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Jan 2016

Indraprastha Gas Ltd is fighting tooth and nail to keep the PNGRB from bestowing a common carrier status to its City Gas Distribution (CGD) network in Delhi.
 8The regulator has claimed that the exclusivity had in fact ended in 2012 and it is about time that IGL falls in line and accepts the common carrier status.
 I8GL says that the principal regulations are yet to be laid down by the PNGRB to declaring CGD networks as common carriers or contract carriers.
 8The company has also claimed that the end of exclusivity is being dealt in a pre-determined way by the PNGRB by claiming that exclusivity has ended before the hearing is conducted.
 8Public comments on the end of exclusivity of IGL has not been elicited by the Board yet, it is contended.
 8The PNGRB however has stuck to its guns and has said that subsequent to the acceptance of the central government authorization of IGL's charge on the Delhi CGD network, the exclusivity period had ended in 2012.
 Comment: It is condemnable that IGL is fighting a battle over exclusivity with the PNGRB when it is quite evident that the exclusivity period ended in 2012. What IGL is doing is pure filibustering. The goal is to use tactics of obfuscation so that the issue is buried in meaningless legalese. IGL is perhaps being goaded on by GAIL, one of whose officers are loaned as a CEO to the city gas entity, to put up a fight. But what IGL is losing, like GAIL did, is both credibility and goodwill. This is where the petroleum minister must intervene though IGL does not come directly under his ministry. One can well imagine what kind of treatment will be meted out to any third party who might be interested in loaning out IGL's assets based on the common carrier principle. It is about time that IGL puts an end to its ridiculous stand on the issue and show the maturity that is commensurate with its size and stature.
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There is no doubt that Dharmendra Pradhan has drafted a well crafted policy but the controversy, if any, will be over the speed at which he wants the indigenization plan to proceed over a 10 year period.
 8There will be some who may say that the the speed is too fast and there is a need to slow down the process or it will hamper rather than provide impetus to the domestic E&P industry.
 8But there are signs of realism too. For example the minister has left deepwater drilling and HP-HT operations outside the ambit of the indigenization programme, knowing that forcing a local content caveat in this high-technology segment will be self defeating. 
 8Thankfully Pradhan has made the draft public, seeking comments from all stakeholders.
 8He will now have the cushion to make any course correction that may be required.
 Click on Reports for more details on the item-wise indigenization schedule that the draft policy has drawn up. Details
The government is pushing hard with its Make in India campaign in the petroleum sector.
 8A draft policy paper calls for a 10% price preference to companies that can meet stipulated local content (LC) requirements in different segments of the industry.
 8The idea seems to be to push foreign companies to to go for local sourcing to the point that they can take advantage of the price preference clause.
 8Local content is defined as added value brought to India for supply of equipment and services in the oil and gas industry.
 8A public sector tender will specify what would be the overall percentage of the procurement value which would be awarded to the lowest techno-commercially qualified local LC manufacturer or supplier, subject to price matching with the L1 bidder.
 8The remaining value of the tender will be awarded to the L-1  bidder which does not meet the LC qualification. 
 8More importantly, in the normal course, as much as 50% of a tender's value will be marked for technically qualified LC manufacturer.
 8The winner must have the lowest price amongst the LC manufacturers and also be within 10% of the L1 bidder's price.
 8Then again, if the tendered item is non divisible, the entire procurement value will be awarded to the eligible LC manufacturer.
 8The caveat is that only those LC bidders whose bids are within 10% of the L1 bid will be allowed the opportunity to match the L1 bid.
 Click on Reports for more Details
Calculations made by the IEA show that today's LNG prices in Asia are way below the cost at which GAIL will be acquiring its committed LNG cargoes from the US.
 8At the current price, the data shows that while the upstream and liquefaction cost are covered for cargoes that could come to Asia from the US, shipping cost is not covered.
 8The current Asian spot LNG price is around $6.4/mmbtu whereas US cargoes can breakeven for Asian deliveries only when the price is close to $9/mmbtu.
 8In fact, East African LNG will be cheaper than that of the US, at a breakeven level of $7.8/mmbtu in Asia.
 8The point to note is that today's LNG prices in Asia are below the development costs of the cheapest new LNG projects around the world.
 Click on Reports for more Details
Why has the price of LNG fallen so dramatically?
 8The reason is that there has been a dramatic fall in demand for LNG in Asia.
 8After growing at around 15% a year in 2010, the growth rate has been falling rapidly and is in negative territory in 2015.
 8LNG demand is a negative 4% in 2015.
 8The fall had been rapid and inexorably downwards ever since 2010.
 8For GAIL, this is really a nightmare scenario. The gas major has committed to buy 5.8 MMTPA of LNG cargoes  -- 3.5 MMTPA with Sabine Pass terminal and the other for 2.3 MMTPA from the Cove Point terminal.--that the gas major has booked through US LNG terminals for delivery from 2017-18 onwards.
 8The company's upfront commitments are high: With Sabine Pass for example, GAIL has a 20-year deal. And the deal is that GAIL will pay a fixed cost of $3/mmbtu and an LNG cost pegged at 115% of the Henry Hub price.
 8The cargoes were meant for delivery to India either by way of swaps or directly from the US but it looks like West Asian suppliers like Qatar may under price their cargoes just below GAIL's cost of delivery to India. If current spot prices are to prevail by the time GAIL takes deliveries, the losses will be unsustainable.
 8The other option is for GAIL to get customers in India who are willing to enter into long term arrangements against US supplies. But given the uncertainties ahead, it will be difficult to rope in such customers soon.
 In the absence of long term contracts in India, GAIL may be forced to look for term contracts outside of India, in unfamiliar markets. 
 8Or it has to become an LNG trader, hedging its bets and looking for the next opportunity wherever it occurs.
 8All of this will require a level of sophistication that GAIL lacks at this juncture.
 Click on Reports for more Details
The Great Eastern Shipping Company Ltd. (G E Shipping) took delivery of a 2005-Japanese built Medium Range Product Tanker, dubbed “Jag Padma” with a capacity of 48,000 dwt.
 8The company had contracted to buy the ship in December 2015.
 8With the inclusion of the vessel, the company’s current fleet stands at 31 vessels.
 The following is the composition:
 822 tankers (8 crude carriers, 13 product tankers, 1 LPG carrier)
 89 dry bulk carriers (1 Capesize, 3 Kamsarmax, 5 Supramax)>
 8The average age of G E Shipping's vessels is 10.6 years aggregating to 2.4 million dwt.
 Click on Reports for more Details
An easy self certification process for local content has been laid down as also a simple way of calculating it.
 8The bidder will submit an undertaking along with the bid on the items and services to be procured from local providers
 8A certificate will also be needed from the bidder's statutory auditor but for procurement of goods beyond Rs 50 crore an independent surveyor will have to do the certification job.
 8An apex Planning and Monitoring Body under an additional secretary in the ministry will be the governing body for the policy and it will have the authority to modify the local content requirement.
 8Penalties will be imposed on those bidders who do not fulfill the local content criterion.
 8And these may include written warning, financial sanction and even the banning of a bidder.
