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Apr 2016

In 1931, Harold Hotelling published his theory of exhaustible resources, starting with a simple question: “How should exploitation take place for the greatest general good, and how does a course having such an objective compare with that of the profit-seeking entrepreneur?”
 8The recent plunge in oil prices and resulting transformation of the energy industry makes Hotelling’s question more relevant than ever. In today’s unique environment, the Indian government must revisit the strategy it uses to assess and exploit national oil and gas resources.
 8Countries such as Norway, the United Kingdom, Colombia and Brazil have demonstrated the merits of a sound hydrocarbons management strategy. Norway forecasts exploration and operation costs, sets investment targets, and evaluates and promotes investment pportunities. Colombia also promotes private investment in specific projects, while the UK focuses on partnerships for strategic projects. Brazil sets its production goals based on three macroeconomic scenarios, while Colombia’s plans are based on the need to satisfy domestic demand. Norway and the UK use operators’ information and sanctioned projects
 8Since creating the Norway Petroleum Directorate (NPD) in 1972, Norway increased its production from 33 MBD to 3.4 MMBD in 2001 and is now managing the slow natural decline of its production. The United Kingdom increased  production from 34 MBD in 1975 to 2.7 MMBD in 1985, 20 years after the first national licensing round in 1965. Colombia doubled production and increased oil proven reserves by 60 percent since it founded the Agencia Nacional de Hidrocarburos (ANH). And Brazil more than doubled its reserves 16 years after opening its market.
 8What can a country like India entering a new phase of national resource development learn from these leaders?
 8Already there are grim projections from international experts that more than 50% of India's gas reserves will stay unexploited because of adverse economics.
 8A time has now come for the political leadership, beginning with Dharmendra Prahan, and going up to none other than the Prime Minister, to break open the silos, think in holistic terms, set the production targets for the KG Basin as a whole (and not just for ONGC but for all players) and pursue a proactive and collaborative policy to achieve these targets.
 8In times of crisis, sitting pretty after announcing a new set of policies is just not going to be enough any more.
 8It is imperative to understand that India is not an attractive hydrocarbon investment destination and the government will have to be far more proactive to achieve results.
 8The old mindset has to go. And a new one has to be ushered in.
 Click on Reports for more Details
For reference purposes the website carries here the following tenders:
8Hiring of services for Excavation and Re-coating of pipelines, Vadodara [GAIL]   Details
8Mutation of pipeline RoU villages in Rajasthan state under Agra Maintenance Base [GAIL]    Details
8Supply of Gas Chromatograph Spares, Panipat [IOC]   Details
8Hydro testing of Heat Exchangers, Vessels and Boilers, Mathura Refinery [IOC]   Details
8ARC for Overhauling of Columns, Vessels and DHDT Units, Bongaigaon Refinery [IOC]   Details
You can also click on Tenders for more
For reference purposes the website carries here the following Newsclips:
8PSU oil firms to spend Rs2,500 crore to open 3,100 fuel stations [Live Mint]  Details
8Indian Oil Corporation inks MoU with Bangladesh Petroleum Corporation  Details 
8HPCL plans $3.8 billion refinery investment to lift capacity by two-thirds  Details 
8Dharmendra Pradhan eyes India's participation in hydro-carbon sector in Bangladesh   Details 
8Iran sees oil output rising to pre-sanctions level by June  Details
8Who speaks for Saudi Arabia on oil, rivals and allies wonder  Details
8Siemens may build gas-fired power plant in Germany  Details
8Engie signs renewable energy and LNG agreements with Egypt  Details  
You can also click on Newsclips for more Details
ONGC will save anywhere between Rs 3000-4000 crore by using the assets of the western offshore Tapit gas field which have been abandoned by its promoters after the economic life of the field has come to an end.
 8A similar savings in costs, albeit at a much higher level, will occur if ONGC were to use the extra infrastructure built by RIL for its D6 block for deliveries out of the KG-DWN-98/2 block.
 8By using the Tapti facilities, ONGC will be able to avoid building new infrastructure for the Daman gas field as well as the C-26 Cluster projects.
 8The Tapti assets were abandoned after peak production fell from 12 mmscmd of gas to 0.1 mmscmd and the partners decided to return the field to the government. The government on its part handed over certain facilities of the field to ONGC to achieve early production from Daman.
 8Gas will be produced at the rate of 2 mmscmd from Daman in the coming months. Peak output will be around 8.25 mmscmd and 9,286 barrels of condensate per day by 2018-19.
