Ratnagiri Gas demerger: GAIL to own LNG terminal, NTPC to get power plant
Ratnagiri Gas and Power Pvt. Ltd (RGPPL) in Maharashtra is in the process of a demerger under which the company’s gas import terminal will be majority-owned by GAIL India Ltd and the power plant by NTPC Ltd, a top GAIL executive said on Tuesday. The project—once owned by US energy giant Enron Corp. which went bankrupt in 2001—in Maharashtra’s Ratnagiri district is now owned by GAIL and NTPC that hold 25.51% stake each; financial institutions hold 35.47% and Maharashtra State Electricity Board has a 13.51% stake. “The demerger is in the process. The LNG terminal will be led by GAIL and will be a subsidiary of GAIL, and the power plant will be led by NTPC,” B.C. Tripathi, chairman and managing director, GAIL India told reporters. On Monday, GAIL said its March-quarter net profit fell 69% from a year ago due to a Rs 7.83 billion impairment charge on the RGPPL plant. Net profit fell to Rs 2.60 billion in the quarter from Rs 8.32 billion a year ago. “In compliance of Ind AS 36, on impairment of assets, GAIL and NTPC carried out an assessment of impairment of investment in RGPPL as on 31 March considering the restructuring of the business. Accordingly, a provision of Rs 7.83 billion has been made,” the company’s press statement said. Tripathi said GAIL will invest Rs 10 billion in building a breakwater facility for the LNG terminal. RGPPL now receives cargoes only between October and May due to the lack of a breakwater to protect vessels from choppy seas during monsoon months. “Last year, we utilized up to 1.5 million tonnes of capacity and going forward, this would be 2.5 million tonnes and once the breakwater is in place, it will be 4 million tonnes of capacity. For breakwater, we have received the bids already and we would be awarding the contracts in a couple of months from now,” he added. GAIL’s capital expenditure for this fiscal is Rs 30 billion and the company is bullish on the petrochemicals segment. It is also working on a 1.7 million tonnes petrochemical plant in Kakinada, Andhra Pradesh where GAIL and Hindustan Petroleum Corp. Ltd will be partners. This is currently in the developmental stage, Tripathi added. “Last year, we produced 577,000 tonnes of polymer. This was an increase of 40%. This year, we expect to go to almost 750,000 tonnes per annum. The second plant which was running at 40% capacity should go to almost 80-85% capacity this year. GAIL’s subsidiary, Brahmaputra Cracker and Polymer Ltd in Assam is also running at 85% capacity. In total, GAIL will be marketing 1 million tonnes of petrochemicals this financial year,” Tripathi said. GAIL also plans to spend Rs 15 billion in city gas going forward. GAIL has been authorized to develop city gas supply in seven cities—Bhubaneshwar, Cuttack, Ranchi, Varanasi, Kolkata, Patna and Jamshedpur. These cities will start getting piped gas supply in the next few years. Kenta Maeda Jersey
GAIL India to invest Rs 1,000 crore to help Dabhol LNG terminal operate all year
GAIL India will invest.Rs 1,000 crore on the liquified natural gas terminal at the Ratnagiri Gas and Power Private (RGPPL) to make it an ‘all-weather’ port by 2019, said BC Tripathi, chairman, GAIL. RGPPL, the second avatar of the troubled Dabhol power project, is in the process of demerging the power plant and the LNG terminal to make the project financially more viable as the project continues to struggle to keep afloat even after a decade since banks and public sector units stepped in to revive it. “We will hold over 70% in the demerged LNG terminal and our aim would be to convert it into an all-weather port so that we can run it at full capacity,” Tripathi said. After the original promoter of the project Enron declared bankruptcy in 2001, it was taken over for revival by RGPPL, backed by the government, in 2005. GAIL and NTPC are the biggest shareholders with 25.1% each, while the government of Maharashtra owns 13.51% and lenders have a 35.47% stake. Post the demerger, GAIL would be a majority stakeholder in the LNG terminal, while NTPC would lead the power project that would run a 500 mw unit. “We hope to give the contract for the breakwater project and expect it to be operational by monsoon in 2019,” said Tripathi. A breakwater is an offshore structure built to break the intensity of the waves so that the terminal can work all year. Right now, this terminal cannot operate for almost five months between June and September since the choppy sea poses risks to the ships. The company had hoped to award the project by October last year but it has been delayed. The demerger of the power plant and the LNG regasification unit has been delayed since lenders such as Power Finance Corp and LIC had put forth conditions. The power plant is in pact to supply 500 mw to the Indian Railways. Ryan Shazier Jersey
