Swiber appeals Bombay High Court to stop ONGC from invoking Rs 7 billion bank guarantee
Swiber Offshore India has appealed to the Bombay High Court to stop state-run Oil and Natural Gas Corporation from invoking a bank guarantee of $105 million (about Rs 7 billion) after the offshore construction and support services provider’s Singapore-based parent ran into financial troubles. The Indian subsidiary of Swiber Holding Ltd had furnished the bank guarantee last year after bagging a construction, maintenance and service contract from ONGC. The genesis of the dispute lies in a liquidation application filed by Swiber Holding Ltd and Swiber Construction Pte in a Singapore court and approval sought to appoint judicial managers to help the company reorganise its business. Judicial management is an equivalent of the Board for Industrial and Financial Reconstruction (BIFR), which helps sick industrial units revive in India. The state run Indian oil and gas company said that it is entitled to invoke the bank guarantee as per the agreement with Swiber Offshore India since the latter had filed for judicial management. However, Swiber Offshore India argued in the high court that it is very much in a position to fulfil its contractual obligations of work and said that invocation of the bank guarantee will hurt the company. It has assured the court that it will obtain suitable court orders from the Singapore Court so that ONGC’s projects do not suffer. The company said that its quantum of work for ONGC, including both ongoing and executed projects, stands at about $800 million (about Rs 53 billion). Justice SJ Kathawala posted the matter for further hearing on August 11 and directed the lenders who have issued the bank guarantees that they will have to abide by the orders passed by the Indian courts. Nishith Dhruva, managing partner of law firm MDP Partners, which is representing ONGC in the matter, confirmed the development but declined to divulge more since the matter is sub judice. Raj Panchmatia, partner at Khaitan & Co, which is representing Swiber Offshore India in the matter, and Huzefa Nasikwala, founder of Nasikwala Law Office, which is representing DBS, a bank that had issued the bank guarantee, refused to comment on the matter. Max Scherzer Womens Jersey
Lower gas price to help government save on fertilizer subsidy
The sharp decline in the price of domestic natural gas in the first half of the current fiscal is likely to lead to a saving in the government’s subsidy outgo on urea, the most commonly used fertilizer, by up to Rs.90 billion in 2016-17. According to official estimates, the 20% price cut on domestically produced gas to $3.06 per million metric British thermal unit (mmBtu) for the April-September period and the renegotiated price of imported liquefied natural gas (LNG) from Qatar’s RasGas Co. Ltd has reduced the price of pooled gas available to fertilizer factories by nearly a third to $6.2 a unit from a year ago. In 2015-16, the pooled price of gas for fertilizer companies was about $9 per unit. Factories are given gas at a pooled price (of domestic and imported gas) from 1 July 2015 so that no factory is at a disadvantage. The idea is to ensure a level-playing field in fuel price as the government does not want the less advantaged factories to shut down leading to higher import dependence. A further reduction expected in gas price for the second half of the fiscal could enhance the savings on subsidy for the domestically produced urea estimated for 2016-17 at Rs.380 billion. Natural gas price has a direct impact on the subsidy outgo as fuel cost accounts for 80% of the urea production cost. “A reduction in gas price by $1 per mmBtu lowers the cost of urea production by $26 per ton,” said Birinder Singh, executive director, Indian Farmers Fertilizer Cooperative Ltd. However, any change in the quantum of fertilizer used by farmers and exchange rate movements could also impact the actual subsidy outgo. India produces 21 million ton of urea and imports about six million tons. In the wake of the prevailing low gas price in world markets, finance minister Arun Jaitley had in 2016-17 budget lowered the subsidy for imported urea to Rs.110 billion from Rs.12,300 for the last fiscal. Companies sell the commodity at government set prices and get the subsidy based on their sales figures. Subsidy on fertilizers, petroleum and food estimated at Rs.2.5 trillion for the current year account for about 12% of the government’s total expenditure and has a bearing on its fiscal consolidation performance. Jaitley proposes to limit government’s fiscal deficit—the gap between receipts and spending usually met through borrowings-to 3.5% of GDP this fiscal, down from 3.9% last year. The prevailing low crude oil price in world markets has helped the finance minister to keep petrol and diesel out of price control, raise taxes on these fuels without increasing the burden on the consumer and focus on directly transferring subsidy on cooking fuel (liquefied petroleum gas) to the consumer’s bank account. An experiment to transfer kerosene subsidy directly to the consumer’s accounts in 26 districts across eight states are underway. Being a net importer of energy, India is one of the economies that has benefited from the low price of fossil fuels in world markets, although the stress on oil producing economies has impacted its foreign exchange remittances. Jim McMahon Jersey