 8ONGC will use the Tapti assets' sub-sea pipelines and gas gathering stations as well as process platform to advance production of gas from its neighbouring Daman field.
 Click on Details for more Details
LNG industry in the years ahead
 8Will under-construction projects stay the course?
 8How will trade evolve in 2016?
 8How will Europe’s role in the LNG market evolve?
 8Will Northeast Asian LNG demand recover?
 8Will there be any new liquefaction FIDs? What types of projects might be able to move forward?
 8How are China and India responding to the LNG oversupply?
 8Will the LNG shipping market begin to recover?
 Look at Reports for more Details
LNG receiving capacity by status and region, as of January 2016 (existing, FID, pre-FID)
 8Global receiving terminal capacity (2000-2021) in terms of those under construction, existing and their utilization rates
 8Start-ups of LNG receiving terminals, 1980-2021 (floating, onshore and countries)
 8Annual send-out capacity of LNG terminals in 2015 and 2021 (in terms of number of terminals)
 8LNG regasification capacity by country (MTPA) and utilisation rates, 2015
 8Receiving terminal import capacity and utilisation rate by country in 2015 and 2021
 8LNG storage tank capacity by country (MMCM) and percentage of total, as of Q1 2016
 8Maximum berthing capacity of LNG receiving terminals by region, 2015
 8Regasification terminals with reloading capabilities in 2015 (reloading capacity, storage, number of jetties, start date of re-export)
 8Use  of FRSUs among importing countries (2000-2021)
 8Floating regasification capacity by status and number of terminals, 2005-2021 (FID, existing, total chartered capacity)
 8Onshore regasification terminals vs. FRSUs (advantages and disadvantages)
 8Regasification costs based on project start dates, 2005-2015 (onshore, floating)
 8Global LNG receiving terminal locations.
 Look at Reports for more Details
Nominal liquefaction capacity by staus and region (existing, FID, pre-FID)
 8Global liquefaction capacity built-out and percentage utilization (1990-2021)
 8Number of trains commissioned vs average train capacity (1964-2021)
 8Nominal liquefaction capacity by country in 2015 and 2021
 8Nominal liquefaction capacity and utilisation by country, 2015
 8Liquefaction capacity by type of process, 2015-2021 (AP-C3MR, AP-C3MR/Split MR, Shell Proprietary, AP-X, Cop Opt. Cadcade, others)
 8Under construction and total proposed FLNG capacity by country in MTPA and share of total, as of January 2016
 8Global list of liquefaction plants, 2015
 8Average cost breakdown of liquefaction project by construction component in 2015 (owner's cost, engineering, equipment, bulk materials, construction)
 8Average liquefaction unit costs in $/tonne (real 2014) by project type, 2000-2021 (Greenfield, Brownfield, Floating)
 8Average liquefaction unit costs in $/tonne (real 2014) by basin and project type, 2000-2021
 8Average cost breakdown of liquefaction projects by expense category (gas treatment, fractionation, liquefaction, refrigeration, utilities, offsite, site preparation)
 8Liquefaction project development risks
 8Post FID liquefaction capacity build out (2015-2021) in US, Australia, Qatar and others
 8Liquefaction capacity by region in 2009, 2015, and 2021
 8Nominal liquefaction capacity by region in 2009, 2015, and 2021
 8Proposed liquefaction projects in the US Lower 48, Alaska, Western and Eastern Canada, Mexico and Australia as of January 2016.
 Look at Reports for more Details
Yearly LNG trade volumes between 2005-2015 (global regasification capacity, total volume of trade, no of LNG exporting and importing countries)
 8LNG exports in terms of volume and market share by countries (2015)
 82015 Incremental LNG exports by country relative to 2014 (in MTPA)
 8Share of global LNG exports by country, 1990-2015
 8Yearly re-exports by country, 2005-2015
 8Annual LNG exports by region, 1990-2015
 8LNG trade between basins, 2015 (Africa, Asia, Asia-Pacific, Europe, Latin America, Middle East, North America)
 8LNG imports and market share by country (2015)
 8Incremental 2015 LNG imports by country relative to 2014
 8Yearly global gas trade, 2000-2014 (LNG, pipeline, consumed where produced)
 Inter basin gas flows between 1964-2015 (Intra-Pacific, Intra-Middle East, Middle East-Atlantic, Intra-Atlantic, Middle East-Pacific, Atlantic-Pacific, Pacific-Middle East)
 8LNG trade volumes by country (importing and exporting countries)
 8Inter-Basin trade 2000 vs 2015
 8Yearly long term volumes of LNG trade (1995-2015)
 8Non-long term cargo market (year-wise, in terms of number of cargoes and number of countries importing and exporting such cargoes)
 8Yearly European import price formation, 2005-2015 in terms of oil price escalation and gas on gas competition
 8Monthly average regional gas prices 2009-January, 2016 in terms of Henry Hub, UK (NBP), German Border Price, Japan, NE South Asia Spot Price).