BHP hires Barclays to divest U.S. shale gas assets – sources
BHP has hired Barclays to divest its U.S. Fayetteville shale gas assets as the miner seeks to fend off an attack by activist funds, two sources close to the matter said on Tuesday. BHP said last month the gas-rich Fayetteville field in Arkansas was under review and that it was “considering all options, including divestment”. BHP declined to comment and Barclays was not immediately available for a comment. The miner had tried to sell the business more than two years ago, but the attempt was shelved in February 2015, when it said it planned to “maximise value” of the assets. The revived sale comes as activist investor Elliott Advisors, which has built up a 4.1 percent stake in BHP’s London-listed arm, urged for changes to boost shareholder value. The sale is expected to draw interest from smaller mining companies already operating in the region, the sources said. The Fayetteville assets, which BHP acquired for $4.75 billion in 2011, had a book value of $919 million at the end of 2016, according to the company’s annual accounts. The miner had to write down the assets by $2.8 billion in 2012 due to lower gas prices. Earlier this month, Elliott called for BHP to run an independent review of its petroleum division, valued at more than $20 billion, after asking to spin off the U.S. oil and gas assets. BHP has rejected the call by Elliott, which was later joined by Australian boutique manager Tribeca Partners. The mining company denied any link between the activists’ move and prospects for Fayetteville including divestment, and said the move was instead part of an ongoing review. Within the petroleum business, BHP has long made it clear it intends to focus on liquid products in the United States, a more lucrative business than dry gas. In February, it agreed to spend $2.2 billion to fund its share of investment for the second phase of the Mad Dog oilfield in the Gulf of Mexico. Ryan Fitzpatrick Jersey
In a first, India’s petroleum regulator to use real-time data monitoring tech to assess output from fields
In a first of its kind move, India’s upstream petroleum regulator, the Directorate General of Hydrocarbons (DGH), will use the all new real-time data monitoring technology to assess output from all the contract areas recently awarded under the Discovered Small Field (DSF) auctions. Real-time data collection and monitoring is being used by many industry players and will help the government decide the quantum of its share as the fields under DSF were awarded based on the new revenue-sharing model prevalent under Hydrocarbon Exploration Licensing Policy (HELP), a senior DGH official told ETEnergyWorld. “It is a common practice among many industry players. We are working on creating a real-time petroleum measurement data access system which will be live soon. It is a support mechanism as the auctions were under revenue-sharing contract. As the focus is will be on production, such a support system is necessary,” the official said. After the award of contracts under DSF, the regulator had held workshops for the winning bidders in order to de-brief the contractors, primarily new entrants, about the various aspects of the DSF policy and newly introduced revenue sharing model. These meetings included workshops on financing matters, essential certificates and statutory clearances, Field Development Programme specifications and the taxation regime for the Exploration and Production sector. The Model Revenue Sharing Contract (MRSC) policy provides flexibility to DGH to issue directions to the contractor on the methodology of measurement, the equipment used for the measurement and the points of measurement of petroleum. In order to create proper infrastructure to promote real-time monitoring, the upstream regulator will announce measurement guidelines to be adhered by the contractors. The operator will have to declare the details of pressure, temperature and flow transmitter in the FDP. The operator will have to facilitate data transfer from all field locations to the central data receiving stations. The oil ministry had launched the first round of DSF in May 2016 under a new liberalized policy under which 46 contract areas consisting 67 fields spread across nine sedimentary basins were auctioned. The auctions had witnessed 134 e-bids for 34 contact areas of the 46 offered. Later, 22 companies were awarded 31 contract areas of which 15 companies were new entrants with no prior experience in the sector. The ministry had pegged the indicative gross revenue over the economic life of these fields at Rs 464 billion. Sheldon Richardson Jersey
