Essar to double CBM production this year
Company to ramp up wells count in Raniganj East block coal fields, seeks to triple output to 2.5 mn scmd in FY18, from current level. Essar Oil & Gas is planning to ramp up its coal-based methane (CBM) production to a minimum of 1.8 million standard cubic metres per day (scmd) by the end of the current financial year from the existing 0.85 scmd and scale it up further to 2.5 million scmd during 2017-18. In this endeavour, it will increase the number of its wells in the Raniganj East block coalfields from around 300 to 363 this year. “We’ll increase the well count by March 2017. Of the nearly 300 wells, 266 have been fracked, 247 have been completed and 175 have been on the active de-absorption cycle,” the company’s CEO for exploration and production, Manish Maheshwari, told Business Standard. Essar Oil & Gas has a revenue-sharing contract with the government for the 260-acre Raniganj CBM project, where it has been granted mining rights for 500 sq km. So far the company has made an investment of Rs 33 billion in this project. The company owns CBM mining rights in coalfields in Raniganj, West Bengal, Sohagpur in Madhya Pradesh-Chhattisgarh, Rajmahal in Jharkhand and Talcher and Ib Valley in Odisha, making it the largest private CBM producer in India. “Rajmahal will also begin production in five years. There are 20 core holes in this project and we have received the necessary approvals for land acquisition there. At present, only Raniganj is producing CBM but other projects will come up in time,” Maheshwari said. Land acquisition approval for the Sohagpur minefield is pending from the Chhattisgarh government and the Petroleum Exploration Licence for the Talcher and Ib Valley coalfields is pending from the Odisha government. All these coalfields have combined reserves of 12 trillion cubic feet (tcf) of CBM, of which Raniganj has reserves of 1.1 tcf. To extract CBM from these coal mines, Essar Oil & Gas has employed six drilling rigs of which two have been procured from Greka drilling on contract. It is also on the lookout for CBM mining projects globally but will keep off “matured markets” like the USand Australia. Besides, Essar Oil & Gas, which is expecting the global crude scenario to remain buoyant at a maximum of $ 50 per barrel of oil till mid-2017 is also planning to aggressively increase its count of petrol pumps from over 2,000 outlets to 5,000 outlets by 2018. Oscar Dansk Jersey
Congress demands SC monitored probe into KG basin scam allegedly involving PM Modi
Gujarat Pradesh Congress Committee (GPCC) on Saturday held demonstrations and burnt effigies of prime minister Narendra Modi outside all the 33 district collectorates and eight mahanagarpalikas, demanding a Supreme Court monitored probe into what it calls Rs 200 billion scam in Krishna-Godavari basin involving Modi when he was chief minister of the state. Stating that the scam was bigger than the 2G scam, state party spokesperson Manish Doshi said that the Modi regime in the state had given Gujarat state petroleum corporation’s (GSPC) 10 per cent stake amounting to Rs 200 billion in KG basin gas field to GeoGlobal Resources, a multinational company existing on paper, for nothing. Cameron Brate Authentic Jersey
India ready to clear $ 6.5 billion of Iran’s oil dues
Keen to step up engagement in hydrocarbon sector with Iran, India has conveyed to the Persian Gulf nation that it was ready to clear nearly USD 6.5 billion of the dues for oil import from that country at the earliest, provided there was clarity on payment channel. The message has been conveyed to Iran even as Prime Minister Narendra Modi is likely to visit the oil-rich country later this month. Government sources said there has been a series of discussions at various levels both in Tehran and here and both sides were confident of resolving the issue soon. “We are working on clearing the dues to Iran and are hopeful that the issue will be resolved soon,” they said. Following lifting of sanctions against it in January under a historic nuclear deal, Iran had terminated a three-year-old system with India of getting paid for half of the oil dues in rupees and has been insisting on being paid in Euros for the oil it sells to Indian refiners. It has also scrapped free delivery of crude oil to Indian refiners. Officials said though Western sanctions against Iran were lifted, problems persist in banking channels due to which regular transactions were not possible yet. Refiners like Essar Oil and Mangalore Refinery and Petrochemicals Ltd (MPRL) owe nearly USD 6.5 billion in dues to Iran. Since February 2013, Indian refiners like Essar Oil and MRPL paid 45 per cent of their import bill in rupees to UCO Bank account of Iranian oil company. The remaining has been accumulating, pending finalisation of a payment mechanism. Petroleum Minister Dharmendra Pradhan and External Affairs Minister Sushma Swaraj had visited Iran last month during