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Mar 2016
Both the Mumbai refineries of BPCL and HPCL are in crowded locations and both have the potential of causing unprecedented havoc in case of accidents.
8In an evaluation exercise to review risks to business, the potential risks at the Mumbai refineries primarily on account of space constraints and congestion feature at the top of this list for both companies.
8Potential disaster risks identified at the refineries are: threat of fire or explosion or large H2S release leading to production loss, environmental damage, loss of property and human life within and outside the refinery, loss of company image and temporary or even a permanent shutdown of the refineries in case the scale of the disaster is very large.
8While disaster management preparedness is high up on the agenda, effective implementation is hindered by external factors such as lack of adequate exit routes or high population density around the refineries.
8Factors like space constraints within the refineries, close proximity of the refineries to densely populated area, security issues, marketing terminals being within the refineries and not segregated from them and the fact that many product tankers ply to the refineries coupled with the frightening possibility of a release of H2S gas from the ARUs/SWSUs/SRUs can cause large scale damage.
8Traffic congestion and density of population around the refineries pose evacuation risks for both people and products, especially since the exists are limited.
8The space constraint is also severely impacting the growth of the refineries, and there is precious little that the companies can do here. In fact some of the bottom residues made in the refineries are being shipped out to refineries elsewhere because of lack of processing space.
8The congestion in the refinery make upgradation of units or addition of units extremely complicated.
8The website carries here a unit configuration map of HPCL's refinery and it shows that the units are very closely strung together. An accident can create wide spread damage across the entire refinery.
Click on our "Report" section for more information. Details
8In an evaluation exercise to review risks to business, the potential risks at the Mumbai refineries primarily on account of space constraints and congestion feature at the top of this list for both companies.
8Potential disaster risks identified at the refineries are: threat of fire or explosion or large H2S release leading to production loss, environmental damage, loss of property and human life within and outside the refinery, loss of company image and temporary or even a permanent shutdown of the refineries in case the scale of the disaster is very large.
8While disaster management preparedness is high up on the agenda, effective implementation is hindered by external factors such as lack of adequate exit routes or high population density around the refineries.
8Factors like space constraints within the refineries, close proximity of the refineries to densely populated area, security issues, marketing terminals being within the refineries and not segregated from them and the fact that many product tankers ply to the refineries coupled with the frightening possibility of a release of H2S gas from the ARUs/SWSUs/SRUs can cause large scale damage.
8Traffic congestion and density of population around the refineries pose evacuation risks for both people and products, especially since the exists are limited.
8The space constraint is also severely impacting the growth of the refineries, and there is precious little that the companies can do here. In fact some of the bottom residues made in the refineries are being shipped out to refineries elsewhere because of lack of processing space.
8The congestion in the refinery make upgradation of units or addition of units extremely complicated.
8The website carries here a unit configuration map of HPCL's refinery and it shows that the units are very closely strung together. An accident can create wide spread damage across the entire refinery.
Click on our "Report" section for more information. Details
HPCL is readying Rs 40,000 crore worth of investments between now and the year 2020.
8This is a large sum of money by any yardstick. The investments will be in the following areas:
8Refining: Rs 21,000 crore
8Marketing: Rs 9,000 crore
8Renewables/others: Rs 1000 crore
8Joint ventures (refineries, natural gas, E&P): Rs 14,000 crore.
8In the course of the next few months, the website will bring you key RFQ dates for equipment and services, along with information on key contacts. This will enable our readers to have advance knowledge on when business opportunities will crop up. Stay tuned.
Click on Reports for more Details
8This is a large sum of money by any yardstick. The investments will be in the following areas:
8Refining: Rs 21,000 crore
8Marketing: Rs 9,000 crore
8Renewables/others: Rs 1000 crore
8Joint ventures (refineries, natural gas, E&P): Rs 14,000 crore.
8In the course of the next few months, the website will bring you key RFQ dates for equipment and services, along with information on key contacts. This will enable our readers to have advance knowledge on when business opportunities will crop up. Stay tuned.
Click on Reports for more Details
The depression in the oil and gas market today is best highlighted by the fate of Oil Country Tubular Ltd (OTCL), a manufacturer of drill pipes, casing pipes, production tubing as well as couplings and connections.
8The company's revenues have fallen a whopping 53% in the first nine months of 2015-16 as business from the E&P industry has begun drying up, following a crash in the price of crude.
8The decline in demand has caused a blood bath in the market, drastically bringing down prices.
8The order book has shrunk to a mere Rs 53 crore as on December 2015 from Rs 115 crore in June 2015.
8The export business has been particularly impacted with export revenues at a mere Rs. 9 crore in 9 months of this year as against Rs. 67 crore in full FY15.
8Coupled with high operating leverage, EBITDA margins have dropped to just 5.7% and PAT has turned negative. Credit rating agencies have dubbed the company's outlook as "negative" from "stable".
8These are bad times for the industry and no one knows yet when the dark clouds are going to be lift.
Click on Reports for more Details
8The company's revenues have fallen a whopping 53% in the first nine months of 2015-16 as business from the E&P industry has begun drying up, following a crash in the price of crude.
8The decline in demand has caused a blood bath in the market, drastically bringing down prices.
8The order book has shrunk to a mere Rs 53 crore as on December 2015 from Rs 115 crore in June 2015.
8The export business has been particularly impacted with export revenues at a mere Rs. 9 crore in 9 months of this year as against Rs. 67 crore in full FY15.
8Coupled with high operating leverage, EBITDA margins have dropped to just 5.7% and PAT has turned negative. Credit rating agencies have dubbed the company's outlook as "negative" from "stable".
8These are bad times for the industry and no one knows yet when the dark clouds are going to be lift.
Click on Reports for more Details
There are some who argue that this is perhaps the best time to invest in oil stocks.
8Which end of the spectrum you invest in will depend upon your risk taking ability. At the highly speculative end are the drilling stocks whose performance is directly related to the price of crude as their fortunes wax or wane with crude price movements as their clients, the E&P operators, either invest more or less when prices go up or down.
8In contrast, the further an investor moves downstream into sectors like pure refining companies, the lower the correlation to oil prices.
8For refiners, oil is an input cost, and lower input prices are a benefit to their business.
8While ONGC's profits are down, IOC's have gone up
8Of course, that does not always automatically translate to greater profits or better equity returns for the downstream segment. If the economy weakens, demand and therefore the price of refined products may decline and sometimes even more than oil prices themselves.
8If there is an upswing in crude price, oil stocks can actually lead the market.
8Clearly, it looks like crude prices are unlikely to touch the $20 level as was direly predicted.
8The projection is that the supply-demand gap will narrow, allowing crude price to firm up going ahead.
8This may well be a good time to buy stocks that are directly related to the price of crude.
8There has been a rally in the price of crude of late and it may fizzle out in the coming weeks but in a six to one year horizon, oil stocks are a good bet.
Click on Reports for more Details
8Which end of the spectrum you invest in will depend upon your risk taking ability. At the highly speculative end are the drilling stocks whose performance is directly related to the price of crude as their fortunes wax or wane with crude price movements as their clients, the E&P operators, either invest more or less when prices go up or down.
8In contrast, the further an investor moves downstream into sectors like pure refining companies, the lower the correlation to oil prices.
8For refiners, oil is an input cost, and lower input prices are a benefit to their business.
8While ONGC's profits are down, IOC's have gone up
8Of course, that does not always automatically translate to greater profits or better equity returns for the downstream segment. If the economy weakens, demand and therefore the price of refined products may decline and sometimes even more than oil prices themselves.
8If there is an upswing in crude price, oil stocks can actually lead the market.
8Clearly, it looks like crude prices are unlikely to touch the $20 level as was direly predicted.
8The projection is that the supply-demand gap will narrow, allowing crude price to firm up going ahead.
8This may well be a good time to buy stocks that are directly related to the price of crude.
8There has been a rally in the price of crude of late and it may fizzle out in the coming weeks but in a six to one year horizon, oil stocks are a good bet.
Click on Reports for more Details
The oil and gas industry looks at climate change as a daunting challenge but there are business opportunities too that can come in its wake which are worth hundreds of billions of dollars.
8The website carries here the details of a business session in New Delhi that will tackle not just the challenges but highlight the opportunities available for the Indian industry in the post-Paris framework.
8The conference will focus on the nature and scale of action that will take place to prevent climate change.
8The attention will be on the level of support needed in terms of finance and technology to usher in the change.
8Result based climate financing options will be discussed.
8It will perhaps be a good idea to send a team to the conference just to stay abreast of developments.
Click on Reports for more Details
8The website carries here the details of a business session in New Delhi that will tackle not just the challenges but highlight the opportunities available for the Indian industry in the post-Paris framework.
8The conference will focus on the nature and scale of action that will take place to prevent climate change.
8The attention will be on the level of support needed in terms of finance and technology to usher in the change.
8Result based climate financing options will be discussed.
8It will perhaps be a good idea to send a team to the conference just to stay abreast of developments.
Click on Reports for more Details
In what is likely to be huge vote of confidence for the Modi government's new policies, Chambal Fertilizers has given capital approval for a new brownfield urea-ammonia project.
8Chambal said it has finalied a Rs 1`057 crore loan from the SBI and Axis Bank for the project.
8Besides, the company will also avail a Rs 300 crore bank guarantee from State Bank of India. It will be in favor of the Government of India as per the New Urea Investment Policy - 2012 requirements.
8In a regulatory filing, Chambal Fertilisers & Chemicals Ltd today said it has executed a loan agreement with SBI for term loan of Rs 500 crore and with Axis Bank for term loan of Rs 557.85 crore.
8Last month, the company had said it has entered into an agreement with four banks including SBI, HDFC Bank, Axis Bank and Exim Bank for availing foreign currency loan of USD 550 million.
8The SBI Bank bank guarantee will be utilized in favor of the Government of India as per the New Urea Investment Policy - 2012 requirements.
Click on Details for more Details
8Chambal said it has finalied a Rs 1`057 crore loan from the SBI and Axis Bank for the project.
8Besides, the company will also avail a Rs 300 crore bank guarantee from State Bank of India. It will be in favor of the Government of India as per the New Urea Investment Policy - 2012 requirements.
8In a regulatory filing, Chambal Fertilisers & Chemicals Ltd today said it has executed a loan agreement with SBI for term loan of Rs 500 crore and with Axis Bank for term loan of Rs 557.85 crore.
