Indraprastha Gas aims to replace diesel generators by gas generator
Indraprastha Gas Ltd is aiming to replace diesel generators by gas generator sets in housing complexes and factories, pitching it as a cheaper and environment-friendly option for the national capital region, which is facing rising pollution due to polluting factories, increasing number of cars and construction activity. A joint venture of state-run GAIL and Bharat Petroleum that supplies piped gas to homes, malls, factories and cars in Delhi and its satellites, IGL is working to capture a new segment of business, the backup generators used by factories and housing complexes due to the shortage of grid supply. These generators almost always use diesel to produce power that is thrice as expensive as grid supply and contributes to worsening pollution. By targeting to replace diesel backup generators, the company aims to sell one lakh cubic metres a day of gas to factories in Rewari, about 100 km from Delhi, where it’s about to launch its services, and about two lakh cubic metres a day to housing complexes in the national capital region in about three years, said ES Ranganathan, the managing director of IGL. The targeted volume is about a third of its current sales to homes and factories. “You have power cuts for more than four hours daily in the national capital region, which also suffers from a lot of air pollution. There is talk of banning diesel cars. This is where replacing diesel by natural gas in generator sets can help cut pollution,” said Ranganathan. Delhi is one of the worst polluted cities in the world and so are its satellites. The winters are especially unbearable with smog enveloping the national capital region. Adopting gas-based generators can also be economically rewarding, Ranganathan said. “At current gas and diesel prices, a gas-based generator can provide electricity for Rs 12 per unit compared to Rs 18 for a diesel generator set,” he said. IGL is working on multiple options for customers to accelerate gas generators’ adoption. A 250 KV – the average capacity at housing complexes – gas generator costs about Rs 45 lakh, compared to Rs 20 lakh for a diesel set, according to IGL. Assuming the set is used for four hours of power backup and given that gas is cheaper than diesel, the user can recover the additional cost incurred in purchasing gas generator in about 20 months, as per IGL. Another option for a customer is to retrofit an existing diesel generating set that would run on a combined ratio of 60% gas and 40% diesel. The cost of retrofitting is about Rs 4-5 lakh, which can be recovered in about six months. But a 40% use of diesel lightens the pitch of environment-friendliness. IGL is also in talks with third-party service providers who will invest in setting up generators and sell power at Rs 12 per unit at current gas prices. “We have finalised a partner for this and are talking to more players so that customers can have more choice,” said Ranganathan. The company plans to shortly install gas-based generators in two-three housing complexes in Indirapuram on the outskirts of Delhi, which will act as a model for other areas, he said. The company also plans to reach out to hospitals for this. A sharp fall in natural gas prices and the government’s preference for it have prompted city gas distributors to think of many ways to promote its consumption. The government wants piped gas to reach one crore customers by 2019, a steep target that has put IGL and other city gas distributors under tremendous pressure. About 34 lakh customers today use piped gas across the country. Tress Way Womens Jersey
India, Bangladesh In Gas Pipe Talks
India and Bangladesh are discussing how a gas pipeline that would link their two countries to Myanmar might be financed. “We are working towards getting a gas pipeline between the two countries,” foreign ministry official Sripriya Ranganathan said at the International Conference on India-Bangladesh Multi-Sectoral Cooperation in Delhi, the New Indian Express reported January 23. Indian state owned Oil and Natural Gas Company (ONGC) and Bangladesh Petroleum Corporation are in negotiation to build the 6,900-km pipeline that would link Bangladesh, Myanmar and north-eastern states of India. “The negotiations are going on to finalise who will finance the pipeline,” Ranganathan told the New Indian Express. The pipeline project was conceived under the Hydrocarbon Vision 2030 for the north-eastern region and is planned to connect Chittagong (in Bangladesh), Sitwe (in Myanmar) with north-eastern states. Demand for gas in Bangladesh is rising rapidly as the economy continues to expand. Dhaka has sought New Delhi’s help in facilitating gas imports from Myanmar. Myanmar’s gas exports to Thailand and China, its two main customers, have fallen in recent months and Dhaka feels Bangladesh could be a replacement as domestic demand is rising steadily. Bangladesh is also keen on importing LNG and is building adequate import infrastructure. Apart from signing agreements for FSRUs, state owned Petrobangla has signed a memorandum of understanding to set up LNG import infrastructure with Indian Petronet. Eric Fisher Womens Jersey
