GAIL awards contract for 105-km LNG project
Gail (India) Limited awarded the contract for laying 105-km pipeline in the Perole-Kodalamuguru- Mangaluru section to Infrastructure Leasing & Financial Services on Tuesday. With this, the project will progress simultaneously from both ends –Kochi and Mangaluru – and the completion of the project will be much faster. The Petroleum and Natural Gas Regulatory Board had on December 2016 given GAIL time till February 2019 to complete the 1,104-km Kochi-Koottanad-Bengaluru-Mangaluru section. The Rs. 44.93 billion project was originally scheduled to be completed in March 2013. “GAIL is targeting to complete the 440-km Kochi–Koottanad—Mangaluru Pipeline by December 2018. The work on the 91-km Kochi–Koottanad section, which was awarded in September 2016, has been received positively by all stakeholders. The pipeline would serve as a ‘green energy corridor’ and enable city gas distribution companies and gas-based industries to come up in the state. As a result, environment-friendly piped natural gas and compressed natural gas (CNG) would be supplied to households and vehicles,” said B C Tripathi, chairman and managing director of GAIL, who met Kerala chief minister Pinarayi Vijayan on Tuesday to apprise him about the progress of the work on the pipeline project. The primary objective of the project is to supply LNG from Petronet LNG’s plant at Puthuvype near Kochi to industries in south India. GAIL is to lay the pipeline in two phases – a 44-km Phase-1 connecting Cochin port to FACT plant in the city and a 1,060-km Phase-II taking the line from there to Thrissur-Koottanand and Palakkad in Kerala and onward to Coimbatore and Salem in Tamil Nadu before reaching Bengaluru. Ryan Jensen Jersey
Union Budget 2017: Petroleum Ministry gets cracking on creation of oil goliath in India
The ministry of petroleum and natural gas has started discussions with state-run oil and gas companies to take forward the Budget proposal to create a globally competitive “oil major” by consolidating the firms. The ministry officials have met heads of all public-sector oil companies and asked them to suggest possible merger scenarios, said a person close to the development requesting anonymity. Finance minister Arun Jaitley had announced in his Budget speech on February 1 that the government plans to merge state-run oil and gas entities to create an integrated firm having the strength to compete with international and domestic private oil and gas majors. He had emphasised that the move will provide the merged entity “capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders”. The move will require the petroleum ministry to do a lot of ground work and think of ways to initiate the proposed consolidation, before the department of investment and public asset management steps in to execute the plan. There are 18 oil and gas state-run utilities including Oil and Natural Gas Corporation (ONGC), Oil India, GAIL (India), Bharat Petroleum Corporation, Indian Oil Corporation and Hindustan Petroleum Corporation. The idea has been received with mixed reactions by the industry. Though some have welcomed it, ONGC chairman Dinesh Sarraf had on February 9 told Reuters that the oil explorer’s overseas arm, ONGC Videsh, should not be merged as such horizontal integration would create monopoly. A GAIL (India) executive, as reported by FE earlier, had said their business model is distinct from others and it may remain a separate vertical even in case of a merger. HomeEconomy Union Budget 2017: Petroleum Ministry gets cracking on creation of oil goliath in India Union Budget 2017: Petroleum Ministry gets cracking on creation of oil goliath in India The ministry of petroleum and natural gas has started discussions with state-run oil and gas companies to take forward the Budget proposal to create a globally competitive “oil major” by consolidating the firms. By: Prasanta Sahu and The Financial Express | New Delhi | Updated: February 15, 2017 7:56 AM 84 SHARES FacebookTwitterGoogle+LinkedInEmail oil The ministry officials have met heads of all public-sector oil companies and asked them to suggest possible merger scenarios, said a person close to the development requesting anonymity. The ministry of petroleum and natural gas has started discussions with state-run oil and gas companies to take forward the Budget proposal to create a globally competitive “oil major” by