8Last month, the company had said it has entered into an agreement with four banks including SBI, HDFC Bank, Axis Bank and Exim Bank for availing foreign currency loan of USD 550 million.
8The SBI Bank bank guarantee will be utilized in favor of the Government of India as per the New Urea Investment Policy - 2012 requirements.
Click on Details for more Details
How much do taxes actually push up the final price of petrol and diesel in India?
8Quite a lot these days.
8As on March 1, 2016 the cost of diesel in Delhi was Rs 46.53 per litre.
This is how the price is split up:
8The Refinery Transfer Price on landed cost basis for BS IV diesel paid by Oil Marketing Companies to refineries is quote low, at a just Rs 17.94/litre
8What is charged to dealer (exclusive of excise duty and VAT) is Rs 20.34 per litre
8Excise duty comes to Rs 17.22 per litre
8The dealer commission is Rs 1.43 per litre
8The VAT applicable in Delhi is Rs 7.33 per litre
8The selling price in Delhi: Rs 46.43 per litre
Click on Reports for more Details
8Quite a lot these days.
8As on March 1, 2016 the cost of diesel in Delhi was Rs 46.53 per litre.
This is how the price is split up:
8The Refinery Transfer Price on landed cost basis for BS IV diesel paid by Oil Marketing Companies to refineries is quote low, at a just Rs 17.94/litre
8What is charged to dealer (exclusive of excise duty and VAT) is Rs 20.34 per litre
8Excise duty comes to Rs 17.22 per litre
8The dealer commission is Rs 1.43 per litre
8The VAT applicable in Delhi is Rs 7.33 per litre
8The selling price in Delhi: Rs 46.43 per litre
Click on Reports for more Details
Petrol in fact is taxed higher than diesel in India
8Against the Refinery Transfer price of Rs 18.17 per litre, the selling price in Delhi is a whopping Rs 56.61 per litre
8The price charged to dealer is Rs 20.87 per litre
8To this, an excise duty of Rs 21.48 per litre is to be added
8The dealer commission is a substantial Rs 2.22 per litre
8The VAT applicable in Delhi is Rs 12.02 per litre
8The total cost comes to Rs 56.61 per litre.
8The reason why petrol is taxed higher than diesel is because diesel is used in the transportation and agricultural sectors but there is an environmental cost to it, as diesel is more polluting than petrol.
8A price differential, though less now than before, will however continue to swing purchase preferences towards diesel cars.
Click on Reports for more Details
8Against the Refinery Transfer price of Rs 18.17 per litre, the selling price in Delhi is a whopping Rs 56.61 per litre
8The price charged to dealer is Rs 20.87 per litre
8To this, an excise duty of Rs 21.48 per litre is to be added
8The dealer commission is a substantial Rs 2.22 per litre
8The VAT applicable in Delhi is Rs 12.02 per litre
8The total cost comes to Rs 56.61 per litre.
8The reason why petrol is taxed higher than diesel is because diesel is used in the transportation and agricultural sectors but there is an environmental cost to it, as diesel is more polluting than petrol.
8A price differential, though less now than before, will however continue to swing purchase preferences towards diesel cars.
Click on Reports for more Details
British Petroleum's share in the KG basin gas output fell to an average of 113 million sq feet per day (msfd) in 2015.
8This is down from 131 msfd in 2014 and 156 msfd in 2013.
8In 2015, BP has not worked in any impairment cost to the KG-D6 bloc. In 2014, it wrote off a massive $415 million. The multinational claimed that the impairment had arisen because of the new gas price formula that pegged the price of gas at an abysmally lower level.
8At these prices, it was near-impossible to produce gas in Indian deepwaters, BP had said.
8In 2015, BP said that a number of activities to sustain production and extend the life of the producing fields in KG D6 block were completed. These included well side-tracks, the installation of additional onshore compression, reactivation of shut-in wells and production optimization.
8This notwithstanding, output continued to fall.
BP hopes situation will improve in India
8BP however continues to hope that the situation will improve in India.
8The company said that it conducted successful tests of three earlier discoveries; two in the KG D6 block and one in the NEC 25 block to progress towards Declaration of Commerciality.
8The company said that it expected "further clarity on the gas price policy to emerge in due course".
Click on Reports for more Details
8This is down from 131 msfd in 2014 and 156 msfd in 2013.
8In 2015, BP has not worked in any impairment cost to the KG-D6 bloc. In 2014, it wrote off a massive $415 million. The multinational claimed that the impairment had arisen because of the new gas price formula that pegged the price of gas at an abysmally lower level.
8At these prices, it was near-impossible to produce gas in Indian deepwaters, BP had said.
8In 2015, BP said that a number of activities to sustain production and extend the life of the producing fields in KG D6 block were completed. These included well side-tracks, the installation of additional onshore compression, reactivation of shut-in wells and production optimization.
8This notwithstanding, output continued to fall.
BP hopes situation will improve in India
8BP however continues to hope that the situation will improve in India.
8The company said that it conducted successful tests of three earlier discoveries; two in the KG D6 block and one in the NEC 25 block to progress towards Declaration of Commerciality.
8The company said that it expected "further clarity on the gas price policy to emerge in due course".
Click on Reports for more Details
The E&P industry clamored loudly for a switch from a fixed to an ad valorem rate on crude production.
8But the move backfired after the Budget moved the cess regime from a fixed Rs 4500 per tonne to an ad valirem rate of 20%.
8The industry had thought that the rate would be 10% or even less.
8Calculations show that the ad valorem rate will have a favourable impact only till prices remain below $45 per barrel.
8Beyond this point, the effective cess will keep rising and cross the fixed regime cess of Rs 4,500/tonne.
8The estimate is that E&P companies will see an adverse long term effect on cash flows when prices rise.
Click on Details for some sensitivity analysis Details
8But the move backfired after the Budget moved the cess regime from a fixed Rs 4500 per tonne to an ad valirem rate of 20%.
8The industry had thought that the rate would be 10% or even less.
8Calculations show that the ad valorem rate will have a favourable impact only till prices remain below $45 per barrel.
8Beyond this point, the effective cess will keep rising and cross the fixed regime cess of Rs 4,500/tonne.
8The estimate is that E&P companies will see an adverse long term effect on cash flows when prices rise.
Click on Details for some sensitivity analysis Details
After the clarification issued on how to calculate the net worth of individual promoters for the Jaigarh-Mangalore gas pipeline, a similar clarification was also issued for the Contai-Duttapulia-Jaipur-Dhamra-Cuttack-Paradip pipeline.
8When promoters are individuals, the normal format for audited financial information, including the networth as defined by Annexure 10B of the bid document is not applicable.
8The regulator has now made it clear that a fresh computation sheet be submitted along with the bid that will take into account the networth of individuals according to an annexure newly appended.
8Interestingly, the networth of an individual stakehikder will be calculated taking 70% of his listed investment and 50% of unlisted investments.
8Other investments such as PPF, NSC and deposits will be taken at the current value while 50% of the market value of land and buildings will go into the asset calculation.
8Added to this will be debtors not exceeding 3 months and cash and bank balances.
8Current and long term liabilities will be subtracted from the above assets, to arrive at the correct net worth figure.
Click on Reports for more Details
8When promoters are individuals, the normal format for audited financial information, including the networth as defined by Annexure 10B of the bid document is not applicable.
8The regulator has now made it clear that a fresh computation sheet be submitted along with the bid that will take into account the networth of individuals according to an annexure newly appended.
8Interestingly, the networth of an individual stakehikder will be calculated taking 70% of his listed investment and 50% of unlisted investments.
8Other investments such as PPF, NSC and deposits will be taken at the current value while 50% of the market value of land and buildings will go into the asset calculation.
8Added to this will be debtors not exceeding 3 months and cash and bank balances.
8Current and long term liabilities will be subtracted from the above assets, to arrive at the correct net worth figure.
Click on Reports for more Details
Iran is putting the final touches to the Iran Petroleum Contract (IPC) that will be the basis for inviting foreign investments into its oil and gas sector.
8About 50 projects are expected to be offered under the IPC.
8The country has drawn up a list of eligible local partners with whom foreign companies will have to tie-up to be able to invest in Iran.
8The eligible upstream partners’ shortlist might be published in May, when the final list of about 50 projects will be released.
8A road show is planned in London too.
8A similar list of eligible contractors is also being drawn up.
8Are Indian companies keeping track of the developments in Iran?
8While E&P companies will have to look out for tie-ups, Indian engineering and equipment suppliers will also need their local tie-ups.
Click on Details for a list of local companies shorlisted by Iran. Details
8About 50 projects are expected to be offered under the IPC.
8The country has drawn up a list of eligible local partners with whom foreign companies will have to tie-up to be able to invest in Iran.
8The eligible upstream partners’ shortlist might be published in May, when the final list of about 50 projects will be released.
8A road show is planned in London too.
8A similar list of eligible contractors is also being drawn up.
8Are Indian companies keeping track of the developments in Iran?
8While E&P companies will have to look out for tie-ups, Indian engineering and equipment suppliers will also need their local tie-ups.
Click on Details for a list of local companies shorlisted by Iran. Details
IOC is trying to push its "indigenously designed" diesel hydrotreater technology -- jointly developed by IOC with EIL -- in the market
8There are no takers yet however.
8The company had installed a grassroots unit of 1.2 MMTPA hydrotreater in its Bongaigoan refinery to produce diesel meeting BS-IV norms (Sulphur <50 ppm and Cetane number of > 51).
8The unit did run into teething problems.
8Nevertheless, IOC is keen on pitching the technology, which it claims has the following salient features:
--Cetane improvement by >10 units
--Reactor design based on in-house hydrodynamic models for predicting pressure drop and liquid hold-up.
--Optimized feed preheat scheme offers cost-effective designs considering both capital and operating costs.
--High active catalyst system developed by IOC's own R&D division but is the unit has to flexibility to use other commercial catalysts.
--Process design based on pilot plant testing with actual design feed.
--Continued support including pilot plant testing in post start-up period and subsequent optimization, revamp and trouble-shooting work.
8It remains a moot point whether there will be any takers for what is essentially an experimental technology.
Click on Reports for more Details
8There are no takers yet however.
8The company had installed a grassroots unit of 1.2 MMTPA hydrotreater in its Bongaigoan refinery to produce diesel meeting BS-IV norms (Sulphur <50 ppm and Cetane number of > 51).
