IOC plans to use half the capacity of country’s proposed longest LPG pipeline
State-run Indian Oil Corporation plans to use nearly half the capacity of the country’s longest liquefied petroleum gas (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 LPG 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 the rising demand for cooking gas in the country. 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 pipeline capacity while HPCL and BPCL have committed 1.8 million tonnes and 1.7 million tonnes respectively. RIL has committed 242,000 metric tonnes. These companies will source some LPG from their respective refineries closer to the proposed route but plan to substantially import LPG for this pipeline. Ports at Kandla, Pipavav and Dahej will be the import points. Those planning to bid must have a minimum net worth of Rs 1,855 crore and furnish a bid bond of Rs 15 crore. The bidders are allowed to deviate up to 5 per cent from the indicative route mentioned in the bid document for preparing the feasibility report. Josh Martin Womens Jersey
Refinery looks remote as differences between govt, Rajasthan escalate
Negotiations over refinery project is expected to stretch long as both Rajasthan government and oil major Hindustan Petroleum Corporation Ltd (HPCL) refused to their position over price revision According to sources, both parties have major differences over the availability of crude oil to keep a 9-million tonne (MT) refinery operational for at least 30 years. HPCL is relying on the conservative figures of directorate of hydrocarbons (DGH) which estimates reserves to be around 380 MT.Rajasthan government, however, based on the estimates of Crain India has argued that availability is much more. According to the sources, to strengthen its case, Rajasthan government is planning to approach DGH to validate the revised figures.”Discussions are on but still there is no meeting of minds. Both the stakeholders are though positive about the final outcome,” said a senior official who is privy to developments. Along with it issues like fixing internal rate of return (IRR) and financial assistance of Rs 37 billion as viability gap funding remains at core of ongoing discussions. In addition, the unilateral decision by the oil company to raise capital cost by Rs 70 billion have become point of contention.”HPCL has come down from their earlier 15% IRR. But even revised estimates are too high when compared with other refineries in the country,” added the official. According to the company though 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. Milan Lucic Jersey
Alternate fuels to hit petrol, diesel demand
Energy consumption cannot grow at current pace, say experts. Petrol and diesel demand have shown steady growth in the country over the last two years. Petrol in the financial year 2015-2016 clocked a demand growth of 15 per cent and is at 11.2 per cent for the first nine months of the current financial year. Diesel, which in 2015-16 grew at seven per cent, showed a 3.7 per cent growth in the nine-month period, according to Petroleum Planning and Analysis Cell (PPAC) data. However, this is bound to change, say industry experts as the trend may not be structurally viable and alternate fuels may play a larger role. “The GDP’s composition is changing with services inching towards 60 per cent, which is reducing the energy intensity of the economy. I do not expect demand for petrol and diesel to grow at a higher rate than the GDP. The recent 11-12 per cent annual growth number is an anomaly,” said Debasish Mishra, partner at Deloitte Touche Tohmatsu India. “In any country, and specifically for India, energy should track the GDP trend and hence energy consumption cannot structurally grow at the current pace. Energy growth should be in the range of 0.6 to 0.8 times of the GDP numbers, and petrol and diesel as a component of energy will sooner or later have to follow the same correlation,” said an oil and gas analyst from a domestic brokerage firm who did not wish to be named. Vivek Jain, associate director, India Ratings & Research expects petrol demand to grow at 11 per cent in the current financial year and taper down to 8-10 per cent in the next financial year. “Going forward, petrol demand growth should come down as we are talking about a higher base,” Jain said. He, however, remains optimistic about petrol demand growth. “GDP would be a wrong correlation to make. If vehicle sales growth continues, petrol consumption may continue to be strong,” Jain added. However, not everyone is convinced. “Taking a long-term view, energy efficiency and efficiency in fuel consumption in vehicles will taper petrol demand,” said the analyst quoted earlier. Several analysts also pointed out a significant contributor to petrol’s double digit growth was the shift in consumption from diesel to petrol. The future for diesel demand in the country looks bleak as alternate fuels like compressed natural gas and liquefied natural gas (LNG) take centre stage. Companies in India are now experimenting with options to run trucks on LNG and two-wheelers on CNG. Experts expect if these trials are successful they will further dent demand for diesel products. Truck transport in the country alone is a significant contributor to diesel demand. Authentic Jersey
ONGC’s $2.4 billion Mozambique deal under Oil Ministry scanner
