Petronet seeks cut in Gorgon LNG price
Petronet LNG Ltd, India’s largest liquefied natural gas importer, is seeking at least 10 per cent cut in price of LNG it plans to buy from Australia’s Gorgon project. Petronet LNG, a private firm whose chairman is the oil secretary, had in August 2009 signed a 20-year deal to buy 1.44 million tonnes per annum of liquefied natural gas (LNG) at a price equivalent to 14.5 per cent of the prevailing oil rates. The indexation agreed was one of the highest in the world. “The world has changed since then and LNG deals are being done at much lower indexation,” an official said. Petronet had late last year renegotiated price of the long-term deal to import 7.5 million tonnes per year of LNG from Qatar, helping save Rs 8,000 crore. At that time it had also signed a contract to buy an additional 1 million tonne per annum till 2028. “That deal for an additional 1 million tonne was at 13.05 per cent of the ruling Brent price. So naturally, the expectation is that the Gorgon should lower the indexation to a minimum 13 per cent,” the official said. Petronet has written to Exxon Mobil, the seller of Gorgon LNG, for reworking the price. “Negotiations are on,” he said. LNG in spot or current market is available at USD 5-6 per million British thermal unit where as Gorgon LNG at current formula will cost USD 7.25 per mmBtu at an oil price of USD 50 per barrel. After adding 5 per cent customs duty, shipping cost and that of converting liquid gas back into its gaseous state, the landed price of the Australian gas will be close to USD 9.5 at the Kochi port where it is supposed to be delivered. State-owned gas utility GAIL India, one of the four PSU promoters of Petronet, had way back in 2013 sought review of the Gorgon LNG price formula. Its the then Director (marketing) Prabhat Singh, who now is the Managing Director and CEO of Petronet LNG, had in June 2013 written a letter seeking reduction in price of Gorgon LNG. Sources said the case of renegotiating the Gorgon deal has strengthened after Petronet last year got RasGas of Qatar to lower the rate for 7.5 million tons per annum LNG it supplies under a 25-year long term contract since 2004. The price of imported LNG under this agreement had been linked to crude oil (Japanese Customs Cleared Crude or JCC) and had a concept of floor and ceiling indexed to last 5-year average. The rate thus arrived was higher than spot LNG. Petronet sought renegotiation of the deal and RasGas agreed to modify the pricing formula to link it with last 3- month average rate of Brent crude oil, they said. GAIL, Indian Oil, Bharat Petroleum and Oil and Natural Gas Corp (ONGC) hold 12.5 per cent each in Petronet. Petronet was to get Gorgon LNG by the end of 2015, but supplies have been deferred to 2017. Kevin Hayes Womens Jersey
Modi’s Urjaa Ganga to bring cooking gas flow in Varanasi
Prime Minister Narendra Modi will today visit his parliamentary constituency Varanasi and lay the foundation stone for the ‘Urja Ganga’ project, aimed at providing piped natural gas (PNG) to all the households in the city. He will also lay the foundation stone for the doubling of Varanasi-Allahabad rail track and electrification of the Varanasi-Allahabad rail section. Modi will also dedicate to the nation a dual rail engine that runs on both electricity as well as diesel. The special engine has been manufactured in Diesel Locomotives Works (DLW), Varanasi. As part of the Urjaa Ganga project, a 1,500 Kilometer long pipeline will also be set up to ramp up availability of cooking gas for households in the region at an estimated cost of Rs 51,000 crore. Ahead of the PM’s visit, BJP workers in the region had launched a cleanliness drive in the city. Among those overseeing the preparedness of the event for Modi’s visit are Petroleum Minister Dharmendra Pradhan, Minister of State for Railways Manoj Sinha and Minister of State for Human Resource and Development Mahendra Nath Pandey. As part of the programme, Modi is expected to launch a stamp dedicated to the city of Varanasi and also lay the foundation for a road project. Officials informed Uttar Pradesh Governor Ram Naik and Chief Minister Akhilesh Yadav have been invited for the foundation laying ceremony of ‘Urja Ganga’ project. The PM will fly from Mahoba by a special Indian Army helicopter which will land at the Dereka helipad around 3:55 PM. From there, he is expected to head to the main venue at Dereka Inter college ground to lay the foundation stone for the various projects. Later, he will leave for Delhi by a special aircraft from the Lal Bahadur Shastri International airport at Babatpur. Vernon Hargreaves III Jersey
