IndianOil buys 3 million bbls Russian Urals crude
Indian Oil Corp bought 3 million barrels of Russian Urals for June loading in a tender, trade sources said on Tuesday. IOC stepped up purchase of Russian grade as Brent-linked grades become competitive against those priced on Dubai after the price spread between the two benchmarks narrowed. IOC issued second tender for sour crude to close on April 19. IOC last bought 1 million barrels of Urals each to load in May and March. Early Wynn Womens Jersey
Oil and gas activity firmly back in growth mode
For the first time since crude prices began falling in late 2014, Permian Basin oil and gas activity is exceeding year-ago levels. The Texas Permian Basin Petroleum Index achieved the milestone of year-over-year increases in February, according to Karr Ingham, the Amarillo economist who prepares the index. He said the index was up sharply from January levels and is 2.4 percent higher than the February 2016 levels. Ingham also cited sharp improvements in crude oil price averages, rig count, drilling permits and oil and gas employment compared to year-ago levels. February crude prices were just over $50 a barrel, up 84.7 percent from the $27.08 averaged the previous February. This is the first time prices have topped $50 a barrel since June 2015, according to Ingham. He said activity may slow in the near future barring an unforeseen event that sends prices significantly higher. The rig count, which had more than doubled since last summer, has seen its growth curve flatten over the last couple of weeks, both in the Permian Basin and statewide, Ingham said. “How far will $50 take us? I don’t know the answer but it will take us ahead for the foreseeable future,” he said. While the industry has momentum at the moment, he said the outlook bears watching. “We’ll see where oil prices land,” he said. “At some point there will be a plateau. The rig count may already be stalled right now, and drilling permits indicate strong activity for now. Assuming we don’t get a significantly higher oil price in 2017, at what point do we reach an activity level incentivized by $50 oil?” he said. As oil prices began their 85 percent surge, so did the rig count, Ingham said. The February rig count averaged 252 rigs, the first time it has topped 250 since March 2015 and was a 66.9 percent rise from the 151 rigs averaged last February. Reflecting that growth in activity, estimated direct oil and gas employment in Midland-Odessa recorded a year-over-year increase of almost 700 jobs, or 2.4 percent, the first such increase since February 2015. The Railroad Commission issued 564 drilling permits in February, up 79.6 percent from the 314 issued last February. In the first two months of the year, the commission has issued 1,051 permits, up 84.7 percent from 569 in the same period of 2016. Operators reported 245 oil completions in February, down 40.8 percent from the 414 reported last February and have completed 489 oil wells so far this year, down 42.9 percent from the 856 completed at this time last year. Crude production volumes rose 3.2 percent compared to February 2016 and are up 3.5 percent so far this year. Natural gas continued to mirror crude oil, reporting higher prices and production volumes. Natural gas averaged $2.61 per Mcf in February, up 45 percent from $1.80 last February. Producers reported only nine natural gas completions in February, down 69 percent from 29 last February and have completed 14 wells so far this year, down 72 percent from 50 a year ago. Natural gas volumes from Permian Basin wells was up 3.3 percent over last February and is up 4.6 percent so far this year. Curtis Lazar Womens Jersey
Open up petroleum marketing as well
It is welcome that public sector oil retailers plan daily revision of automotive fuel prices in five cities from May 1, with nationwide rollout of the “daily dynamic pricing” policy planned later this year. It would be in line with global practice, and better align the going rates for crude oil imports with retail prices of petroleum products. It is essential to do so, to determine domestic scarcity value, as much of our growing requirement of crude is met by way of imports. However, in tandem, it is also vital to reform and overhaul market design for retailing However, in tandem, it is also vital to reform and overhaul market design for retailing petro-products. The continuing policy of ring-fencing retail sales of petro-products exclusively for oil companies is both anachronistic and incongruous. It is also not as per the best international practice. Worse, it implies a huge national cost. Given the large and fast-growing domestic oil sector — India is now the third-largest importer of crude — the tight effective monopoly in retail sales of petro-products creates scope for padding costs. Abroad, in the mature markets, independent oil retailers account for about half the offtake of oil. We need to speedily integrate oil into the larger retail industry. It would lead to more competitive oil prices, boost convenience and likely improve service quality as well. In parallel, we also need speedy rationalisation of taxes on oil. We need to drop the perverse tax-on-tax and cascading rates across the value chain in oil. Petroleum products are to stay out of the goods and services tax framework, for now. But the Goods and Services Tax Council needs to firm-up consensus to bring petro-products into the goods and services tax regime at the earliest. However, it would be sensible to duly cap input tax credits for oil products, to factor in externalities like pollution and impact on climate change. Odell Beckham Jr Authentic Jersey
Is India ready for the U.S. LNG trade?