ONGC’s USD 2.475 billion purchase of Videocon Group’s 10 per cent stake in a giant Mozambique gas field has come under the Oil Ministry’s scanner following allegations that the PSU may have overpaid about USD 200 million, charges that the company vehemently denied. ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), had in June 2013 bought 10 per cent stake in the Offshore Area 1 from Videocon Group for USD 2.475 billion. This stake was later divided between OVL and Oil India Ltd in 60:40 ratio. The deal has now come under Oil Ministry’s scanner following allegations that OVL might have overpaid Videocon. Government officials said the ministry has over the past few months asked the company to provide several details of the deal including the basis of the valuation. The inquest by the ministry was acknowledged by senior company officials, who said details have been provided on multiple occasions. Sources said Videocon was in 2012 willing to sell its stake to OVL at a small premium to the price Thailand’s PTT Exploration and Production paid for acquiring an 8.5 per cent stake in the same block from Cove Energy for 1.22 billion British pounds (USD 1.9 billion at exchange rate prevalent at that time). The 10 per cent stake, they said, was available to OVL for about USD 2.3 billion or so but the company a year later paid USD 2.475 billion to Videocon. An e-mail sent to ONGC Chairman Dinesh K Sarraf, who was Managing Director of OVL at the time of the deal, for comments received a response from the company stating: “There is no basis to this allegation and ONGC Videsh strongly refutes it.” OVL had followed up the Videocon purchase by buying another 10 per cent stake in the same Offshore Area 1 of Mozambique from US energy major Anadarko Corp for USD 2.64 billion in 2014. A year later, Anadarko in its annual filings with the US Securities and Exchange Commission said it made a “gain” of USD 1.5 billion or over 62 per cent of the purchase price, from the sale of 10 per cent interest in Offshore Area 1. Woodlands, Texas-based energy exploration company Anadarko continues to be the operator of the block, with its stake reduced to 26.5 per cent from 36.5 per cent after the deal. Presently, OVL has 16 per cent stake in Offshore Area 1, which holds as much as 75 trillion cubic feet of gas reserves. OIL has 4 per cent and a unit of Bharat Petroleum Corp Ltd (BPCL) another 10 per cent stake. Other partners in Area 1 include Mitsui with 20 per cent stake, ENH (15 per cent) and PTTEP (8.5 per cent). Gas from the block is to be converted into liquefied natural gas (LNG) for transportation by ships to markets like India. Sean Doolittle Jersey
How Jaitley may have got it right on petroleum subsidy
Finance minister Arun Jaitley’s expectation of benign crude oil price for the next financial year, which got reflected in this year’s budget numbers for petroleum subsidy, has found support from the latest developments on key factors impacting global oil prices. Jaitley has budgeted for a petroleum subsidy of Rs 21,909 crore for 2017-18, a less than 1 per cent increase over the revised estimate of Rs 21,770 crore for current fiscal. This came despite the nearly 25 per cent jump in oil prices since 30 November when the global cartel OPEC announced its historic production cut. US-based Energy Information Administration (EIA) reported last week US crude oil inventories rose to 508 million barrels between January 27, 2017 and February 3, 2017, the second-highest weekly inventory stockpile since 1982. US shale output rose to highest levels since April 2016, in the same period. “Gradual increase in retails prices of Kerosene and LPG will save subsidy for the GoI by around Rs 50 bn in FY18 as per ICRA’s estimates. After factoring in the benefits from the above, the subsidy provided in FY18 budget will be sufficient till a crude price of around $60 per bbl,” said K Ravichandran, Senior Vice President at ratings agency ICRA. He added the centre could have expected that crude prices will not increase materially from the current level. “This is due to counter balancing factors at play including additional US production which will more than compensate for voluntary cut by OPEC members in the near term, leaving the markets adequately supplied,” he said. Also, experts say US president Donald Trump’s energy policies towards increasing drilling as well as production activities will undermine OPEC’s efforts to restore prices. While Russia — one of the biggest oil producers — has agreed to cut production by more than 500,000 barrels per day in the first two quarters of 2017, analysts predict Russia’s oil output will reach record levels from the second half of 2017 to capitalize on increased oil prices. Further, Libya and Nigeria, which were exempted from making cuts in oil production, have aggressively increased production. Libya alone has raised output by more than 100,000 barrels per day since the OPEC deal was announced. Jarred Tinordi Womens Jersey
Sri Lanka off-shore oil block re-offered for development
Sri Lanka is calling offers to develop an off-shore oil block in the North West of the island where some gas-condensate discoveries have already been made. Sri Lanka’s Petroleum Development Secretariat said it seeking expressions of interest to survey and develop the 2,924-sq km block. Cairn India did seismic surveys and dug three wells, of which two showed evidence of petroleum. However the firm did not develop the wells when oil prices collapsed after a global commodity and economic bubble fire by the US Federal Reserve burst, and the block was returned to Sri Lanka amid doubts about its commercial viability. Cairn won the block in 2007 at the height of the last commodity bubble. In the Mannar and Sri Lanka’s north oil exploration also happened in the 1970s, after the first oil shock and commodity bubble fired by the Fed, forcing the dollar off the gold standard. Sri Lanka also saw some oil exploration in 1981, during the second oil shock and commodity bubble, which ended when Fed Governor Paul Volcker tightened policy and ended it, creating the so-called ‘great moderation’ period. Sri Lanka is now offering the block at a time when oil prices are low. Stanley Cup Womens Jersey