14 deals signed as UAE aims $75bn investments in India
The UAE and India signed 14 pacts, including defense and energy, as part of groundwork for a strategic partnership between the two countries. The pacts were signed following a meeting between Sheikh Mohammad bin Zayed Al-Nahyan, crown prince of Abu Dhabi and deputy supreme commander of the UAE Armed Forces, and Indian Prime Minister Narendra Modi in New Delhi on Wednesday. The agreements aim at establishing cooperation in defense manufacturing and technology, research, innovation, and cooperation between public and private sector institutions of the two countries. The two countries will also collaborate in armaments, defense industries and transfer of technology. In a joint statement issued at the end of the state visit, the two leaders reviewed the progress in realizing the $75 billion target for UAE investments in India’s plans for rapid expansion of next generation infrastructure development, as reported by WAM. The Abu Dhabi National Oil Company (ADNOC) and the Indian Strategic Petroleum Reserves Ltd. (ISPRL), agreed to establish a strategic crude oil storage in the southern Indian city of Mangalore. ADNOC will store about 6 million barrels of oil at Mangalore, taking up about half of the site’s capacity, said Sunjay Sudhir, joint secretary for international cooperation at the Indian Oil Ministry. The agreement with ISPRL, an Indian government-owned company mandated to store crude oil for emergency needs, covers the storage of 5.86 million barrels of ADNOC crude oil in underground facilities, at the Karnataka facility. Copies of the agreement were exchanged by Dr. Sultan Ahmed Al-Jaber, UAE Minister of State and ADNOC Group CEO, and India’s Petroleum Minister Dharmendra Pradhan, at a ceremony in New Delhi. Dr. Al-Jaber said: “This agreement, championed by the leadership of both countries, introduces a new strategic energy partnership with India that leverages the UAE and ADNOC’s expertise and oil resources. “This mutually beneficial partnership will create opportunities for ADNOC to increase its market share in delivering high quality crude to India’s expanding refining industry, while also helping India meet its growing energy demand and safeguard its security. “India is an important energy market and this storage agreement reinforces ADNOC’s role as one of the world’s most trusted and reliable suppliers of oil. We will utilize the Mangalore facility to not only build on our existing business relationships across India but also to explore new downstream opportunities for ADNOC’s expanding range of refined and petrochemical products,” he added. Pradhan said: “It is our hope that this strategic agreement will build on the strong bonds of cooperation between our two nations and provide the foundation for a mutually beneficial energy partnership.” Ben Hutton Womens Jersey
Global Oil, Gas Discoveries Drop to 70-year Low
Oil and gas discoveries around the world dropped last year to their lowest since the 1940s after companies sharply cut back in their search for new resources amid falling oil prices. The decline in discoveries means companies such as Exxon Mobil and Royal Dutch Shell will struggle to offset the natural depletion of existing fields, reinforcing forecasts of a supply shortage by the end of the decade. Total oil and gas resources found in 2016 reached just more than 6 billion barrels of oil equivalent (boe), said Sona Mlada, senior analyst at Oslo-based consultancy Rystad Energy. The numbers do not include North American shale resources which have been a key driver in supply growth in recent years. Offshore liquid discoveries, where most major new fields have been found in recent decades, reached 2.3 billion boe last year, 90 percent below 2010 levels. As a result, companies were able on average to replace only 10 percent of their oil and liquid gas reserves last year, compared with a reserve replacement ratio of 30 percent in 2013. “The lack of discovered volumes in 2016 will not have an immediate impact on the global oil supply in the short-term, given the lead time it takes from the discovery to start-up of a field’s production,” Mlada said. “However, these ‘missing’ discovered volumes in the current years could have an impact on the global supply some 10 years down the line – depending on the investment decisions of the exploration companies.” Several significant discoveries were announced in recent weeks including Exxon’s find of 100-150 million boe offshore Guyana and Statoil’s 80 million boe discovery off Norway. Global exploration spending dropped in 2016 to $40 billion and could drop further this year, consultancy WoodMackenzie said last month. As a result, the number of exploration wells drilled dropped last year by 40 percent from levels seen in 2014 when oil prices began the sharp decline, according to Mlada. Around 60 percent of resources discoveries made last year were gas, she added. Mirco Mueller Authentic Jersey