The U.S. is expected to become a net exporter of natural gas in a period between 2017 and 2018. The growth of domestic natural gas production in the U.S. is pushing it for speedy development of its liquefied natural gas (LNG) export terminal, as evident from the increase in long term application received and approved by Department of Energy (DoE)/Office of Fossil Energy (FE). For instance, the total number of non-FTA applications approved by DoE/FE have already increased from nine from September 2014 to 24 as of March 1, 2017. Presently, 95% of the U.S.’s total gas exports are moved through pipelines to Mexico and Canada. While natural gas exports through pipeline to Canada is already declining, pipeline gas exports to Mexico are expected to flatten before it starts decreasing due to development of Mexico’s own production capacity. Energy Information Agency (EIA) has predicted U.S.’s net exports of LNG to reach 6.7 trillion cubic feet (tcf), constituting 16% of its total gas production. Given its robust production of shale gas, U.S. has started to diversify its natural gas exports through LNG to consistently seek for the new markets. This is relevant at a time when global LNG industry itself is invigorating, where on one hand, traditional demand from countries, such as Japan, Korea and China is slowing down, with rolling off a long-term oil indexed contracts, on the other hand, the new LNG supply projects from countries like India, Pakistan and Egypt are picking up. This signifies a shift from a seller’s market to a buyer’s, wherein the latter having a greater say in LNG market dynamics. Buyers are now using their power not only to re-negotiate their long-term contracts with destination flexibility but also consistently looking for smaller and short-term deals. Moreover, reduced regassification cost, increase investments in small scale LNG terminals, increased investments in floating LNG, an urge to move towards clean energy systems through greater use of natural gas is working as a catalyst for increased demand for LNG, worldwide. In addition, opening of the expanded Panama Canal in June last year is termed as a potential supply-chain game changer, particularly for LNG sailing through Gulf Coast. This route offers shorter and less costly route to Northeast Asia, a primary destination for the U.S. LNG exports. Though, for India, Suez Canal or around the southern tip of Africa remains the more cost effective option compared to Panama Canal. Currently, shale and tight oil plays make up about 50% of natural gas production of the U.S., which has contributed significantly towards its natural gas production growth during the last decade, wherein, it has successfully increased its production of dry gas from 18 trillion cubic feet (tcf) to 27 tcf. In case of India, according to International Gas Union’s 2017 World LNG Report, it is the fourth largest LNG importer with 19.2 million tonnes per annum, having a global market share of 7.4%. According to Petroleum Planning & Analysis Cell, India’s LNG imports increased by 15% in 2015-16 on y-0-y basis to 16.08 million metric tons (mmt), while over the last five years. LNG imports increased by 38% since 2011-12. In September 2014, under a non-FTA category, nine American LNG terminals have been approved to export LNG of which two have inked deals to sell to Gas Authority of India Limited (GAIL). GAIL has signed two agreements with U.S. firms to import LNG. One agreement will bring 3.5 mtpa or 168 billion cubic feet (bcf) from Cheniere’s Sabine Pass in Louisiana, while the other is for 2.3 mtpa or 110.4 bcf from Cove Point in Maryland. Thus, while GAIL was one of the first companies to buy U.S. LNG from Sabine Pass and Cove Point, it bought the second shipment of LNG from Cheniere Energy to become the first Asian importer of U.S. shale gas. For the U.S., India could thus become one of the biggest LNG markets with flurry of U.S. shipments Cheniere-operated terminals at the US Gulf Coast over the coming months, provided the landed cost of LNG successfully competes with coal, for use in power generation. However, if U.S. LNG fails to compete with coal it would be difficult for India to easily expand the usage of LNG in price sensitive sectors such as power and fertilizer. This was already visible from the recent decision taken by the government when on March 31, 2016, when it scrapped subsidized imported LNG scheme in a backdrop of low gas prices and state governments withdrawing from the scheme. This scheme which helped LNG