consolidating the firms. The ministry officials have met heads of all public-sector oil companies and asked them to suggest possible merger scenarios, said a person close to the development requesting anonymity. Finance minister Arun Jaitley had announced in his Budget speech on February 1 that the government plans to merge state-run oil and gas entities to create an integrated firm having the strength to compete with international and domestic private oil and gas majors. He had emphasised that the move will provide the merged entity “capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders”. The move will require the petroleum ministry to do a lot of ground work and think of ways to initiate the proposed consolidation, before the department of investment and public asset management steps in to execute the plan. There are 18 oil and gas state-run utilities including Oil and Natural Gas Corporation (ONGC), Oil India, GAIL (India), Bharat Petroleum Corporation, Indian Oil Corporation and Hindustan Petroleum Corporation. The idea has been received with mixed reactions by the industry. Though some have welcomed it, ONGC chairman Dinesh Sarraf had on February 9 told Reuters that the oil explorer’s overseas arm, ONGC Videsh, should not be merged as such horizontal integration would create monopoly. A GAIL (India) executive, as reported by FE earlier, had said their business model is distinct from others and it may remain a separate vertical even in case of a merger. However, unlike as was believed after Jaitley’s announcement that one large behemoth will be created, oil minister Dharmendra Pradhan had clarified that it will not be a merger of all companies, that more than one large company could be created or smaller firms may be merged into larger Navratna companies. News channel ET Now, sourcing wire agency Newsrise, on Tuesday tweeted that according to an oil ministry official, at least one merger between oil firms will be announced by September 30. Talking about the merger scenarios, a government official not wanting to be named said there are various options to consolidate the public sector oil companies. “These include creating a holding company, or creating two companies by merging the upstream ones together and downstream ones separately.” The official reiterated what Pradhan said and added that the third option could be merger of smaller companies with larger ones. According to a recent Fitch Ratings report, though the move could reduce inefficiencies across the sector and create an entity that is better placed to compete globally for resources and less vulnerable to shifts in oil prices, a merger would face significant execution challenges. The main hurdles, according to the report, will be faced in terms of managing the integration of employees, addressing overcapacity in the merged entity, and winning the backing for merger from private shareholders. Some experts like former Planning Commission member Kirit Parikh have argued against the government’s move. “When these activities are combined into one unit, inefficiency in one activity can be hidden by the efficiency of another. This reduces the incentive to be efficient for the loss-making company and reduces resources for growth and investment for the profit-making company,” Parikh wrote in The Times of India, even as he admitted that one giant oil corporation will increase the bargaining power of the company in purchasing crude in the international market. Scott Wedgewood Jersey
Shell, Pavilion Gas to start shipping LNG to Singapore in 2017
Shell Eastern Petroleum and Pavilion Gas will start supplying Singapore with liquefied natural gas (LNG) later in 2017 under contracts awarded last year, the city-state’s trade minister said. The two firms were awarded the right to supply LNG to Singapore last October, and will have exclusive franchises that last for three years, or until their shipments reach 1 million tonnes a year, whichever comes first. Singapore is planning to import more of the super-cooled fuel as contracts for natural gas supplied via pipelines from Malaysia and Indonesia are due to expire in the early 2020s. “We will also allow interested parties to import spot LNG in the second half of 2017, up to 10 percent of the total gas imports in Singapore,” trade minister S Iswaran said. Pavilion Gas, a unit of privately held Singapore-based Pavilion Energy Pte Ltd, and Shell Eastern Petroleum, a