India’s gas production to rise over 40 per cent to 125 mmscmd over the next decade: ICRA
India’s natural gas production is set to rise by over 42 per cent to 125 million standard cubic meter per day (mmscmd) over the next decade through 2027 owing to a market-linked pricing formula and the marketing freedom allowed by the government to companies, according to research and ratings agency ICRA. “The pricing formula along with the marketing freedom could improve the viability of gas discoveries in challenging fields and could lead to higher domestic gas production over the longer term. ICRA expects domestic natural gas production to increase to around 110 mmscmd by 2020-21 and to 125 mmscmd by 2026-27 from the current level of around 88 mmscmd,” ICRA said in a statement. It added that apart from marketing and pricing freedom for gas discoveries (not yet commenced production), the centre has also announced various reforms like implementation of the revenue-sharing model, a uniform licence framework and an open acreage policy under the new Hydrocarbon Exploration Licensing Policy (HELP) and reduction in royalty rates for the deepwater and ultra-deepwater areas which could aid in incremental gas production over the long term. The recent fall in prices had made future development of many gas fields unviable. But the government provided marketing and pricing freedom (subject to a price ceiling) to players operating in deepwater, ultra-deepwater and high pressure-high temperature areas that were yet to commence commercial production as on January 1, 2016. Natural gas price ceiling for the challenging areas are US$5.3 per mmbtu as of now but this may keep varying in line with the prices of substitute fuel. According to ICRA, the capacity utilisation levels of some gas transmission pipelines would remain sub-optimal in the near to medium term due to shortage of gas supplies but would show an increasing trend with rising LNG consumption. “Further, with incentives being offered for challenging fields, domestic gas production is expected to improve over the long term, which along with the rise in re-gasification capacity, could lead to an increase in pipeline utilization,” it said. India’s total natural gas supply potential is expected to increase over the next five to six years with higher domestic production and commissioning of firm re-gasification capacity during 2018-22. With the increase in supplies, the difference between the projected demand and supply potential is expected to narrow down 2019-20 onwards. However, the upcoming LNG capacities may operate at relatively lower utilisation than the current utilisation of regasification capacities in the country, according to ICRA. The price sensitivity of R-LNG demand would be critical in this regard. Analysts believe if many re-gasification terminals, as planned, come on stream over the next four to five years, the new entrants would face significant pressure on volumes and margins as they will have to compete with the existing terminals and brownfield expansion, which are more cost efficient because of lower capital intensity. Sub-optimal capacity utilisation and lower regasification margins could put significant pressure on the returns and credit profiles of new entrants, especially in the initial years of operations. Jeff Beukeboom Authentic Jersey
All Roadblocks Cleared, Rajasthan to Finally Have A Nine Million Tonnes Refinery at Barmer
Decks have been cleared for setting up of the much awaited nine million tonne per annum refinery at Barmer in Rajasthan. A new Memorandum of Understanding (MoU) will be signed shortly for setting up of this Rs 37000 crore refinery project that will come up as a joint venture between central PSU Hindustan Petroleum Corporation Ltd (HPCL) and the state government. “Rajasthan Government and HPCL have come together to set up a 9 MT refinery in Barmer…..Modi Government’s gift to people of Rajasthan on Rajasthan Diwas,” union petroleum minister of state (I/C) Dharmendra Pradhan tweeted on Thursday. Earlier in the day, while replying to the Finance and Appropriation Bill, 2017 in the Assembly, Rajasthan Chief Minister Vasundhara Raje said a lot has been talked about the refinery and the state government will ink an Memorandum of Understanding (MoU) with HPCL with new terms and condition, which will be in interest of the government. Officials confirmed that the state government will soon sign a new MoU with HPCL by next month for setting up of the 9 million tonnes per annum (mtpa) refinery in Barmer at a cost of around Rs 37,000 crore. As per the previous MoU, Rajasthan government had to pay a huge interest-free loan every year for 15 years, which would have added a massive financial burden on the state government. “We started reviewing the project in July 2014 and initiated renegotiation with the HPCL. Though we took