Singapore awards two new LNG import licences to meet future demand
Pavilion Gas and Shell Eastern Petroleum have been appointed as importers of liquefied natural gas (LNG) into Singapore, the city-state’s trade minister said on Monday. “These two companies were selected on the basis of the reliability, flexibility and competitve-pricing of their LNG supplies,” S. Iswaran, Singapore’s minister for trade and industry, said at the opening of Singapore’s International Energy Week (SIEW). The two firms beat Sembcorp Industries and BG Singapore Gas Marketing for the contracts to supply Singapore with 1 million tonnes per annum (mtpa) of LNG. The exclusive franchises awarded on Monday will last for three years or when the firms reach imports of 1 mtpa, depending on which comes first. The Energy Market Authority’s (EMA) first called for proposals in June 2014. Eric Berry Authentic Jersey
India to promote LNG as fuel for vehicles: Pradhan
The Minister of State (Independent Charge) for Petroleum & Natural Gas Dharmendra Pradhan said that the government wants to promote LNG as a fuel for vehicles. “Efforts are being made to have LNG-driven bus in Kerala very soon. Long-haul driven vehicles and trains will also adopt LNG as fuel,” Pradhan said at a media briefing here on Thursday. The country’s LNG handling capacity is being enhanced from 21 mmt to 50 mmt. In Eastern India, the government is laying 2,500 km long pipeline, which will provide gas to industry and help in gas distribution in seven cities of Eastern India, he added. The Minister said the share of gas in the Indian energy basket is 6.5-7 per cent, but India aspires to take the share of gas to 15 per cent in the next three to five years so as to have a new gas-based economy. In this regard, 80 lakh connections have been provided under the Prime Minister Ujjwala Yojana to BPL women and target of 1.5 crore will be achieved this year. The country will zoom from BS IV to BS VI by 2020 so as to have clean fuel. He said there is a large scope of energy efficiency in Indian refineries. On the issue of 2G Ethanol, Pradhan said that public sector companies are setting up 11 plants to manufacture 2G Ethanol. Pradhan was speaking after an MoU signing event between PetroFed and TERI to undertake a study on climate change’s impact on oil and gas sector. The study called “Climate Change Risks: Preparedness for Oil and Gas Sector”, will evaluate how global markets and technological options are likely to change as a result of global climate policy measures. The study will suggest suitable measures for the sector to achieve India’s INDC target of reducing emission intensity of GDP by 33-35 per cent below the levels in 2005 by 2030. It will further highlight how the global market and technological options are likely to change as a result of global climate policy measures; and how the 1.5 degree and 2 degree scenarios of global warming are likely to affect the infrastructure and operations in different climatic zones of India, an official statement said. Pradhan said Cop 21 will come into effect soon and it is important for the country to know the effects of greenhouse gases and ways to control them. He said that this study will provide important inputs for future strategy on oil and gas infrastructure development. Chad Johnson Womens Jersey
Lanka, India hold joint exercise on oil spill prevention
Sri Lanka and India on Thursday held a joint oil spill prevention exercise onboard the Indian Coast Guard Ship ‘Samudra Paheredar’, which is on a two-day official visit to the island country. The Navy said that prior to the training exercise, the ship’s crew of ‘Samudra Paheredar’, personnel from Sri Lanka Coast Guard, Marine Environmental Protection Authority and Sri Lanka Navy participated in a two-day workshop which included a wide range of activities related to oil spill prevention, Xinhua news agency reported. The Navy said oil spills from vessels that occur as a result of sudden collisions with oil platforms and various other related reasons, had posed a significant threat on the marine environment to date. As both India and Sri Lanka are located close to one of the busiest network of international shipping lanes, the readiness is of paramount importance for both countries to take remedial action against oil spills. Mark Bavaro Jersey
BPCL plans to spend $6.8 billion on refinery expansion by 2022