 Look at Reports for more Details
For reference purposes, the website carries here the following data on the LNG vessel industry and market:
 8Average LNG spot rates vs. vessel deliveries (2011-2015)
 8Major LNG shipping routes in the world along with distance traversed (2015)
 8Atlantic-Pacific LNG trade vs total number of voyages per year (2011-2015)
 8Estimated long-term and spot charter rates versus new build orders, end-2015
 8Firm conventional new build orders by quarter (2011-2015)
 8LNG fleet by owner type (on order, delivered, active)
 8Propulsion types and associated characteristics
 8Average delivery and cost per cubic meter in ordered year by LNG carrier type, 2005-2015 (Steam, TFDE, MEGI, SSD and DFDE)
 8Tariff structure of LNG vessels traveling through the Suez Canal and Panama canal
 The website also carries here the answers on the following questions on the LNG vessel industry:
 -- When will the shipping market recover from the current oversupply in tonnage?
 -- When LNG carriers with ME-GI propulsion systems are delivered, will the spot charter market evolve into a three-tier market?
 -- Do commodity traders in the LNG market have more opportunity to participate in supplying volumes given the lower barriers of entry in shipping?
 Look at Reports for more Details
The point to note is whether GAIL has done the right amount of due diligence in selecting the technology for the vessels which it is going to charter hire.
 8Has an assessment been made of the best propulsion system to use for long journeys that these vessels will make from the US to India?
 8Fuel efficient systems will have to be the prerequisite and will its tie-ups  -- to ensure that a third of the vessels are made in India -- limit  its technology choices?
 8Then again, has the gas major done an exercise of how freight rates are going to behave by the time the ships are commissioned?
 8Should hiring vessels which are idle now or in the coming years be a better proposition than entering into expensive long term charter hire contracts for new builds?
 8Will the obligation of building ships in India raise its charter hiring costs to the extent that it makes the delivered cost of its LNG uncompetitive in an over supplied market?
 8Have all the cost economics been worked into its vessel orders?
 8Lastly, the big question is whether the building of LNG carrier capacity in Cochin Shipyard straddle GAIL with billions of dollars in liabilities at a time when extinguishing them will be a challenge?
 8Then again, will Cochin Shipyard be able to create the capability of building LNG vessels through globally competitive bids or will it always have to piggyback on captive Indian public sector orders?
 8Make in India is, arguably, a good slogan but it cannot come at the cost of loading GAIL with an unbearable burden.
 Look at Reports for more Details
The technology for LNG vessels is also undergoing a rapid transformation.
 8With only two bidders in the race, and with the complication of choosing one that has a tie-up with an Indian shipyard, GAIL may have limited maneuvering in determining the the right technology for its vessel fleet.
 8One of the bidders for the GAIL contract, Samsung Heavy Industries, which also entered into an indigenization contract with Cochin Shipyards, has developed a new version of the membrane containment system but it remains a moot point whether it will be deployed for GAIL's vessels.
 8There are also many variants of propulsion systems which attempt to reconcile the objective of low fuel consumption with the necessity of consuming the Boil of Gas in an LNG vessels, and an audit is needed on whether GAIL is making the right choice.
 8Steam turbines are the traditional propulsion system of LNG carriers but dual-fuel diesel-electric propulsion (DFDE) are gaining traction.
 8Then again there are conventional low-speed diesel engines consuming heavy fuel oil which do not use any BOG. The gas is instead reconverted to LNG.
 8The newest innovation in LNG carrier engine design is the ME-GI  technology, which utilizes high pressure slow-speed gas-injection engines. These vessels consume around 15-20% less fuel than conventional DFDE systems
 8The steam propulsion systems are also being overhauled with the Steam Reheat engine that is based on a reheat cycle, where the steam used in the turbine is reheated to improve its efficiency.