unit of Royal Dutch Shell, join BG Singapore Gas Marketing as the country’s approved LNG importers. BG Singapore – now part of Shell after the Anglo-Dutch major bought its parent, the BG Group – was the first company to import LNG into Singapore in April 2008. Singapore’s LNG terminal, which is run by Singapore LNG Corporation (SLNG), is also to commission a nitrogen blending facility this year, Iswaran said, adding that the unit will “enable Singapore to accept a wider range of cargoes with varying LNG specifications.” Some natural gas types cannot be held in storage without adding nitrogen, and such a facility would allow Singapore to import from a broader base of suppliers. Singapore is also planning to allow other parties to use spare storage capacity at its LNG terminal for storage and reload services. “This is a business area that will grow with the completion of a fourth tank at SLNG by 2018, which will increase our storage capacity by 260,000 cubic meters, to a total of 800,000 cubic meters,” Iswaran said. SLNG will call for proposals from companies interested to use its spare capacity later this year, the minister said. Tom Compton Authentic Jersey
Petronet buys 26 percent stake in LNG vessel for Rs 100 crore
Petronet LNG Ltd, India’s largest liquefied natural gas importer, has bought a 26 per cent stake in the shipping consortium that built its biggest LNG ship to transport gas form from Australia. Petronet had in 2013 contracted Shipping Corp of India (SCI) and its Japanese partners to build and operate a 173,000 cubic meters capacity LNG ship. The LNG vessel, ‘Prachi’, was delivered in December last year. After sea trials, the ship has delivered the first cargo of LNG from Gorgon project in Australia to Petronet’s Dahej import terminal in Gujarat. “We have now decided to take 26 per cent equity in India LNG Transport Company (No 4) Private Limited,” Petronet Director (Finance) R K Garg said here. Singapore-headquartered India LNG Transport Co (No 4) is the firm that won the time-charter contract from Petronet and got the 173,000 cubic meter vessel built at Hyundai Heavy Industries Co Ltd’s Ulsan shipyard in South Korea. Garg said agreements for Petronet taking the equity have been executed and the consideration paid. “It (the money paid) is less than Rs 100 crore,” he said. After this, state-owned SCI holds 26 per cent and NYK Line of Japan hold 26 per cent stake each in the company, while 22 per cent is held by Mitsui OSK Line and K Line. ‘Prachi’ is the fourth LNG vessel to be hired by Petronet. The earlier three are all deployed for ferrying LNG from Qatar. SCI, K Line, NYK Line and MOL consortium had won the tender by quoting the lowest charter hire of a little over USD 78,000 per day for 19 years for hauling LNG from Gorgon. Teekay LNG Partners LP, the only other firm to put in a price bid, had quoted a charter hire rate of USD 79,200 per day. The consortium had also built the previous three vessels for Petronet as well. It in 2002 won a 25-year contract for two ships, ‘Disha’ and ‘Rahi’, by quoting the lowest day rate of USD 68,900 for each ship for transporting the cargo from Qatar, and a contract for the third vessel, ‘Aseem’, in 2006 at a day rate of USD 72,880. “We did not take any equity in first two vessels but exercised our right and took 3 per cent in third (Assem),” Garg said. SCI, India’s biggest ocean carrier, holds a 29.08 per cent stake each in ‘Disha’ and ‘Rahi’ and a 26 per cent stake in the third, ‘Aseem’. Garg said all the four ship will be managed by SCI. The first two vessels were capable of carrying 138,000 cubic meters of gas and the third was of 155,000 cubic meters capacity. The fourth vessel, with 173,000 cubic meter capacity, is the biggest Petronet has ordered yet, he added. State-owned Oil and Natural Gas Corp (ONGC), GAIL India Ltd, Indian Oil Corp and Bharat Petroleum Corp Ltd (BPCL) own 12.5 per cent stake in Petronet LNG Ltd, India’s biggest buyer of LNG. Luke Stocker Womens Jersey
Kandla-Gorakhpur Proposal: IOC may use 50% of longest LPG pipeline
