India to formally sign oil and gas contracts with companies under new policy
India’s oil ministry will today formally sign oil and gas extraction contracts with winning bidders under the recently concluded discovered small field (DSF) auctions, the first such bidding for exploration licenses held by India after a gap of six years. The auctions had witnessed 134 e-bids for 34 contact areas of the 46 offered. Later, 22 companies were shortlisted for 31 contract areas of which 15 companies were new entrants with no prior experience in the sector. Touted as an auction round that would replicate the shale gas revolution of the US, half of the fields went to new and lesser known entrants like engineering company Megha Engineering & Infrastructure, KEI-RSOS Petroleum, Enquest Drilling and Nippon Power and many more new players with no prior experience in the oil and gas sector. “The DSF auction round was very important for the country as it helped us gauge the high investment sentiment even at a time when investments in the exploration sector were at an all-time low globally. The government has successfully changed the negative sentiment that used to be attached with the sector earlier,” a senior official said overseeing the contract signing said. He added that the positive response from the investors, especially new players, has given the government the confident to go ahead with the second round of DSF bidding. “We also expect a healthy response from investors in the upcoming oil and gas auctions held under a revamped bidding mechanism called open acreage licensing policy,” he said. The oil ministry had launched DSF I in May 2016 under a new liberalized policy under which 46 contract areas consisting of 67 fields spread across nine sedimentary basins were auctioned. The ministry had pegged the indicative gross revenue over the economic life of these fields at Rs 46,400 crore. These fields, which hold in place reserves of 62 million tonnes of oil and oil equivalent gas, can cumulatively produce a peak of around 15,000 barrels of oil per day and 2 million standard cubic meters per day of gas, the Directorate General of Hydrocarbons (DGH) said in a statement last month. The peak oil and gas output envisaged is about 2 per cent of India’s current oil and gas production Maurkice Pouncey Authentic Jersey
KEI-RSOS secures two oil and gas blocks in KG Basin
KEI-RSOS Petroleum & Energy, which currently operates five marginal gas fields in the KG Basin and markets the gas to industries, announced securing two oil and gas blocks in the KG Basin from the union petroleum and natural gas ministry. The allotment of these blocks was part of the discovered small fields in global bids where the bid rounds were launched in May last year and blocks were allot ted under revenue sharing model last week. The two blocks allotted to the company together hold reserves of over 1,400 million barrels of oil and 35,000 million standard cubic feet of gas. KEI-RSOS Petroleum is jointly owned by Lt Murthy Jasti of the River Bay group of Rajahmundry and KEI group owned by Anil and Shobhana Kamineni of the Apollo Hospitals promoters’ family. The JV firm proposes Rs 200 crores to invest around over the next two years to exploit reserves from these blocks. Derek MacKenzie Authentic Jersey
Big relief: Cairn India’s Barmer oil & gas block among 10 granted extension
In what may come as a relief to Cairn India and encourage it to increase the pace of investment, the Vedanta group company’s prolific Barmer oil and gas block has been granted an extension of 10 years or economic life of the field, whichever is earlier. Extension was also granted to nine other blocks wherein recoverable reserve is yet to be fully exploited. The private oil explorer has been seeking extension of the production sharing contract (PSC) for this field, with reserves of 318.31 MMT of oil and oil equivalent of gas, since 2009. The PSC was due to expire on May 14, 2020. Cairn’s another block — in Cambay Basin with reserves of 29.10 MMT — has also been given extension. The other operators to benefit include GSPC, Essar, ONGC, Focus and HOEC, and the beneficiary states are Rajasthan, Gujarat and Assam. The government’s step, a formal nod to which was given by the CCEA on Wednesday, is progressive towards achieving the target of 10% reduction in import of oil by 2022, and will help in accelerating and augmenting domestic production of hydrocarbons from the existing blocks. Petroleum minister Dharmendra Pradhan recently urged explorers to use enhanced oil recovery techniques to increase production. The country imports around 80% of its energy needs and according to the International Energy Agency, India’s demand for oil in 2014 at 185 MTOE was next only to the US and China. This demand is expected to go up to 401 MTOE