8The unit did run into teething problems.
8Nevertheless, IOC is keen on pitching the technology, which it claims has the following salient features:
--Cetane improvement by >10 units
--Reactor design based on in-house hydrodynamic models for predicting pressure drop and liquid hold-up.
--Optimized feed preheat scheme offers cost-effective designs considering both capital and operating costs.
--High active catalyst system developed by IOC's own R&D division but is the unit has to flexibility to use other commercial catalysts.
--Process design based on pilot plant testing with actual design feed.
--Continued support including pilot plant testing in post start-up period and subsequent optimization, revamp and trouble-shooting work.
8It remains a moot point whether there will be any takers for what is essentially an experimental technology.
Click on Reports for more Details
There is no clarity yet on whether IOC's Rs 3300 crore capacity expansion-cum-up gradation project to meet BS-IV specifications of its subsidiary, Bongaigaon Refinery and Petrochemicals Ltd (BRPL), will be entitled to a 50% excise duty relief now that the incentive policy for investments in the North East stands withdrawn.
8While the transition to BS-IV fuels is inevitable and does not require any subsidy, the creation of additional capacity from 2.35 MMTPA to 2.70 MMTPA may not elicit the requisite income tax and excise relief now that the concessions have been withdrawn from December, 2014.
8There is in fact some uncertainty now on whether even the existing capacity will get the necessary relief since the incentive policy itself has been withdrawn.
8The central government has claimed that the subsidy scheme was open ended and did not have sufficient backing of finds from the excheqyer, and will come back, albeit in another avatar.
8Accounting for the withdrawal of subsidies will be a a big problem for IOC as it has three refineries -- th other two in Guwahati and Digboi -- in the North East.
8The project IRR will also be different now and has to be recalculated.
8 The following facilities are to be set up in the Bongaigaon refinery:
--Crude processing capacity enhancement from 2.35 to 2.7 MMTPA
--DHDT capacity enhancement from 1,200 TMTPA to 1,800 TMTPA to meet BS-V/VI HSD specification
--CRU-MSQ revamp to meet BS-V/VI MS specification
--Selective Desulphurisation (SDS) Unit
--An INDMAX project along with an Indmax Gasoline De-Sulphurisation Unit
--The refinery expansion is taking place because the capacity of the Haldia-Barauni pipeline that supplies low sulphur imported crude -- over and above sweet crude from the Assam fields -- is being expanded. The crude availability at the refinery now stands at 2.7 MMTPA.
--Bongaigoan has two CDUs and it is the capacity of the second CDU that is going to be raised from 1 to 1.35 MMTPA.
Click on our Reports section for more Details
8While the transition to BS-IV fuels is inevitable and does not require any subsidy, the creation of additional capacity from 2.35 MMTPA to 2.70 MMTPA may not elicit the requisite income tax and excise relief now that the concessions have been withdrawn from December, 2014.
8There is in fact some uncertainty now on whether even the existing capacity will get the necessary relief since the incentive policy itself has been withdrawn.
8The central government has claimed that the subsidy scheme was open ended and did not have sufficient backing of finds from the excheqyer, and will come back, albeit in another avatar.
8Accounting for the withdrawal of subsidies will be a a big problem for IOC as it has three refineries -- th other two in Guwahati and Digboi -- in the North East.
8The project IRR will also be different now and has to be recalculated.
8 The following facilities are to be set up in the Bongaigaon refinery:
--Crude processing capacity enhancement from 2.35 to 2.7 MMTPA
--DHDT capacity enhancement from 1,200 TMTPA to 1,800 TMTPA to meet BS-V/VI HSD specification
--CRU-MSQ revamp to meet BS-V/VI MS specification
--Selective Desulphurisation (SDS) Unit
--An INDMAX project along with an Indmax Gasoline De-Sulphurisation Unit
--The refinery expansion is taking place because the capacity of the Haldia-Barauni pipeline that supplies low sulphur imported crude -- over and above sweet crude from the Assam fields -- is being expanded. The crude availability at the refinery now stands at 2.7 MMTPA.
--Bongaigoan has two CDUs and it is the capacity of the second CDU that is going to be raised from 1 to 1.35 MMTPA.
Click on our Reports section for more Details
ONGC is now looking for uranium in the KG Basin.
8The company plans to drill 6 parametric wells in the Kaikalur Lingala Area of the KG Basin to collect uranium cores.
8A total of 8000 metres of drilling will be carried out, using four rigs.
8The first four wells using a minimum 4 rigs will be completed within 75 days.
8Open hole and cased hole logging operations will be carried out.
8The cores will then be sent to laboratories for testing.
8Around 50 metres of core per well will be collected for analysis
Click on Reports for more Details
8The company plans to drill 6 parametric wells in the Kaikalur Lingala Area of the KG Basin to collect uranium cores.
8A total of 8000 metres of drilling will be carried out, using four rigs.
8The first four wells using a minimum 4 rigs will be completed within 75 days.
8Open hole and cased hole logging operations will be carried out.
8The cores will then be sent to laboratories for testing.
8Around 50 metres of core per well will be collected for analysis
Click on Reports for more Details
Will the $7.5 billion TurkmenistanAfghanistan-PakistanIndia (TAPI) gas pipeline project be eventually constructed?
8The fact that it is moving ahead is evident from the fact that the agreement to operate the 1,814 pipeline was signed in Istanbul and the four countries have agreed to put up $200 million as the initial seed capital.
8The pipeline is meant to ferrya 90 mmscmd of gas for 30 years.
8India and Pakistan would get 38 mmscmd each, while the remaining 14 mmscmd will be supplied to Afghanistan.
8A significant part of this gas is meant to land in India.
8Plans are that the pipeline will be completed in 2018.
8If that is so, gas from the pipeline will reach India sooner than indigenous gas will be pumped out of the KG Basin discoveries once the new gas pricing policy is in place.
8If there are no hurdles, and the pipeline comes through, it will dramatically change the gas dynamics in India.
Click on Details for more Details
8The fact that it is moving ahead is evident from the fact that the agreement to operate the 1,814 pipeline was signed in Istanbul and the four countries have agreed to put up $200 million as the initial seed capital.
8The pipeline is meant to ferrya 90 mmscmd of gas for 30 years.
8India and Pakistan would get 38 mmscmd each, while the remaining 14 mmscmd will be supplied to Afghanistan.
8A significant part of this gas is meant to land in India.
8Plans are that the pipeline will be completed in 2018.
8If that is so, gas from the pipeline will reach India sooner than indigenous gas will be pumped out of the KG Basin discoveries once the new gas pricing policy is in place.
8If there are no hurdles, and the pipeline comes through, it will dramatically change the gas dynamics in India.
Click on Details for more Details
This website believes that India must push for cross-country gas pipelines even if the risks are high.
8Besides TAPI, India must also push for the Iran-Pakistan-India pipeline at all cost.
8This website had argued in great detail in the past that the India must build transnational pipelines even if the financial and security risks are big as it will help the country to pit pipeline suppliers with those of LNG to elicit better gas prices.
8Europe does this to great benefit while negotiating with Russia for pipeline gas supply even as its LNG terminals remain empty..
8The sunk cost of such pipelines will come out of lower gas prices on LNG deals on account of a stronger bargaining position.
8Despite hiccups with Pakistan, South Block must send instructions to Indian interlocutors for the TAPI pipeline to continue pushing ahead with its construction regardless of anything else.
Click on Reports for full report on how transnational pipelines help lower the overall cost of gas for a country. Details
8Besides TAPI, India must also push for the Iran-Pakistan-India pipeline at all cost.
8This website had argued in great detail in the past that the India must build transnational pipelines even if the financial and security risks are big as it will help the country to pit pipeline suppliers with those of LNG to elicit better gas prices.
8Europe does this to great benefit while negotiating with Russia for pipeline gas supply even as its LNG terminals remain empty..
8The sunk cost of such pipelines will come out of lower gas prices on LNG deals on account of a stronger bargaining position.
8Despite hiccups with Pakistan, South Block must send instructions to Indian interlocutors for the TAPI pipeline to continue pushing ahead with its construction regardless of anything else.
Click on Reports for full report on how transnational pipelines help lower the overall cost of gas for a country. Details
Ferrying gas through a pipeline still remains the cheapest option for India, according to a recent study.
8The study compares the cost of an onland pipeline with that of supplying the same quantity of gas through the LNG route and an undersea pipeline from Iran and finds the land route to be the cheapest.
8Because there is no liquefaction and regasification cost involved, it saves around $4/mmbtu.
8The study assumes a transportation cost of $2.25/mmbtu for the deepwater pipeline in comparison to the LNG ferrying cost of 0.5/mmbtu from Iran, $1/mmbtu from other parts of Asia and $2.25/mmbtu from the US.
8It is only with the onland pipeline from Iran that there are no other charges except a transportation cost of $2.35/mmbtu, which makes it the cheapest option to bring in gas.
8The same logic can be extended to TAPI, through the transportation cost is expected to be higher because a longer distance is to be traversed. Also provision of adequate security will ratchet up the cost significantly.
8Even then, gas from Turkmenistan is expected to arrive in India at a competitive price
Click on Reports for more Details
8The study compares the cost of an onland pipeline with that of supplying the same quantity of gas through the LNG route and an undersea pipeline from Iran and finds the land route to be the cheapest.
8Because there is no liquefaction and regasification cost involved, it saves around $4/mmbtu.
8The study assumes a transportation cost of $2.25/mmbtu for the deepwater pipeline in comparison to the LNG ferrying cost of 0.5/mmbtu from Iran, $1/mmbtu from other parts of Asia and $2.25/mmbtu from the US.
8It is only with the onland pipeline from Iran that there are no other charges except a transportation cost of $2.35/mmbtu, which makes it the cheapest option to bring in gas.
8The same logic can be extended to TAPI, through the transportation cost is expected to be higher because a longer distance is to be traversed. Also provision of adequate security will ratchet up the cost significantly.
8Even then, gas from Turkmenistan is expected to arrive in India at a competitive price
Click on Reports for more Details
After RIL let go of the deepwater drillship Dhirbbhai Deepwater KG2 in October 2015, the market crash kept the Transocean owned vessels idle for the last few months.
8But the news is now out that the drilling ship has been hired for a period of six months though the company is refusing to name the operator.