Nixed H-Energy pipeline project leaves Bengal out of gas
The Petroleum and Natural Gas Regulatory Board (PNGRB) has scrapped the tender for a trunk pipeline for evacuation of gas from the proposed floating LNG terminal (FRSU) of Hiranandani Group near Contai in West Bengal. The terminal, scheduled to become operational in March 2020, with its pipeline network is designed to cater to the demands of both India and Bangladesh. Hiranandani group outfit H-Energy Private Ltd (HEPL) emerged the lowest bidder for the 705-km pipeline project on May 12. On July 15, the tender was annulled, citing ‘viability’ concerns. “This is the first instance where the board has received such a type of bid in respect of a natural gas pipeline. Since current regulations have no checks to avoid such bid outcomes, a review of the regulation and the bid document shall be undertaken to facilitate rebidding of the pipeline,” the order said. The plan was that one arm of the pipeline snaking through Bengal and after meeting the local demand, would extend up to Bangladesh. The other arm would reach Paradip connecting industrial hubs in Odisha and the Dhamra port, where the Adani Group is setting up an LNG terminal. Adani and the State-owned IndianOil (IOC), which has booked re-gassification capacity at the five million ton per annum Dhamra terminal, participated in the biding process. Questions galore The Regulatory Board’s decision has raised many questions. First, PNGRB held that H-Energy’s low bid of one paise per mmBtu (million metric British thermal unit) makes the project unviable. Apparently, this is to stop H-Energy from cross-subsidising pipeline operations with revenues from other business verticals. Sources, however, point out that the same Board approved nearly two-dozen city gas distribution (CGD) projects based on identical bids. They also wonder if the transmission rate holds the key for viability of pipeline projects, as most projects approved by the regulator in the last five-six years have remained on paper. Many observers level a charge of conflict of interest against the regulator as many PNGRB executives, including some key personnel evaluating the tender, were on deputation from IndianOil. PNGRB response In a written response, Arvind Kumar, Additional Advisor with PNRGB, denied this charge, saying: “All officers of the Board… are on deputation from different PSUs under the Petroleum Ministry, since its inception.” he said. On city gas projects, he said, the authorisation regulations for CGD and natural gas pipeline are “different”. In CGD, the successful entity gets marketing exclusivity. And, the bid tariff is applicable for the third party only and that too after the marketing exclusivity ends only for 20 per cent of the volume. ‘Unfair treatment’ A H-Energy source, however, alleged unfair treatment. “The bid process was annulled by the PNGRB well after H-Energy was technically qualified, our price bid was opened and our composite score was found to be the highest. Most importantly, the yardstick used for the annulment that is ‘standalone economic viability’ is neither mentioned in the tender document nor in any existing regulation,” a H-Energy source told BusinessLine. Sources in the West Bengal government also expressed concern at the development that would cast a shadow on the timely implementation of the LNG project. “The Rs. 9,000-crore project (including pipelines) is an important investment proposal for the State. Cancellation of the tender is a major setback to the State,” said a senior West Bengal government official. West Bengal doesn’t have access to natural gas. The decade-old proposal by GAIL India to connect Haldia with the HBJ pipeline has not seen any progress. In a recent decision, GAIL decided to connect the pipeline to Adani’s Dhamra terminal and this to be followed by an extension to Haldia in the third phase. The Contai terminal being a crucial plank of the Narendra Modi government’s initiative to enhance energy cooperation with Bangladesh, any delay in project implementation will have international ramifications. Armed with a go-ahead from the Ministry of External Affairs, H-Energy promised supply of one million ton of re-gassified LNG to an upcoming State owned power project in South Bangladesh bordering Bengal. The power project couldn’t be fed gas from Bangladeshi sources in the East due to infrastructure inadequacy. A gas sales agreement in this regard is at an advanced stage of finalisation. Also, authorities in both the countries are working on a tax regime to make the trade a win-win and also exploring means to create an international grid connecting northern part of Bengal through Bangladesh. Jeff Locke Womens Jersey
Iran Begins Shipping Euro 4 Compliant Oil