Gas exploration to continue despite tough pricing scenario: ONGC
Dinesh K Sarraf, Chairman of the Oil and Natural Gas Corporation (ONGC), said on Thursday that while the state-run firm would continue to invest in gas exploration, it was getting increasingly difficult owing to the “tough” pricing scenario. Speaking to CNBC-TV18. Sarraf said gas prices were displaying a downward trend and that he had asked the government to revise gas prices upwards. On the government’s Budget proposal to merge all state-owned energy firms into a consolidated giant, Sarraf said the combine will have economies of scale. He said while there are a number of ways in which a merger can be undertaken, a vertical integration would be best as it would ensure that the companies perform better irrespective of pricing trends. A horizontal integration, on the other hand, would lead to monopolies, Sarraf said. Finance Minister Arun Jaitley in his Budget speech last week had announced a proposal to merge state-owned oil companies to create an integrated oil behemoth. The creation of an oil giant will also allow it to actively look at mergers and acquisitions in a proactive manner. Earlier, Indian Oil Corporation Chief B Ashok said the proposal of merging oil companies into one big public sector undertaking was a welcome move, but may not be an easy task. He said integration across the value chain will bring stability to the industry and mergers can lead to creation of a world-scale company. James Harrison Authentic Jersey
Phase I of Strategic Petroleum Reserve programme has capacity of 5.33 MMT: Govt.
Minister of State for Petroleum & Natural Gas Dharmendra Pradhan informed the Rajya Sabha in a written reply to a question yesterday that Strategic Petroleum Reserve (SPR) facilities set up at Visakhapatnam, Mangalore and Padur under Phase I of the SPR programme have a total capacity of 5.33 MMT. Mr. Pradhan said that, on January 25, 2017, a Definitive Agreement on Oil Storage and Management was signed between Indian Strategic Petroleum Reserve Ltd (ISPRL) and Abu Dhabi National Oil Company (ADNOC) of the United Arab Emirates (UAE) for filling up one of the two caverns at Mangalore SPR facility. The other cavern at Mangalore has already been filled up by the Government, he said. He also said that the ISPRL, which is the special purpose vehicle (SPV) for construction of SPR facilites, had invited preliminary Expression of Interest (EoI) from reputed international parties for filling up of the Padur SPR facility. Mr. Pradhan said that there was 63 days of existing storage, based on estimated commercial reserve of crude oil, petroleum products and gas. The total 5.33 MMT reserve of Phase-I of the SPR programme is currently estimated to supply approximately 10.5 days of India’s crude requirement according to the consumption during 2015-16, he added. Chicago Blackhawks Womens Jersey
Cairn India Q3 avg gross oil & gas production across assets firm at 182 kboepd
Qtrly average gross oil and gas production across assets firm at 182 kboepd, in-line with expectation. .Says in active discussions with world class oil field services companies to partner for end to end outsourcing of certain projects. .Proposed merger of Vedanta Limited and Cairn India expected to complete in the first quarter of CY2017. .Says commencing exploratory drilling in February for Palar-Pennar project .Says gas sales in Rajasthan temporarily suspended due to technical issue between transporter and buyers .Says production from appraisal wells expected in Q1 FY18 for Aishwariya Barmer Hill project .Satellite field Guda stage-1 is expected to start production in Q1 FY18. .Says the drilling programme in palar-pennar block is planned to be completed in April 2017 Charles Woodson Jersey
ONGC halts naphtha exports from Hazira
India’s Oil and Natural Corp (ONGC) will not export naphtha from Hazira in western India as it supplies the fuel to a cracker operated by ONGC Petro additions Ltd (OPaL), four sources with knowledge of the matter said on Thursday. OPaL, promoted by ONGC and co-promoted by Gujarat State Petroleum Corp (GSPC) and gas company GAIL (India) Ltd, operates a cracker which has a capacity of 1.1 million tonnes of ethylene a year. “We are supplying all of the naphtha to OPaL… we will export if our laycans do not match with that of OPaL’s,” said a company source, adding that OPal is working out its strategy to source some quantity from the market as well. A cracker of this size typically consumes more than 3 million tonnes of naphtha a year, based on Reuters calculation, but OPaL cracker is able to run on gas and naphtha. “OPal did not run full until recently,” said a second source, explaining why ONGC only stopped halting exports this year. ONGC is the key supplier of feedstock to OPaL, with the raw material coming from Hazira, Uran and Dahej in western India. ONGC Hazira was exporting one to two 34,500-tonne cargoes a month in 2016 but this stopped this year, based on Reuters data. ONGC was also exporting an average 35,000 tonnes of naphtha a month from Mumbai in 2016. It last sold a cargo for January 2017 loading. Patrick Eaves Authentic Jersey