8The final negotiations are still on and this is the reason why Transocean is refusing to name the operator, more so as the environment today is highly competitive and there is a lot of under cutting in the market.
8The price range is expected to be at around $200,000 or slightly less, market sources said.
8If this day rate is confirmed, it will be a new low.
8Till about a few months ago, the asking price was $300,000 for an idle floating rig on a contract for 12 months or more, compared with the $350,000 to $400,000 earlier in the year.
8Rates peaked at as much as $650,000 in 2013, prompting a surge in the building of new rigs.
8But clearly, this is a new phase entirely with rates in the range of $200,000. This rate is clearly not a level at which any rig owner can make money but owners are keen on hiring out the rigs at any cost so as to keep them from being idle or scrapped altogether.
Click on Details for more. Details
8But the news is now out that the drilling ship has been hired for a period of six months though the company is refusing to name the operator.
8The final negotiations are still on and this is the reason why Transocean is refusing to name the operator, more so as the environment today is highly competitive and there is a lot of under cutting in the market.
8The price range is expected to be at around $200,000 or slightly less, market sources said.
8If this day rate is confirmed, it will be a new low.
8Till about a few months ago, the asking price was $300,000 for an idle floating rig on a contract for 12 months or more, compared with the $350,000 to $400,000 earlier in the year.
8Rates peaked at as much as $650,000 in 2013, prompting a surge in the building of new rigs.
8But clearly, this is a new phase entirely with rates in the range of $200,000. This rate is clearly not a level at which any rig owner can make money but owners are keen on hiring out the rigs at any cost so as to keep them from being idle or scrapped altogether.
Click on Details for more. Details
ONGC is likely to reap the benefits of the current slump in offshore rigs against its tender for two floaters for sub-sea development of the Vashishta and S-1 fields.
8According to reports there were as many as 14 rigs on offer from 10 companies around the world.
Among those in the companies in the race are:
8Seadrill
8Aban Offshore
8Joint Stock Company of Russia
8Ocean Rig
8Unviersal Energy
8Dynamic Drilling
8Japan Drilling
8Jet Drilling
8Queiroz Galvao
8Rajamani Oilfield Services
8Saipem
8Vantage Drilling
8China Offshore Services
Click on Details for more Details
8According to reports there were as many as 14 rigs on offer from 10 companies around the world.
Among those in the companies in the race are:
8Seadrill
8Aban Offshore
8Joint Stock Company of Russia
8Ocean Rig
8Unviersal Energy
8Dynamic Drilling
8Japan Drilling
8Jet Drilling
8Queiroz Galvao
8Rajamani Oilfield Services
8Saipem
8Vantage Drilling
8China Offshore Services
Click on Details for more Details
The announcement that the price of gas in India is going to be linked to the landed price of alternate fuels has created a stir in the offshore oil and gas equipment and services industry across the world.
8The assumption is that the higher price for gas will unlock billions of dollars of investments in India's offshore discoveries by ONGC, GSPC and the RIL-BP combine.
8There is anticipation that ONGC may begin finalizing contracts for its Rs 53,000 crore foray in the KG Basin in anticipation of new gas price to be announced.
8How many rigs can ONGC seek, if new gas prices are announced?
Click on Details to find out more on ONGC's rig requirements. Details
8The assumption is that the higher price for gas will unlock billions of dollars of investments in India's offshore discoveries by ONGC, GSPC and the RIL-BP combine.
8There is anticipation that ONGC may begin finalizing contracts for its Rs 53,000 crore foray in the KG Basin in anticipation of new gas price to be announced.
8How many rigs can ONGC seek, if new gas prices are announced?
Click on Details to find out more on ONGC's rig requirements. Details
The first block that will begin production after the new gas pricing regime is announced is likely to be GSPC's KG-OSN-2001/3 block
8Commercial gas production from GSPC's 3 discoveries (KG-08, KG-15 & KG-17) was to commence in January 2012 but was delayed first for technical reasons and subsequently due to commercial factors.
8Two wells of the field had been on test production as early as August and November 2014 respectively.
8Subsequently, the petroleum ministry had allocated around 0.8 mmscmd of gas from these discoveries to Nagarjuna Fertilizers & Chemicals Ltd.
8But GSPC wanted the gas to be sent to Gujarat Narmada Valley Fertilizers & Chemicals Limited (GNFC) instead. The stalemate ensured that no gas was supplied.
8Then again GSPC had sought a higher price than what was arrived at through the gas pricing formula, claiming that its cost of production is not met by the current gas pricing formula.
8GSPC had invested a massive Rs 9000 crore in the block and it is still to elicit any cash flow out the investment.
8It was a risky investment indeed as the wells had to be drilled in a High Temperature-High Pressure (HTHP) and low permeability environment in ultra deepwater areas.
Clearly, this is one block that will be the first to produce gas once the new pricing policy comes into existence Details
8Commercial gas production from GSPC's 3 discoveries (KG-08, KG-15 & KG-17) was to commence in January 2012 but was delayed first for technical reasons and subsequently due to commercial factors.
8Two wells of the field had been on test production as early as August and November 2014 respectively.
8Subsequently, the petroleum ministry had allocated around 0.8 mmscmd of gas from these discoveries to Nagarjuna Fertilizers & Chemicals Ltd.
8But GSPC wanted the gas to be sent to Gujarat Narmada Valley Fertilizers & Chemicals Limited (GNFC) instead. The stalemate ensured that no gas was supplied.
8Then again GSPC had sought a higher price than what was arrived at through the gas pricing formula, claiming that its cost of production is not met by the current gas pricing formula.
8GSPC had invested a massive Rs 9000 crore in the block and it is still to elicit any cash flow out the investment.
8It was a risky investment indeed as the wells had to be drilled in a High Temperature-High Pressure (HTHP) and low permeability environment in ultra deepwater areas.
Clearly, this is one block that will be the first to produce gas once the new pricing policy comes into existence Details
The government has to decide whether all or a handful of deepwater projects will elicit the new gas price announced in the Union budget.
8Will GSPC's block be entitled to the new price? Will RIL's D-1 and D-3 fields qualify?
8Or will the new price be confined to those discoveries in which production has not begun yet?
8Will the government drop its earlier insistence that a "premium" be given only to discoveries after November, 2014. This was an arbitrary cut off point arrived at by the bureaucrats in the petroleum ministry for those who would be entitled to the "premium" and those who would not.
8The finance minister's budget declaration incentivises "gas production from deep-water, ultra deep-water and high pressure-high temperature areas, which are presently not exploited on account of higher cost and higher risks".
8This statement seems to include all discoveries and not just those after November, 2014.
8But it is only when a CCEA note is moved and a formal announcement made that the picture will be clear.
8It is unlikely that ONGC or GSPC or RIL will not start any work on their discoveries unless all aspects of the new gas pricing formula are made clear.
Click on Details for more Details
8Will GSPC's block be entitled to the new price? Will RIL's D-1 and D-3 fields qualify?
8Or will the new price be confined to those discoveries in which production has not begun yet?
8Will the government drop its earlier insistence that a "premium" be given only to discoveries after November, 2014. This was an arbitrary cut off point arrived at by the bureaucrats in the petroleum ministry for those who would be entitled to the "premium" and those who would not.
8The finance minister's budget declaration incentivises "gas production from deep-water, ultra deep-water and high pressure-high temperature areas, which are presently not exploited on account of higher cost and higher risks".
8This statement seems to include all discoveries and not just those after November, 2014.
8But it is only when a CCEA note is moved and a formal announcement made that the picture will be clear.
8It is unlikely that ONGC or GSPC or RIL will not start any work on their discoveries unless all aspects of the new gas pricing formula are made clear.
Click on Details for more Details
Given India's vast coast line and the extent of oil and gas activity dotting the coast, oil spills are a real possibility.
8India has put together a contingency plan for oil spills but there is still a lot to learn.
8In this context, Indian policy makers will need to look at what is called a Common Operating Picture (COP) that was released yesterday on how to respond to oil spills.
8The IPIECA is an UN approved oil and gas association covering both upstream and downstream industry worldwide on social and environment issues.
8The recommendations have been dubbed as reusable best practices that can be deployed at any site of oil spillage, anywhere in the world.
8The advantage of a shared understanding across different situations of oil spillage is the strength of this joint initiative by multiple stakeholders.
8The initiative also has the support of Resource Data, Inc, a major technology provider for handling oil spills for the more than twenty five years now
Click on Details for more Details
8India has put together a contingency plan for oil spills but there is still a lot to learn.
8In this context, Indian policy makers will need to look at what is called a Common Operating Picture (COP) that was released yesterday on how to respond to oil spills.
8The IPIECA is an UN approved oil and gas association covering both upstream and downstream industry worldwide on social and environment issues.
8The recommendations have been dubbed as reusable best practices that can be deployed at any site of oil spillage, anywhere in the world.
8The advantage of a shared understanding across different situations of oil spillage is the strength of this joint initiative by multiple stakeholders.
8The initiative also has the support of Resource Data, Inc, a major technology provider for handling oil spills for the more than twenty five years now
Click on Details for more Details
The National Gas Hydrate Programme had launched a second expedition looking for gas hydrates off the coast of India in 2015.
8A drill ship was hired to look for gas hydrate cores in Krishna Godavari basin and deep offshore Mahanadi areas.
8Based on this expedition, it has been estimated that gas hydrate resources total up to a massive 134 trillion cubic feet of gas in about 8400 sq km area in the KG Basin.
8Efforts are on particularly in Japan and the US to tap gas hydrates as an energy source.
8A BP Outlook report has estimated that gas hydrates will contribute a reasonable volume of gas by the year 2050.
Click on Reports for more on India's gas hydrate reserves, including findings from the first expedition that was launched by the National Gas Hydrate Programme Details
8A drill ship was hired to look for gas hydrate cores in Krishna Godavari basin and deep offshore Mahanadi areas.
8Based on this expedition, it has been estimated that gas hydrate resources total up to a massive 134 trillion cubic feet of gas in about 8400 sq km area in the KG Basin.
8Efforts are on particularly in Japan and the US to tap gas hydrates as an energy source.
8A BP Outlook report has estimated that gas hydrates will contribute a reasonable volume of gas by the year 2050.