by 2035. However, during the extended PSC duration, explorers will be required to pay 10 percentage points more over the existing rate of government’s share of profit petroleum. The existing rate ranges between 35% and 55%, and varies across fields as per the PSC. Between 1991 and 1995, 28 exploration blocks of ONGC and Oil India were auctioned under the pre-NELP regime to attract private and foreign investment. Out of the 28 blocks, 10 blocks which have been given extension are operational and the rest have been relinquished. Out of these 10 blocks, six blocks are under production, for two filed development plans have been submitted, and two are under exploration. The government is expecting 58 MMT of oil equivalent to be extracted during the PSC extension period which will be worth around R1.12 trillion, and the companies are expected to invest around $5.43 billion in these 10 blocks. Through the PSC extension, the government is expecting to expedite production and improve investment climate. The Delhi High Court is at present hearing a case filed by Cairn India regarding extension of its contract for the Barmer oil and gas block in Rajasthan. The firm is also seeking a better price for crude oil produced from the block. The next date of hearing is March 31. Clayton Fejedelem Authentic Jersey
Cairn, ONGC, Essar benefit from pre-NELP contract extension
The Union Cabinet’s decision on Wednesday to grant extension to production sharing contracts for 10 blocks will benefit Cairn India Ltd (CIL), Oil and Natural Gas Corporation (ONGC), Essar Oil, Focus Energy, Hindustan Oil Exploration Company (HOEC), and Gujarat State Petroleum Corporation Ltd (GSPC). The contracts for these pre-NELP (New Exploration Licensing Policy) exploratory blocks will be extended for 10 years from the expiry of their contracts. The move, the government said, will help accelerate indigenous production of hydrocarbons from existing blocks and act as a progressive step towards achieving the target of 10 per cent reduction in import of crude oil by 2022. “There were about 28 pre-NELP exploratory blocks awarded to various operators. Out of that, 18 blocks were relinquished. The current policy for extension is applicable for 10 of the remaining blocks,” said an official source close to the development. According to government estimates, the operators are set to invest an additional $5,430 million in these blocks in the next 10 years. The government’s share of profit petroleum during the extended period of contract would be higher at 10 per cent for these fields. The current policy is for the 10 blocks, including Cairn India’s Barmer block, which were awarded prior to the advent of the NELP in 1999. The NELP was adopted to give a level-playing field for both public and private sector players in exploration and production (E&P), and was based on the production sharing contract (PSC) through sharing of revenues with the government after recovery of cost by the contractor. Till now, 256 blocks have been awarded to exploration companies in nine rounds of the NELP. India recently concluded its first round of discovered small and marginal fields (DSF) auctions, during which only 31 of the 46 contract areas on offer were awarded. Corey Liuget Authentic Jersey
Ratna and R-series fields to be developed by ONGC after a delay of 20 years
The board of state owned behemoth Oil and Natural Gas Corporation Limited (ONGC) last month approved the development of R-series fields with a capital cost of Rs 4,104.63 crore, petroleum minister Dharmendra Pradhan informed Rajyasabha. A Comptroller & Auditor General (CAG) report of 2015 had observed that keeping the discovered R-series fields idle without assigning production rights had led to a deferment of domestic production of crude oil and natural gas from the fields to the tune of Rs 26,200 crore. Production from these fields is targeted to start in 2019 with an output of 10,000 barrels per day initially. The Ratna and R-series oil fields hold an estimated 87 million barrels of oil and 1.2 billion cubic meters of gas reserves. The Ratna and R-series fields are medium-sized fields, located in the western offshore on the south west of Mumbai. ONGC had originally discovered these fields and created facilities in Ratna R-12, which is a part of Ratna and R-series, at a cost of Rs 472 crore. These facilities were used by the state-owned ONGC for production since 1983 before production was stopped in September 1994 after which the field was put up for auctions by the then PV Narasimha Rao led congress government. Subsequently these fields were awarded to a consortium led by Essar oil in 1996. However, production sharing contract (PSC) for the fields could not be finalized due to differences of rates of royalty and other issues. In March 2016, the Union cabinet chaired by PM Modi approved the cancellation of the letter of award given to the consortium led by Essar Oil Limited in 1996 and decided to revert the Ratna and R-series fields to ONGC. Vince Carter Womens Jersey