 8Wärtsilä introduced a new low-speed 2-stroke dual-fuel engine in 2014. This alternative to DFDE propulsion systems offers capital expenditure reductions of 15-20% via a simpler and lower cost LNG and gas handling system. On the operating expenditure side of the equation, significant gains are achieved because no high pressure gas compression system external to the engine needs to be operated onboard the vessel, and NOx abatement systems are not required.
 8The attention of the industry is now riveted on a new generation of LNG carrier design by BG. Codenamed Blue Amazon, the project involves the adjustment of the shape of the hull and cargo tanks, both crucial in reducing resistance through the water, thus reducing theoretical fuel consumption.The final design, which is undergoing review by Korean shipyards, should emerge in March 2016.
 Look at Reports for more Details
The over supplied LNG shipping market is in as much of a turmoil as the LNG market itself.
 8Many newly built ships are lying idle.
 8The freight rates have crashed.
 8At the end of 2015, 146 conventional vessels were on order.
 8Only round 70% of vessels in the order book were associated with charters that extend beyond a year. By contrast, 40 vessels were ordered on a speculative basis.
 8By the time GAIL's chartered fleet enters the market, the number of unattached vessels will have gone up. This would keep freight rates low unless there is a demand pick up, which seems unlikely with Japan and Korea showing signs of lower demand for LNG from current levels.
 8With the influx of newbuilds in 2014 and 2015 without a substantial increase in total LNG volume traded, the list of available tankers remained high throughout 2015.
 8In 2015, the amount of LNG delivered on a per tanker basis dropped to 0.6 MT from 0.7 MT in 2011 as many newbuilds sat idle in Asia Pacific and Middle East as shipowners struggled to charter them.
 8In desperation, some vessel owners were able to clock higher utilisation rates than the rest by offering their tankers early on at below market price to maintain "cold tanks", build up an operational history for their tankers, and be compatible at multiple ports.
 8Some vessels were hired out for single voyages or backhauls while many sat idle.
 8Newbuilds expected to hit the market in 2016 will further push the LNG shipping market into oversupply. This year will see minimal growth in LNG production to absorb the new vessels.
 8This situation is not seen to be improving in the next few years.
 Look at Reports for more Details
This website had reported earlier that GAIL runs the risk of not finding a market for 5.8 MMTPA of LNG it had booked in the US given the massive over supply situation in the global market.
 8The Indian gas major also runs an equally big risk of over committing itself while booking as many as 9 captive LNG freight carriers (going up to 11) in  what is already a highly over supplied carrier market.
 8Latest data shows that 29 new LNG carriers were delivered in 2015 with a combined capacity far in excess of the requirements of an additional 4.7 MMT of LNG.
 8In addition, inter-basin trade went down in 2015 due to a narrowed arbitrage, reducing the number of extra-long haul deliveries.
 8In total, the active global fleet comprised 410 vessels – excluding vessels equal to or less than 60,000 cubic meteres in capacity – for a combined capacity of 63 MMSCM by the end of 2015.
 8More worryingly, many vessels ordered in 2012 and 2013 had no specific work at the time of order, and today more than 40 vessels remain unchartered to a specific project.
 8As of January 2016, 146 LNG carriers were in the order book with deliveries stretching to 2022.
 8With the order book representing around 40% of the existing fleet, this state of affairs is unprecedented and the oversupply will impact the LNG shipping spot market
 for years to come.
 8GAIL's vessels will come at a time when the over supply is likely to be at its worst.
 8So the Indian gas major faces a double whammy: At projected LNG market prices in 2018, its LNG cargoes are uneconomical even before the gas is loaded on to LNG vessels in the US loading terminals unless the public sector gas major can get the terminal owners to lower the fixed charges even as its new vessels come on to a highly depressed and over supplied LNG freight market.
 8The risks attached to its LNG business will multiply by an order of magnitude once it places orders for its fleet of vessels.