imports surged by 15% to 16.08 mt (Figure) in 2015-16 and to 17 mt in first 11 months in 2016-17 is now set to dip in the absence of this scheme. Decisions like this can have a significant impact on government’s plan to shift towards gas based economy, where import of LNG is a significant component. Further, India’s LNG expansion plan, is also burdened by taxes, irrespective of reduction of import duties from 5% to 2.5%. Gujarat, a destination for three of India’s four import terminals, namely, Dahej, Dabhol and Hazira, has withdrawn the tax benefit for imported LNG consumed outside the state. Moreover, GAIL, which is set to receive U.S. LNG cargoes from the Cove Point terminal in Maryland has called for imports to be made more economic to the domestic consumers so that sectors outside power, such as fertilizers, chemical plants and city gas distribution are encouraged to use natural gas. These efforts will contribute largely in stabilizing the environment and curb emissions. Thus, while the U.S. is gearing up to expand the base of its natural gas exports by increasing LNG exports, India would do well to gear itself to optimize the benefits of U.S. LNG trade by providing tax reliefs to sectors which needs to be pushed for greater natural gas usage. The U.S. on the other hand would be happy to narrow the trade deficit on its side while exporting LNG to India to mutually gain from LNG trade. Eric Fehr
PPLC policy is to encourage suppliers and service providers to progressively adopt
The Union Cabinet chaired by the Prime Minister Narendra Modi has approved signing of Framework of Understanding (FoU) on Cooperation in the Hydrocarbon Sector with Bangladesh, setting up of Indian Institute of Petroleum and Energy (IIPE) at Visakhapatnam in Andhra Pradesh as “an Institute of National Importance” through an Act of Parliament and also approved the Policy to provide Purchase Preference (linked with Local Content PP-LC) in all Public Sector Undertakings under Ministry of Petroleum & Natural Gas on 12th April, 2017. The Secretary for Petroleum and Natural Gas, K D Tripathi said that the ‘Make in India’ initiative was launched by Prime Minister in September, 2014 as part of a wider set of nation-building initiatives devised to transform India into a global design and manufacturing hub. In tune with the campaign, the Government has decided to incentivize the growth in local content in goods and services while implementing oil and gas projects in India through a policy for providing Purchase Preference to the manufactures/services providers who meet the local targets in oil and gas business activities. Under the policy, progressively increasing targets of Local Content are being stipulated for procurement of goods, services and EPC contracts for oil and gas business activities. The manufacturers/service provider who meet the local content targets and whose quoted price is within 10% of lowest valid price bid, would be eligible for 10% purchase preference for a stipulated portion of the purchase order, on matching such price. For example, Drilling/Workover Rigs/WSS units construction in the onshore sector the local content would be pegged at 50% in the first year and progressively increased to 60% in the next two years and they to 70% in last two years. Similarly, for premium bids as wells as specialized drilling and completion services the local content stipulated is 10% in the first year and progressively increased to 15% in the next two years and then to 20% in the last 2 years. He added that the policy is expected to encourage suppliers and service providers to progressively adopt ‘Make in India’ practices and add value to their goods and services within the country. It will facilitate growth of activities related to manufacturing, services and EPC in the Indian economy. This will boost productivity and help in growth of employment at all levels in the oil and gas sector. Tripathi said that this policy is applicable to all the Public Sector Enterprises and their wholly owned subsidiaries under the Ministry of Petroleum and Natural Gas; Joint Venture that have 51% or more equity by one or more Public Sector Enterprises under the Ministry of Petroleum and Natural Gas; attached and subordinate offices of MoPNG. The Cabinet had approved a Framework of Understanding on Cooperation in the Field of Hydrocarbons. This was first discussed during the visit of Petroleum Minister Dharmendra Pradhan to Dhaka in April 2016 with the objective to work as an umbrella framework to