 8If during the execution of a contract or after it, the LC requirement is not met, than the PBG will be confiscated. Details
ONGC is planning to install additional gas compressor plants at different locations in its Ahmedabad asset which will help gas gathering stations meet their pressure requirement.
 8The four stations which are part of the project includes, Wadu, Newagam, Motera and Kalol.
 The facilities to be required at each GCS/GGS station are listed as follows:
 -- Procurement, installation and commissioning of booster gas compressors trains along with cooling systems and associated works.
 -- Installation of common suction knock out drums (KOD) on the inlet line to the compressor and a common discharge KOD on the compressor discharge.
 -- Hook-up of inlet and outlet of compressors with respective existing facilities.
 -- Allied electrical, civil, mechanical, piping and instrumentation works.
 Click on our Reports section for more. Details
Compressors at the Wadu and Nawagam GCS
 8The Wadu-Paliyad field is located towards the north of the Kalol field in the Ahmedabad-Mehsana tectonic block of the Cambay basin.
 8There are 27 wells in the Wadu field, which are connected to Wadu-GGS that produce about 206m3/day of liquid.
 8At the Wadu GGS, a high pressure gas compressor plant (GCP) is proposed to be installed to cater to the continuous gas injection requirement at the wellhead.
 8For meeting the injection gas requirement, a total of three trains of HP gas compressors, each of 50,000 SCMD, capacity are required.
 8At Nawagam GGS, enhancement of the existing (3 x 50,000 SCMD) gas compressor plant to cater to the gas injection requirement of gas lift wells of the Nawagam field is envisaged.
 8For meeting the injection gas requirement, two trains of new HP gas compressors, each of 50,000 SCMD capacities is required.
 Click on our Reports section for more Details
At the Kalol GCS, a total of 27 gas wells are connected, out of which 11 gas wells contribute low pressure (LP) gas of around 85,000 SCMD.
 8Out of these 11 gas wells, eight wells contributing 50,000 SCMD have very low FTHP and are activated on daily basis due to frequent water loading.
 8During activation, these wells are to be diverted to the LP Separator and and they have to be kept under low pressure activation.
 8Thus the produced gas from the LP separator needs to be pressurized more for further supply to the GCP line for compression and to onwards distribution lines.
 8For meeting the requirement, three booster gas compressors (2 OP+1SB) each of 25,000 SCMD capacity are to be installed.
 8At Motera GGS, during annual shut down, the proposed AG gas is diverted to the Kalol AG grid line through an existing line from the Motera GGS to the Kalol GGS-XI for further utilization.
 8And due to this upstream low intake pressure, the entire gas does not pass through thereby causing back pressure on the system and repealed operational problems.
 8Hence, it is proposed to install two booster gas compressors (1 OP+1SB) each of 15,000 SCMD capacity here.
 Click on our Reports section for more. Details
All other associated facilities like suction and discharge KODs, air coolers and utility instruments will form a part of LSTK scope of work for these compressor plants.
 8Piping works for gas and auxiliary systems will comprise of the following:
 -- Inlet and discharge process gas manifolds
 -- Interstage process gas piping and relief valves at stage discharge
 -- Complete piping with control valves
 -- NRVs at the discharge line
 -- Manifolded vents and drains
 Click on our Reports section for more. Details
The Chinese are damming the Brahmaputra -- one of the world's largest rivers -- and it is already creating a crisis in Assam.
 8The Chinese have just completed the the 510 MW  Zangmu Dam in Tibet on the Brahmaputra and although its is meant to be a run-of-the-river hydroelectric project, there are reports of a sharp drop in the water table in Assam this winter.
 8Eyewitness reports claim that the Brahmaputra -- which is fed in the winter by melting snow from its icy origins in Tibet -- has shrunk much more this winter than in the past.
 8And the water problem is severe enough for IOC to seek the diversion of a local river to be able to feed water to its Digboi refinery.
 8Digboi is not near the Brahmaputra but the overall shrinkage of the water table on account of a lower water flow in the Brahmaputra has resulted in a water crisis in the refinery.
 8The Chinese are planning to build more dams in TIbet on the river and this is going to create a severe ecological problem just not for the North East but also for Bangladesh through which the river flows into the Bay of Bengal.
 8The Chinese are bent on bringing this mighty river -- named after the son of Lord Brahma -- to  its knees.
 8Experts predict future conflicts in the world may well be over exploitation of water resources. The damming of the Brahmaputra is appearing to be a source of potential conflict between India and China.
 Click on Reports for more Details
 The global E&P industry is in turmoil. Projects are being shelved and layoffs are occurring across just about any industry connected with the E&P business.
 8In this scenario India's deepwater gas discoveries have little chance of getting to the production stage even if gas prices were to be decontrolled today.
 8The low landed price of LNG -- and a further decline in the near term on account of the glut in the market -- will dictate the ceiling price that offshore gas in India can elicit. And the price that comes out is not lucrative enough at this point for operators to push for development of their reserves.
 8The government will have to put together other complementary measures to be able to get these discoveries into the development mode.
 8Given the current scenario, implementing PSC timelines mindlessly makes little sense and imposition of PSC fines will hardly do much to swell the Government’s coffers. All it will do is chase away the few remaining players still invested in the sector with little hope of getting any new ones in.
 8 In a situation when any new bid round will hardly attract any investors , the government may therefore need to think of  modifying Production Sharing Regime (PSC) terms --- to take into account delays in the implementation of the development plan on account of the challenges faced in making such projects viable. There have been precedents for such modifications such as when a "Rig Holiday" was allowed to take into account the acute shortage of drilling rigs.
 Click on Reports for more Details
 How can petroleum minister Dharmendra Pradhan make a mark as an innovative petroleum minister?
 8If he wants to leave an indelible mark on the footprints of time, he has to be different from the long list of his predecessors who were known more for self aggrandizement than for innovative policy measures. The last big idea came from the maverick Mani Shankar Aiyer who visualized a series of gas pipelines that will run from Turkmenistan and Iran all the way to India and eastwards to Bangladesh, and onwards to Myanmar and Thailand.
 8Pradhan is in an advantageous situation to push for fresh ideas because he has a boss in Narender Modi who is always looking at the big picture.
 8To begin with, Pradhan needs to free up the domestic E&P sector, by changing the rules of the game. Making the PSC more flexible to take into account ground realities is one good idea as is freeing up the price of gas.
 8Importantly, he can also make a presentation to the Prime Minister on how the ONGC can get more bang out of its Rs 53,000 crore planned investment in the KG basin by not going through with it and instead picking up cheaper assets in other parts of the world.
 8Oil and gas prices are unlikely to remain low for a long time. It is established that demand will go up and not down in the years ahead. Projections show that large investments will still be needed to feed the world's still growing appetite for energy.
 8The current situation is only temporary and it will pass.
 8Pradhan won't be accused of making the kind of mistakes his predecessors did, like buying up Imperial Energy at a high premium or spending more than $5 billion just to buy up equity in the still-born Mozambique project. The price tags were high at that point in time because the valuations were based on prevailing prices then.
 8He will be making a safe investment if he were to divert ONGC's KG Basin investment into buying up equity oil elsewhere.