 Click on Details. Also look at Reports Details
For reference purposes the website carries here the following tenders:
8Hiring of Consultants for Pre-feasibility report and Bid Advisory Services for PNGRB 7th and forthcoming rounds of CGD Bidding [GAIL]   Details
8Hiring of Consultancy Services for Quantitative Risk Assessment of Natural Gas Pipeline Stations & Terminals [GAIL]   Details
8Calibration of Pressure Safety Valves, Vadodara [GAIL]   Details
8Testing and Reconditioning of Hydraulic Accumulators of steam turbine, Mathura Refinery [IOC]   Details
8EIA Study of BS-IV Project, Barauni Refinery [IOC]   Details
You can also click on Tenders for more
For reference purposes the website carries here the following Newsclips:
8Collapse in crude price making it difficult for ONGC Videsh to keep positive cash flow  Details
8ONGC, GAIL, IOC fail to fulfil Sebi rule for at least one woman director on their boards  Details 
8Top bureaucrats in fray for chairman's post in Oil India  Details 
8Delhi High Court seeks government's reply on Cairn's plea against tax demand   Details 
8Saudi Arabia's decision not to cut production bears semblance to 1986  Details
8The global oil deal that never came to be  Details
8Iran urges oil producers to keep discussing freeze  Details 
You can also click on Newsclips for more Details
Petroleum minister Dharmendra Pradhan is in Bangladesh.
 The following issues are on his agenda:
 8Continuing dispatch of HSD by NRL from its Siliguri terminal to Bangladesh's Parbatipur depot
 8IOC's LNG terminal in Chittagong
 8‘Indo-Bangla Friendship Pipeline’
 8EIL's consultancy deal for a 3 MMTPA refinery expansion in Bangladesh
 8Investment by Indian companies in E&P projects in Bangladesh
 8MoU on broad aspects of cooperation in downstream oil and gas sector opportunities in Bangladesh
 Look at Details for more Details
As E&P operations have become exponentially more complex, the volume of data that companies must deal with has soared.
 8Worldwide, sensors now generate upwards of 1 petabyte daily from offshore rigs, enough to fill more than 2,000 average-sized hard drives (500 GB) every day.
 8In ONGC too, while this kind of data does power robust reservoir engineering and production management, its brass lacks visibility on basic information such as operating costs or the daily use of logistical resources.
 8This is because data collection is typically scattered across many systems that tend to be specialized for a single technical function, such as ERP systems for finance, drilling scheduling systems, and logistics planning systems. The lack of integration and cross functioning teams in ONGC stops the company from gaining valuable fact-based insights that could dramatically improve their operations.
 8New software tools have now come into place and companies like ONGC must take advantage of them. And these tools have begun to incorporate built-in capabilities previously present only in analytical software -- such as regression analysis, prediction, and spreadsheet-like computing functions.
 8What is more, they can plug into existing data architecture and immediately integrate databases that vary by location (wellsite versus headquarters), function (operations, logistics, HSE, and finance), and source system.
 8Next-generation visualization tools to quickly and more comprehensively analyze large amounts of data through  interactive dashboards to look at various levels of granularity is the need of the moment.
 8Dashboards can be designed in a few months and results can show immediately.
 8This “deploy-and-improve” approach will allow ONGC to react quickly to changing conditions.
 8For one, such tools can have an immediate impact on ONGC Non-Productive Time (NPT)
 8But the problem with ONGC is that merely deploying technology will not automatically create economic value.
 8More specifically, using analytics and visualization tools without the proper business context will not produce insights
 8ONGC will have to develop a new approach to data value creation requires a cultural shift, a new mindset.
 8Here again the petroleum ministry should take the lead -- by appointing an additional secretary of the caliber of  Ajay Prakash Sawhney -- to push for change in ONGC, by acting as a catalyst to create a strong leadership that ensures that new tools and identified changes are accepted and implemented throughout the organization.
 8Senior management must be involved in the process, and people from the business functions affected should be included.
 Click here for more. Details
Other industries have achieved better integration with their suppliers through what is called tiering of sppliers. The automotive, aerospace, and electronics industries have all restructured around original equipment manufacturers (OEMs) and tier-1 (primary) suppliers across their value chains. These three industries share some common trends in terms of (1) early involvement of suppliers in product design; (2) joint R&D efforts and initiatives between OEMs and suppliers; and (3) more risk and reward sharing between system integrators and OEMs.
 8It is time for the Indian industry to begin thinking along these lines.
 8As in these industries, the oil and gas supplier market can also tier itself around the main activities of its value chain. Tier 1 suppliers can consolidate around field development, well delivery, engineering and construction, and field management, while clusters of Tier 2 OEMs work together to support the primary Tier-1 services providers.
 8Today, operators sometimes have to deal with as many as 15 different suppliers and OEMs during production operations. These can create numerous problems in terms of equipment compatibility and costly, complex inventory-management systems. Supplier tiering would help resolve some of those problems.
 8The number of automotive industry suppliers, for example, has fallen by 80 percent over the past three decades, yet the size of the supplier market has increased six-fold in value over that time.