State-run Indian Oil Corporation plans to use nearly half the capacity of the country’s longest LPG pipeline. The balance capacity of the proposed pipeline is to be used by the public sector corporations Hindustan Petroleum and Bharat Petroleum, and Reliance Industries. Petroleum & Natural Gas Regulatory Board (PNGRB), the downstream regulator, has invited bids from interested parties by June 6 to lay a 2,650-km long liquefied petroleum gas pipeline from Kandla in Gujarat to Gorakhpur in Uttar Pradesh, with additional feeder lines of Pipavav-Ahmedabad and Dahej-Koyali. The pipeline will have a capacity of 6 million metric tonnes per annum, including common carrier facility for any third party on open access basis. The main line will be about 2,000 km long. Indian Oil Corporation had written to the PNGRB about four months ago, saying it was interested in building such a pipeline between Gujarat and Uttar Pradesh to cater to rising demand for cooking gas. Following such expression of interests, the regulator has to hold consultations with all stakeholders. Based on their feedback, it has to firm up the specifications for the proposed pipeline and then open it to formal bids. During the consultation, GAIL said the proposed pipeline would hurt the company’s underutilised LPG pipeline that partly runs on the same route, and therefore shouldn’t be built. During the consultation, the companies supporting the pipeline had to intimate PNGRB how much capacity each of them planned to use. IOC has committed to use 3 million metric tonnes of capacity while HPCL and BPCL have committed 1.8 mt and 1.7 mt respectively. RIL has committed 242,000 mt. These companies will source some LPG from their respective refineries. Domantas Sabonis Jersey
Argentina’s Enarsa seeks nine LNG cargoes via tender -sources
Argentina state-run energy firm Energia Argentina S.A., or Enarsa, has launched a tender seeking nine cargoes of liquefied natural gas (LNG) for delivery between April and May, two trading sources with direct knowledge of the tender said on Tuesday. Enarsa is seeking four cargoes for discharge at the port of Bahia Blanca and the remaining five cargoes for Escobar, the sources said, adding that two cargoes are scheduled for April delivery and the remaining for delivery in May. The tender will close on Feb. 21 and will remain valid until Feb. 22, the sources said, declining to be identified as they were not authorised to speak with media. Brian Robison Womens Jersey
Cairn India scouts for oilfield services firms in a bid to cut cost, boost output
Cairn India Ltd., which is in the process of getting merged with Vedanta Ltd., is scouting for global oilfield services companies like Schlumberger Ltd. and Halliburton Co., to take over operations of its key hydrocarbon assets in a bid to cut down expenses and boost production within a short span of time. Besides, parts of the company handling support services such as finance, statutory compliance and human resources will become part of Vedanta Ltd. post merger, which is expected to be completed in the first quarter of this calendar year. Cairn India and Vedanta Ltd; are owned by UK-listed natural resources giant Vedanta Resources Plc. Cairn India said in a statement to Mint ,in response to emailed queries, that the idea is to monetize its resource base with further investments. The company has held a round of discussion with two global oil and gasfield service providers and is exploring various partnership options with them and with others. The exact nature of the arrangement will be worked out keeping in mind the provisions in Cairn’s production sharing contract with the government for the hydrocarbon assets. A person with direct knowledge of the matter said on condition of anonymity that partnerships are being explored for the assets of Mangala, Bhagyam, Aiswharya, Barmer Hill and Raageswari Deep Gas fields in Rajasthan. The move is in line with recommendations made by the Boston Consulting Group, said the person. “We are planning to have a unique partnership approach with global oil and gas companies to leverage full potential of our resources. The model will open up avenues for introduction of new and latest technologies for exploration and production to monetize India’s hydrocarbon reserves. The proposed Cairn initiative to identify technological partnerships to unlock resource potential, evoked very positive response,” said the statement from Cairn, adding that the idea was to further improve economics of its key projects. The company, which on last Thursday reported a nearly 15-fold jump in profit after tax in the October-December period to Rs 6.04 billion from a year ago, said on that day quoting acting chief executive officer Sudhir Mathur that the company was in active