The National Iranian Oil Products Distribution Company (NIOPDC) has announced that the country has deployed its first Euro 4-compliant gas oil shipment to global markets. Mahmoud Taherizadeh, Director of the Mahshahr region for NIOPDC stated: “In the first four months of the current Iranian calendar year, about 184 million liters of diesel fuel with Euro 4 standards have been exported from Mahshahr oil terminal… In addition to diesel oil, approximately 960 million liters of mazut were also deployed to world markets over the span of four months.” He said that for the same period last year, mazut shipments totaled 472 million leaders. Taherizadeh said that since no oil gas cargo had been shipped from Mahshahr terminal in the prior year, this is the first time in the current year that exports of Euro 4-compliant diesel oil have been shipped from the terminal. Taherizadeh said that the Mahshahr terminal has become a “major corridor” for petroleum exports, and that diesel and mazut exports are expected to continue to grow. In the current Iranian year, which begins on 20 March, the country has exported an average of 9 to 9.5 million liters of gas oil per day. Those numbers show an increase of two times the amount from the same period in the previous year. India is one of Iran’s oil customers. Last month, the country imported 461,000 barrels of oil per day from Iran, which was up 110 percent from July of last year, and 21 percent increase from June. Vehicle sales in India remain on the rise, increasing the country’s demand for oil. Iran continues to strive to recover from losses incurred during the nuclear sanctions. While the sanctions were in place, India paid for Iranian imports in rupees, which Iran then used in turn to make purchases from India. Jordan Martinook Womens Jersey
Essar Oil’s fuel exports to fall in 2018/19 as focus shifts to local sales
Indian refiner Essar Oil’s fuel exports will sharply drop in 2018/19 as it ramps up local sales by doubling its retail network and turns some of its naphtha into profitable gasoline, its managing director said. Rising fuel demand, driven by India’s thirst for gasoline, is expected to help push the growth rate in the country’s fuel consumption ahead of China’s. Essar Oil, which operates the 400,000 barrels per day Vadinar refinery in western Gujarat state, directly sells gasoil and gasoline in the retail market through 2,470 fuel stations and exports about 45 percent of its refined fuels output. It plans to increase its retail sales outlets to 4,300 this fiscal year and to over 5,000 the next year, L.K. Gupta told reporters on Saturday, adding higher local sales would shrink Essar’s export to 25 percent. “All along, we were a country where people were aspiring for a bicycle and now we want at least two-wheelers (motorcycles and scooters)…65 percent of gasoline demand is from two-wheelers,” Gupta said. He said Essar is investing about $200 million to raise output capacity of its naphtha hydrotreater, continuous catalytic reformer and isomerisation units by 15-20 percent and set up new units to recover sulphur and manufacture propylene. These projects, to be completed by March 2018, will boost Essar’s profit from turning crude into refined fuels by $0.90 per barrel, Gupta said. Expansion of units would halve Essar’s naphtha exports to one cargo a month and raise annual gasoline output by 10-15 percent from the current 3-3.5 million tons, he said. Erik Gudbranson Womens Jersey
OIL pays Rs 24.9 million royalty to Arunachal Pradesh
Oil India Limited has made a payment of Rs 24.9 million to Arunachal Pradesh against differential royalty on oil for February 2014 to March this year. General Manager of Oil India, Duliajan (Assam), A K Acharya handed over the cheque to Chief Minister Pema Khandu in his office yesterday. The GM briefed Khandu on the pending issues of Ningru oil field and requested him to expedite the Petroleum Mining Lease, an official release said here. He also apprised Khandu of the yet to be signed MoU of 10 MW gas power plant. The Chief Minister assured him to fast-track the pending issues and asked the firm to take up more activities in the state as it has abundant mineral oil resources which need to be tapped properly, the release said. Robert Griffin III Womens Jersey
ONGC on recruitment drive for 417 posts; invites GTs at E-1 level in Engineering & Geo-Sciences
Interested candidates have to apply online through ongcindia.com. The last date to apply is August 10, 2016. The Oil and Natural Gas Company (ONGC) recently announced 417 engineering and geo-sciences vacancies. Through the recruitment drive, the energy major invites application from interested candidates who have successfully cleared GATE-2016 examination. The candidates will be appointed as Graduate Trainees (GTs) at E-1 level in Engineering & Geo-Sciences posts. The application process has already started and the last date to apply is August 10, 2016. The advertisement/notification clearly mentions that only the GATE – 2016 examination score will be valid for the recruitment. The results of any other examination, even GATE – 2015, will not be considered. Candidates will be shortlisted on basis of their GATE 2016 and personal interview scores. Eligibility criteria ONGC has invited application for varied posts including Assistant Executive Engineer, Chemist, Geologist, Geophysicist, Materials Management Officer, Programming Officer and Transport Officer posts. The educational qualifications vary for different posts advertised. Age limit for general candidates is 30 years as on January 01, 2016. Age relaxation for ST, SC, OBC, physically disable candidates are as per the Government rules. Age relaxation will be extended to departmental candidates to the extent of their service rendered in ONGC. Scott Wilson Jersey