Click on Reports for more on India's gas hydrate reserves, including findings from the first expedition that was launched by the National Gas Hydrate Programme Details
In what can easily be one of the biggest flip flops in the history of corporate India, GAIL is planning to prune its plans to buy up to 11 LNG ships on account of changing market dynamics.
8The tender deadline has been extended by one more month till March 31, 2016
8Given that it will take at least six months before LOIs can be awarded, and three years to build these ships, deliveries are unlikely before September 2019 or later.
8GAIL is committed to buy 6 MMTPA of LNG cargoes from US LNG liquefaction plants and first supplies are expected in 2017-18.
8The earlier thinking was that the gas will be shipped to India as the price calculations were turning out to be positive but with the recent PLL-RasGas deal and the turn in the LNG market subsequent to an over supply situation, the thinking has changed in GAIL.
8The gas major, it seems, will have to work as a trader in the global market for LNG as the possibility of a large proportion of its US LNG volumes being sold in the spot market and not in the long term segment looms large.
8This can turn out to be a dangerous game to play as the global LNG market is populated with players with more experience and deeper pockets than GAIL.
8Ironically, it was the government's intervention while pushing for indigenous local participation in the tender for building LNG carriers for GAIL that forced the gas major to put off the award of contracts for these vessels.
8This turned out to be a blessing in disguise quite by default as there is now a complete change of heart at GAIL and the gas major is no longer looking at awarding contracts for all 11 ships.
8The orders are likely to be trimmed as India is no longer a focus market for GAIL after RasGas' predatory pricing had made US cargoes uncompetitive in the Indian market.
8Nothing reflects more badly on the quality of leadership in GAIL than the fact that it took a quirk of fate -- a government intervention for quite another reason altogether -- for the company to escape the liability that would have devolved on the company if orders were placed for purchase of all of these ships two years ago.
8This reflects a certain recklessness of conduct by the GAIL brass which is not in consonance with the mandate given to it by the government of India.
Click on Reports for more Details
8The tender deadline has been extended by one more month till March 31, 2016
8Given that it will take at least six months before LOIs can be awarded, and three years to build these ships, deliveries are unlikely before September 2019 or later.
8GAIL is committed to buy 6 MMTPA of LNG cargoes from US LNG liquefaction plants and first supplies are expected in 2017-18.
8The earlier thinking was that the gas will be shipped to India as the price calculations were turning out to be positive but with the recent PLL-RasGas deal and the turn in the LNG market subsequent to an over supply situation, the thinking has changed in GAIL.
8The gas major, it seems, will have to work as a trader in the global market for LNG as the possibility of a large proportion of its US LNG volumes being sold in the spot market and not in the long term segment looms large.
8This can turn out to be a dangerous game to play as the global LNG market is populated with players with more experience and deeper pockets than GAIL.
8Ironically, it was the government's intervention while pushing for indigenous local participation in the tender for building LNG carriers for GAIL that forced the gas major to put off the award of contracts for these vessels.
8This turned out to be a blessing in disguise quite by default as there is now a complete change of heart at GAIL and the gas major is no longer looking at awarding contracts for all 11 ships.
8The orders are likely to be trimmed as India is no longer a focus market for GAIL after RasGas' predatory pricing had made US cargoes uncompetitive in the Indian market.
8Nothing reflects more badly on the quality of leadership in GAIL than the fact that it took a quirk of fate -- a government intervention for quite another reason altogether -- for the company to escape the liability that would have devolved on the company if orders were placed for purchase of all of these ships two years ago.
8This reflects a certain recklessness of conduct by the GAIL brass which is not in consonance with the mandate given to it by the government of India.
Click on Reports for more Details
Why did GAIL postpone the LNG tender by one more month?
8Prospective bidders have reportedly raised a lot of concerns, including recalculation of costs if the number of vessels to be ordered is lowered from the minimum of nine that bidders had taken into consideration.
8Bidders have also raised concerns over some financial conditions and guarantee stipulations in the tender.
8There was also apprehension that GAIL could end up with a single bid if the concerns were not addressed.
8Industry circles see the combine of Japan's shipping company NHK, state-run Cochin shipyard and Korean shipmaker Samsung as a certainty.
8Pipavav shipyard is the other prospective Indian bidder that has tied up with Daewoo but it seems to be having last minute second thoughts over participating in the tender, particularly because of the need for a $100 million upfront investment in sprucing up its shipyard to be in a position to build one LNG cessels,
8L&T, which was in talks with Samsung, had pulled out.
Click on Details for more Details
8Prospective bidders have reportedly raised a lot of concerns, including recalculation of costs if the number of vessels to be ordered is lowered from the minimum of nine that bidders had taken into consideration.
8Bidders have also raised concerns over some financial conditions and guarantee stipulations in the tender.
8There was also apprehension that GAIL could end up with a single bid if the concerns were not addressed.
8Industry circles see the combine of Japan's shipping company NHK, state-run Cochin shipyard and Korean shipmaker Samsung as a certainty.
8Pipavav shipyard is the other prospective Indian bidder that has tied up with Daewoo but it seems to be having last minute second thoughts over participating in the tender, particularly because of the need for a $100 million upfront investment in sprucing up its shipyard to be in a position to build one LNG cessels,
8L&T, which was in talks with Samsung, had pulled out.
Click on Details for more Details
There are currently a total of 431 LNG tankers which are used for international trade. This number also includes floating storage and regasification units (FSRU) which, while they can be used as conventional tankers, are designed to act as floating LNG terminals.
8142 vessels are on the order books with shipbuilders and expected to be added to the global fleet within the next five years.
8Most LNG tonnage has been ordered to service specific production projects, and is commonly referred to as project tonnage. The cost of building an LNG carrier has varied dramatically due to fluctuations in global steel prices, technical specifications and carrying capacity. The cost of a new-build usually varies from $200-$250mn for a conventional vessel. Most LNG carriers are built in either South Korea or Japan. Due to the comparatively high cost of LNG ships, very few ship-owners have ordered vessels on a purely speculative basis.
8Of the 142 tankers on the order books, only 18 are being built without a long-term commitment from a charterer. In terms of the existing global fleet, less than 5% of the existing fleet has been built on a speculative basis. Rather than servicing any particular production project, the owners of these vessels target mid-term, short-term and spot markets.
8If GAIL by pruning its orders is banking on uncommitted vessels to take on its load, it is too big a risk to take.
Click on Reports for more Details
8142 vessels are on the order books with shipbuilders and expected to be added to the global fleet within the next five years.
8Most LNG tonnage has been ordered to service specific production projects, and is commonly referred to as project tonnage. The cost of building an LNG carrier has varied dramatically due to fluctuations in global steel prices, technical specifications and carrying capacity. The cost of a new-build usually varies from $200-$250mn for a conventional vessel. Most LNG carriers are built in either South Korea or Japan. Due to the comparatively high cost of LNG ships, very few ship-owners have ordered vessels on a purely speculative basis.
8Of the 142 tankers on the order books, only 18 are being built without a long-term commitment from a charterer. In terms of the existing global fleet, less than 5% of the existing fleet has been built on a speculative basis. Rather than servicing any particular production project, the owners of these vessels target mid-term, short-term and spot markets.
8If GAIL by pruning its orders is banking on uncommitted vessels to take on its load, it is too big a risk to take.
Click on Reports for more Details
For reference purposes, the website carries here details of capex cuts expected in the global oil and gas industry in 2016.
8Data is also given of the capex cuts in 2015 over 2016.
Annual capex information is given for the years 2010 to 2015 and estimates for 2016 for the following segments:
8Chemicals
8Exploration and production of oil and gas
8Midstream
8Downstream
8The biggest hit is the E&P sector, with capex of non-national oil company investment falling to $379 billion in 2016, from $541 billion in 2015 and $741 billion in 2014.
Click on Reports for more Details
8Data is also given of the capex cuts in 2015 over 2016.
Annual capex information is given for the years 2010 to 2015 and estimates for 2016 for the following segments:
8Chemicals
8Exploration and production of oil and gas
8Midstream
8Downstream
8The biggest hit is the E&P sector, with capex of non-national oil company investment falling to $379 billion in 2016, from $541 billion in 2015 and $741 billion in 2014.
Click on Reports for more Details
Now that the PNGRB has rejected the claim of authorization by the Haryana City Gas Distribution Ltd (HCGDL), the ball has been thrown back to the High Court of Punjab and Haryana for a decision.
8The court had ruled that the bids would not come in the way should HCGDL establish its rights over the Rohtak GA.
8The PNGRB had claimed that a hearing was afforded to the company on the basis of a direction from the court but now that the plea for dropping the Rohtak GA from the bidding round was rejected, it will be for the court to decide the next course of action.
8The point to note however is that the PNGRB has received 4 bids for the CGD network in Rohtak GA so far.
Click on Reports for more Details
8The court had ruled that the bids would not come in the way should HCGDL establish its rights over the Rohtak GA.
8The PNGRB had claimed that a hearing was afforded to the company on the basis of a direction from the court but now that the plea for dropping the Rohtak GA from the bidding round was rejected, it will be for the court to decide the next course of action.
8The point to note however is that the PNGRB has received 4 bids for the CGD network in Rohtak GA so far.
Click on Reports for more Details
PNGRB rejects Haryana City Gas Distribution Ltd (HCGDL)'s request to exclude Rohtak GA in the 6th round of bids for CGD on the ground that the company was already granted authorisation by the government of Haryana to build a city gas distribution network in the city.
8The Board has ruled that under the CGD Authorisation Regulations, laid down on 19 March 2008, all operating entities were asked to apply immediately afterwards to obtain authorisation.
8This the HCGDL failed to do .
8The regulator said that HCGDL’s explanation that they were already granted authorisation by the government of Haryana did not hold good, as natural gas ia a subject included in the Central lists and the state governemnt did not have the authority to grant permission.
8Further, the Board has stopped HCDGL from carrying out any activity pertaining to such laying, building or operating or expanding CGD work in Rohtak.
8It said that any such work would be deemed unlawful.
8The regulator clarified the 6th round of CGD bidding would include the Rohtak GA and HCGDL could choose to participate if they met the eligibility criteria.
Click on Reports for more Details
8The Board has ruled that under the CGD Authorisation Regulations, laid down on 19 March 2008, all operating entities were asked to apply immediately afterwards to obtain authorisation.
8This the HCGDL failed to do .
8The regulator said that HCGDL’s explanation that they were already granted authorisation by the government of Haryana did not hold good, as natural gas ia a subject included in the Central lists and the state governemnt did not have the authority to grant permission.