time, despite increase in project cost, the expenditure on state will reduce by two-third,” the chief minister said on Thursday. She added that the interest free loan will reduce to Rs 1,123 crore per annum and the financial burden too will reduce to Rs 16,845 crore. This indeed is a massive relieve for the state exchequer. Chief Minister Raje said that after hard negotiations, the state equity in the project has been reduced by Rs 100 crore. “HPCL is happy to partner in progress of Rajasthan by setting 9MMT Barmer Refinery,” HPCL also tweeted on Thursday. The Barmer refinery will mostly consume the locally available Rajasthan crude (from Cairn India’s oil and gas fields) besides other crude varieties. It is important to note here that Rajasthan has become the second largest crude oil producer in the country after the offshore field Bombay High. Oilfields in the state (of ONGC and Cairn India) were producing nearly 90 lakh tones oil annually, which is 24% of the total domestic crude oil production. Terron Armstead Jersey
India keen to explore shale gas resources
India has an estimated 96 trillion cubic feet of recoverable shale gas reserves and the government is eager to tap them. Oil and Natural Gas Corporation and Oil India have already spent Rs 199.47 crore on shale gas exploration in the country. To exploit shale gas and oil in the country, the government on October 14, 2013 announced the policy guidelines for exploration and exploitation of shale gas and oil by ONGC and OIL in their on-land Petroleum Exploration Licence and petroleum mining lease areas awarded under the nomination regimes. “ONGC has drilled a total of 21 wells in 18 blocks for shale gas and oil. OIL has completed geological and geophysical studies and geochemical analysis in its identified areas in its identified areas. Both these entities are carrying out shale gas exploration from their funds. During 2013-16 and 2016-17, ONGC and OIL made an expenditure of Rs 199.47 crore on shale gas exploration. All blocks are is still under exploration stage,” said minister for petroleum and natural gas Dharmendra Pradhan in the Lok Sabha on March 27. In pursuance of the shale gas exploration policy, ONGC has identified and initiated shale gas and oil exploration activities in 50 areas; and OIL has identified and initiated shale gas exploration activities in six regions. In India, shale oil and gas reserves are found mainly in Tamil Nadu, Andhra Pradesh and Rajasthan. “These are positive developments for the natural gas sector. Currently, hope for an increased domestic production is very weak. The scenario may change,” said Sudha Mahalingam, an independent energy analyst and former member of PNGRB. Robert Bortuzzo Jersey
Dharmendra Pradhan launches BS-IV grade fuels across the country, Releases LPG connection to mark the completion of 2 crore connections under PMUY
Union Minister of State (Independent Charge) for Petroleum and Natural Gas, Dharmendra Pradhan formally launched BS-IV grade transportation fuels across the country from here today. The event coincided with Utkal Divas (formation day of the State) being celebrated in Odisha today. To mark the historic occasion of the launch of BS-IV fuels across the country, the Minister symbolically commenced sale of the eco-friendly and low–emission fuels from 12 different locations across the countrythrough live video links. They were: Varanasi, Vijayawada, Durgapur, Gorakhpur, Imphal, Bhopal, Ranchi, Madurai, Nagpur, Patna, Guwahati and Shillong. At the same event, Minister Pradhan handed over a deposit-free domestic LPG connection under the PradhanMantri Ujjwala Yojana(PMUY) scheme to Swalia Bibi of Shikharchan Basti in Bhubaneswar to mark the completion of release of 2 crore LPG connections to women beneficiaries from below poverty line (BPL) householdsacross the country. Speaking on the occasion, Mr Dharmendra Pradhan reiterated his Ministry’s commitment to the holistic vision of Hon’ble Prime Minister, Narendra Modi. “Today, we begin a new era of clean transportation fuels that will benefit the 1.25 billion citizens of our country by substantially reducing pollution levels everywhere,” he said. From today, India will have “Only BS-IV” fuels, Mr Pradhan reiterated, and complimented the oil marketing companies, IndianOil, HPC and BPC, for working in unison to set up refining infrastructure and logistics in a record time for the launch of BS-IV grade fuels across the country as per schedule. The OMCs are incurring an expenditure of Rs. 90,000 crore on phase-wise upgradation of fuel quality in the country. Mr Pradhan said that even though India is not a major polluting country, we shall stand by the Prime Minister’s commitment at COP-21 in Paris that India will substantially reduce carbon emissions and greenhouse gas emissions in the coming years. Migration to BS-IV fuels shows India’s resolve