initiate, monitor and pursue activities of mutual interest in the oil and gas sector. It will give an institutional mechanism for our engagement with Bangladesh in the Hydrocarbon sector. Salient Features of the proposed Framework document include: Promotes the energy trade and integration of oil and gas grids of the two countries Promotes investments in each other’s countries as well as in third countries, technology transfer, R&D, conducting joint studies and capacity building of human resources. Provides increased trans-border economic cooperation and connectivity. Promotes bilateral cooperation at the sub-regional and regional levels Exchange of information to energy policy formulation in the region. This Framework of Understanding shall remain in force for a period of five years, and shall be automatically renewed thereafter for a period of every five year. The visit of PM Sheikh Hasina which took place on April 8-10 has given a further impetus to the Indo Bangladesh relations, as 22 documents were signed, including many in the field of oil and gas. Minister of State (I/C) for Petroleum and Natural Gas, Dharmendra Pradhan had visited Bangladesh during 18-19 April, 2016 and in the last two years there have been at least 7 meetings between him and his counterpart in Bangladesh. There is an institutionalised Energy Dialogue at the level of Secretary which met last month in Dhaka. The comprehensiveness of the relationship between India and Bangladesh comes from the fact that we are already engaged in Supply of HSD from Siliguri to Parbatipur, Setting up LNG Terminal at Kutubdi island, Setting up LPG Terminal in Chittagong / Kutubdi island, Providing gas for the Khulna Power plant in Bangladesh, Working of gas grid connectivity, Refurbishment of refineries, Building of pipelines and Upstream activity in Bangladesh by Indian companies etc. India and Bangladesh have signed three Documents: Sale Purchase Agreement between Numaligarh Refineries Ltd (NRL) and Bangladesh Petroleum Corporation for supply of High Speed Diesel to Bangladesh; Setting up of an LNG terminal in Kutubdia Island by Petronet LNG Ltd and Setting up of an LPG Terminal by IOCL in partnership with Petrobangla. In addition to these Hon’ble Prime Minister Narendra Modi along with Prime Minister of Bangladesh flagged off the Rail Rake carrying 2200 MT of HSD from Radhikapur in India to Parbatipur in Bangladesh. The rail rake travelled on the newly constructed rail route. The length of the new route is around 260 kms, almost half of the old route. Justin Bethel Womens Jersey
Iran launches offshore natural gas projects in Gulf to produce 150 mcm gas
Iran on Sunday launched several projects in the Gulf which it said would produce 150 million cubic metres of gas per day from the world’s largest natural gas field which the country shares with Qatar. In a ceremony carried live on state television President Hassan Rouhani inaugurated five new projects which officials said would put Iran on an equal footing with Qatar in exploiting the offshore gas field, which Tehran calls South Pars and Doha calls North Dome. Rouhani, and other officials at the event including oil minister Bijan Zanganeh, did not give a timeline. Iran also launched four petrochemical projects with an annual production of two million tonnes worth about $2 billion, state media said. Earlier this month, Qatar said it had lifted a self-imposed ban on development of the joint field, as the world’s top LNG exporter looks to see off an expected rise in competition. Qatar declared a moratorium in 2005 on the development of the North Field, to give Doha time to study the impact on the reservoir from a rapid rise in output. Luke Kuechly Jersey
HPCL resumes work on Rs 41,000 crore Rajasthan oil refinery
State-owned Hindustan Petroleum Corp Ltd (HPCL) today decided to resume work on the Rs 41,000 crore Rajasthan oil refinery after its board agreed on reduced fiscal incentives from the state government. “HPCL Board at its meeting held today has approved resumption of Rajasthan refinery project and signing of revised MoU with the Government of Rajasthan for implementation of the project,” the company said in a filing to the stock exchanges. It however gave no details. Oil Minister Dharmendra Pradhan had earlier this month stated that fiscal incentives for the project have been revised and a memorandum of understanding (MoU) is likely to be signed in Jaipur later this month. “The fiscal package negotiated by the previous (Congress) government had put a big