U.S. Shale Oil Output Set to Grow in February as Prices Rise
U.S. shale production is set to snap a three-month decline in February, the U.S. government said on Tuesday, as energy firms boost drilling activity with crude prices hovering near 18-month highs. The month-on-month increase in production would be the first since October and the third rise in a year, according to the U.S. Energy Information Administration’s drilling productivity report. February production will edge up 40,750 barrels per day (bpd) to 4.748 million bpd, the EIA said. In January, it was expected to drop by 5,900 bpd. In the Permian Basin in West Texas and eastern New Mexico, output is set to rise by 53,000 bpd to 2.180 million bpd, the data showed. North Dakota’s Bakken oil production was set to drop by 20,000 bpd to 978,000 bpd. Eagle Ford oil output from Texas was set to drop by 3,000 bpd to 1.042 million bpd. U.S. crude futures were trading around $53 a barrel on Tuesday, not far below 18-month highs set earlier in January, as members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries followed through on plans to cut output at the start of the year in an effort to boost prices and cut the global oversupply. [O/R] Total U.S. natural gas production was forecast to increase in February for a third month in four to 48.0 billion cubic feet per day (bcfd), the EIA said. That would be up over 0.3 bcfd from January. The biggest regional decline was expected to be in the Eagle Ford, down almost 0.1 bcfd to 5.5 bcfd in February, the lowest level of output in the basin since November 2013, the EIA said. Output in the Marcellus Formation in Pennsylvania and West Virginia was set to rise by almost 0.2 bcfd to 18.6 bcfd in February, a fourth consecutive increase. EIA also said producers drilled 712 wells and completed 545 in the biggest shale basins in December, leaving total drilled but uncompleted wells (DUCs) up 167 at 5,379, the most since April. Herman Edwards Womens Jersey
Cashless discounts: Fuel retailers may ask govt for compensation
State-owned fuel retailers are planning to approach the government to compensate them for their losses while giving a 0.75% discount for cashless payments, two people aware of the matter said. In the wake of demonetisation, the government on 8 December announced a discount of 0.75% for purchase of auto fuel using credit and debit cards and e-wallets at fuel stations run by Indian Oil Corp. Ltd (IOCL), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd. The discount came into effect on 13 December 2016. “We may reach out to the government seeking compensation on the revenue losses arising out of the 0.75% discount we are currently providing. We plan to approach the government in a few months,” said the first of the two officials cited above, an executive from one of the oil marketing companies, on condition of anonymity. A Mint report last month quoted OMCs as saying that the discounts could dent the revenue by around Rs1,100 crore till March. If the discount period is extended by another quarter, it would double. The OMCs said they do not want the discount period extended. While marketing business (which includes fuel retailing) forms 18% of volumes for IOCL, at BPCL and HPCL, it forms 40-50%. Religare Institutional Research in a report dated 9 December said, “Assuming 70% of transactions at OMC outlets go digital, IOCL, BPCL and HPCL could see a worst-case earnings hit of 8-14% in FY18 if they are unable to pass on these costs (which is unlikely). There are additional benefits of improved transparency and efficiency.” The OMCs did not reply to an email sent on Thursday morning. “I think the discount helps our marketing strategy. It will bring more customers to us who can experience our services, if they already have not. We will have to see if the government agrees to compensate us for the losses,” said the second official, another OMC executive, on condition of anonymity. For OMCs, diesel forms 70% of sales. “Assuming 70% of all transactions at fuel outlets move to the digital medium, the net discount for petrol/diesel works out to Rs0.3/litre. This can be comfortably passed on, as OMCs have been able to raise gross marketing margins in these products from Rs1 per litre to Rs2.6 per litre over the last three years,” added Religare Institutional