 8There will be those who will say that diverting such a large investment may be detrimental to India's Made in India programme as a significant part of the Rs 53,000 crore splash will have gone to shore up the domestic equipment and service industry.
 8That's a charge that may not be entirely true. For one, deepwater investments have a large foreign component as the equipment and services required are very sophisticated and not usually made in India. Then again, there is nothing that should prevent a domestic firm from bidding in OVL's tenders that come out from an overseas asset that it purchases now.
 8The time has come for bold and innovative decisions. And Pradhan should now rise to the occasion.
 Click on Reports for more Details
A time has come for the government to do some unconventional thinking on the oil and gas exploration front.
 8Take the example of ONGC's proposed Rs 53,000 crore investment in the KG-DWN-98/2
 8While the total oil initially in place (OIIP) in the block is estimated at 106 million cubic metres (MMm3), production of only 26.71 MMm3 is envisaged during the 2019-2031 period. Then again, the gas initially in place (GIIP) is estimated at 69.57 BCM, of which only 51.33 BCM can be produced during the 2018-34 period.
 8The website is proposing that ONGC should keep this investment on hold and instead look at acquiring oil and gas acreages abroad in terms of equity oil with the same amount of money.
 8Rs 54,000 crore is a lot of money by any yardstick and given the crash in E&P asset prices worldwide, the public sector E&P major will be able acquire 10 times the reserves in the KG-SWN-98/2 for this price tag.
 8It can also acquire a few small to mid cap E&P companies with ready reserves and production for that price too. Tallow Oil for example is going at a market cap of around $2 billion. ONGC can acquire a clutch of similar companies for the  $7.4 billion that it plans to invest in KG-DWN-98/2. It can hit the ground running with a production of up to 200,000 barrels of oil per day if not more with that kind of investment.
 8The KG-DWN-98/2 investment can fetch an IRR that will barely touch the hurdle rate of 10% at best. ONGC can do much better by deploying the money elsewhere.
 8What the government must do is to maximize the reserves accretion on the country's account -- as oil and also gas are now fungible commodities and what matters is ownership and not whether it is located in India or abroad -- and preserve domestic reserves for exploitation when either the returns are highly positive or when there are other more pressing compulsions such as when India's energy security is at stake.
Click on Reports for more Details
The crude carriers market displayed a mixed picture last week, with rates for VLCCs shooting up and regaining some of the recently lost ground, while at the same me the rest of the market was watching a bit more of its 2015 gains being wiped out.
 8Last week also ended with what was the biggest two day rally in the price of oil since 2008. The sell-off of the past months appeared to be finally ending but the surge in the oil price proved to be short-lived in the end followed by another slide in the current week
 8News that production in Iraq hit a record high in the month of December, reaffirmed the weak fundamentals the price of the commodity is facing since the supply glut is not going to disappear anytime soon
 8Following the sharp fall during the week prior, rates for VLCCs managed to cover a substantial part of their recent losses in the past days, as activity in both the Middle East and West Africa regions strengthened and allowed owners to enjoy improved sentiment and consequently numbers.
 8Suezmax rates in West Africa lost further ground last week, with competing VLCC tonnage in the region adding on to the pressure, while numbers off the Black Sea/Med were also reflecng lack of fresh business.
 8It was a quiet week for Afras in the Med last week, while the North Sea market was overall steady.
 8The Caribs market, following a very good beginning to the year, also succumbed to pressure of thinner acvity last week, shedding WS 10.
 Click on Reports for more Details
 What kind of flexibility is to be provided to an operator through the PSC mechanism to get the deepwater discoveries off the ground?
 8It is clear that an operator is unlikely to go into production until he gets a return on his investment and given the current volatility in prices, it is difficult to pin down a date on which a positive break even is guaranteed for him to begin investing money.
 8A few operators are speaking of forward contracts with equipment and service providers. Given the distress in which the suppliers are in, they are willing to try out innovative contracts and now is the time to get them done. For example, an operator can commit to using a deepwater rig for a 24-month period within a five year time slot. The time slot is to be chosen by the operator when he finds the conditions favorable to begin development work in his discoveries.
 8Given the current rock-bottom prices for equipment and services, the operator can pin down a bulk of their commitments in the future through forward contracts without a specific deployment date in mind.
 8However, what he will need is flexibility in the existing PSC for the operator to make the best of the low prevailing prices for equipment and services and pick up options on future development.
 8The system will have to build in an element of trust. Already a large quantum of money had been been invested in getting to the discovery stage. The sunk cost is high for an operator when he goes from exploration to the discovery stage in a deepwater block.
 8It will be in the operator's best interest to get the discovery off the ground as soon as possible and the government will do well to repose trust in his judgment to do so than to keep him bound and beholden to a set of archaic rules.
 8The government has the problem of making the PSC flexible enough to allow the operator the freedom to time his investment when he finds it most suitable. Needless to say an operator cannot take an infinitely long time to make up his mind, and caveats have to inserted to ensure that there is no willful default.
 Click on Reports for more Details
LNG-based power is not economically viable in India as the price of power is far too high. But will, what does not work for India, work for Bangladesh?
 8The Anil Ambani Group is planning to push the turbines bought for the doomed Samalkot project in Andhra Pradesh to Bangladesh for a 3000 MW power plant using a 2 million tonnes a year floating LNG import terminal. The FSRU terminal shall be set up at Maheshkhali Island in Cox's Bazar district of Bangladesh.
 8The guarantees given by manufacturers such as GE for their advanced 9FA machines as others will hold true for the Bangladesh project.
 8Clearly, Bangladesh is in need of power as there is a big shortage there but the moot point is whether it can afford expensive LNG-based power.
 8An easier solution would have been to set up power plants in India and ferry it across to Bangladesh through HVDC lines or allow Bangladesh to import power from Bhutan or Nepal.
 8One argument could well be that power from coal based plants in India -- a cheaper option -- is to be marshaled to take care of India's requirement and will perhaps not be available for wheeling to Bangladesh.
 8Given the severe shortage of power in Bangladesh, the economic cost of power is high and perhaps justify an LNG based power plant.
 8There are far too many variable to the project. It makes business sense for Anil Ambani to put his spare equipment to use and salvage the sunk cost in the now defunct Samalkot project but it will be a challenge getting Bangladesh to accept a high price for power even though a friendly government is willing to consider the project at this juncture. 
 Click on Details for more Details
IOC's 0.65 MMT Digboi refinery is the oldest refinery in Asia, set up in 1901 by the British government.
 8Located in the remote  jungles of Upper Assam, nearing Myanmar, the general belief was that the refinery will have to be shut down as it was uneconomical to keep such a low capacity unit going.
 8But it looks like IOC is having a change of heart.
 8The company wants to expand the capacity of the refinery from 0.65 MMTPA to 3 MMTPA.
 8But the problem is that there is neither crude nor markets near Digboi to keep an expanded refinery alive.
 8IOC is now planning to conduct a study to figure out whether crude can be sourced from either Myanmar or Bangladesh.
 8The study will also look at the prospect of marketing its finished product either in Myanmar and Bangladesh.
 8A comprehensive analysis is to be conducted whether crude can be brought in, processed and exported.
