress in Istanbul, Turkey. “We are in the process of reforming the gas market in India where you can sell your gas through a gas trading hub,” said Pradhan. ET had reported on June 15 that the government was working on a plan to build a natural gas trading hub that could aid better price discovery for domestic as well as imported gas, and could eventually become Asia’s pricing hub competing with Singapore, Shanghai or Tokyo. India is the 4th biggest liquefied natural gas (LNG) importer in the world, sourcing nearly half of its gas requirements from overseas. Rates of most of its long-term LNG contracts are linked to crude oil and those of domestic gas decided by the government-set formula. A market-driven pricing is considered necessary for the domestic market to mature, and a local trading platform could help in that. An electronic trading platform is expected to be ready by early 2018 which will allow only physical trading, according to people familiar with the plan. The country has four LNG terminals with a combined capacity of 27 million tonnes per annum. The capacity is expected to rise to 47.5 million tonnes by 2022. The gas pipeline network is also expected to double to 30,000 km in the next few years. Pradhan also invited investors to participate in the country’s exploration and production sector, where a new policy allows companies the freedom to carve their own blocks, use just one licence to exploit all forms of hydrocarbons, and the liberty to price their gas. “We have opened up 2.8 million sq km of area for your investment, and I extend the commitment of the government of Prime Minister Modi that you will receive a red carpet welcome if you decide to invest in it,” Pradhan said. The rising middle class of emerging Asian countries like India will drive the demand for energy both in terms of electricity and cooking and transportation fuel, Pradhan said, adding that India is the only country where the demand will continue to rise for more than a decade. The minister said that in the current oversupplied market, it is important for producers to understand the perspective of consumers and demand centres and the changes that have taken place in these demand centres. Pradhan held bilateral talks with Turkish Energy Minister Berat Albayrak, discussing issues of bilateral energy cooperation, including in renewable energy. Patrick Maroon Jersey

Natural gas sector will see more market-friendly reforms: Oil Minister Dharmendra Pradhan

Pradhan rolls out red carpet for global investors to participate in largest oil and gas auctions

Oil minister Dharmendra Pradhan has called upon the global investors community to participate in India’s largest oil and gas bidding round saying that the government has already launched a new hydrocarbon policy which will minimize litigations. He was speaking at the plenary session on ‘Current Economic Strategies in Indian Oil & Gas Sector’ at World Petroleum Congress (WPC) in Istanbul. “The main reason of today’s event is to promote the next round of bidding in India. Few days back, on 28 June 2017, we launched the oil and gas bidding round of India under a new Open Acreage Licensing Policy. We have opened up 2.8 million square km of area for your investment and I extend the commitment of the government of Prime Minister Modi that you will receive a red carpet welcome if you decide to invest in it,” Pradhan said. The minister also announced the country’s plan to set-up a natural gas trading hub in order to propel the country’s natural gas industry. “We are in the process of reforming the gas market in India where you can sell your gas through a gas trading hub. We are also completing a 30,000 Kilometer national gas grid in the coming years,” Pradhan said. India’s oil minister stated that the experience of many litigations and policy hurdles during the previous New Exploration Licensing Policy (NELP) era of oil exploration and production prompted the government to announce a completely new hydrocarbon policy. “With the experience of several litigations and not very encouraging production output from NELP rounds, we decided to not go for incremental policy change but to have a completely new policy. As a result of this, the government has brought in a modern, progressive, investor-friendly and world-class policy for the next bidding round. We call it Hydrocarbon Exploration Licensing Policy or HELP.” Pradhan also highlighted the introduction of Goods and Services Tax (GST) and its benefits for investors and emphasized on how India has become a global and accessible market place in the energy sector. “As India grows and aspires to become a world leader, you must all take note that India represents a robust consumption market with ready market access. Global primary energy consumption increased by just 1 per cent in 2016. The growth in energy consumption in 2016 in India has been 5.4 per cent and the total primary energy consumption was 723.9 million ton of energy equivalent,” he said. According to government estimates, India is expected to account for one-fourth of the incremental global energy demand between 2013 and 2040. The oil minister also held talks with Turkish Energy Minister Berat Albayrak during which issues of bilateral energy cooperation including renewable energy were discussed. The two Ministers agreed they need to work together on few concrete projects in coming years in areas like Exploration and Production and downstream sectors. Pradhan was representing India at the tri-annual WPC Conference widely recognised as the ‘Olympics’ of the oil and gas industry. It attracts ministers, chief executive officers of oil and gas multinational corporations, experts and academics from the hydrocarbon sectors. Chris Carson Womens Jersey

Ophir Energy to cut 15 per cent jobs amid global oil price glut

Ophir Energy Plc will cut about 15 percent of its global workforce, the UK oil and gas explorer said on Wednesday, as low oil prices force oil producers to trim costs. The company said the job cuts were focused on corporate roles in London and expatriate positions to save an estimated $10 million to $12 million a year. Ophir also lowered its full-year production forecast, saying its Kerendan gas field ramped up at a slower-than-expected pace. The full-year forecast has been lowered to 12,000 barrels of oil equivalent per day (boepd), and said production in the first half ended June 30 averaged at 11,300 boepd. This was 1,200 boepd below target as production at two of its gas fields was lower than expected, the company said. Tim Hardaway Womens Jersey

The future of Oil & Gas may remain uncertain in the short and medium future, the industry at a delicate cross-road: Dharmendra Pradhan

Dharmendra Pradha, Minister for Petroleum and Natural Gas, while chairing the plenary session on supply and demand challenges for Oil, Gas and products at the 22nd World Petroleum Congress (WPC) in Istanbul said the world is at a stage like never before, where the future of oil and gas’s supply and demand may remain uncertain in the short and medium term. He added that India is the only country where demand for oil and gas will be robust for the next decade. While speaking at the plenary session Pradhan highlighted how disruptive innovation will impact the demand of oil and gas in the world and how renewable has the potential to replace conventional energy sources. “Disruptive innovation will impact the demand of oil and gas in the world. Falling cost of renewable in general and falling cost of solar in particular. Most of Asia and Africa are now discovering solar tariffs at less than four cents per kilowatt, significantly cheaper than conventional power,” Pradhan said. “For India which is leading the solar and renewable revolution, we need to realise that the oil industry is at a delicate cross-road, where higher crude prices will give a further push to renewable. We are told that there is going to be a breakthrough in battery technology and renewable source may take over conventional source in the near future,” Dharmendra Pradhan added. Pradhan also emphasised that the growth in e-vehicles may also have a far reaching impact on the world’s oil and gas demand. “The rate at which e-vehicles will be adopted will depend on a lot of factors like the price of power, storage, utility network factors etc… but if estimates are to be believed, it may make considerable impact on the oil and gas sector, ” Pradhan said. Pradhan is representing India at the WPC and has conducted several bi-lateral meetings with ministers and presided over plenary sessions. The Minister will also launch an event on Hydrocarbon Exploration and Licensing Policy (HELP) as a part of the process of promoting the upcoming oil and gas bidding rounds in India. Aaron Rodgers Authentic Jersey

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