Research in its report. The OMCs operate (owned and co-owned with dealers) a network of 52,000 retail outlets, with annual sales of 92 billion litres of diesel and 31 billion litres of petrol (FY17E). OMCs said on Thursday that post-demonetisation, they have seen e-transactions go up by 50% in cities and around 30% in semi-rural areas. However, many rural areas are yet to start with digital payments. OMCs said many rural outlets do not have the means to accept digital payments. Once that is facilitated, the number of transactions would go up. Kotak Securities in a report dated 27 December said, “IOCL management indicated that it has not received any clarification from the government on compensation for discounts on fuel sales through digital means. However, the company will be able to recover the incidental loss through reduction in transaction costs and modestly higher marketing margins on overall sales, if not compensated adequately.” OMCs expect that once people get used to the e-transactions, the discounts would cease. Terence Newman Womens Jersey
Piped cooking gas in PM’s constituency Varanasi by March next year
People in Varanasi, the Parliament constituency of Prime Minister Narendra Modi, will start getting piped cooking gas by March next year, about nine months ahead of the proposed Jagdishpur-Haldia gas pipeline touches the city, with supplies sourced using tankers. State-owned natural gas major GAILBSE -0.69 % plans to start a gas distribution pilot in Varanasi and Bhubaneswar by March 2018, its director (projects) Ashutosh Karnatak said. During the pilot, each city would have two compressed natural gas (CNG) stations for vehicles and about 500 domestic piped gas connections. The supply will be fetched from the nearest sources using tankers until the Jagdishpur-Haldia pipeline reaches the two cities, Karnatak said. GAIL is building a 2,620-km of gas pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal, Bokaro in Jharkhand and Dhamra in Odisha. It also has the government mandate to develop city gas distribution network in seven cities along the way and supply piped gas to consumers in those cities. GAIL is rapidly implementing the pipeline project, awarding contracts for laying of pipeline on several stretches and engaging with landowners to easily secure right of use. “Our mantra is constraint first, progress later. We try and resolve the problems of our vendors first. With their constraints gone, the progress is automatically made,” said Karnatak. “We are continuously engaging with farmers, understanding their pulse, gauging their reactions to secure their participation in the process. This should help us stay on schedule,” he said. Under the plan, Varanasi is the first of the seven cities to be touched by the proposed pipeline, with Patna, Jamshedpur, Kolkata, Ranchi, Bhubaneswar and Cuttack coming in later. The pipeline, with a gas carrying capacity of 16 million metric standard cubic meters a day, will reach Varanasi and Patna by December 2018 and other cities next year. GAIL will invest Rs 2,800 crore in building city gas distribution networks in all seven cities, which are expected to serve nearly 3.4 lakh domestic and industrial customers and 1.7 lakh vehicles in five years. Jagdishpur-Haldia pipeline project had been languishing for years. The Modi government gave it a new lease of life. Its route was also changed, benefiting Varanasi and cities in Odisha. Cam Neely Jersey
OPEC oil output to come down in January: International Energy Agency
Steeper cuts in OPEC oil production are likely this month as producers increasingly implement a recent key deal aimed at stabilising oil prices, the IEA said Thursday. “Initial indications are that a steeper (month-on-month) decline may be on the way in January,” said the International Energy Agency, which analyses energy markets for major oil consuming nations. Under a landmark deal on November 30, aimed at reducing a global supply glut that depressed oil prices, the Organization of Petroleum Exporting Countries is meant to slash its output ceiling by 1.2 million barrels per day (bpd) to 32.5 million bpd, effective January 1. On Wednesday, the cartel said that its oil production fell in December but remains well above levels envisaged the deal. However, steeper cuts would come this month as Saudi Arabia and nearby producers move to implement the agreed reductions, the IEA said. Under the deal, Saudi Arabia is to cut production to 10.1 million bpd, Iraq to 4.4 million bpd, Kuwait to 2.7 million bpd and UAE to 2.9 million bpd, according to OPEC. Iran, able to export crude freely again following the lifting of sanctions under a 2015 nuclear deal with major powers, can ramp up output to 3.8 million bpd. Libya and Nigeria are exempt from the accord, while Indonesia has suspended its membership. – Coordinated