 8There is a feeling within the company that some kind of economies of scale can be established to expand the capacity of the refinery and find a market for its products.
 8A final decision on the fate of the refinery will be taken only after the study is completed.
 Click on our Reports section for more details on the various aspects of the study Details
New tanker building acvity picked up last week but the prediction is that the market will experience less activity throughout 2016, with tanker orders diminishing gradually.
 8In fact, a number of top yards to have already massively revised downwards their order targets for 2016, expectingng an even more challenging year compared to 2015.
 8In South Korea, Hyundai has dropped its target by about 12.5% when compared to last year, while Daewoo and Samsung have set their 2016 tar-gets 23% and 30% lower respectively.
 8With newbuilding interest across almost all sectors remaining challenging,  the expectation is that expect prices will remain under pressure, while even if stronger than expected activity does take place, competition among yards will remain intense, a fact which in itself is not going to allow newbuilding prices to firm.
 8In terms of recently reported deals, Viken Crude has placed an order for one firm Suezmax (155,000dwt) and one firm Aframax (115,000dwt) at Samsung, in S. Korea with delivery set in 2018.
 Click on Reports for more Details
Even though oil prices have crashed, oil production continues to remain surprisingly resilient.
8One of the remarkable features of the oil market was the resilience of American shale producers in the face of falling prices. Since mid-2015 shale firms have cut more than 400,000 b/d from output in response to lower prices.
8Nevertheless, America still increased oil production more than any other country in the year as a whole, producing an additional 900,000 b/d, according to the IEA.
8During the year the number of drilling rigs used in America fell by over 60%. Normally that would be considered a strong indicator of lower output. Yet it is one thing to drill wells, another to conduct the hydraulic fracturing (“fracking”) that gets the shale oil flowing out. Rystad Energy, a Norwegian consultancy, noted late last year that the “frack-count”, ie, the number of wells fracked, was still rising, explaining the resilience of oil production.
8The shale industry used other innovations to keep the oil gushing, such as injecting more sand into their wells to improve flow, using better data-gathering techniques and employing a skeleton staff to keep costs down. The money is no longer flowing in. But the oil is still flowing out. Even some of the oldest shale fields, such as the Bakken in North Dakota, were still producing at the same level in November as more than a year before.
8The shale industry also benefited from financial engineering. Last year at least half of the firms involved had hedged the oil price to protect revenues. Some went bankrupt, but most have managed to sweet-talk bankers into keeping the credit flowing—at least until the latest crisis.
8It is not just the shale industry that managed to keep its head above water longer than expected. Those extracting in more expensive places, such as Canada’s oil sands and Brazilian pre-salt, have too. Canada, whose low-quality benchmark oil, West Canada Select, is trading below $15 a barrel, giving it the ignominious title of the world’s lowest-value crude, is one of the non-OPEC countries expected to add most to global supply this year. So is Brazil, despite debt and corruption at its state oil company, Petrobras.
Click on Details for more Details
A battle of wits is on between the PNGRB on one hand and  BPCL and the petroleum ministry on the other over the regulator's insistence on bestowing a common carrier status on 22% spare capacity in the Cochin Coimbatore Karur petroleum product pipeline.
 8While PNGRB is bent on declaring it a common carrier, HPCL has argued that the pipeline is meant to evacuate additional production from the Kochi refinery, which is expanding its capacity from 9.5 to 15.5 MMTPA.
 8The current capacity utilization of 78% will go up to 100% once the Kochi expansion is over.
 8The ministry has weighed in in favour of BPCL, claiming that the pipeline was soley commissioned for evacuating products from the refinery and this was before the PNGRB regulations came into existence.
 8Further the CCK pipeline originates from a refinery and not from a port,  and evacuation from the refinery is a priority or else refinery output will suffer.
 8It will be hazardous in every respect to allow any other entity to utilize the pipeline through the refinery, the ministry has claimed.
 8In light of such clear warning, it remains to seen which side winks first
 Click on Reports for more Details
The oil crisis this time around is not similar to the ones that happened before.
 8The fall in the price of oil is not translating into an stimulus for the economy unlike in the past.
 8An example is held up of America, which is both a large producer and consumer of oil. At the start of 2015, JP Morgan, a bank, reckoned that cheap oil would boost GDP by around 0.7% -- a boost to consumers’ purchasing power equivalent to 1% of GDP, offset by a smaller drag from weaker oil-industry investment.
 8The bank now reckons the outcome was between a contraction of 0.3% and a boost of a measly 0.1%.
 Consumers may have saved more of the windfall than had seemed likely and the share of oil-related capital spending in total business investment in America, which had steadily risen for years, has fallen by half
 8Add in the indirect effects of the downturn in the oil industry and the net impact of cheap oil may even have been a bigger decline than JPMorgan’s most pessimistic estimate.
 Click on Details for more Details
When super major Exxon Mobil  speaks up, it is time for everyone to listen.
 8The company in a new analysis has claimed that there is no reason for panic in the oil and gas industry because the long term outlook continues to be bright.
 8The multinational has packed a lot of data into its prediction that oil and gas will continue to play an overwhelmingly important role even in the year 2040.
 8The company sees energy demand going up by 25% from now till 2040.
 8In 2040, oil will remain the world’s largest energy source, essential in the transportation sector and as a feedstock for the petrochemicals industry. Global demand for oil and other liquids is projected to rise by about 20 percent from now to 2040.
 8Coal, currently the world’s second-largest fuel, is expected to see global demand peak around 2025 and then begin to decline. This decline will be led by the industrial and power generation sectors, as businesses improve energy efficiency and switch to fuels with lower CO2. But coal will continue to account for a good 20 percent of global energy demand, down from about 25 percent in 2014.
 8Natural gas, on the other hand, is projected to continue to expand rapidly – surpassing coal as the world’s second-largest fuel in about a decade.
 8Exxon Mobil expects 40 percent of the projected growth in global energy demand from 2014 to 2040 will be met by natural gas.
 8By 2040, global natural gas demand will rise by 50 percent. LNG share will double to almost 20 percent of gas demand in 2040.
 8Along with it, inter-regional natural gas pipeline exports will rise by 70 percent in this period.
 8By 2040, Exxon Mobil expects unconventional supplies to account for nearly 90 percent of North America gas production.
 8Unconventional supply – including shale gas, tight gas, coal bed methane and coal-to-gas – is also anticipated to make an impact in other regions, notably Asia Pacific, where one-third of production will be unconventional by 2040.
 Click on Reports for more Details
According Exxon Mobil, oil and gas demand will continue to remain very strong in the next 25 years.
 8Importantly, there are enough reserves to take care of demand well into the foreseeable future.
 8In 1981, the U.S. Geological Survey estimated that remaining global recoverable crude and condensate resources were 1 trillion barrels; today, the IEA estimates that it is 4.5 trillion barrels – enough to meet global oil demand beyond the 21st century. By 2040, the amount of resources yet to be produced will still be far higher than total production prior to 2040, even with a 20 percent rise in global oil demand.
 8Then again, the the oil and gas equipment and services industry will continue to remain buoyant.