8Further, the Board has stopped HCDGL from carrying out any activity pertaining to such laying, building or operating or expanding CGD work in Rohtak.
8It said that any such work would be deemed unlawful.
8The regulator clarified the 6th round of CGD bidding would include the Rohtak GA and HCGDL could choose to participate if they met the eligibility criteria.
Click on Reports for more Details
The PNGRB has provided further clarification on how to calculate the net worth of individual promoters while submitting a bid for a pipeline project.
8The clarification was sought by H-Energy Pvt Ltd (HEPL) in connection with the Jaigarh-Mangalore natural gas pipeline.
8As the promoters of HEPL were individual persons, the normal format for audited financial information, including the networth as defined by Annexure 10B of the bid document is not applicable.
8The regulator has now made it clear that a fresh computation sheet be submitted along with the bid that will take into account the networth of individuals according to an annexure newly appended.
8Click on Reports to find out the methodology evolved by PNGRB to arrive at the networth of individuals. Details
8The clarification was sought by H-Energy Pvt Ltd (HEPL) in connection with the Jaigarh-Mangalore natural gas pipeline.
8As the promoters of HEPL were individual persons, the normal format for audited financial information, including the networth as defined by Annexure 10B of the bid document is not applicable.
8The regulator has now made it clear that a fresh computation sheet be submitted along with the bid that will take into account the networth of individuals according to an annexure newly appended.
8Click on Reports to find out the methodology evolved by PNGRB to arrive at the networth of individuals. Details
For reference purposes, the website has arranged the various provisions of the union budget under the following heads for easier reading and clarification:
8The important changes in the tax rates
8Incentives under the Made in India programme
8Clarity on Tax litigation and dispute resolution
8Clarifications on BEPS: County by country reporting (CbCR)
8Phasing out of incentives and deductions
8Widening of tax base
8Financial sector reforms
8Ease of doing business
8Amendments in Cenvat Credit Rules
8Exemptions and benefits granted
8Other significant announcements and changes
Click on Reports for more Details
8The important changes in the tax rates
8Incentives under the Made in India programme
8Clarity on Tax litigation and dispute resolution
8Clarifications on BEPS: County by country reporting (CbCR)
8Phasing out of incentives and deductions
8Widening of tax base
8Financial sector reforms
8Ease of doing business
8Amendments in Cenvat Credit Rules
8Exemptions and benefits granted
8Other significant announcements and changes
Click on Reports for more Details
The Modi government has rebutted criticism that not enough has been done to push domestic production of oil and gas in the country.
8The gas price has now been pegged to the landed cost of alternate fuels but a lot of supplementary measures will be needed to shore up domestic production and these steps have not been taken yet.
The government however has listed out the following steps that it has taken to actively encourage the indigenous E&P industry:
8Early monetization of discoveries policy
8Appraisal of about 1.5 million sq. km of un-appraised area of the Indian sedimentary basins.
8Re-assessment exercise conducted for hydrocarbon resources.
8Setting up of National Data Repository.
8Policy for exploration and exploitation of Shale Gas/Shale Oil resources by NOCs under the Nomination Regime.
8Policy for exploration in the Mining Lease (ML) areas after the expiry of the exploration period.
8Offering of marginal fields through bidding round.
8Policy on Non-exclusive Multi-client Speculative Survey for assessment of unexplored sedimentary basins.
8Policy frame work for relaxations, extensions and clarifications at the development and production stage under the PSC regime for early monetisation of hydrocarbon discoveries.
8Policy on Testing Requirements for Discoveries under New Exploration & Licensing Policy (NELP) Blocks
8Policy measures to promote modern technology for maximizing production from mature fields.
Click on Reports for more Details
8The gas price has now been pegged to the landed cost of alternate fuels but a lot of supplementary measures will be needed to shore up domestic production and these steps have not been taken yet.
The government however has listed out the following steps that it has taken to actively encourage the indigenous E&P industry:
8Early monetization of discoveries policy
8Appraisal of about 1.5 million sq. km of un-appraised area of the Indian sedimentary basins.
8Re-assessment exercise conducted for hydrocarbon resources.
8Setting up of National Data Repository.
8Policy for exploration and exploitation of Shale Gas/Shale Oil resources by NOCs under the Nomination Regime.
8Policy for exploration in the Mining Lease (ML) areas after the expiry of the exploration period.
8Offering of marginal fields through bidding round.
8Policy on Non-exclusive Multi-client Speculative Survey for assessment of unexplored sedimentary basins.
8Policy frame work for relaxations, extensions and clarifications at the development and production stage under the PSC regime for early monetisation of hydrocarbon discoveries.
8Policy on Testing Requirements for Discoveries under New Exploration & Licensing Policy (NELP) Blocks
8Policy measures to promote modern technology for maximizing production from mature fields.
Click on Reports for more Details
The last tender floated by oil marketing companies (OMCs) for ethanol elicited bids for 120 crore litres as against a requirement of 133 crore litres need to achieve the 5% blending level.
8For 10% blending, the figure is 266 crore literes.
8The government has now floated another tender to collect more ethanol for the blending programme.
8Fixation of the ethanol price based on distance, has encouraged movement of ethanol to longer distances, including states having lack of distilleries.
8Click on Reports to find out more about the role of state governments and the price range currently prevailing for purchase of ethanol by the OMCs.
8Also look for details on the government's decision to lower the customs duty on imported ethanol.
Click on Reports for more Details
8For 10% blending, the figure is 266 crore literes.
8The government has now floated another tender to collect more ethanol for the blending programme.
8Fixation of the ethanol price based on distance, has encouraged movement of ethanol to longer distances, including states having lack of distilleries.
8Click on Reports to find out more about the role of state governments and the price range currently prevailing for purchase of ethanol by the OMCs.
8Also look for details on the government's decision to lower the customs duty on imported ethanol.
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For reference purposes, the website carries here the following LPG related data:
8State-wise number of households in India
8State-wise number of active LPG customers
8Ratio of the number of LPG customers to the number of households for every state.
8The differential is very wide and the ratio varies from a high of 128% to a low of 26%.
8The average coverage comes to about 60% but the average hides large variations underneath.
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8State-wise number of households in India
8State-wise number of active LPG customers
8Ratio of the number of LPG customers to the number of households for every state.
8The differential is very wide and the ratio varies from a high of 128% to a low of 26%.
8The average coverage comes to about 60% but the average hides large variations underneath.
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For reference purposes, the website carries the following details on the gas pricing formula adopted by the govenrment:
8Last three prices notified by the PPAC in dollars on GCV basis.
8Last three prices notified on the basis of INR at the rate of exchange prevailing at the time of notification.
8ONGC's estimate of loss or gain for every $1/mmbtu loss or gain in the gas price
8The weights of volume and price in different global trading hubs while arriving at the domestic natural gas price for the period October 2015 to March 2016.
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8Last three prices notified by the PPAC in dollars on GCV basis.
8Last three prices notified on the basis of INR at the rate of exchange prevailing at the time of notification.
8ONGC's estimate of loss or gain for every $1/mmbtu loss or gain in the gas price
8The weights of volume and price in different global trading hubs while arriving at the domestic natural gas price for the period October 2015 to March 2016.
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For reference purposes, the website carries here detailed information on state-wise and oil marketing company (OMC) wise data of under measurement and adulteration found petroleum poducts sold in retail outlets across the country.
8The data is given for three years
8It is noticed that there are wide variations in cases across different states.
8In the period April-December, 2015, there were a total of 4240 cases of under measurement and 217 instances of adulteration.
8Also given here are the latest provisions in the marketing guidlines of the OMCs for collection of samples and prosecution of those who violate the law.
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8The data is given for three years
8It is noticed that there are wide variations in cases across different states.
8In the period April-December, 2015, there were a total of 4240 cases of under measurement and 217 instances of adulteration.
8Also given here are the latest provisions in the marketing guidlines of the OMCs for collection of samples and prosecution of those who violate the law.
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The game of supply and demand of crude oil has been responsible for the rise and fall in fortunes of companies in recent times. Yet, the game has its own way of playing itself out, as some of the world’s largest seismic acquisition companies would vouch.
8Even as investments slump and some seismic companies fold up, Petroelum Geo Services( PGS) has announced just two months ago that its Ramford Titan vessel towed 18 streamers, each more than 7 kms long and 1.7 kms apart covering an unprecedented 127 kms streamer area in offshore Myanmar. The company stated that its operations acquired data at a rate of 160 kms per day, a record of a kind.
8Not to be outdone Polarcus, also operating its 3D seismic project off the Myanmar coast has declared early this year that they have set new acquisition performance records of an even higher 190 square kilometres per day, a production rate that is currently unrivalled in the seismic industry. Both companies are vying for top slots in seismic exploration even as their businesses shrink and profits plunge in the face of crashing crude prices.
8While competitive spirits have been unleashed by the two companies scouting for data in this isolated part of the world, they only highlight the fact that their timing has been atrocious. For, these two vessels have been launched at a time when business is difficult to come by, and more and more vessels are being laid off and a clutch of companies are folding up on account of lack of business.
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8Even as investments slump and some seismic companies fold up, Petroelum Geo Services( PGS) has announced just two months ago that its Ramford Titan vessel towed 18 streamers, each more than 7 kms long and 1.7 kms apart covering an unprecedented 127 kms streamer area in offshore Myanmar. The company stated that its operations acquired data at a rate of 160 kms per day, a record of a kind.
8Not to be outdone Polarcus, also operating its 3D seismic project off the Myanmar coast has declared early this year that they have set new acquisition performance records of an even higher 190 square kilometres per day, a production rate that is currently unrivalled in the seismic industry. Both companies are vying for top slots in seismic exploration even as their businesses shrink and profits plunge in the face of crashing crude prices.
8While competitive spirits have been unleashed by the two companies scouting for data in this isolated part of the world, they only highlight the fact that their timing has been atrocious. For, these two vessels have been launched at a time when business is difficult to come by, and more and more vessels are being laid off and a clutch of companies are folding up on account of lack of business.
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In the face of an adverse budget -- in which the prevailing cess on crude oil was changed from a fixed Rs 4500 PMT to an advalorem rate of a high 20% -- Cairn India has come out with a presentation that it has both the financial muscle power and low cost reserves to ride out the storm.