to cut down emissions. The next step is to usher in BS-VI fuels by 1st April, 2020, to be at par with global standards, he said.Speaking about the new milestone crossed by the PMUY scheme, Mr Pradhan said that the Government is fully committed to providing sustainable, clean and affordable energy as an essential input for economic development of India, which has emerged as the fastest going economy in the world. He said that the resounding success of initiatives like PaHaL, GiveItUp and the ongoing PMUY scheme are ample proof of the effectiveness of these socio-economic welfare schemes, which go a long way in ensuring energy inclusion of the poor. Minister Pradhan expressed his happiness that the journey of PMUY started by the Hon’ble PM to transform the lives of BPL women across the country has crossed the 2 crore mark at Bhubaneswar today, that too on the auspicious occasion of Utkal Divas. In Odisha alone, PMUY has benefited 10 lakh BPL households and freed them from smoke-related hazards, he said. The Petroleum Ministry is vigorously pursuing various other forms of energy such as liquefied natural gas (LNG)for industries and transport sector, compressed natural gas (CNG) and AutoLPG for automobiles, and piped natural gas (PNG) for households, besides ethanol and bio-mass to expand the existing energy basket, he added. KD Tripathi, Secretary (Petroleum), and other senior officials of the Ministry of Petroleum & Natural Gas, IndianOil, HPC and BPC, besides eminent guests and invitees were present on the occasion. India’s Path to Green Fuels The increasing consumption of oil is directly linked to atmospheric pollution, and the health impact of the deteriorating ambient air quality linked to combustion of fuels is of serious concern in urban areas worldwide. The Government of India has taken several policy measures and significant interventions to reduce vehicular emissions and improve fuel efficiency. India has followed the regulatory pathway for fuel quality and vehicle emissions standards termed as Bharat Stage (BS). The transition has been in phases, considering the time and money that is required at the refinery end and in terms of vehicle production. • India’s fuel quality standards have been gradually tightened since the mid-1990s. The fuel upgradation programme took off with notification of vehicular emission norms for new vehicles in 1991. Patrick Marleau Authentic Jersey
Defence Ministry allows use of land for Piped Natural Gas infrastructure
The Ministry of Defence (MoD) has granted permission to use defence land to create Piped Natural Gas (PNG) infrastructure across all cantonments and military station areas in the country. The MoD’s communication has been marked to all three chiefs of the Indian Armed Forces as well as the Director General Defence Estates (DGDE). A senior DGDE official said, “All cantonments in the country will soon get PNG connection. The policy’s implementation will be carried out by chief executive officers (CEO) of cantonment boards.” According to defence source, the ministry has specifically mentioned that for work related to building PNG infrastructure on A-1 defence land the concerned authorities will have to seek permission from the areas’ Station Head Quarters. Similarly, for residential pockets in cantonments, the company will have to get permission from the CEOs. The communication categorically mentions, “Principal Director, Defence Estates of the respective command will be the sanctioning authority for grant of license for use of Defence land for laying infrastructure or pipeline.” The cantonment board’s CEO shall place the proposal to lay PNG infrastructure in the board meeting for approval along with land details, etc Commenting on the security aspects of the pipeline, the source said, “The PNG company shall ensure safety and security of all underground installation/utilities as well as facilities and shall be solely responsible for compensation of concerned authority. The compensation may be for damage caused or claims or replacement sought at their cost and risk.” Jason Verrett Jersey
Oil PSUs enrol a whopping 3 crore LPG consumers in 2016-17