burden on Rajasthan. Now, that has been balanced,” he had said. The fiscal sops offered previously were in favour of the company but now they have been reworked in favour of the state, he said. The project, which has been in the works for nearly five years, is projected to cost Rs 41,000-42,000 crore, up from the previous estimate of Rs 37,320 crore. HPCL, in March 2013, had signed an MoU with the Rajasthan government for setting up the refinery-cum-petrochemical complex in the Thar desert near the oil discoveries made by Cairn India. The refinery however never took off as a change of guard in the state led to the Rajasthan government putting on hold the fiscal incentives for the project. While the size of the refinery remains the same, the unit will cost more because it now has to be built to produce Euro-VI grade petrol and diesel, officials said. Engineers India Ltd (EIL) is doing a feasibility study. The HPCL board, in March 2013, had approved setting up of the complex at a cost of Rs 37,320 crore. Half of the crude oil requirement at the proposed refinery at Barmer was to come from the neighbouring oil fields of Cairn India. The rest was to be imported crude. At that point, HPCL had asked the state government to extend fiscal benefits like the ones extended by Gujarat and Odisha to new refinery projects to make the Barmer unit viable. The concessions included 50 per cent exemption in excise duty, waiver of VAT on products sold in Rajasthan and the state government picking a small stake in the project. Originally, the state-owned Oil and Natural Gas Corp (ONGC), which owns 30 per cent interest in the Barmer oil fields of Cairn India, in 2005 had committed to building the refinery, but later started soft-pedalling the project. In 2012, HPCL entered the fray and proposed to take 51 per cent stake in it. ONGC, which originally had the authorisation from the government for processing the Barmer crude at the proposed refinery, willingly made way for HPCL. Cairn India, which holds 70 per cent interest in the fields, produces about 1,60,000 barrels per day oil (8 million tonnes a year) from the Rajasthan fields. For HPCL, which has only two refineries in Mumbai and Visakhapatnam, the project will help meet fuel demand in the north. Joel Bitonio Womens Jersey
Essar, Adani and JSW to build LNG terminals at ports
Conglomerates in India now have a Rs 17,000-crore investment theme built around an industrial fuel: liquefied natural gas (LNG). The Essar, Adani and JSW Groups, among others, are setting up LNG terminals along India’s eastern and western water margins as natural extensions to the port infrastructure, reflecting the increasing demand for the gas as an alternative energy source in the country as global prices of the fuel head south. Essar Ports, part of the Essar Group, has won the recent bid for a Rs 450 crore, 1-million-tonne LNG import terminal at the Haldia port in West Bengal, according to two people aware of the developments. The Kolkata Port Trust had called bids for the terminal, for which staterun Petronet LNG and V Energy were also in the race. “As a group, we keep looking at growth opportunities in its businesses. But it is not our policy to comment on any specific proposal,” a spokesperson for the Essar Group told ET. Essar, Adani, and JSW Groups’ planned investments on their respective LNG terminal projects total Rs 17,000 crore: At its Dhamra port in Odisha, Adani Ports and SEZ is building an LNG terminal of 5 million ton capacity, entailing an investment of Rs 5,200 crore, and an LPG terminal of 2.5 million ton capacity, which would see an additional investment of Rs 2,300 crore. The JSW group has also tied up with the Hiranandandani Group, spending up to Rs 4,000 crore to set up an LNG terminal at JSW’s Jaigarh port in Maharashtra. Essar might sign the 30-year licence agreement in the next couple of months. It has already sought environmental clearance for the project that may come up in the next two years. The majority of the equipment would be on lease, keeping the investments relatively low, one of the two sources quoted above said. Later, Essar might set up a 5-million-ton LNG terminal at its facility at Hazira in Gujarat. “Going forward, LNG will be the focus for Essar,” the person said. A consortium led by Russia’s oil giant Rosneft has bought the group’s oil business for $12.9 billion putting the ports out of almost all liquid cargo. The resultant shift is toward hydrocarbons. “On a group level, Essar could be a large user of LNG, through