cuts – “OPEC’s elevated supply during 2016 helped push global oil stocks to record levels and the explicit aim … of the deal is to speed the market’s return to balance by working off the excess,” the IEA said. “Coordinated action with non-OPEC countries… could hasten the process.” On December 10, OPEC also struck an agreement with countries outside the group, most notably Russia but not the United States, for them to reduce production. Both deals boosted oil prices by around 20 percent to above $50 per barrel, but gains have been capped by unease about implementation and rising US shale production thanks to the higher prices. On Thursday oil prices firmed, with WTI up 27 cents at $51.35 and Brent 34 cents higher at $54.26. Both agreements are valid for six months and are extendable for another six months. However, Saudi Arabia’s Energy Minister Khaled al-Falih said Monday it was “unlikely” that an extension would be necessary, pointing to a pick-up in global demand. The IEA said the output cuts “have entered their probation period and it is far too soon to see what level of compliance has been achieved.” “The coming weeks will provide more clarity.” A committee to monitor compliance — Kuwait, Algeria and Venezuela along with non-OPEC producers Russia and Oman — is tentatively scheduled to meet in Vienna this weekend. – Vigorous demand – In the meantime, the IEA said it had revised upwards its estimate for global oil demand growth in 2016 and now saw growth at 1.5 mbd, “with most of the revision contributed by stronger European demand.” In particular, demand was vigorous in the fourth quarter of 2016 as it was “pulled higher by a combination of resurgent industrial activity and colder winter weather conditions,” the agency said. “In 2017, however, we still expect the rate of growth for global demand to fall back to 1.3 mbd,” it continued. “The prospect of higher product prices — assuming that the cost of crude oil rises in 2017 — plus the possibility of a stronger US dollar are factors behind our reduced demand growth outlook for this year.” Marqise Lee Authentic Jersey
Big Oil back on the acquisition trail as outlook brightens
The world’s top oil companies are back in acquisition mode, targeting smaller exploration and development firms to boost oil and gas reserves rather than the mega-mergers that followed previous slumps in crude prices. Since late November, major oil companies have announced 11 deals worth more than $500 million each with a combined value of $31 billion, the clearest sign yet that oil executives are more confident a recovery is underway. When crude prices collapsed in the second half of 2014, large oil firms slashed spending on exploration and production and offloaded assets to reduce debt so they could cope with lower revenue from oil and gas sales. But with crude reservoirs declining at a rate of 10 percent a year in some cases, major oil companies are now looking to snap up assets to start growing again and there are plenty of smaller firms burdened with debt looking to sell. “You’re seeing the majors sharpening their pencils after a long while and actually flipping around from disposals to acquisitions,” said Tony Durrant, chief executive of British energy firm Premier Oil , which is looking to sell several stakes in its North Sea operations. Total acquisitions of oil and gas fields, known as upstream assets, tripled to $31 billion in December from a month earlier, when the Organization of the Petroleum Exporting Countries agreed to cut output for the first time in eight years, according to data from consultancy Energy Market Square. Deals in the last month of 2016 alone accounted for nearly a quarter of total activity during the year. MAJOR DEALS BP announced a string of investments in the last two months of 2016, including a $1 billion partnership with Dallas-based Kosmos Energy in Mauritania and Senegal in West Africa, as well as acquisitions in Abu Dhabi and Azerbaijan. The British company also spent $375 million on a 10 percent stake in Eni’s giant Zohr gas field in Egypt while Russian oil giant Rosneft bought 30 percent stake of the same field for $1.575 billion. France’s Total and Norway’s Statoil bought into Brazil’s lucrative sub-salt deepwater oil fields while ExxonMobil Corp bought assets in Papua New Guinea to meet growing Asian demand for liquefied natural gas. The trend continued in January with Total boosting its stake in Uganda’s Lake Albert oil project by snapping up most of Tullow Oil’s stake for $900 million. ExxonMobile and Noble Energy also struck deals worth nearly $10 billion combined for a larger slice of the Permian Basin, the largest U.S. oil field. While deal making outside the United States almost ground to a halt at the start of 2016, acquisitions in North American shale basins have continued