 8Of the approximately $750 billion a year of upstream oil and gas investment required, almost 85 percent will be needed to simply keep production at current levels.
 Disruptive technologies will not change the future all that soon
 8And the multinational downplays the impact of disruptive technologies in the demand supply matrix for oil and gas.
 8The company expects conventional hybrids share in the global car market to jump from about 2 percent of  new-car sales in 2014 to more than 40 percent by 2040. In contrast, plug-in hybrids and fully electric cars are likely to account for less than 10 percent of new-car sales globally in 2040.
 8The company does not see wind and solar accounting for more than 10 percent of global electricity generation in 2040, up from 4 percent in 2014.
 8Given the intermittent nature of energy produced by these sources, gas fired base load power plants will be needed to complement power produced by non-conventional means.
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Exxon Mobil is also saying that by 2040, the carbon-intensity of the global economy is likely to fall by half.
 8Energy efficiency gains are expected to be a major contributor to this achievement, supported by a gradual but significant transition to less-carbon-intensive energy types.
 8As a result of these changes, it is expected that global energy-related CO2 emissions to peak around 2030, and then begin declining. Global CO2 emissions are expected to be only about 10 percent higher in 2040 versus 2014, despite the fact that population will have risen by about 25 percent and global GDP will have more than doubled.
 8Emissions in the OECD are projected to fall by about 20 percent from 2014 to 2040, with the OECD’s share of global emissions falling from less than 40 percent to less than 30 percent. Europe will likely remain the least carbon-intensive economy of any In the non-OECD however, CO2 emissions are expected to rise one-third by 2040. China’s emissions are likely to peak by 2030, and then decline by 10 percent to 2040, when its share of global emissions will be about 25 percent, more than double that of the United States or India.
 8Emissions will continue to rise in India and other developing countries through 2040, but around 2030, the downward trends in the OECD and China are expected to more than offset those increases.
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The multinational thinks that instead of subsidizing high-cost alternative technologies, plugging for open-market competition among a wide range of practical, lower-carbon options will be a better option to keep carbon emissions under check.
 8Exxon Mobil claims that imposing a transparent and reliable price on emissions would be society’s most cost-effective approach to CO2 reduction.
 8Under a cost-of-carbon approach, the incentives for reducing GHG emissions – as well as the most cost-effective solutions – would become readily apparent.
 8For example, in the United States it is clear that improving the fuel efficiency of conventional gasoline vehicles will reduce more emissions – at a lower cost – than expanding the use of expensive electric vehicles.
 8Also, in the power generation sector, substituting natural gas for coal is a far more cost-effective option for curbing emissions than building new wind or solar facilities for electricity generation.
 8By focusing on market-based solutions, governments can avoid requiring consumers and taxpayers to pay for high-cost solutions when better options abound.
Comment: Essentially, the underlining point that Exxon Mobil is trying to make is that a tax on carbon will raise the use of gas at the cost of coal. That is what oil and gas companies have been pushing for some months now. But the other point that the company is making is that there is no reason to panic. Things will settle down over the next 25 years and emissions will start climbing down from the year 2030 onwards. Will be it be too later by then? Well that is something only time will tell.
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ONGC is planning to revamp the Geleki field in Assam -- one of the oldest onland fields of the E&P major -- by installing a new Gas Compressor Plant (GCP) and replacing as much as 400 km of infill pipelines.
 8The new configuration is expected to push the life of the field by an additional 20 years, sources said, keeping the field as one of the main workhorses of ONGC's Assam asset.
 8The field already has in place Gas Gathering Stations, three existing GCPs, a boiler plant as well as a captive power plant and an ETP.
 8The revamp is a big job by itself and the new GCP will have the following configuration:
 -- 4 skid mounted trains of Low Pressure (LP) Gas Compressors
 -- 3 skid mounted trains of Medium Pressure (MP) Gas Compressors
 -- 4 skid mounted trains of High Pressure (HP) Gas Compressors driven
 -- An H.P.Gas dehydration system with a capacity of 15.0 LSCMD based on the molecular sieve gas drying philosophy for drying of  HP gas to a water dew point of (-) 40°C.
 -- An Intermediate Blow Down Drain system
 -- A Closed Blow Down Drain  system
 -- Associated fire fighting systems as well as utilities and offsites.
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The replacement of the infill pipeline network is a big job too, involving 400 kms of network.
 8The pipeline size will vary from 400 mm to a mere 60 mm and will involve:
 -- Well fluid networks
 -- Gas fluid networks
 -- Water injection and effluent disposal networks
 -- Lines from the gas gathering stations to the compressor plants
 8The pipeline network will connect well fluid and gas lift lines to as many as 174 wells
 8There are also another 107 water injection wells.
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The revamp will come as a shot-in-the-arm for the beleaguered oil and gas equipment and service providers in India.
 8ONGC is seeking an LSTK contractor with the capability to do end-to-end work.
 The work will involve:
 -- Design, basic and detailed engineering as well as contracting, installing and commissioning of facilities
 -- Supply and logistics is part of the job
 -- So is commissioning and accompanying guarantee runs
 -- As also all other work that will lead to a satisfactory completion of the job.
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The problem with India's CBM blocks is that they are located in well populated areas where land acquisition is a major problem.
8For a public sector company like ONGC, it becomes difficult to maneuver around the complicated ownership patterns for land. Payments are also not easy to make and some of the procedures are beyond the public sector rule book.
8This is the reason why the company wanted to rope in JV partners so that local problems can be taken care off by the partner.
In Jharkhand, for example, of the three CBM blocks, ONGC was able to rope in a partner for only one, the North Karanpura Block, leaving the E&P major to fend for its own in the Jharia and Bokaro blocks where land has to be acquired for a period of 20-25 years.
8The company is now looking for agents who will help ONGC acquire land in the two blocks. The following are the details:
Jharia CBM Block: The block is spread over two districts,Bokaro & Dhanbad. A total of 72 new wells are planned to be drilled and 4 surface facilities are to be created for which land has to be acquired. The approximate size of well site is around 80 m x 85 m and of Surface facilities is 6-8 acres. These will be connected with approach roads. The development area under the block is 65.1 sq. km. Out of these, 72 well locations, 48 new wells are planned in the Bokaro district covering villages Parbatpur, Talgharia, Silphore, Parua, Tilatand, Mohal, Machatand and adjoining villages in Chandankiyari block and 24 wells are planned in the Dhanbad district covering villages Mahuda, Deoghara, Olidih, Muchiraidih etc. in the Baghmara block and adjoining areas. Land can be either permanently acquired or can be taken on long term lease basis.
Bokaro Block: The block extends into two districts namely Bokaro & Ramgarh. Total wells planned in the block are 141 in two districts. The development area is 75 sq km. The block is divided in two patches (Patch-A & Patch-B) which are separated by the Lugu hills, and have a surface distance of nearly 65 km. The Patch-A falls in the Bokaro district in and around villages - Palani, Ochho, Hosir, Mohalibandh, Sadam, Gomia, Dumrivihar etc. under the Gomia Police Station where nearly 105 new wells are to be drilled. Patch B falls in the district of Ramgarh in and around villages Duni, Bongahara, Keribanda etc. under the Kuju P.S, where nearly 36 new wells are to be drilled. The area for well site would be 80 M X 85M. There are three surface facilities planned, 1 GCS ( area 12-15 acres) in Patch-A and 2 EPS (area 6 - 8 acres each) in Patch-B.