State-run oil companies enrolled a record three crore cooking gas consumers in 2016-17, about twothirds of them from poor families, as part of the government drive to shut hazardous smoke from the kitchens of those who had not yet had access to clean cooking fuel. The government has mandated oil companies to add 10 crore new cooking gas customers between April 2016 and March 2019. Half of the new connections have to go to poor households under the government’s Ujjwala Yojana. “When Modi ji took over as prime minister, the country had 14 crore active LPG consumers, which has today expanded to 19.80 crore. So, we have achieved 5.8 crore in less than three years,” oil minister Dharmendra Pradhan said. “When we formed government, it used to be less than 1 crore new connections a year,” he said, adding that 3.16 crore connections had been given by March 24. This exceeds the 2016-17 target of 3 crore connections and is way ahead of 1.77 crore new customers added in 2015-16. About two crore new customers in 2016-17 were poor women. The rapid expansion means 71% of Indian households now have access to cooking gas, compared with 56% in April 2015. Indian Oil, Bharat Petroleum and Hindustan Petroleum have been rapidly rolling out the government plan to take clean fuel to more and more households, especially in the traditionally-disadvantaged eastern states. Chhattisgarh, Jharkhand, Bihar and Odisha are some of the states with least access to cooking gas. With just 30-40% cooking gas coverage, these states are far behind Delhi, Punjab, Kerala and Goa, which have above 100% coverage. The government’s Ujjwala Yojana, which offers subsidised connection to the poor, has been crucial in raising access to cooking gas in the past fiscal year. “The successful implementation of Ujjwala has renewed poor people’s faith in the government,” Pradhan said. The increased consumer base also helped boost domestic cooking gas consumption by 10% in 2016-17. This rapid expansion has come with its own set of challenges, the biggest of which is to let supply infrastructure keep pace with the increased customer demand. A 6.2% growth in number of cooking gas distributors between April and December 2016, fell far short of the 17% expansion in active customer base in the same period. Rollie Fingers Authentic Jersey
Subsidised imported gas scheme scrapped
The government has discontinued a two-year-old scheme under which it offered imported gas at subsidised rates to stranded and underutilised gas power projects. But the government is open to resuming the programme if all stakeholders wanted it back, power minister Piyush Goyal said. ET had on February 19 reported that the power ministry was unlikely to extend the scheme that covered power projects with a combined capacity of 24,000 MW. Industry associations had made representations to the ministry for extension of the scheme that ended on March 31 and state-run gas transporter GAIL India too had made the same request. However, state governments that participated in the programme to revive private and state-sector plants withdrew from it, a senior ministry official said. “In the backdrop of low gas prices and state governments withdrawing from the scheme, we have decided not to extend the scheme,” the official said. “The scheme is being discontinued but if there is interest from all sides, we can resume it,” Goyal told media persons last week. The scheme for importing spot regassified LNG was started in 2015-16 for stranded gas-based power plants and plants receiving inadequate domestic supply of the fuel. The Power System Development Fund provided financial support under the programme. Companies that got gas in three rounds of auction under it include NTPC, Ratnagiri Gas & Power, Torrent Power, GVK Industries, Lanco Kondapalli, GMR Energy, Gujarat State Electricity Corp and CLP India. Under the scheme that was meant to make gas affordable, state government were required to forego some taxes. Also, gas transporters and import terminals had offered discounts on charges for their services. The power ministry auctioned the rights for companies to source gas under the scheme. The first two rounds of auction were to supply gas from June 2015 to September 2015 and from October 2015 to May 2016. Under those, the bidders had to indicate the total incremental electricity they would generate by using the gas sourced from the e-bid and quote the subsidy requirement. In the third round of auction held in March 2016, for supply from June that year, bidders had agreed to forego the subsidy. The Association of Power Producers had recommended continuation of the scheme for two more years, arguing that it would be at zero cost for the government as subsidy determined in the third round was negative, meaning producers were ready to pay a premium instead of taking a subsidy. Nick Vannett Womens Jersey
‘Pak extracting gas from Indian fields