at a steady pace. In the Permian Basin, for example, the time it takes to produce oil and gas after an initial investment is far quicker and cheaper than developing conventional fields over three to five years. ONLY CHOICE More deals are likely this year as the large overhang of crude oil in the world that has weighed on the market since 2014 continues to clear and oil prices rise. “When you can cut capex (capital spending), two-and-a-half to three years later you see production decline and reserves depleting and you have one choice only and that is going after high quality resource,” said Sachin Oza, co-manager with Stephen Williams of the Guinness Global Oil and Gas Exploration Trust. “If you’ve not spent any time filling your hopper with these opportunities that take five years to build up, there is only one choice: you have to buy them,” said Oza. The Guinness Trust is a fund that invests in firms in the early stages of exploration or development of energy resources which it believes will attract investment from oil majors. Investors reckon large firms will focus on underdeveloped basins in east and west Africa, Romania and Albania, as well as nascent Latin American reserves in places such as Colombia, all areas where the growth potential is seen as greater than in established regions such as North America and the North Sea. While slides in oil prices typically unleash a wave of takeovers, companies emerging from the current downturn are generally shunning outright acquisitions and instead looking at specific deals for specific fields. After a prolonged period of low oil prices in the late 1990s Exxon merged with Mobil, Total merged with Elf Aquitaine and Petrofina, Chevron bought Texaco, BP snapped up Amoco and ARCO and Conoco and Philips merged. This time round, the only stand-out acquisition has been Royal Dutch Shell’s takeover of BG, which was announced in April 2015 and completed in February a year later for $53 billion. BUYER’S MARKET As large oil firms are wary of increasing their debt burden at this point, investors say corporate acquisitions are likely to be limited in numbers and scope but oil field assets are very much in the crosshairs. Oil majors are opting for joint ventures to develop specific fields in complex deals, such as share swaps or deferred payments, to lower their risk and limit the amount they need to spend upfront following two years of budget cuts. “The international (ex-U.S.) asset market is a buyer’s market, as sellers continue in balance sheet preservation mode,” said Charles Whall, energy portfolio manager at Investec Asset Management. “European majors, which already have large dividend commitments, are unwilling to use equity for assets without immediate cash flow … Most of these asset deals are structured to minimise the debt impact in the near term,” he said. Such deals also mean the sellers can retain a stake in the assets as their value rises with oil prices, said Oza and Williams at the Guinness Trust. Analysts say for much of 2015 and 2016 there was subdued activity because buyers and sellers were too far apart on price. Buyers hunting for bargain-basement deals were frustrated by sellers holding out for better terms but as oil prices have started to stabilise there has been more convergence. According to Martijn Rats,
Saudi Arabia’s oil giant likely to set up crude refinery in Andhra Pradesh
Global giant in the oil sector, Saudi Aramco has hinted at setting up a refinery in Andhra Pradesh. The Saudi Arabian oil major also evinced interest in turning coastal Andhra Pradesh as one of its major bases but this plan will move forward only after the Centre okays the proposal. Chief minister N Chandrababu Naidu, who was in Davos to attend the World Economic Forum (WEF) summit, held negotiations with Aramco president and CEO Amin al-Nasser on Wednesday, and extracted a positive response on making investments in AP. The chief minister promised Naseer to allot land and water without any hassle for the mega refinery. Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national petroleum and natural gas company based in Dhahran. Buoyed by Nasser’s assurance, the chief minister said that a high-level delegation will be sent to Dhahran within a fortnight. Extolling on how Andhra Pradesh is endowed with rich natural resources, Naidu told Nasser that his government is firm on completing the mega petro-chemical corridor along the coast. Articulating elaborately on the oil reserves in the Krishna-Godavari basin, Chandrababu invited Aramco to invest in Andhra Pradesh. He also spoke about the proposed petro-chemical university. In response, Nasser said that Aramco would collaborate with the government in India first and study the possibility of partnering with Andhra Pradesh in setting up the refinery. James Hurst Womens Jersey