Shell, Engie exit Kakinada LNG project
Royal Dutch Shell, Europe’s largest oil firm, and French energy major Engie have exited a floating LNG import terminal project at Kakinada in Andhra Pradesh over concerns about demand for imported gas in India. Post exit of Shell and Engie (previously known as GDF Suez), state-owned gas utility GAIL India Ltd is negotiating with Andhra Pradesh government on possible structure of the project, GAIL Chairman and Managing Director B C Tripathi said. “Shell and GDF (now known as Engie) are no longer part of the project,” he told reporters here. The two firms had wanted GAIL to guarantee a minimum sale of imported liquefied natural gas (LNG) before investment decision could be taken. However, with power plants not willing to buy imported gas, such a guarantee never came. Tripathi did not put a timeline for completion of building the floating storage and regasification unit (FSRU) off the Kakinada coast. “The project is now between Andhra Pradesh government and GAIL and we are discussing its structure,” he said. Way back in 2011, GAIL and Shell had conceived plans to set up a floating LNG receipt facility (FSRU) in Bay of Bengal for import OF super-cooled natural gas (LNG) in ships and then piping it to onshore. Shell had teamed up with billionaire Anil Ambani-led Reliance Group’s Reliance Power and Kakinada Sea Ports Ltd (KSPL), which operates the Kakinada deep water port in Andhra Pradesh, for setting up an FSRU with a capacity of up to 5 million tons per annum (mtpa), expandable to 10-plus mtpa to “meet the surging demand for gas in the region.” However, Reliance Power exited the project in 2014 and Shell decided to join the GAIL-led project. On January 15, 2015, Shell, GDF Suez and Andhra Pradesh Gas Distribution Corp (APGDC) — a joint venture of GAIL and Andhra Pradesh government, signed an agreement for 3.5-5 mtpa FSRU. Shell and GDF took 26 per cent stake each while ADGDC held the remaining 48 per cent. Also, another agreement was signed between GAIL, GDF and Shell to cover sourcing of LNG and the marketing of the regasified LNG from the terminal. For this venture, GAIL held 48 per cent stake and the remaining was split equally between GDF and Shell. However, the project never got off the ground as the foreign partners insisted on GAIL getting firm customers of imported LNG first, sources said adding GAIL however felt it cannot guarantee any minimum offtake in absence of indicative price of imported gas. This particularly because Indian Oil Corp (IOC) is setting up a 5 mtpa LNG import terminal at Ennore to cater to demand in the state while Adani Group is leading a joint venture to set up another similar capacity import facility at Dhamra in Odisha. The terminals had already led to Petronet LNG – the nation’s largest importer of liquefied natural gas, shelving its plans to build a 5 mtpa facility at Gangavaram in Andhra Pradesh. GAIL had in 2011 set up APGDC as a joint venture company with the government of Andhra Pradesh to set up regional gas pipeline distribution network and to develop projects to sell CNG in major cities of state. GAIL Gas Ltd, a wholly owned subsidiary of GAIL, held 50 per cent stake in APGDC while the balance was with state government entity Andhra Pradesh Gas Infrastructure Corp (APGIC). APGDC has been authorised by the regulator PNGRB to lay, build, operate and expand natural gas pipeline from Kakinada to Srikakulam having length of 301 km for the mainline. The pipeline will cover four districts of Andhra Pradesh namely East Godavari, Vishakhapatnam, Vizianagaram and Srikakulam. APGDC is also in the process of obtaining authorisation to lay further pipelines within the state. Lane Johnson Womens Jersey
Petroleum Ministry may block oil PSUs buying GDF stake in Petronet