which they had conveyed to Iranian leaders that India wants to significantly ramp up engagement in oil and gas sector with that country. The issue of the pending dues had also figured in the meetings. Swaraj during her visit had conveyed to Iranian leadership that India wants to invest in joint ventures in oil and gas sectors in the Persian Gulf nation where foreign investors from major economic powers are rushing in to get early footholds after lifting of sanctions. Following lifting of sanctions against Iran, India has been eying deeper energy ties with that country and has already lined up USD 20 billion as investment in oil and gas as well as petrochemical and fertiliser projects there. New Delhi is looking to increase engagement with the sanction-free Iran by raising oil imports and possible shipments of natural gas. It also wants rights to develop Farzad-B gas field in the Persian Gulf discovered by OVL. A deal for the field was not signed during Pradhan’s visit as Iranian Parliament, Majlis, is yet to approve the new Iran Petroleum Contract (IPC) under which the Farzad-B field is to be given to the OVL-led consortium. Indian firms have so far shied away from investing in Iran for the fear of being sanctioned by the US and Europe. The same was deterring New Delhi from claiming rights to invest nearly USD 7 billion in the biggest gas discovery ever made by an Indian firm abroad. But after the lifting of sanctions, India is making a renewed pitch for rights to develop 12.8 trillion cubic feet of gas reserves OVL had found in 2008. Pradhan also conveyed to the Iranian side that both countries must expand the basket of oil and gas trade. He had also expressed India’s interest in importing LPG from Iran and said companies from both sides could discuss setting up of an extraction plant in Chabahar, if required. India’s total crude import in 2015-16 was around 184 million tons. Iran had in November 2013 offered free delivery of crude oil to Indian refiners as tough Western sanctions crippled its exports. With shipping lines refusing to transport Iranian crude for fear of being sanctioned, Iran used its shipping line for the delivery and did not charge for transportation. Kevin Huber Authentic Jersey
BPCL cleared for $450m investment in BORL
India’s Bharat Petroleum Corporation Ltd. (BPCL) has obtained government clearance to increase its investment in Bharat Oman Refineries Ltd. (BORL) up to a maximum of Rs30 billion ($450 million), a report said. This will further increase the capacity of BORL’s Bina refinery in the Indian state of Madhya Pradesh, according to the Tomes of Oman report. “The infusion of funds by the BPCL will enable BORL to overcome implications arising out of erosion of its net worth,” the report quoted a cabinet statement. BORL “proposes to undertake a debottlenecking project at the refinery to further increase the refining capacity from six million tons per annum to 7.8 MTPA. The estimated project cost is Rs30 billion,” the statement said. “The highlights of the proposal for debottlenecking project include certain modifications to produce products in accordance to the new auto fuel policy,” it added. Philip Rivers Jersey
Petrol, diesel prices hiked
Petrol price was today hiked by Rs 1.06 per litre and diesel by Rs 2.94 a litre. Petrol in Delhi will cost Rs 62.19 per litre from midnight tonight as against Rs 61.13 currently, said Indian Oil Corporation, the nation’s largest fuel retailer. Similarly, a litre of diesel will cost Rs 50.95 compared to Rs 48.01 at present. The hike comes on back of Rs 0.74 per litre cut in petrol price and diesel by Rs 1.30 a litre on April 16. “The current level of international product prices of petrol and diesel and the rupee-US Dollar exchange rate warrant increase in price of petrol and diesel, the impact of which is being passed on to the consumers with this price revision,” the IOC said. State-owned fuel retailers IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) revise rates of the fuel on 1st and 16th of every month based on the average oil price and the foreign exchange rate in the preceding fortnight. “The movement of prices in the international oil market and the rupee-USD exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes,” the company added. Trai Turner Jersey
Shell joins the likes of AstraZeneca, to insource software projects to its own centres