Govt. Of Sri Lanka: Huge tender for oil pipelines next week
The Government will next week award a tender valued at more than Rs. 8.7 billion for the construction of four pipelines to carry oil from the Colombo harbour’s Dolphin Pier to Kolonnawa. Bidders from India, Malaysia, China and the United States have been shortlisted to construct the pipelines, each six-and-a-half kilometres long, to replace the 69-year-old oil pipelines in use, Ceylon Petroleum Corporation (CPC) Chairman T.C. Jayasinghe said. The Cabinet has given approval for the project and the tender will be awarded to the lowest bidder by the tender board on Friday, he said. Two pipelines are for jet and crude oil while the others are for refined petrol and diesel. “The existing pipelines are old and their capacity is less; hence, the transportation of oil takes long resulting in the CPC having to pay demurrage at times. There are also leaks in some places leading to wastage,” he explained. The pipelines would run underground so there would be no logistical issues such as having to relocate people. The project was likely to be completed in one-and-a-half years, he said. Mr. Jayasinghe said the company which won the tender would have to undertake the US$ 60 million (Rs 8.7 billion) project using its own funds which the government would pay back in 12 years after a three-year grace period. Jonnu Smith Authentic Jersey
Government may cut gas price for producers by 20 per cent in October
Natural gas price paid to producers like state-owned Oil and Natural Gas Corp (ONGC) and Reliance Industries is likely to fall 20 per cent to $ 2.45 in October. This will be the fourth reduction in last 18 months following the formula approved by the government in October 2014. Price of natural gas produced from existing fields of ONGC and RILBSE 2.15 % is likely to fall to $ 2.45 per million British thermal unit with effect from October 1 as opposed to $ 3.06 currently, a senior official said. This rate is on gross calorific value (GCV) basis. The gas price was last cut on April 1 from $ 3.82 per mmBtu to $ 3.06 per mmBtu. On a net-calorific value (NCV) basis, the gas price was on that day cut to $ 3.4 per mmBtu as compared to $ 4.24 previously. On NCV basis, the new gas price is likely to be $ 2.7 from October 1. Jake Ryan Jersey
RIL to commission $35 billion projects in FY17
Reliance Industries (RIL) expects to commission projects with a total investment of $35 billion in 2016-17. These include petrochemical expansion projects that would place RIL among the top 10 global producers in that sector, the company said in its annual report for 2015-16. RIL has also sought shareholders’ approval to raise Rs10,000 crore through non-convertible debentures (NCDs) this fiscal year. “In the polyester chain, we added substantial volumes in an effort to further integrate our business …Reliance is confident of placing all our incremental output from the new projects in the domestic markets to meet India’s growing demand,” chairman Mukesh Ambani said in a letter to shareholders. RIL said its petrochemical plant expansion was on schedule and would provide the company the capacity and earning potential of a top pro ducer in the world. It is also upbeat on the impending launch of the Reliance Jio Infocomm telecom service. During the year, RIL and its subsidiaries arranged long-term foreign currency facilities of about $6.3 billion. RIL, which repor ted a gross refining margin of $10.8 a barrel in 2015-16, ma naging to outper form the Singapore benchmark with a premium of $3.3 a barrel, expects mar gin pressure, but ho pes to perform better than the benchmark. “The ability to ope rate at high utilisa tion levels and switch product slate et conditions enabled to suit market conditions enabled RIL to capture margin optimisation opportunities in the market.Overall, effective utilisation of secondary processing units, innova tive approach to optimise logistics cost and utilisation, production flexibility to swing to higher netback products and sourcing of bestvalue crude and feedstock-enabled RIL to sustain its performance even in a challenging margin environment,” the company said. RIL said it expanded its fuel retail pump network to 1,000. It sees opportunity for further expansion. The company also said: “Both Reliance and its partner BP are evaluating the new policy and investment plans to develop discovered resources.” AFFORDABLE 4G RIL has said its telecom arm Reliance Jio Infocomm will launch its 4G LTE services at “substantially lower “rates than rivals, rekindling fears of a bruising tariff war in an already competitive industry. “Affordability is a key to success of the digital revolution. Jio will make its services accessible and affordable to all consumers, “RIL said in its annual report on Thursday. Robert Newhouse Authentic Jersey