Petroleum Ministry may block any attempt by state-owned GAIL, IOC, ONGC and BPCL to buy 10 per cent stake of Frances GDF International in Petronet LNG Ltd as it is keen to keep the liquefied natural gas importer a private limited company. GDF, a unit of French energy giant Engie SA, has written to sell its entire stake in Petronet to the companys principal promoters — gas utility GAIL India Ltd, explorer Oil and Natural Gas Corp (ONGC) and refiners Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL). At present, the four companies hold 49.99 per cent stake of Petronet. If any of the promoters were to buy GDFs stake, the combined shareholding of state-owned firms will rise above 50 per cent and will lead to conversion of Petronet into a public sector company, something that oil ministry does not want, sources privy to the development said. Though Petronet is registered as a private company, Government of India’s Secretary in the Ministry of Petroleum and Natural Gas is its Chairman. By its private nature, the company is currently out of purview of CAG audit as well as any Parliamentary scrutiny. “We can exercise our right of first refusal to buy GDF stake but what is the use. We will never get permission from the ministry,” a top official at one of the promoters said. The Ministrys desire to keep the company private had led to none of the four promoters exercising their right of first buy when in August 2011 Asian Development Bank (ADB) offered to sell its entire 5.2 per cent stake in Petronet. All the four promoter firms IOC, ONGC, GAIL and BPCL were originally interested in buying ADBs 5.2 per cent stake but management of Petronet was opposed to it as it would have led to PSU holding crossing 50 per cent. The board of all the four promoter companies approved exercising the first right of refusal over ADB stake but the Ministry vetoed the proposal at a meeting on March 26, 2012. Eventually, ADB in September 2014 sold 39 million shares via a block deal to CitiGroup and HDFC Mutual Fund for Rs 7.145 billion. EDF holds 75 million shares in Petronet, which at Fridays closing price on BSE of Rs 448.15, is valued at Rs 33.61 billion. Petronet is Indias biggest importer of liquefied natural gas. GDF International had in March sent a communication to each of the promoters offering “a first right of purchase/refusal in relation to the proposed sale of 10 per cent equity shares in the company in the same proportion in which the promoters are holding equity shares in the company.” The four promoter firms hold 12.5 per cent stake each in Petronet. Going by this proportion, they are each entitled to buy 2.5 per cent of GDFs stake. But now, it is unlikely that anyone of them will exercise that option given that Petronet has been structured as a private company, sources added. Eddie Giacomin Authentic Jersey
GAIL to open new energy route for India with US shale gas
GAIL will open a new energy route for India early next year by beginning regular imports of shale gas from the US, adding to New Delhi’s bargaining power with its predominantly West Asian suppliers. The gas utility will begin importing gas in ships under a long-term contract from Dominion Cove Point LNG (liquefied natural gas) project from March 2018 and has floated tender for chartering ships for transportation. The company has also made a time-swap deal for a million ton of US gas for 2018-19 in an attempt to recast its supply portfolio in line with domestic demand. Chairman B C Tripathi on Monday said the company initially sees US shipments replacing spot cargoes and will charter four ships to begin with. “We bought about 55 spot cargoes totalling under four million ton of gas in 2016. This is expected to increase and be replaced by the US shipments.” Chris Herndon Authentic Jersey
India’s crude oil output dips 0.6% in April
India’s crude oil production fell 0.6 per cent to 2.93 million tonnes in April after Cairn India shut some 70-odd wells at its biggest oil field in prolific Rajasthan block. Crude oil production stood at 2.95 million tonnes in the same month last year, according to a statement by Petroleum Ministry today. State-owned Oil and Natural Gas Corp (ONGC) output was up 2.5 per cent to 1.84 million tonnes but lower production by private sector firms dragged down the overall production. Private/ joint venture fields produced 8.44 per cent less crude oil at 818,450 tonnes mainly because 70 wells on Mangala field of Cairn were shutdown for workover. Also, “few high water cut wells” were closed at Mangala while the reservoir at Bhagyam – the second biggest field in Rajasthan block, performed poor, the ministry statement said. Natural gas production was 1.8 per cent higher at 2,532.73 million standard cubic meters (mmscm) after output at ONGC fields rose 9.7 per cent to 1,790.07 mmscm. Oil refineries produced marginally lower fuel at 20 million tonnes. Public sector refiners output was almost flat but throughput at private sector refineries of Reliance Industries and Essar Oil was lower. Brock Coyle Authentic Jersey