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The consumption of all petroleum products registered a growth of 8.3 percent during December, 2015 as compared to that in December, 2014.
 8Except for SKO, all other products recorded a positive growth in the month of December.
 8On cumulative basis, a growth of 9.5 percent was registered for the period April to December, 2015. SKO and Lubes/Greases are the only products which have recorded a negative growth of -3.7 percent, and -6.1 percent respectively during the period April to December, 2015.
 8Highlighting the underlining factors at work, the PPAC has quoted a report by the Boston Consulting Group ( BCG)  and Confederation of Indian Industry (CII), that says that India’s robust growth and rising household incomes would continue to increase and expand its share of global consumption of goods and services
 8This increased impetus has given momentum to the growth in consumption of all petroleum products.
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In line with the continuing trend, there has been a growth of 11.8 percent in the consumption of MS during December, 2015 as compared to December, 2014. 
 8MS consumption recorded growth of 8.8 percent in 2013-14 and 11.2 percent in 2014-15, clearly indicating that growth in petrol consumption is driven by healthy growth in the automobile Industry.
 8Despite a sharp increase in the ownership of passenger vehicles in India in last few years, the ownership levels per capita of passenger vehicles are still very low compared to other emerging economies and developed countries, indicating a trend of continuous healthy growth in MS demand.
 8Further, the declining prices of MS have resulted in general a greater usage of cars and two wheeler and consumer preference for petrol driven vehicles.
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HSD consumption in the country recorded a growth of a modest 5.3 percent during the month of December, 2015 as compared to December, 2014 and a cumulative growth of 6.2 percent for the period April to December, 2015.
 8Diesel growth could have been better but there was a prospective price reduction from 1st of January, 2016, resulting in low inventory with dealers towards month end. Also floods in Chennai and that fact that iron ore mining activity has slowed down due to China’s recession coupled with surging import of finished steel in India put a dampner on demand.
 8The mood in the commercial vehicle (CV) industry continued to remain buoyant and CV sales registered a growth of 11.4 percent during the month of December, 2015. The medium and heavy commercial vehicles sales recorded a growth of 19.3 percent during December, 2015 which is mainly attributed to the positive sentiments in the economy and rising demand for logistics and transportation services.
 8It is further predicted that falling energy prices, improved IIP and growth in GDP along with falling rate of interest, proposal to scrap commercial vehicles older than 15 years would strengthen the demand for medium and high commercial vehicle (M&HCV’s) in the market.
 8The power deficit position improved from -3.2 percent in December, 2014 to -1.6 percent during December, 2015.This improved power position may have led to reduced usage of diesel for back-up power generation.
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The total LPG consumption which has grown continuously for the last 28 months in a row has recorded a positive growth, 6.2 percent during the month of December, 2015. Cumulatively also a growth of 7.5 percent was registered for the period April to December, 2015.
 8The packed LPG domestic consumption registered a growth of 3.9 percent during December 2015, which is mainly due to high base of the previous year when consumers started uplifting their quota of 12 cylinders before the launch of DBTL scheme, as a result of which a growth of 19.6 percent was registered during December 2014. However, during the period April to December 2015, a growth of 5.7 percent was registered.
 8During the period April to December 2015 release of 146.2 lakh new connections and 77.4 lakh DBCs has contributed to the growth of LPG packed domestic consumption.
 8The non-domestic LPG consumption for the twelfth month in a row registered a positive growth of 47.3 percent in December 2015 and cumulative growth of 44.4 percent during April to December 2015.
 8High growth in LPG Packed Non-Domestic segment may be attributed to easy availability, low price of non-domestic LPG and curb in diversion of subsidized domestic cylinders after the launch of DBTL.
 8Whereas in case of Bulk LPG, consumption recorded a negative growth of -1.8 percent during December, 2015 and 2.2 percent during April to December 2015. 
 8The auto LPG after registering a positive growth for eleven months in a row, registered a negative growth of -1.2percent in December, 2015 while registering a 6.4 percent growth during April to December 2015.
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On month on month basis, Natural Gas consumption saw a decline of 2.34 percent during December, 2015 as compared to December, 2014.
 8The decline was predominantly due to reduction in domestic gas production and lower off-take of gas in core sectors.
 8Moreover IOCL’s own sourcing of LNG for its Panipat and Mathura refineries in Northern region and lower off-take by IOCL customers in Western region and GAIL customers in Southern region led to lower consumption.
 8In terms of volumes, total consumption during December, 2015 was 3,216 MMSCM as compared to 3,294 MMSCM in December, 2014.
 8Gas consumption in the power sector increased by around 28.77 percent from 670.18 MMSCM in December, 2014 to 863.01 MMSCM during December, 2015, which is primarily because of the “gas pooling policy” introduced by govermment to revive idling gas based power plants in the country.
 8Consumption in fertilizer sector also showed a growth of 1.16 percent from 1,229.15 MMSCM in December, 2014 to 1,243.37 MMSCM in December, 2015.
 8CGD sector showed a growth of 8.35 percent from 354.96 MMSCM in December, 2014 to 384.60 MMSCM in December, 2015 due to increase in off-take by CGD companies in all the regions.
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Bitumen consumption registered a growth of 11.2 percent during the month of December, 2015 and cumulatively there is a growth of 10.9 percent for the period April to December 2015.
 8High consumption of bitumen is attributed to the major repair and road widening projects being undertaken across the country.
 8In Rajasthan, the four lane-mega highway between Kota-Jhalawar has been approved by the government and work has started.
 8Petcoke consumption also registered a growth of 3.7 percent during December, 2015 and a cumulative growth of 21.9 percent was registered during the period April to December, 2015.
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Light diesel oil (LDO) consumption recorded a high growth of 21.9percent in the month of December, 2015 and a growth of 14.6 percent on cumulative basis for the period April to December, 2015.
 8The month wise demand also fluctuates depending on its requirement at power plants for boiler restart as and when it trips.
 8LDO is also extensively used in various types of furnaces and increase in manufacturing activities lead to increase in its consumption.
 Low sulphur heavy stock (LSHS) consumption registered a growth of 12.6 percent during December, 2015.
 8On cumulative basis, there has been a growth of 7.0 percent for the period April to December, 2015.
 8The growth is mainly from the fertilizer and general trade sectors.
 8Demand growth would have been higher but for the shift to natural gas by major customers like power and fertilizer industries.
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There are many who believe that a statutory organization such as the  PNGRB -- set up through an Act of Parliament -- should always be above reproach.
8To most people, the 'statutory' tag grants a certain fairness of conduct as well as objectivity of purpose and autonomy of fucntion to an organization but this cannot be said of the PNGRB.
8The regulator was set up to be an independent body at a time when the ministry was accused of being both the judge and the jury as there was an inherent conflict of interest as regulator and owner of companies in the petroleum sector. But it still remains a debatable point whether the industry would have been better off served by the ministry or by the PNGRB. 