its steel plants,” said the source. A fall in LNG prices amid rising demand stoked new investments in the fuel’s storage and transportation infrastructure. “There is high demand for LNG, and shift towards alternative sources of energy,” said Kalpana Jain, partner at Deloitte India. “Of course, the prices are a reason too. Landed rates in Japan, for instance, have fallen to $5 per unit from $16 in the last two years.” The Adani Group’s two terminals in Odisha would help close the gap in the state’s energy requirements, and support various local ancillary industries. At Mundra in Gujarat, the Adani Group is currently working on an LNG terminal that will have an initial annual capacity of 5 million tons a year. It is also working on a 1.6 million ton LPG import terminal. The project cost of the LNG import terminal is estimated to be about Rs 4,500 crore. Connor Brown Authentic Jersey
Assam’s NRL signs MoU with Paradip Port Trust and IOCL for Import of crude oil at Paradip Port
Under NRL’s proposed Refinery expansion Project, a 28 Inch Diameter 1400 Km long Crude Oil Pipeline of 1 MMTPA capacity will be laid for transporting 6.0 MMTPA of imported crude oil from Paradip Port in Odisha to Numaligarh in Assam. According to NRL,the MoU provides for utilizing IOCL’s spare capacity of existing SPMs (Single Point Mooring) at Paradip. Paradip Port Trust will extend land space for installation of Crude storage tanks, Pump house and Township at Paradip. The tripartite MoU was signed between Chairman Paradip Port Trust, Rinkesh Roy, Director (Technical) NRL,. B.J Phukan and ED (Pipelines.) IOCL, A. K Tiwari in the presence of Union Minister for Road Transport, Highways and Shipping, Nitin Gadkari; Minister of State for Petroleum and Natural Gas, Dharmendra Pradhan; Assam’s Finance minister, Himanta Biswa Sarma, Assam’s Industry Minister, Chandra Mohan Patowary; and NRL MD P.Padmanabhan. Chris Pronger Womens Jersey
Cairn and partners to invest Rs 32.40 billion in Ravva Field
Cairn India Limited, along with its partners is set to invest Rs 32.40 billion in the Ravva Fields in the Krishna-Godavari Basin, to undertake 20 Developmental Wells and for setting up related infrastructure, as the oil and gas production is dwindling from the existing wells. Cairn India Limited approached the Ministry of environment Forest and Climate Change seeking necessary clearances for the proposed project. According to the minutes of the meeting by Expert Appraisal Committee under the Ministry, the proposal was given green signal as far as Coastal Regulation Zone (CRZ) is concerned. “In order to enhance the hydrocarbon production within the already approved capacities, Cairn India Limited on behalf of Ravva JV proposes the following oil and gas developments to produce contingent hydrocarbon resources available in Ravva Field-Drilling of 20 developmental wells: 6 from new RI Platform and 14 from existing platforms… Drilling of 6 nos. of exploratory/appraisal wells to assess presence of hydrocarbons in identified pockets. “The cost of the above proposed oil and gas development is estimated to be approximately Rs 32.40 billion,” the EAC said in the minutes of the meeting held last month. According to the company’s annual report of FY 16, the Ravva Fields produced 18,602 Barrels of Oil Equivalent per Day (BOEPD) average daily gross operated production in 2016-17 against 23, 845 BOEPD in FY 16. Cairn India officials did not respond to mail seeking additional information. The Ravva field (PKGM-1 Block) located in the shallow offshore area of Krishna Godavari Basin, has completed 21 years of successful operations with, Cairn India as the operator with 22.5 per cent participating Interest. Exploration, development and production in the block are governed by a PSC that runs until 2019, which is in partnership with ONGC, videocon and Ravva Oil Singapore. Currently, there are eight unmanned offshore platforms and a 225 acre onshore processing facility at Surasaniyanam in East Godavari of Andhra Pradesh which processes the natural gas and crude oil produced from the field, the annual report said. Over the years due to ageing of the field, production of oil and gas has declined. The onshore processing facility though has approved capacity to produce 50,000 BOPD (Barrels of Oil Per Day) crude oil and 2.32 MMSMD ( Million Metric Standard Cubic Meters per Day) of gas and is presently producing approximately 22,000 BOPD of crude oil and 1.44 MMSCMD of natural gas, the minutes added. A.Q. Shipley Authentic Jersey