India’s Bharat Petroleum Corp Ltd plans to spend $6.75 billion through 2022 to raise refining capacity by 62 percent to meet rising fuel demand in the world’s fastest growing major economy, a company official said. India is replacing China as the driver of global oil demand growth as its economy expands and a rising middle class buys motor vehicles. The International Energy Agency expects India to account for a quarter of global energy use by 2040. BPCL, the country’s second-biggest state refiner, aims to lift its crude processing capacity to 1.18 million barrels per day (bpd) by 2022 from the current 730,000 bpd, its head of refineries R. Ramachandran told Reuters on Wednesday. In the fiscal year to March 2016, Indian fuel demand rose to its highest level in at least 15 years partly because of the nation’s renewed manufacturing push under Prime Minister Narendra Modi’s ‘Make In India’ drive. “We are aiming for an economic growth rate of 7 to 8 percent so if that happens, Indian fuel demand is bound to grow. We will see a (fuel demand) growth rate which will continue to remain at 6 to 7 percent at least for the next 10 to 15 years,” Ramachandran said. About half of the planned refinery expansion spending will be used to raise the capacity of the Bina plant in central India to 320,000 bpd from 120,000 bpd. BPCL, which operates Bina in a tie-up with Oman Oil Co., will initially expand the capacity to 156,000 bpd by mid-2018, Ramachandran said, adding the overall expansion could cost 200 to 250 billion rupees ($3 billion to $3.75 billion). The refiner intends to spend about 100 billion rupees to expand its coastal plants at Kochi in southern India and Mumbai in the west. The company is currently raising the capacity of its Kochi plant by 63 percent to 310,000 bpd and plans to expand the plant to 400,000 bpd by 2022, Ramachandran said. “Mechanical completion is in-progress and final touches need to be given to some units. From next fiscal we will operate it at full capacity (of 310,000 bpd) on sustained basis,” he said. The Mumbai refinery expansion faces limitations because of high population density and land constraints. By 2022, BPCL will raise the Mumbai capacity by about 17 percent to 280,000 bpd, he said. BPCL also intends to triple the capacity at its Numaligarh plant in northeastern Assam state from 60,000 bpd currently, he said. The company would invest about 150 billion rupees, drawn by the potential to export to neighbouring countries. “Besides meeting local demand the refinery is positioned to also supply products from the plant to Myanmar, Bangladesh and Nepal,” Ramachandran said. However, the expansion hinges on the continuation of the federal tax incentives, he said. India gives some tax relief to refineries in the northeast to make them profitable as the fuel demand in the region is very low. Todd Gurley II Authentic Jersey
Cabinet approves revision of ethanol price for supply to oil firms
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Modi, today announced it has approved the mechanism for revision of ethanol price for supply to Public Sector Oil Marketing Companies (OMCs). OMCs will now be provided ethanol at a subsidized rate to carry out the Ethanol Blended Petrol (EBP) Programme The administered price of ethanol for the EBP Programme will be Rs 39 per litre during the next sugar season from 1st December 2016 to 30th November 2017. Additional charges will be paid to the ethanol suppliers as per actuals in case of Excise Duty and VAT/GST and transportation charges as decided by OMCs. Increase/reduction in the retail selling price of Petrol would proportionately factor in the requirement of maintaining the fixed cost of purchase of ethanol during the ethanol supply year. The prices of ethanol will be reviewed and suitably revised by Government at any time during the next sugar season depending upon the prevailing economic situation and other relevant factors. The revision in ethanol prices will facilitate the continued policy of the Government in providing price stability and remunerative prices for ethanol suppliers. The Government on started revision of ethanol prices in December 2014, and decided that the delivered price of ethanol at OMC depots would be fixed in the range of Rs. 48.50 per litre to 49.50 per litre including Central/State Government taxes and transportation charges. Lamin Barrow Authentic Jersey
Niti Aayog rejects OilMin’s Rs 100 billion demand to build new reserves