8The regulator has goofed up so many times that it has lost the trust of its main constituency, the oil and gas industry.
8The fact that it could elicit no bids whatsoever for 14 of the 34 districts illustrates the ham handedness with which it dispenses its duties at a time when there is heightened interest in the usage of piped gas for commercial and consumer use.
8The regulator is transparent only on paper, for many bidders have found its conditionalities too stringent and its carving of GAs too arbitrary.
8The lackluster response to the CGD bidding round is a rap on the knuckles for the regulator and a warnng to spruce up its act before it is too late.
8That the courts have time and again upheld appeals against its rulings is a pointer to the fact that its orders are driven more by sentiment than by points of law.
8That it allowed entities such as GAIL and Assam Gas Company to get away with token monetary penalties for industrial accidents that have cost dozens of lives without invoking relevant sections under the PBGRB Act that would have called for more stringent action is a testimony to the regulator's casual approach to serious matters.
8There can even be allegations of deliberate wrong doing by the regulator and some of its actions require tougher judicial and Parliamentary scrutiny.
8The time has come to take the PNGRB to task for its various acts of omission and commission.
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Such are the vagaries of commodity cycles that at one moment a company could be maximizing production and reaping in profits while at the next it could be staring at curtailing output and keeping losses to the minimum. All within a span of a few quarters.
 8With Cairn India, like with most other E&P companies, the cushioning time was very little.
 8As long as the cash flows are positive, any company will remain in business and Cairn has a large enough margin here.
 8But the mindset takes a little longer to change. Cairn continues to talk about pumping in more chemical filled water through its wells and drilling more infill wells but remains silent on how it will manage the crisis -- beyond squeezing the contractors a little more every quarter --  that the oil price crash has brought about.
 8Anil Agarwal is a tenacious entrepreneur and will leave no stone unturned to protect his turf. His latest initiative is to call for government protection. In a statement he said that Indian commodity industry needs protection from the global price rout
 8He has also campaigned for rationalization of cess levies and thankfully it has found a sympathetic ear with the petroleum ministry though it remains a moot point whether the cash strapped FM will provide any relief.
 8What Agarwal needs to earnestly do is to quickly shift to a work plan that is based on oil price scenarios to limit the impact on his bottom line and not just look at production optimization plans.
 8The Cairn boss should look within and not at the government to secure his investments.
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The much touted CGD bidding round conducted by the PNGRB has turned out to be a damp squinb.
8Of the 34 geographical areas for which bids were invited, as many as 14 elicited no bids at all.
8Of the other 20, there wree 56 bids from 18 companies.
8But the distribution of these bids was highly uneven.
8Six of them received one bid each, while the majority of the bids were concentrated in the in a few states predominantly in the western states of Maharashtra and Goa while, it may be noted that  many districts of UP and some in the neighboring northern provinces saw a poor response.
8The GAs encompassing  Raebareli, Mainpuri, Chitradurga, Bhiwani Auraiya, Baghpat, Etawah, Shahdol, Gadag, Jhabua, Nainital, Amethi, Datia and Rewa recevied no bids at all.
8Among those areas where interest was shown, Rewari in Maharashtra and North Goa bagged 6 and 7 bids respectively while most others trail behind with much fewer biddings.
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In all, 18 companies had put in bids to set up CGD projects.
 8Of them, Mahanagar Gas Limited, Central UP Gas, SKN Haryana City Gas, Maharashtra Natural Gas and Consortium of Gail Gas and BPCL have each submitted only single bids whereas Gujarat Gas Limited, Consortium of Mahesh Resources and Gujarat State Petronet remain among the highest bidders with Gujarat Gas having submitted as many as 8 bids. 
 8Surprisingly, GAIL has decided to stay quiet. The company had put in one bid through its subsidiary GAIL gas while GAIL Gas in consortium with BPCL put in another bid.
 8Indraprashta Gas Ltd put in three bids.
 8The Adani group has shown a lot of interest: bidding for two GAs on its own while putting in bids for four more projects in a collaboration with IOC.
 8IOC incidentally is the only public sector entity to team up with a private sector partner.
 8HPCL put in a bid for two districts.
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Cairn India Ltd has boasted that its polymer flooding programme in Rajasthan's Barmer field is the largest in the world. 
 8The flooding will involve pumping a massive 400,000 barrels of chemical laden fluid per day into the earth by March, 2016.
 8This plan is only for the Mangla field but more chemical laden fluids will be pumped in when the EOR plan is extended to other fields in the block.
 8The problem here is of disclosure. How safe is the flooding programme? 
 8The toxic chemicals used in such operations have generated significant public concern and become a flashpoint for public controversy in the west. 
 8These chemicals, if released into the environment, can have a range of harmful spinoffs based on their toxicity, mobility, solubility, volatility, and persistence. 
 8Cairn must provide an undertaking to use “environmentally friendly” fluids and provide specifics that would allow other stakeholders to evaluate the effectiveness of these initiatives.
 8US companies now ensure that diesel is completely eliminated from fluids that are pumped into the reservoirs. Can Cairn give such an undertaking?
 Then again, some environmentally friendly companies have taken out the suite of benzene, toluene, ethylbenzene, and xylene (BTEX) chemicals from injection fluids. Isn't it possible for Cairn to do so too?
 8Some companies have begun employing chemical hazard rating systems for managing and reducing the toxicity of injection chemicals, can Cairn do it too?
 Companies such as BHP Billiton have reported that 81% of its injection fluids contain chemicals that satisfy its most demanding toxicity reduction criteria which exclude endocrine disruptors, known or suspected carcinogens, mutagens, reproductive toxicants, or US government listed “priority pollutants”.
 8Cairn India must take the initiative and start the process of doing this in India too .
 8If not, then it is the job of the government to ensure that the massive amounts of chemicals pumped into the Barmer reservoirs are safe from the environment and human health point of view.
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There have been some positive developments in Cairn India but much of it has been  overshadowed by the crash in crude prices.
 8For one, the company has finally signed an agreement with GSPL India Gasnet Limited (GIGL), who will now construct the pipeline connecting the Raageshwari Gas Terminal to Palanpur, from where it will be linked to the upcoming Mehsana Bhatinda Pipeline
 8The tendering process for the new gas processing terminal is also progressing well.
 8Then again, fresh exploration efforts have thrown up new gas zones which have established a southern extension to the Raageshwari Deep gas field.
 8More crude oil deposits have been found in via new exploration efforts.
 8First cargo of Rajasthan crude oil was successfully loaded for MRPL through the much delayed Salaya-Bhogat pipeline, generating superior realization.
 8All of these are positive developments and would have buoyed the company's share price under normal circumstances.
 8But the environment has changed. The overwhelming uncertainty over how crude prices will evolve is what cripples both managers and shareholders alike at this jucnture.
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Tenders are out for the Enhanced Oil Recovery (EOR) programme in Cairn India's Rajasthan block.
 8Front End Engineering Design for the polymer flooding programme is at an advanced stage.
 8Contracts are being negotiated for rigs, services and drilling & completion and long lead items.