‘ONGC is in no way linked to the proposed hydrocarbon project at Neduvasal’
ONGC has no further role with the proposed hydrocarbon extraction project at Neduvasal and its surrounding villages in Pudukkottai district, said top officials from ONGC based in Karaikal. They further said that it was up to the Union government to decide whether the project would be implemented along with private players or be scrapped once and for all. The officials told reporters in Trichy that since the state government had not given approval for the project, it would be impossible to proceed further. Stating that several misconceptions are being spread, linking ONGC with the proposed hydrocarbon extraction project at Neduvasal, executive director for assets, manager of Cauvery asset, Kulbir Singh, and group general manager of Cauvery basin Pawan Kumar, addressed the media jointly to counter the spread of unwarranted rumours and fears, here on Thursday. Under the Discovered Small Field (DSF) bid round 2016, Government of India had awarded 31 contract areas to various companies. However, ONGC is not an awardee under DSF 2016 in Tamil Nadu, said Pawan Kumar. “In 1993, 2008 and 2009, ONGC tested 13 wells in and around Neduvasal for exploration purposes. However, out of 13 wells 10 had been abandoned due to non-availability of oil or gas sources and gradually all the acquired land was returned to farmers in their original condition. Meanwhile, the remaining three wells (Nallandarkollai, Kottaikadu and Pullanviduthi) were being considered for production purposes. However, it came to light that the project would not be financially viable. Thus, ONGC decided not to execute the project,” he said. Meanwhile, the Union government decided to handover the project to any private player in such a way to make use of the wells, he further stated. “Only five acres of land are with the possession of ONGC where the three wells are there as of now. So, it is up to the Centre to decide whether the project would be continued or not,” he further clarified. ONGC was neither carrying out nor does it have plans to carry out exploration of shale gas, shale oil or coal bed methane in the Cauvery basis, said Kulbir Singh. Moreover, the state government itself had banned both exploration projects, he added. There are no pending due to farmers for leasing of lands till now. Moreover, ONGC had restored all the lands acquired for exploratory purposes to a near original condition, as per the guidelines to enable farmers to cultivate again, officials said. In order to create awareness among the farmers and general public about the actual process involved in the extraction of natural oil and gas executed by ONGC, the corporation has planned to organize street plays and jingle shows, officials said. CM Punk Womens Jersey
US is swimming in crude oil: EIA data
The United States has got a lot of crude oil on its hands right now. According to data released by the US Energy Information Administration (EIA), stockpiles swelled by a further 4.95 million barrels to 533.1 million barrels. That was near double the 2.8 million inventory build expected, and left stockpiles at the highest level on record. That’s a lot of crude, not only in absolute levels, but also based on current consumption levels. “US oil stockpiles trended lower through most of last year because of the fall in US supply, but this trend is reversing as US oil production increases,” said Vivek Dhar, mining and 2 energy commodities analyst at the Commonwealth Bank. “US oil output lifted to around 9.1 million barrels per day (mbd) last week, and is now only around 0.5mbd be low peaks reached in June 2015.” Even with murmurings about a possible extension to production cuts implemented by Opec and non-Opec members in the first half year, Dhar says that the risk to his average crude price of $50-60 per barrel this year appear slanted to the downside due to the ongoing lift in US supply. Brian Gibbons Jersey
ONGC to invest $10 billion in deepwater projects off India’s east coast