discussions with world class oilfield services companies to partner for “end to end outsourcing of certain projects” meant to help in further optimizing costs, expedite project execution through better vendor coordination, and act as a force multiplier. Cairn’s plan to outsource operations comes in the wake of oil and gas field services becoming cheaper in the wake of global exploration companies cutting down capital spending due to muted crude oil prices. Cairn’s statement to Mint said the merger will be positive as it will generate value for the shareholders and de-risk Cairn India by providing access to Vedanta’s portfolio of diversified assets in a volatile market. The company, however, denied any plans to rationalize manpower for any function, post-merger. A company official, who asked not to be named, said that while balance sheets of the two companies will get merged, the merged entity will still preserve Cairn brand for its hydrocarbon business. Cairn needs statutory approval for transferring its production-sharing contract with the government to the merged entity. Cairn statement also said, quoting group chairman Anil Agarwal, that the company was committed to invest Rs. 300 billion to add 1,00,000 barrels of oil and oil equivalent over the next three years, primarily from its prolific Rajasthan fields. At present, Cairn accounts for 27% of India’s crude oil production and wants to raise its share to 50% over the next few years. Leonard Fournette Womens Jersey
LNG importer buys stake in shipping consortium
Petronet LNG Ltd, India’s largest liquefied natural gas importer, has bought a 26 per cent stake in the shipping consortium that built its biggest LNG ship to transport gas form from Australia. Petronet had in 2013 contracted Shipping Corp of India (SCI) and its Japanese partners to build and operate a 173,000 cubic meters capacity LNG ship. The LNG vessel, ‘Prachi’, was delivered in December last year. After sea trials, the ship has delivered the first cargo of LNG from Gorgon project in Australia to Petronet’s Dahej import terminal in Gujarat. “We have now decided to take 26 per cent equity in India LNG Transport Company (No 4) Private Limited,” Petronet Director (Finance) R K Garg said here. Singapore-headquartered India LNG Transport Co (No 4) is the firm that won the time-charter contract from Petronet and got the 173,000 cubic meter vessel built at Hyundai Heavy Industries Co Ltd’s Ulsan shipyard in South Korea. Garg said agreements for Petronet taking the equity have been executed and the consideration paid. “It (the money paid) is less than Rs 1 billion,” he said. After this, state-owned SCI holds 26 per cent and NYK Line of Japan hold 26 per cent stake each in the company, while 22 per cent is held by Mitsui OSK Line and K Line. ‘Prachi’ is the fourth LNG vessel to be hired by Petronet. The earlier three are all deployed for ferrying LNG from Qatar. SCI, K Line, NYK Line and MOL consortium had won the tender by quoting the lowest charter hire of a little over USD 78,000 per day for 19 years for hauling LNG from Gorgon. Teekay LNG Partners LP, the only other firm to put in a price bid, had quoted a charter hire rate of USD 79,200 per day. The consortium had also built the previous three vessels for Petronet as well. It in 2002 won a 25-year contract for two ships, ‘Disha’ and ‘Rahi’, by quoting the lowest day rate of USD 68,900 for each ship for transporting the cargo from Qatar, and a contract for the third vessel, ‘Aseem’, in 2006 at a day rate of USD 72,880. “We did not take any equity in first two vessels but exercised our right and took 3 per cent in third (Assem),” Garg said. SCI, India’s biggest ocean carrier, holds a 29.08 per cent stake each in ‘Disha’ and ‘Rahi’ and a 26 per cent stake in the third, ‘Aseem’. Garg said all the four ship will be managed by SCI. The first two vessels were capable of carrying 138,000 cubic meters of gas and the third was of 155,000 cubic meters capacity. The fourth vessel, with 173,000 cubic meter capacity, is the biggest Petronet has ordered yet, he added. State-owned Oil and Natural Gas Corp (ONGC), GAIL India Ltd, Indian Oil Corp and Bharat Petroleum Corp Ltd (BPCL) own 12.5 per cent stake in Petronet LNG Ltd, India’s biggest buyer of LNG. Brandon Allen Jersey
U.S. shale oil output to rise in March to highest in 10 mths -EIA