Minister of State Minister of Petroleum and Natural Gas Dharmendra Pradhan in reply to a question by Barmer MP Col Sona Ram Choudhary Monday agreed that Pakistan is producing gas from the fields located near border areas. “The exploration work was suspended since last 25 years. Now, our government has encouraged exploration activities. This will lead to hydrocarbon production not only from Jaisalmer and Barmer but also from Kuchchh region of Gujarat,” the minister claimed. Col Sona Ram, while putting his question in Parliament, said Pakistan is producing gas on a large scale and its gas fields are quite close to Indo-Pak border adjoining Jaisalmer. “Jaisalmer got the first gas exploration work 40-50 years ago. Gas fields were discovered and supply was started to nearby gas based power plants. Currently, a number of gas wells, situated at border are not functioning. Meanwhile, many Chinese companies are exploring for hydrocarbon on the other side of the border. As we are not exploring and producing gas, our gas is migrating to Pakistan side,” he added. The MP asked the minister which are the steps government is considering so that the other side can’t extract gas from Indian reserves. The minister indicated that his ministry may very soon clear pending approvals for Thar oil fields. “Crude oil production is at Barmer. Recently, gas reserves have been discovered and gas production is taking place on pilot basis. There are certain approvals pending for these fields. Government will accord permission within few days clearing path for gas production,” said Pradhan. It may be mentioned that OMV Pakistan company started exploration activities in Sindh in 1991 and is producing gas from the Sawan, Miano, Latif, Tajjal, and Mehar gas fields. Mari and Miano gas fields are situated closest to Indo-Pak border. Bhit, Kadanwari, Kandkot, Qudirpur and Sui are other fields at Pakistan side of border producing gas. Meanwhile, at Indian side of border, Cairn India-operated Barmer basin is part of the initial Pre-New Exploration Licensing Policy (NELP) blocks that are due for renewal. The Production Sharing Contract extension request is pending with MoPNG. Once approved, it will provide clarity to the company board to approve a capex plan for further exploration and development. ONGC-Cairn Joint Venture is currently working to monetize natural gas potential in Rajasthan block. It had put forward a $700-million plan to develop and produce gas reserves at Raageshwari fields in Barmer block. “Raaseshwari in-place resource estimate stands at 1-3 trillion cubic feet (TCF), with recovery factor estimated at about 50%,” said a report from brokerage firm Motilal Oswal. The Barmer block is the biggest onshore crude oil field contributing nearly 27% of country’s production. Similarly, focus energy is doing oil exploring gas in Shahgarh Bulj area of Jaisalmer, in which many dozens of well is stopped. In Ghotki dist of pak, 7-8kms from the Indian border opposite the international border adjoining tanot-longewala area in Jaisalmer, huge reserves of oil have been found. Pak oil company with the help of Chinese company have started producing oil in huge quantity. In this area 2500 pakistani and Chinese experts are working in the work of oil exploration and oil production. In this regard, senior official sources confirmed it and said in pak area opposite tanot-longewala area, pak oil company with the help of Chinese oil company have found huge oil reserves in area of 8-10kms. In pak’s ghotki dist, for last one month, oil production is going on and aviation lights on rings used in exploration works can be seen from long distance and movement of vehicles can be heard. More than 250 experts and other personnel are working here. Sources said that pak in this area had started oil exploration in 2005-06, but in January 2017 started new oil and gas works and discovered huge oil and gas reserves and production was started on large scale. It is told that pak oil companies have found huge reserves against their expectation. Looking to this, oil and gas exploration works have been started in nearby areas tool. On the other hand, in Indian area of ghotaru, longewala the ONGC are doing the exploration works, but till now there has not been any big success and ongc is producing only 50000 cubic metre gas in this area. Taylor Decker Womens Jersey
Arbitration on compensation demand in RIL-ONGC gas row starts
A three-member arbitration panel has started hearing validity of the government’s demand of USD 1.55 billion as compensation from Reliance Industries for “unfairly” producing ONGC’s gas. The panel, headed by Singapore-based arbitrator Prof Lawrence Boo, had its first hearing on March 3 where the timetable was drawn, sources privy to the development said. RIL will first file its statement of claim, followed by a statement of defence by the government. This will be followed by rejoinders, counter-rejoinders and oral hearing, sources said, adding that the panel plans to wind up the hearing in a year. The central government has named former Supreme Court judge G S Singhvi as its nominee on the three-member arbitration panel while RIL and its partners BP Plc of the UK and Canada’s Niko Resources have named former UK High Court Judge Bernard Eder to the panel. RIL-BP-Niko had slapped an arbitration notice on November 11 last year. This was against the oil ministry’s November 3, 2016 notice to RIL, Niko and UK’s BP seeking USD 1.47 billion for producing about 338.332 million British thermal units of gas in the