India’s Oil & Natural Gas Corp. is wading into deep waters, where energy giants BP Plc and Reliance Industries Ltd. found a sea of trouble. State-run ONGC plans to invest in a region off India’s east coast to help boost natural gas output and raise crude flows, said Tapas Kumar Sengupta, its director for offshore operations. The nation’s top explorer will spend about 648 billion rupees (about $10 billion) in deepwater projects in the Krishna-Godavari basin, according to Oil Minister Dharmendra Pradhan. ONGC is betting that it can pry more out of the resource-rich area by studying hurdles faced by other companies. Reliance and partner BP have a project in the basin that’s producing only 9% of its target. Unearthing deposits from the region, where the depth of water is comparable to those in the U.S. Gulf of Mexico, are critical to Prime Minister Narendra Modi’s plans to cut energy imports and help narrow a budget deficit. “The east coast is our future because western offshore fields are in a heavy declining trend,” Sengupta said in an interview in his office in New Delhi. “To keep India’s gas production alive, the east coast needs to make a tremendous contribution in the next two decades.” The country’s biggest hydrocarbon producer expects the area, including its KG-DWN-98/2 block, will add about 40 MMscm to daily gas production within five years, according to Sengupta. That’s almost half of India’s net gas production of 84 MMscmd from April 2016 to February this year. Oil output could rise by 77,000 bpd, he said. ONGC’s block lies next to Reliance’s KG-D6, one of the biggest discoveries of the year when it was found in 2002. Production there has tumbled about 85% since hitting a peak in 2010 as the private Indian company and BP found the reservoir is more difficult to produce from than they had initially estimated. Shut wells Gas production at the KG-D6 block was 2.64 Bcm during the 11 months to February, compared with a target of 29.32 billion for the fiscal year ending March 31, Oil Minister Pradhan said in parliament on March 20. Reliance, controlled by India’s richest man Mukesh Ambani, and BP were forced to shut most of the wells producing gas from the KG-D6 block after water and sand started entering them. Production also declined because of low flow pressure and natural decreases of deposits in the wells. Technological developments over the past few years may help ONGC avoid similar pitfalls. “We have confidence the technology can mitigate the risks of developing such high-risk areas,” Sengupta said, adding that the company has also learnt from the problems that have afflicted others. The company has done “extensive” appraisals in the area, which has helped it analyze the reservoir’s characteristics, he said. To test the rates of hydrocarbon flows, ONGC has started early production from a deepwater well in the area that’s near the Reliance-BP block. Deepwater challenges “The well has been producing 1 MMcmd since May without any decrease in flow,” Sengupta said. The energy deposit lies in the Bay of Bengal below up to 2,900 m of water, making it comparable to some of the deepest areas in the world, including Royal Dutch Shell’s Stones and Perdido projects in the Gulf of Mexico. “Challenges are huge in deepwaters and the biggest challenge was to establish the flow assurance,” Sengupta said. “Unless and until you are confident about the volume, you cannot propose something to your stakeholders.” ONGC will hire consultants with experience on similar projects for developing its deepest discoveries that are located about 150 km from the coast. “Some of the top engineering consultants mainly from the U.S. and Australia with experience in the Gulf of Mexico and Western Africa have shown interest in helping us,” according to Sengupta. Companies also require prices that can justify production. Reliance and BP, which discovered additional gas pools near the biggest reserves in their block, are awaiting assurances on pricing from the Indian government before they start developing the new deposits, the British company’s chief executive officer, Bob Dudley, told analysts Feb. 28. Gas pricing ONGC is confident its projects are viable at current prices. The cap now for fields that are located in deepwater, ultra-deepwater and high pressure-high temperature areas is $5.30/MMbtu. India sets gas prices every six months using a formula based on U.S., Canadian, UK and Russian rates, with the next revision due on April 1. “The government direction for a different kind of gas pricing is helping us to make these fields viable,” Sengupta said. “ONGC is already gearing up for the big work to be done for the import reductions.” Adam Joseph Duhe Jersey
World’s top LNG buyers form alliance to push for flexible contracts