U.S. shale oil production for March is expected to rise by the most in five months to its highest rate since May last year, government data showed on Monday, as energy companies boost drilling on the back of crude prices that are hovering over $50 a barrel. March oil production is forecast to rise by nearly 79,000 barrels per day to 4.87 million bpd, according to the U.S. Energy Information Administration’s drilling productivity report. That would be the biggest monthly rise since October. In the Permian shale play of West Texas and New Mexico, output is forecast to rise by more than 70,000 bpd to 2.25 million bpd, in what would be the biggest monthly rise since January 2016. Meanwhile, Eagle Ford production in Texas is expected to rise by 14,000 bpd to 1.08 million bpd, the first monthly increase since December 2015, EIA data showed. In North Dakota’s Bakken field, production is forecast to fall by nearly 18,000 bpd to 976,000 bpd, the fifth consecutive month-on-month decrease. U.S. natural gas production from the seven biggest shale basins was projected to increase to a record high 49.1 billion cubic feet per day in March, the EIA said. That would be up over 0.5 bcfd from February and would be a third monthly increase in a row. EIA projected output would decline in only one region in March, the Eagle Ford. Output there is expected to ease by 25 million cubic feet per day to almost 5.6 bcfd, its lowest level since November 2013. Output in the Marcellus formation in Pennsylvania and West Virginia, meanwhile, is set to rise by almost 0.2 bcfd to a record high 19.1 bcfd in March, a fifth consecutive increase. EIA also said producers drilled 760 wells and completed 668 in the biggest shale basins in January, leaving total drilled but uncompleted wells (DUCs) up 92 at 5,381, the most since April. Cal Ripken Womens Jersey
LPG gains, higher petrochemical capacity to power gas utility GAIL
GAIL, India’s largest gas transmission company, reported earnings revival for the sixth consecutive quarter in the December quarter due to higher demand for imported gas. The momentum is likely to continue owing to strong realisation from LPG segment and capacity ramp-up in the petrochemicals plant in the fourth quarter. In the December quarter, the LPG segment reported more than two-fold jump in operating profit (EBIT) due to restart of Kandla terminal, high demand from the hinterland and lower domestic gas prices that kept the cost of production low. As a result, the contribution of the LPG segment to total profit before tax increased to 25% in Q3 as compared to 10% a year ago. The earnings growth in the LPG segment is likely to continue due to higher realisation in the March quarter.LPG price in January was Rs 30.6 per kg and rose to around Rs 34.9 in February. The average price in the December quarter was Rs 26.9 per kg. Typically, one rupee increase in price lifts up operating profit by Rs 30 crore. In addition, the petrochemicals segment is likely to be a key contributor to the earnings growth owing to higher capacity utilisation. GAIL had shut down the second unit of the pet rochemicals plant at Pata between the third week of November and the third week of January as demonetisation push down polymer demand.Despite the shutdown, revenue from the division grew 4% sequentially in the quarter. The management expects that the use of petrochemical capacity will reach 80% and 90% in FY18 and FY19, respectively, from the current 72%. The petrochemicals segment will account for nearly a quarter of the total EPS growth for the next year. Analysts are cautious about the risk from long-term contracts benchmarked to Henry Hub – a gas pricing gauge used in the US. The supply of these contracts will start from early next year. Given that the landed cost of the US gas is expected to be higher and the prices of imported gas are lower, the Street expects GAIL to bear some losses on the long-term contracts. However, during an analyst call after the latest quarterly results, GAIL said that it was confident of selling the contracted supply from Henry Hub. The company is working on converting short-term supply agreements to long term to improve revenue visibility. However, it may end up compromising on the marketing margin. GAIL’s stock has outperformed the S&P BSE Oil & Gas index in the past three months. However, it still trades at a meagre premium to its long-term average given worries over the potential impact of the US contracts. Mookie Wilson Authentic Jersey