The government’s think-tank Niti Aayog has shot down petroleum ministry’s demand for nearly Rs 100 billion of public money for building more strategic crude oil reserves as the proposal strays from the agreed plan to rope in private sector investments for crude storage beyond the existing 5 million tonnes. While pointing out that there was neither plan fund allocated for the project nor any funding tie-up for it from other resources, Niti Aayog said that during the preparation of the 12th Five Year Plan the ministry had agreed to private sector involvement in building and operating strategic storage. “There is significant interest in global crude oil majors to create storages to secure markets and also on arbitrage on fluctuating prices. As regards energy security, as long as the crude is stored on our mainland, we will always have the first right,” it commented on the proposal. “Niti Aayog, therefore, is not in agreement with the proposal and recommends that the ministry ought to come up with a policy to encourage private sector investment instead of deploying government funds,” it added. Under the first phase, India built 5.33 million tonnes storages at Visakhapatnam, Mangalore and Padur to provide for 12 day supply cover. Of this, Visakhapatnam has been commissioned while the other two are slated to start by end of this year. National oil companies of Abu Dhabi, Kuwait and Saudi Arabia and private major Shell have expressed interest in storing oil at these caverns after India’s last Budget announced income tax exemption on sale of stored crude oil by foreign firms to local buyers as an incentive for foreign oil companies to lease space. However, foreign investors are awaiting regulatory issues such as local taxes and India’s ban on crude oil exports to be settled before pumping money in building storage facilities. Under Phase II, the petroleum ministry plans to build an additional 10 million tonnes of storage capacity at Bikaner (5.6 million) in Rajasthan and Chandikhol (4.4 million) in Odisha to take the strategic cover to 99 days from current 75 days (63 days at refinery plus 12 days strategic). For this, it had asked the Ministry of Finance to provide Rs 100 billion partly from plan funds and partly out of the oil industry development cess collected on crude oil production as there is no Budget provision for this project. Texas Rangers Jersey
ONGC, United Energy said to vie for $2 billion Chevron fields
Oil & Natural Gas Corp., the largest Indian oil and gas explorer, and Hong Kong-listed United Energy Group Ltd. are among bidders for Bangladesh natural gas assets being sold by Chevron Corp., people with knowledge of the matter said. United Energy submitted a joint offer with Chinese conglomerate Orient Group Inc., one of the people said. The gas fields, which could fetch as much as $2 billion, have also drawn interest from Brightoil Petroleum Holdings Ltd., the people said, asking not to be identified because the information is private. The Bangladeshi government has also expressed interest in taking over Chevron’s interests in the assets, according to the people. No final agreement has been reached with any party, the people said. Energy companies have announced $43.2 billion of asset sales this year after crude prices fell to the lowest level in more than a decade, according to data compiled by Bloomberg. Chevron, the largest US oil producer after Exxon Mobil Corp., is seeking buyers for Asian geothermal assets that could fetch as much as $3 billion and is also holding talks to sell assets in Indonesia and Thailand, people familiar with the matter said earlier. State partner The San Ramon, California-based company operates the Bibiyana, Jalalabad and Moulavi Bazar natural gas fields in Bangladesh and sells all the production to state oil company Petrobangla, according to its website. Its net daily production last year averaged 720 million cubic feet of natural gas and 3,000 barrels of condensate. “We can confirm that Chevron has been in commercial discussions about our interests in Bangladesh,” Chevron said in an e-mailed statement on Thursday. “At this stage, no decision has been made to sell our interests. We will only proceed if we can realize attractive value for Chevron.” Representatives for ONGC, United Energy, Brightoil Petroleum, the Bangladeshi energy ministry and Petrobangla didn’t immediately respond to requests for comment. Calls to Orient Group’s general line were unanswered.
India to double LNG import capacity to 50 million ton per year
India plans to more than double its liquefied natural gas (LNG) import capacity to 50 million tonnes a year, Oil Minister Dharmendra Pradhan told a news conference on Thursday, without giving a timeline. It has a capacity to import 21 million tonnes of the super-cooled fuel currently. As the nation moves to a gas-based economy, India wants to increase the share of natural gas in its energy mix to 15 percent in the next three-to-four years from 6.5 percent now, Pradhan said. Dawuane Smoot Jersey