The world’s biggest liquefied natural gas (LNG) buyers are clubbing together to secure more flexible supply contracts in a move that further shifts power to buyers rather than producers. Korea Gas Corp (KOGAS) said on Thursday it had signed a memorandum of understanding in mid-March with Japan’s JERA and China National Offshore Oil Corp (CNOOC) to exchange information and “cooperate in the joint procurement of LNG.” Japan, China and South Korea are the world’s biggest LNG importers, accounting for about 55 percent of global purchases, according to data from energy consultancy Wood Mackenzie. The countries’ biggest respective buyers are joining together to extract concessions from producers that would give them supply flexibility such as having the right to re-sell imports to third parties, something they are not allowed to do under so-called destination restrictions. “We have created a platform to share, discuss and solve our common issues such as traditional LNG business practices, including destination restrictions,” JERA spokesman Atsuo Sawaki said. The unusual alliance of three buyers across three countries will pressure exporters like Qatar, Australia and Malaysia, who prefer to have clients locked into decades-long fixed supply contracts that oblige buyers to take fixed amounts of monthly volumes irrespective of demand, with no right to re-sell unneeded supplies to other end-users. BIG CHANGE The LNG market is in the midst of huge changes as the biggest ever flood of new supplies is hitting the market, with volumes coming mainly from Australia and the United States. New production has resulted in global installed capacity of over 300 million tonnes a year, while only around 268 million tonnes of LNG were traded in 2016, according to Thomson Reuters data in Eikon. That has helped pull down Asian spot LNG prices by more than 70 percent from their 2014 peaks to $5.65 per million British thermal units (mmBtu). It has also given importers more suppliers to choose from, putting pressure on major producers like Royal Dutch Shell , Chevron, ExxonMobil and Woodside Petroleum to grant more flexible contract terms. Lee Seung-hoon, KOGAS chief executive officer, said in a recent interview with Reuters that his company was looking for flexible LNG contracts. Jera’s Co-President Yuji Kakimi made similar statements in an interview earlier this month. “Through this MOU deal, Korean, Chinese and Japanese LNG buyers are expected to play an active role in the LNG market,” Lee said in the statement announcing the agreement. KOGAS is the world’s No.2 LNG buyer behind Jera, which is a joint venture between Chubu Electric Power and Tokyo Electric Power. “Flexibility is becoming critical for LNG buyers … as the rise of solar capacity is going to make consumption of LNG more seasonal,” said Kerry Anne Shanks, head of LNG research for Asia/Pacific at Wood Mackenzie. Alex Killorn Womens Jersey
Dharmendra Pradhan seeks to allay protests over oilfields development in Tamilnadu
Oil minister Dharmendra Pradhan today met a delegation of villagers from Neduvasal in Tamilnadu protesting the recent award of oil and gas projects in the area. He was accompanied by commerce and industry minister Nirmala Sitharaman and Minister of State for Road transport, Highways and Shipping, Pon Radhakrishnan. The villagers of Neduvasal have been up in arms since February over the recently approved oil and gas extraction contract given to Gem Laboratories under discovered small field bidding round. The protests started after the Cabinet Committee of Economic Affairs (CCEA) granted approval to projects to extract hydrocarbons in 31 contract areas across the country including two in the southern state. “Assured the delegation that the government will not unilaterally produce oil there without addressing their concerns in consultation with the TN government,” Pradhan said in a tweet after meeting the delegation from Neduvasal village. The minister also said in a separate statement in Parliament today the operator company has to obtain the requisite Mining Lease transferred from ONGC through the State Government for starting any petroleum activity. “After the grant or transfer of lease, to start any actual operations the operators will have to get requisite environmental clearances from State Government or Ministry of Environment, Forest and Climate Change by following the prescribed process which may involve public hearing also,” he said in Lok Sabha. He informed that some local people and organizations have submitted representations and also filed two petitions in National Green Tribunal (NGT), Southern Zone, Chennai objecting the award of discovered small fields expressing apprehension regarding their possible environmental impact. The awarded projects will be taken up after following the requisite process including obtaining environmental clearances, Pradhan said. According to information available on the Directorate General of Hydrocarbon (DGH) website, Gem Laboratory Pvt Ltd, a new entrant in the hydrocarbon sector, has been given in-principle approval to extract oil and gas from a contract area in the Neduvasal village containing 1,243 million standard cubic feet (MMSCF) of gas and 2,785 thousand barrels of oil. Also, Bharat Petro Resources Ltd (BPRL) has been given in-principle approval to extract oil and gas from Karaikal village in the same state. Adrian Amos Womens Jersey