Global energy giant Shell has joined the likes of AstraZeneca, Lowe’s and Target to insource some of its software projects to its own centres and reduce the number of its vendors. During the launch of Shell’s first global information technology centre in Bengaluru, its chief information officer Jay Crotts said that they intend to first insource its project delivery capabilities to the Bengaluru centre which he expects to be the company’s largest IT delivery centre by the end of this year. “We do have significant number of outsourcing contracts and Shell is clearly on a path to insource our project delivery capabilities. Our concentration has been to bring it in-house to Shell and actually focus our delivery centre here in Bengaluru” said Shell’s chief information officer Jay Crotts. “We do in-house software development and we will continue and take advantage of the talent we have here to improve the processes. We will also bring in our IT cloud operations which will take us through middle of next year,” Crotts said. Shell also plans to reduce the number of vendors. “We do have a significant number of vendors but my focus is to get it to a fewer number and be much more focused in our delivery ,” Crotts said. Wipro currently counts Shell as one of its big customers Sterling Moore Authentic Jersey
Inadequate availability of gas limiting urea sector growth
Short supply of gas is impeding the growth of fertiliser industry, which is getting only 24 to 26 mmcmd of the fuel as against the allocated 31.5 mmcmd, a Parliamentary panel has said. “The committee note with deep concern that the inadequate availability of gas is one of the major limiting factors to the growth of urea industry in the country,” the Parliamentary Standing Committee on Department of Fertilisers (DoF) said in its report which was tabled in Parliament today. The committee said that it is of strong view that pricing and firm availability of natural gas for existing and new units of fertiliser companies are the pre-requisites to raise the indigenous production. “..therefore, desire the Department (DoF) to play a proactive role in association with the Ministry of Petroleum and Natural Gas towards allocation of gas for the existing and new fertiliser plants in the country,” the report added. The current requirement for the fertiliser sector is 46.5 mmcmd while only 31.5 mmcmd is being allocated to them. As against that, what is supplied is only 24 to 26 mmcmd of domestic gas. The panel also suggested that the DoF should take up the matter of connectivity of gas pipeline to three naptha based fertiliser plants. There are total 30 urea manufacturing plants in the country, out of which 27 are on gas, while remaining three are on Naptha.
RIL entitled to recover cost on unviable gas discovery: Parliament’s Public Accounts Committee
Taking a diagonally opposite view to CAG, Parliament’s Public Accounts Committee today said RILBSE -0.29 % is entitled to recover all cost incurred on unviable gas discoveries as government’s technical arm DGH had in the first place allowed it to retain the entire KG-D6 block area. PAC, which went into the 2011 CAG report that castigated Oil Ministry for allowing Reliance Industries Ltd to retain its entire eastern offshore KG-D6 block in contravention of the Production Sharing Contract, said exploration cost on unviable finds cannot be disallowed. CAG had faulted the ministry and its technical arm, the Directorate General of Hydrocarbons (DGH), for allowing RIL to retain the entire 7,645 sq km KG-DWN-98/3 (KG-D6) block in the Bay of Bengal after the giant Dhirubhai-1 and 3 gas finds were made in 2001. As per the rules, only the area where discovery is made is allowed to be retained after exploration period. In its report tabled in Parliament, PAC said delineating Development and Discovery Areas from vast area given to explore oil and gas, requires technical expertise. And, the block oversight committee comprising of ministry officials and DGH as well as DGH had on the request of RIL allowed it to retain the entire block area as Discovery Area. “Therefore, the exploration costs incurred by the contractor (RIL) on unviable discoveries cannot be disallowed as the contractor is entitled to recovery contract cost out of a percentage of total value of petroleum produced and saved from the contract area as per the PSC,” the report said. Contract cost is the expenditure incurred in exploring and/or developing a discovery. “We recommend that the Ministry of Petroleum and Natural Gas should review the determination of the entire contract area as ‘discovery area’ strictly in terms of the PSC provisions,” CAG had said in its report, asking for delineation of the discovery area and relinquishment of the rest. In a subsequent report, CAG had stated that the ministry should accept sharing of exploration cost of only those wells which resulted in discovery and disallow the cost for others. On the USD 2.3 billion expenditure that the ministry had disallowed as penalty for KG-D6 gas output lagging targets due to non-drilling of committed wells, PAC said RIL has invoked arbitration in almost all the cases where Government has disallowed the costs. It noted that the “ministry in their submission before the Committee agreed that there were anomalies in the provisions” of the Production Sharing Contract (PSC). “The Committee while appreciating that the Ministry has learnt its lessons are apprehensive about the status of issues between the Government and the Contractors that have