Proposal to extend oil production cut could lead to under investment: Dharmendra Pradhan
Oil producing countries’ proposal to extend production cut could end up creating possibility of under investment in the sector and leaving consumers’ demand unmin the long run, Oil Minister Dharmendra Pradhan has said. “While the production cut is an attempt to arrest the slide in prices, however, it also has an inherent chance of under investment and consumer’s needs not being met in the long run, which is not in the interest of a balanced and healthy global oil and gas market,, an Oil Ministry statement quoted Pradhan as having told representatives of oil cartel OPEC in Vienna. Pradhan co-chaired the 2nd India-OPEC Institutional Dialogue at the OPEC headquarters two days ahead of the OPEC Ministerial meeting scheduled from May 25. Pradhan highlighted the importance of India – OPEC engagement and discussed the effects of the production cut of 1.8 million barrels per day by OPEC and non-OPEC countries on the global oil market volatility, according to the official statement. Oil prices have risen 11% since May 9 on media reports that a pledge by OPEC and other producers, including Russia, to cut supplies by 1.8 mbpd would be extended to March 2018, instead of covering just the first half of this year. There have also been reports of producers considering deepening the production cut. Pradhan stressed that the OPEC should work towards “Responsible Pricing,, which would allow India to provide energy to the common and marginalised people who have been deprived of access to energy so far. Higher crude prices would retard growth rate which will result in slowing down the demand of crude oil, he said. Pradhan said India’s energy mix was undergoing major changes with renewables becoming important. “The oil Industry is at a delicate cross road and higher crude prices will give a further push to renewables,, he said. About 86% of India’s import of crude oil, 70% of natural gas, 95% of LPG are from OPEC countries. Andy Levitre Jersey
GAIL in time-swap deal for US LNG
State-owned gas utility GAIL India Ltd today said it has signed a first-ever time-swap deal to sell some of its US liquefied natural gas (LNG) as it rejigs the supply portfolio in line with domestic demand. GAIL Chairman and Manging Director B C Tripathi said the company is to receive LNG from its shale gas project in US from March next year. It has however time swapped some of the supplies. Under the agreement, it will g15 cargoes or about 0.8 million tonnes of LNG from an unnamed trader this year. In return, GAIL will sell 10 cargoes or about 0.6 million tonnes next year from Sabine Pass on the US Gulf coast. “We imported 55 cargoes of LNG on short or medium term contracts in 2016-17. This equals to under 4 million tonnes of LNG in a year. This volume we expect to replace from our US portfolio,” he said. GAIL has a deal to buy 3.5 million tonnes a year of LNG for 20 years from Cheniere Energy and has also booked capacity for another 2.3 million tonnes at Dominion Energy’s Cove Point liquefaction plant. Against a supply of 5.8 million tonnes of LNG from US, GAIL has been able to create a market for just under 4 million tonnes in India and so it wants to sell of the remaining overseas. Tripati said GAIL had separately signed a deal with Royal Dutch Shell to sell about 0.5 million tonnes of its US LNG. So from a potential supply of 5.3 million tonnes (after the Shell deal), GAIL feels Indian market can absorb only 4 million tonnes or so. “We hope to replace the short and medium term contracted volumes with US LNG,” Tripathi said, adding that the company has floated a tender to time-charter four LNG ships to ferry the gas in its liquid form (LNG) from US coast to Dahej in Gujarat. The LNG that GAIL will receive this year between April and December under the time-swap deal will be at oil-linked prices. The sale of US gas next year will be at a premium to its pricing formula on a free-on-board (FOB) basis. Tripathi said there are not many new takers for imported LNG particularly in the power sector which is price sensitive, thereby forcing the rejig of supply portfolio. The company is also renegotiating price and time of supply of 2.5 million tons per annum of LNG by Gazprom of Russia. GAIL is saddled with long-term deals for US and Russian gas after it went on a contracting spree between 2011 and 2013 when when the fuel was scarce and prices kept rising. Devin Hester Jersey