8The Q-3 profit after tax in 2015-16 had fallen by a dramatic 99% on account of the crash in crude prices.
8The Cairn management had campaigned hard for an ad-valorem tax rate but the attempt backfired. When the 20% rate was announced it came as a big disappointment to the company, which was rooting for a rate that was less than 10%. Clearly, you can't have the cake and eat it too.
8As crude prices rise, the 20% cess will be a millstone around Cairn India's neck as it will be for others, knocking off a full 20% off the crude price.
8The company continue to maximize output through what is being dubbed as the world' largest polymer flooding programme.
8Is this the right strategy when crude prices are at an all time low or should company go easy on the EOR programme, if it is technically feasible, so that reserves are conserved, only to be exploited when oil prices go up?
8It is well known that oil producing countries such as Saudi Arabia are trying to pump as much oil as possible in the face of crashing prices in order to protect market share and push high cost producers to bankruptcy.
8Cairn India has no such compulsions
8Solutions are needed to the external low price environment and the company does not seem to be wanting to tackle the problem head on.
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8The Q-3 profit after tax in 2015-16 had fallen by a dramatic 99% on account of the crash in crude prices.
8The Cairn management had campaigned hard for an ad-valorem tax rate but the attempt backfired. When the 20% rate was announced it came as a big disappointment to the company, which was rooting for a rate that was less than 10%. Clearly, you can't have the cake and eat it too.
8As crude prices rise, the 20% cess will be a millstone around Cairn India's neck as it will be for others, knocking off a full 20% off the crude price.
8The company continue to maximize output through what is being dubbed as the world' largest polymer flooding programme.
8Is this the right strategy when crude prices are at an all time low or should company go easy on the EOR programme, if it is technically feasible, so that reserves are conserved, only to be exploited when oil prices go up?
8It is well known that oil producing countries such as Saudi Arabia are trying to pump as much oil as possible in the face of crashing prices in order to protect market share and push high cost producers to bankruptcy.
8Cairn India has no such compulsions
8Solutions are needed to the external low price environment and the company does not seem to be wanting to tackle the problem head on.
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Cairn India has produced a chart that pegs its operating cost at $7/bbl.
8This cost is only higher than that of Iran and UAE (at $6/bbl), Saudi Arabia, Iraq and Kuwait ($5/bbl).
8Cairn's cost is lower than that of Algeria, Libya, Russia, Mexico, Kazakhstan, Norway and Venezuela and all other oil producing countries.
8The company also says that cost of its polymer flooding programme is one of the lowest in the world
8The cost is pegged at $5/bbl.
8But it is now well established that crude prices are unlikely to show a dramatically upward anytime soon. Prices are likely to remain tepid in 2016 and also in 2017.
8Yes, low costs are a big help but with profits plunging dramatically, Cairn needs to tell its shareholders how it is going to tackle low prices through cost cutting exercises, managerial revamp and technological solutions instead of carrying on with business as if the world around it has not changed in the last one year.
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8This cost is only higher than that of Iran and UAE (at $6/bbl), Saudi Arabia, Iraq and Kuwait ($5/bbl).
8Cairn's cost is lower than that of Algeria, Libya, Russia, Mexico, Kazakhstan, Norway and Venezuela and all other oil producing countries.
8The company also says that cost of its polymer flooding programme is one of the lowest in the world
8The cost is pegged at $5/bbl.
8But it is now well established that crude prices are unlikely to show a dramatically upward anytime soon. Prices are likely to remain tepid in 2016 and also in 2017.
8Yes, low costs are a big help but with profits plunging dramatically, Cairn needs to tell its shareholders how it is going to tackle low prices through cost cutting exercises, managerial revamp and technological solutions instead of carrying on with business as if the world around it has not changed in the last one year.
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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?
8Then 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?
8Companies 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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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?
8Then 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?
8Companies 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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Mayank Ashar, CEO, Cairn India spoke out against the government's decision to levy a 20% ad volorem cess on crude oil.
8He is pitching for the rate to go down to 5 to 8%.
8He also argued for removal of service tax on oil field services.
8Then again, he says that the budgetary decision to withdraw the income tax benefit on oil and gas production commencing from April 1, 2017 could well be violating existing signed contracts.
8Production from new discoveries in existing producing bocks or fields will also come under this preview, hitting Cairn India badly as it plans to produce more from new discoveries in its Rajasthan block.
8If the government remains adamant in rolling back the exemption, will legal recourse be an option?
8All in all, the new budget provisions have not gone down well with Cairn India.
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8He is pitching for the rate to go down to 5 to 8%.
8He also argued for removal of service tax on oil field services.
8Then again, he says that the budgetary decision to withdraw the income tax benefit on oil and gas production commencing from April 1, 2017 could well be violating existing signed contracts.
8Production from new discoveries in existing producing bocks or fields will also come under this preview, hitting Cairn India badly as it plans to produce more from new discoveries in its Rajasthan block.
8If the government remains adamant in rolling back the exemption, will legal recourse be an option?
8All in all, the new budget provisions have not gone down well with Cairn India.
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Cairn India's frustrations with the government's decision making process often forces it to take matters to court.
8It has moved the Delhi High Court to issue directions to the government to act on a host of pending issues relating to the Barmer Block in Rajasthan.
8But taking the government to court involves taking a calculated risk.
8This government is unlikely to take kindly to court directions on subjects that it believes should be handled only under its ambit..
8And if the government decides to become intransigent as a consequence, the company may find it very difficult to carry on doing business with it.
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8It has moved the Delhi High Court to issue directions to the government to act on a host of pending issues relating to the Barmer Block in Rajasthan.
8But taking the government to court involves taking a calculated risk.
8This government is unlikely to take kindly to court directions on subjects that it believes should be handled only under its ambit..
8And if the government decides to become intransigent as a consequence, the company may find it very difficult to carry on doing business with it.
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IOC is planning to lay a new 798 km crude pipeline network that will augment the existing Salaya-Mathura pipeline to feed the company's inland refineries in Koyali, Mathura and Panipat.
8The extra crude will help push up the processing capacities of these refineries.
8The project cost has been pegged at Rs 1584 crore.
8This project also envisaged closing some of the engine driven pumping stations on the Salaya-Mathura main line and replacing them with motor driven pumps (MLPU’s) in adjacent stations.
8The new pipeline will start from Moda village in Jamnagar and traverses across 7 districts of Gujarat before entering Rajasthan and then going on to Haryana.
8All along this route an Optical Fibre Cable (OFC) would also be laid for Supervisory Control and Data Acquisition (SCADA)
8The pipeline would generally be laid along the existing ROW available with the Salaya-Mathura pipeline.
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8The extra crude will help push up the processing capacities of these refineries.
8The project cost has been pegged at Rs 1584 crore.
8This project also envisaged closing some of the engine driven pumping stations on the Salaya-Mathura main line and replacing them with motor driven pumps (MLPU’s) in adjacent stations.
8The new pipeline will start from Moda village in Jamnagar and traverses across 7 districts of Gujarat before entering Rajasthan and then going on to Haryana.
8All along this route an Optical Fibre Cable (OFC) would also be laid for Supervisory Control and Data Acquisition (SCADA)
8The pipeline would generally be laid along the existing ROW available with the Salaya-Mathura pipeline.
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The combined capacity of IOC's three inland refineries at Koyali, Mathura and Panipat is 36.7 MMTPA whereas the capacity of the crude supply networks add up to 35.8 MMTPA.
8IOC plans to debottleneck the refineries and operate them above their nameplate capacity and the capacity constraint of the existing evacuation network will be coming in the way.
8Another bottleneck is that the existing network can only ferry crude of 25 cst viscosity. The capacity get further limited if crude of higher viscosity is used
8The new pipeline will be laid parallel to and at a distance of 5 metres to the existing crude oil and product pipeline in the same RoW.
8No additional land will be required
8Cost benefits analysis for the proposed line has been carried out on the basis of expected increase in revenue due to increased processing of crude oil of higher viscosity.
8Accordingly, the IRR in the best case works out in the range of 17.2 to 23.8% depending on the parameters taken.
8This IRR is above the prevailing hurdle rate of 13% in all the scenarios. IOC therefore finds the pipeline economically viable.
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8IOC plans to debottleneck the refineries and operate them above their nameplate capacity and the capacity constraint of the existing evacuation network will be coming in the way.
8Another bottleneck is that the existing network can only ferry crude of 25 cst viscosity. The capacity get further limited if crude of higher viscosity is used
8The new pipeline will be laid parallel to and at a distance of 5 metres to the existing crude oil and product pipeline in the same RoW.
8No additional land will be required
8Cost benefits analysis for the proposed line has been carried out on the basis of expected increase in revenue due to increased processing of crude oil of higher viscosity.
8Accordingly, the IRR in the best case works out in the range of 17.2 to 23.8% depending on the parameters taken.
8This IRR is above the prevailing hurdle rate of 13% in all the scenarios. IOC therefore finds the pipeline economically viable.
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HPCL is planning to set up a Rs 450 crore petroleum storage terminal at Vadodara in Gujarat with a capacity of 2.10 lakh KL of products.
8Storage tanks will be built to keep HSD, MS, SKO, Ethanol, Bio-fuel and SLOP & Interface.
For equipment and service providers, orders are likely to be issued for the following items:
8Petroleum storage tanks
8Plant equipment and machinery
8Boundary wall
8Truck parking area
8DG Sets
8CCTV surveillance system
8SCADA system
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8Storage tanks will be built to keep HSD, MS, SKO, Ethanol, Bio-fuel and SLOP & Interface.
For equipment and service providers, orders are likely to be issued for the following items:
8Petroleum storage tanks
8Plant equipment and machinery
8Boundary wall
8Truck parking area
8DG Sets
8CCTV surveillance system
8SCADA system
Click on Reports for more Details
While the two seismic giants, PGS and Polarcus, have gone to town show-casing the acquisition capacities of their new vessels, the industry as a whole has a different story to tell.
8A recent report has revealed that the combined fleet of 59 3D vessels amongst the five big seismic companies WesternGeco, CGG, PGS, Polarcus and Dolphin has now declined to a mere 26. This only endorses the notion that it takes fewer vessels to meet the market’s requirement under the present circumstances. And establishes that a slump in oil prices has clearly impacted the seismic operations of these giants.