been lingering on due to the original provisions which have now been relaxed. “The Committee are of the view that a strong dispute resolution mechanism should be put in place to address the concerns of both parties,” the report said. On award of contracts by RIL on the basis of a single financial bid, PAC asked the ministry to develop robust monitoring mechanism within the existing PSC framework to ensure that a fully transparent and cost-effective process is adopted by operators in future. Commenting on government mandating a discovery confirming test before recognising a gas find, it said alternative tests for confirming commerciality of the discoveries must be allowed. “The Committee while noting that the CCEA has relaxed the provisions by providing that Operator should either relinquish or carry out DST (test) and pay penalty for delays or develop the discoveries on his own risk in ringfenced manner are of the view that a comprehensive policy may be brought out allowing alternative tests for confirming commerciality of the discoveries to ensure that the policy does not get redundant with introduction of new technologies,” it said. Government auditor CAG did not say in its September 2011 report if the capital expenditure for KG-D6 being raised from USD 2.4 billion proposed in 2004 to USD 8.8 billion in 2006 was unjustified or inflated. As per the PSC, RIL should have relinquished 25 per cent of the total area outside the discoveries in June, 2004, and 2005, but the entire block was declared as a discovery area and the company was allowed to retain it. CAG was critical of government oversight, particularly on high value procurement decisions, and sought an “in-depth review” of 10 contracts, including eight awarded to Aker Group by Reliance on a single-bid basis. Tim Williams Jersey
IOC investing Rs 45K crore to expand refining capacity to meet demand
Refining giant Indian Oil Corp (IOC) is preparing for a future when batteries will increasingly replace car fuel tanks but for the moment is investing Rs 45,000 crore to expand its refining capacity to meet the rapidly rising fuel consumption in the country. The rapid progress in battery technology and a big customer cheer Tesla, the battery-car innovator, received recently has strengthened hope battery-powered cars may within decades replace conventional cars on most roads and end the dominance of fossil fuel in transportation. “At this point of time, I don’t see Tesla totally changing the world because projections do not indicate that,” B. Ashok, chairman, Indian Oil Corp told ETin an interview. “We believe that looking at that (Tesla) as a threat we should not stop our activities because that will be a bigger threat. If it doesn’t transform the world as it is expected to, and we still have to depend on the conventional energy, there should not be a shortage of energy available at that point of time because I today fear that if I set up a refinery, maybe after ten years the refinery will have no meaning. I can’t take that stance.” With a capacity of 80,000 million tonne of refining capacity, 35% of India’s total, Indian Oil Corp is the country’s largest refiner. It also has 25,000 filling stations, nearly half of the nation’s total. The company plans to raise its refining capacity by a quarter with an investment of Rs 45,000 crore in brownfield expansion, debottlenecking and fuel quality upgrade projects in the next five to seven years. Under this, its freshly-built Paradip refinery will expand to 20 million tonne from 15 million tonne today, so will its Panipat facility. The company plans to invest heavily in fuel marketing and distribution infrastructure as well as exploration and production. India’s fuel consumption grew 11% in 2015-16 and is expected to rise more than 7% in the current fiscal. While big investments are underway at Indian Oil Corp, what has changed is the way the projects are evaluated. “Instead of purely looking at whether it makes commercial sense for us to take up some projects, we have started having these conversations whenever we look at any proposal that how sustainable this is? So if the business is going to be altered in the future because of any change in demand trend and so on, to what extent will our investment which we are making ensure that there is no redundancy of that,” Ashok said. So if petrol and diesel were to run out of car owners’ favour tomorrow, the refinery should be flexible enough to tweak its output to be able to supply more raw material to the company’s growing petrochemicals business, he said. The company is also investing heavily in research and development in this regard. Doug Middleton Authentic Jersey
Petronet LNG tenders to buy two LNG cargoes
India’s biggest gas importer Petronet LNG (PLNG.NS) has tendered to buy two cargoes of liquefied natural gas, two trade sources said. The cargoes are for delivery in August and September, the sources said. LaDainian Tomlinson Womens Jersey