 8But if crude prices are low or below breakeven, will it make sense for Cairn to continue with the EOR plan or should it be put  on hold until prices improve?
 8Unless there are technical issues involved, it will perhaps make sense for Cairn to put its development plans on hold -- while keeping its exploration work going -- as every extra barrel of oil produced will not be adding to net profit at currently prevailing prices.
 8At some point when prices move up, the EOR programme can surely be taken up again.
 8For the time being, the best policy is to preserve reserves underground and then pump them up later, subject of course to technical feasibility.
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Cairn India Ltd's PAT breakeven point for its Indian operations seems to be $34/bbl and now that the price has dipped well below this mark, everything else being equal, the company would not end up with a loss in Q4, 2015-16.
 8At this level of crude price in Q3, the company's cash flow was positive, with an EBITDA of Rs 665 crore, but profit after tax was a mere Rs 9 crore.
 8There is now little scope for cost cutting as the company has pushed its vendors to a further round of renegotiation.
 8So where does the oil price crash leave the company? Surely not in a very comfortable place.
 8It is not known what kind of maneuverability it has to reduce output so as to be able to ramp it up later when a more conducive price environment prevails.
 8It has cut down on capital expenditure but continues to push up its polymer flooding programme in the Mangla field -- and is going up to 400,000 barrels per day by March, 2016 from 200,000 barrels in Q2 -- as it is part of a planned process. All the EOR wells in the Mangla field have been drilled and completed.
 8The future looks uncertain for Cairn as prices are not likely to show any upward trend this year as global oil inventories continue to pile up.
 8In any case, even when there is an upswing in price, the projection is that it will not go beyond $50-$60/bbl as American shale gas operators will then swing in with additional output to keep prices from going up.
 8The worrying part is that every producing country is pumping in as much crude as is possible while demand for oil seems to be slowing down rather sharply.
 8Cairn India no doubt has a huge pile of reserves at $2.8 billion but nevertheless, profits, if any, will be range bound from here on till well into the foreseeable future.
 8If prices hover at sub-$34/bbl levels, then it will begin eating into this reserve.
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In India more than in most other places in the world, "retirement" is literally the end of the world for a productive human being..
 8This is more typically evident in the public sector.
 8After a hectic 35-year career, a line is drawn, and when he steps over the threshold, he suddenly becomes redundant, capable only of leading a retired life, possibly engaged in soft activities and tending to grand children at home.
 8So, the argument goes, if the PNGRB were to offer an honorarium and provide him an opportunity to escape the boredom of his retired life, regardless of the experience he brings to the table or the contribution he makes, he ought to be thankful.
 8The point to note is that some of the most advanced countries in the world however do not treat their retirees as badly as India does.
 8These countries respect experience and the attendant skills that an expert may bring along irrespective of age.
 8Norway's retirement age is 67 years, for the UK it is 65 and for the US, it is 66 and will go up to 67.
 8An early retirement age makes sense in a country where the unemployment ratio is high and 70% of the population is below the age of 30. And India fits the bill. However not to be forgotten is the fact that retiree still has many years of active life left in him due to advancements in life expectancy and medical technology and he is still capable of meaningful and productive contributions.
 8But then there are segments like the oil and gas industry where there is a dearth of talent and expertise. The requirement for skilled manpower is significantly higher than supply, and the need of the hour is to attribute the right value to skills and experience that a retired oil and gas professional brings to the table.
 8He is not looking for empathy. He simply expects that there is value for his long familiarity with the industry and his understanding of the domain.
 8PNGRB should scrap the age limit while empanelling experts -- and privilege experience and expertise over a cut-off figure -- and offer commensurate fees for services rendered.
 8Afterall, if a retirees' contribution is the same as that of a someone below the age of 60, why should he be paid any differently?
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The argument that a fall in crude price is good for the crude carrier market as it facilitates trade or that freight rates will stay firm as carriers double up as floating storage facilities when inventories pile up has been proved wrong by last week's sharp drop in rates.
 8In fact, it has been a long time since the crude carriers market has seen this much red.
 8Last week rates across the board noted significant drops, a fact which has certainly shaken at least to a small degree the confidence built up so far.
 8As things in the Middle East were exceptionally quiet throughout the week and tonnage started building up across all key trading regions, charterers quickly took control of things forcing rates especially for tonnage above 120,000dwt to sharply correct downwards.
 8Nothing seemed able to stop the drop of VLCC rates last week, as a very quiet Middle East seemed to have set a peculiarly stressful tone for earnings in the region, while numbers quoted off West Africa were also heavily discounted
 8Suezmax rates in West Africa gave up their resistance last week, as it seems that most of this month’s program got to be covered during the week prior, leaving owners chasing more forward dates.
 8The Black Sea/Med market was also lacking fresh business, something that quickly reflected in rates there as well.
 8Afras witnessed a quiet market across both the Med and North Sea last week, while the Caribs Afra continued to overperform the rest of the market on the back of strengthening enquiry in the region Details
The India Africa Hydrocarbon Summit is taking place at a time when the global oil and gas industry is in crisis.
 8The summit is meant to strengthen partnerships and ease Indian petroleum investments in Africa.
 8But at this juncture, even though asset prices have turned attractive, Indian companies do not have the inclination to put in any money, particularly after the multi-billion dollar investment in Mozambique has got stuck in the mud.
 8Nevertheless, oil minister Dharmendra Pradhan put forward India's view point succinctly at the summit, attended by 41 African heads of states, today:
 8India imported 32 MMT of crude from Africa, mainly from Nigeria and Angola. This constitutes 16% of India's consumption. This is going to increase in the coming years.
 8India's requirements can be addressed by Africa which accounts for 15% of current proved accessible global reserves.
 8India has a huge appetite for energy, with its primary energy consumption in the last 15 years growing at about 7.3% as compared to a global CAGR of 3%.
 8Indian upstream companies have invested $7-8 billion in Mozambique, Sudan, Gabon, Libya and Egypt.
 I8ndia is already providing comprehensive EPC services in Algeria, Nigeria, Libya, Sudan and Ghana, among others.
 8India has offered a concessional credit of $10 billion over the next five years in African countries. Indian public and private sector companies can tap into this credit line to invest in the oil and gas segment.
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The PNGRB is enjoying its newfound role as benefactor. Or so it appears.
 8It has invited applications from only retired or super annuated experts from the oil & gas industry for empanelment in its panel of experts to undertake "compliance, capacity assessment and investigation activities related to petroleum, petroleum products and natural gas related sectors".
 8All applicants are required to have a minimum working experience of 15 years or 10 years depending upon the kind of sub segments they are working in.
 8The selection of applicants from the panel will be valid for two years. And the Board's decision is final with the right to remove a panelist if it chooses to.
 8With all these strict conditions thrown in, surely the PNGRB promises to offer something substantive in return.
 8No brownie points for guessing that the regulator assures that travel and logistics will be taken care of.
 8And that there will of course be an "honorarium". 
 8But, the question is how much will it be? 
 8That has not been spelt out. Perhaps slip 1000 rupees in a white envelope with a "thank you" tag, or will it be a more generous Rs 5000? If the "consultant" is lucky it can well be a princely sum of Rs 10,000!
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