8Dolphin Geophysical , for example has gone into bankruptcy in December, 2014. Company chief, Jacobsen had assured the industry in 2014 that since it was “ asset light”, nothing could possibly dent the company’s prospects. Its vessels were not owned but chartered.
8Yet, the future turned out to be different.
8The story is the same for Polarcus, which had rapidly expanded its fleet of vessels only to be forced to downsize its fleet and go through a financial restructuring.
8CCG, had a fleet of 19 3D vessels after expanding rapidly over the last four years but it now plans to operate with a fleet of just five vessels.
8The company is also looking at focusing on its GGR division, (Geophysics, Geology and Reservoir) while reducing seismic surveys to just 25% of its operations.
8Schlumberger too has reinvented its seismic operations, reducing its fleet of vessels to a third of its original fleet of 18. The company's strategy is to focus on multi-client projects, which lowers seismic survey costs and minimizes risks
8Another company PGS has re-strategised to aggressively exploit its Ramford brand and cater to both the multi-client and proprietary survey market.
8Dolphin with its limited fleet of vessels is also looking to renewing its contracts with operators in the coming year, albeit at a big discount.
8Despite new vessel costs being high, seismic companies are bracing themselves to retire old vessels and bring up a few new ones with the hope that the market recovers some of its former lustre that will bring new wind to the sails of these seismic giants.
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8A recent report has revealed that the combined fleet of 59 3D vessels amongst the five big seismic companies WesternGeco, CGG, PGS, Polarcus and Dolphin has now declined to a mere 26. This only endorses the notion that it takes fewer vessels to meet the market’s requirement under the present circumstances. And establishes that a slump in oil prices has clearly impacted the seismic operations of these giants.
8Dolphin Geophysical , for example has gone into bankruptcy in December, 2014. Company chief, Jacobsen had assured the industry in 2014 that since it was “ asset light”, nothing could possibly dent the company’s prospects. Its vessels were not owned but chartered.
8Yet, the future turned out to be different.
8The story is the same for Polarcus, which had rapidly expanded its fleet of vessels only to be forced to downsize its fleet and go through a financial restructuring.
8CCG, had a fleet of 19 3D vessels after expanding rapidly over the last four years but it now plans to operate with a fleet of just five vessels.
8The company is also looking at focusing on its GGR division, (Geophysics, Geology and Reservoir) while reducing seismic surveys to just 25% of its operations.
8Schlumberger too has reinvented its seismic operations, reducing its fleet of vessels to a third of its original fleet of 18. The company's strategy is to focus on multi-client projects, which lowers seismic survey costs and minimizes risks
8Another company PGS has re-strategised to aggressively exploit its Ramford brand and cater to both the multi-client and proprietary survey market.
8Dolphin with its limited fleet of vessels is also looking to renewing its contracts with operators in the coming year, albeit at a big discount.
8Despite new vessel costs being high, seismic companies are bracing themselves to retire old vessels and bring up a few new ones with the hope that the market recovers some of its former lustre that will bring new wind to the sails of these seismic giants.
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The big surprise in the budget is the announcement that gas production from deep-water, ultra deep-water and high pressure-high temperature areas will be incentivized and pegged to the landed price for "alternative fuels".
8The finance minister has said that the landed price of alternative fuels will serve as a ceiling for the gas price that Indian producers can charge from these discoveries. This is a change from the earlier government position that only a "premium" will be given on the existing gas price that is arrived at through a formula that averages netback prices at gas hubs around the world.
8The switch to a new pricing paradigm will allow the gas price to be pegged at a significantly higher level than what is currently prevailing but what will be the alternative fuel benchmarks that will used to arrive at the new ceiling price for gas producers in India is still not fully known.
8It is important to note that the finance minister does not talk of one alternative fuel but alternative fuels, implying that the ceiling price may not be pegged to just one fuel.
8Some news reports claim that the best alternative for domestic gas is LNG and the domestic gas price that deepwater operators will b entitled to will be indexed to the landed price of LNG.
8This pricing exercise is not going to be easy either, as both long term and short term LNG cargoes will have to be taken into account.
8Then again, is LNG an alternate fuel or is it just the same as natural gas and therefore not an "alternative fuel"? By this logic, will LNG be excluded from this basket of alternative fuels?
8Should the ceiling price be marked to naphtha or fuel oil -- which are good alternatives to gas -- or be directly inked lto crude oil instead?
8Another question is what will be the slope of indexation to the landed price if it is an alternate fuel which is not LNG?
8Will it not be confusing if all kinds of "alternate fuels" are taken in the basket to which gas prices from new discoveries will be indexed?
8Ideally however the automatic choice should be the landed price of LNG to serve as a ceiling, for domestic producers will not be able sell gas at prices above this level.
8Then again, the finance minister talks of providing "calibrated marketing freedom" to operators. So will it be "calibrated" to allow for differential prices for shallow water, deepwater water, ultra deepwater and HPHT discoveries?
8Finally, the new formula will have to be worked out by the petroleum ministry and a CCEA note will have to be moved before a formal announcement can be made.
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8The finance minister has said that the landed price of alternative fuels will serve as a ceiling for the gas price that Indian producers can charge from these discoveries. This is a change from the earlier government position that only a "premium" will be given on the existing gas price that is arrived at through a formula that averages netback prices at gas hubs around the world.
8The switch to a new pricing paradigm will allow the gas price to be pegged at a significantly higher level than what is currently prevailing but what will be the alternative fuel benchmarks that will used to arrive at the new ceiling price for gas producers in India is still not fully known.
8It is important to note that the finance minister does not talk of one alternative fuel but alternative fuels, implying that the ceiling price may not be pegged to just one fuel.
8Some news reports claim that the best alternative for domestic gas is LNG and the domestic gas price that deepwater operators will b entitled to will be indexed to the landed price of LNG.
8This pricing exercise is not going to be easy either, as both long term and short term LNG cargoes will have to be taken into account.
8Then again, is LNG an alternate fuel or is it just the same as natural gas and therefore not an "alternative fuel"? By this logic, will LNG be excluded from this basket of alternative fuels?
8Should the ceiling price be marked to naphtha or fuel oil -- which are good alternatives to gas -- or be directly inked lto crude oil instead?
8Another question is what will be the slope of indexation to the landed price if it is an alternate fuel which is not LNG?
8Will it not be confusing if all kinds of "alternate fuels" are taken in the basket to which gas prices from new discoveries will be indexed?
8Ideally however the automatic choice should be the landed price of LNG to serve as a ceiling, for domestic producers will not be able sell gas at prices above this level.
8Then again, the finance minister talks of providing "calibrated marketing freedom" to operators. So will it be "calibrated" to allow for differential prices for shallow water, deepwater water, ultra deepwater and HPHT discoveries?
8Finally, the new formula will have to be worked out by the petroleum ministry and a CCEA note will have to be moved before a formal announcement can be made.
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The Union budget for 2016-17 has brought in a mixed bag of measures for the oil and gas sector.
8Gas prices for deepwater discoveries are to be raised and pegged to the landed price of "alternative fuels". This may spur investments in getting these discoveries to the production stage.
8The fixed cess on crude production has been converted to an ad valorem regime. But the fact that the prevailing cess of Rs. 4500 PMT was converted to a 20% ad valorem rate has caused much heart burn as the expectation was that it will be brought down to 10% and not be pegged at 20%.
8More importantly, the Central Sales Tax Act is being amended to ensure that contractual movement and not physical movement of gas will count when levying tax. This is will help promote the swapping of gas across the country.
8Then again, the discrimination in levy of customs duty on oil fields operated by ONGC and OIL on nomination basis has been done away with so that they duo can enjoy a level playing field with other operators who already had the benefit.
8Tax breaks are to be extended to foreign national oil companies and multinationals who want to hold crude reserves n underground strategic crude storage facilities.
8There is bad news too in the budget for some players The excise duty on ATF has been raised and exemptions from income tax on production of mineral oil and natural gas has been withdrawn if the production commences on or after 1st April, 2017, going back on a promise to provide a tax holiday for seven years for NELP players
8The customs duty on ethanol has been brought down but whether that is going to spur imports by Indian OMCs remain to be seen.
8The ship repair industry has been given a leg-up and that will help make dry docking of offshore E&P vessels in India more attractive.
8There are tax breaks for the Indian shipping industry too and that should spur growth in this segment..
8Of course the industry had a host of other demands which were not fulfilled, including reduction of fuel under-recoveries such as income-based restriction on direct benefit transfer for LPG and roll-out of direct benefit transfer for kerosene subsidy as also removal of excise duty on compressed natural gas (CNG) and removal of import duty on LNG to promote gas infrastructure development in the country.
8But industry should be happy with what it got.
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8Gas prices for deepwater discoveries are to be raised and pegged to the landed price of "alternative fuels". This may spur investments in getting these discoveries to the production stage.
8The fixed cess on crude production has been converted to an ad valorem regime. But the fact that the prevailing cess of Rs. 4500 PMT was converted to a 20% ad valorem rate has caused much heart burn as the expectation was that it will be brought down to 10% and not be pegged at 20%.
8More importantly, the Central Sales Tax Act is being amended to ensure that contractual movement and not physical movement of gas will count when levying tax. This is will help promote the swapping of gas across the country.
8Then again, the discrimination in levy of customs duty on oil fields operated by ONGC and OIL on nomination basis has been done away with so that they duo can enjoy a level playing field with other operators who already had the benefit.
8Tax breaks are to be extended to foreign national oil companies and multinationals who want to hold crude reserves n underground strategic crude storage facilities.
8There is bad news too in the budget for some players The excise duty on ATF has been raised and exemptions from income tax on production of mineral oil and natural gas has been withdrawn if the production commences on or after 1st April, 2017, going back on a promise to provide a tax holiday for seven years for NELP players
8The customs duty on ethanol has been brought down but whether that is going to spur imports by Indian OMCs remain to be seen.
8The ship repair industry has been given a leg-up and that will help make dry docking of offshore E&P vessels in India more attractive.
8There are tax breaks for the Indian shipping industry too and that should spur growth in this segment..
8Of course the industry had a host of other demands which were not fulfilled, including reduction of fuel under-recoveries such as income-based restriction on direct benefit transfer for LPG and roll-out of direct benefit transfer for kerosene subsidy as also removal of excise duty on compressed natural gas (CNG) and removal of import duty on LNG to promote gas infrastructure development in the country.
8But industry should be happy with what it got.
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