seven years ended March 31, 2016 that had seeped or migrated from the Oil and Natural Gas Corporation’s (ONGC) blocks into their adjoining KG-D6 in the Bay of Bengal. After deducting USD 71.71 million royalty paid on the gas produced and adding an interest at the rate of Libor plus 2 per cent, totalling USD 149.86 million, a total demand of USD 1.55 billion was made on RIL, BP and Niko. RIL is the operator of the KG-D6 block with 60 per cent interest while BP holds 30 per cent. The remaining 10 per cent is with Niko Resources. The government’s compensation claim flowed from the report of the Justice (retd) A P Shah Committee. The Shah panel, in its August 28, 2016, report, concluded that there has been “unjust enrichment” to the contractor of the block KG-DWN-98/3 (KG-D6) due to production of the migrated gas from ONGC’s blocks KG-DWN-98/2 and Godavari PML. The government, sources said, accepted the recommendations of the committee and consequently, decided to claim restitution from RIL-BP-Niko for “the unjust benefit received and unfairly retained”. So, a notice was sent, they said, adding that the government is also pressing RIL to pay USD 174.9 million of additional profit petroleum after certain costs were disallowed because of KG-D6 output being lower than the target. The cost recovery issue is being arbitrated separately. Originally, ONGC had sued RIL for producing gas that had migrated from its blocks KG-DWN-98/2 (KG-D5) and Godavari PML in the KG basin to adjoining KG-D6 block of RIL. Under direction of the Delhi High Court, the government had appointed a one-man committee under retired Justice A P Shah to go into the issue. Shah, however, said the compensation should go to the government as it is the owner of all unproduced natural resources. Kareem Hunt Authentic Jersey
Essar Oil gives undertaking to pay lenders soon after Rosneft deal
Pushed by LIC, Essar Oil has given an unconditional undertaking to the institution and some of the lenders that their dues would be cleared within three days of the closure of its crucial deal with the Russian firm Rosneft. These lenders had expressed their reluctance to approve the proposed acquisition of Essar Oil by Rosneft and other offshore investors till the dues are cleared. On Friday, Essar communicated its decision to LIC, GIC and some of the banks which insisted on settlement of loan dues, a person familiar with the development told ET. The unconditional and irrevocable undertaking has been en cable undertaking has been endorsed by Rosneft and other strategic investors who would hold 98% of Essar Oil once Essar group promoters Ruias sell their stake. Under the circumstances Essar will have to prepay around $225 million to various lenders in persuading them to clear the deal -which is expected to revive the group and lower leverage levels of debt saddled companies like Essar Steel. Most loan covenants typically lay down that lender’s consent is necessary for a change of management. Essar and its lenders having large exposure to the group are keen to close the deal by March 31. One of the possible reasons for sticking to the deadline could be future tax implication of signing the deal on or after April 1, 2017. Since Essar holds stake in the g roup company through Mauritius-based entities, selling shares after March 31 would mean a capital gains tax for Rosneft and other foreign investors if they choose to exit in future. According to India’s revised treaty with Mauritius, while shares bought before April 1, 2017 would not attract capital gains tax irrespective of when they are sold, there would be capital gains tax on shares bought on or after this date and sold later. Thus, even though selling shares after the deadline of March 31, 2017 would not require Essar to pay any capital gains tax, it would expose Rosneft and other investors to capital gains tax as and when they sell their stakes. However, a senior banker as well as a person close to Essar brushed aside any such concern and the possibility of renegotiation of the deal price if the transaction is not closed by March 31, 2017. “It’s not an issue for long-term strategic investors like Rosneft. These are matters which typically would concern private equity investors,” said one of them. LIC had told Essar that it would approve the deal only after its loans to Essar’s power venture are regularised.In reference to this, an Essar official told ET that Essar Oil and Essar Power had individually availed long term facilities from LIC and the these facilities cannot be linked. LIC and other lenders are yet to respond to the proposed undertaking. The $13-bn deal, which would be single largest inflow of foreign direct investment into India, was announced last October when Prime Minister Narendra Modi met President Vladimir Putin during a meeting of BRIC leaders in Goa. Rob Housler Authentic Jersey