 Click here for more. Details
Operators need to work more closely with their suppliers to achieve production-cost optimization targets and resolve operational challenges.
 8To improve performance, operators and services companies can form Joint Efficiency Teams (JETs).
 8The JET can carry out an end-to-end assessment of efficiency opportunities, from planning through execution, and start the process of implementing the actions necessary to achieve an improvement in performance.
 8A governance body, with representation from both parties, should periodically review JET activities, based on agreed performance-evaluation criteria.
 8Services providers often have greater experience than operators in specific areas and niches of the E&P value chain.
 8A JET would ensure lessons and best practices are captured, and the right behaviors reinforced in both the operator and supplier organizations.
 8Similar transitions have occurred in other industries, such as aircraft manufacturing. Engine manufacturers no longer just sell engines and spare parts, but also monitor the engine’s performance over its lifetime to better understand its operating conditions and help airlines reduce downtime, thus improving asset productivity.
 8A similar approach can be applied in the oil and gas industry.
 Click here for more. Details
ONGC's cost reduction in the KG-DWN-98/2 from the earlier estimate of Rs 53,000 crore to Rs 34,000 crore has come about from an indiscriminate squeezing  of supplier margins.
 8What will happen is that the cost cutting exercise will force suppliers to cut corners and engage in risky or unsafe work practices, sacrificing quality in an attempt to save their own costs and preserve margins.
 Short-term cost savings from supplier discounts are eventually eroded by the cost of re-work, budget overruns, project delays and reliability issues in low-quality jobs. In any case, cost savings arising from supplier discounts are likely to have a minimal impact in terms of offsetting the huge revenue loss that has resulted from the 50 percent oil price drop since June 2014.
 8It is time to think differently; long-term success requires changes in the behavior both of operators and suppliers. Instead of simply seeking price cuts from suppliers, oil and gas companies should attempt to collaborate more closely with their suppliers and create a mutually beneficial relationship that creates value and eliminates waste.
 8ONGC's supplier contracts seldom incentivize contractors to focus on improving efficiency.
 8Drilling contractors are paid by the day, almost regardless of progress.
 8Incentives for working faster are virtually non-existent.
 8Consequently, many service providers remain within their own domain and do not consider the full effect of their actions or inactions on the overall work flow.
 8The principal-agent dilemma arises because sometimes the agent (supplier) is able to make decisions on behalf of, or that impact, the principal (operator); if the incentives of the two parties are not aligned, the agent is motivated to act in his own best interests rather than those of the principal.
 8The goal therefore should be to reduce information asymmetry and manage conflicts of interests between operators and suppliers.
 8Potential sources of value for operators include:  reduced variability in performance through standardization; systematic application of lessons learned; and efficiency savings from common working methods and jointly developed work packages. Suppliers, meanwhile, can benefit from the certainty in revenue that long-term partnerships provide and the reduced cost of  tendering repeatedly for the same type of work.
 8Shell and Worley Parsons signed a global  agreement in 2013, with a five-year renewal option, covering engineering, procurement, and construction services for surface facilities projects in unconventional oil and gas assets. BP and Aker Solutions also signed a two-year agreement in 2013, with a four-year renewal option, covering engineering, modifications, and maintenance services for BP-operated oil and gas fields in offshore Norway.
 8We believe these types of working agreements should be encouraged.
 Click here for more. Details
When Narender Modi first came to power, he ordered a review of all the sick wells that ONGC and OIL had shut down, claiming that they should perhaps be worked over, to produce oil and gas at lower cost.
8Modi's suggestion was met with some amount of mirth among industry experts, who thought that the Prime Minister was naive and talking from a very simplistic point of view. Nevertheless, given that these were directions from the Prime Minsiter, both OIL and ONGC went through a review exercise of the wells and then the idea was quietly buried as something not worth pursuing.
8But the Prime Minister, to some extent, may have been right in his observation.
8A recent report by BP has indicated that nearly half of all the oil to be found within the next 40 years will come from already identified accumulations, since reservoirs release just a fraction of the hydrocarbons buried underground.
8This should be a wake-up call for companies, encouraging them to look more closely at their existing portfolio of assets and to become more efficient at oilfield management, squeezing out more resources for less money.
8Existing wells can be classified into three categories: based on flowrate variations:
 Healthy wells with high and stable flowrates. These wells require minimal surveillance and this can be automated and done remotely
 Sick wells with unstable, wide variations in flowrate. These represent the biggest opportunity for production increases. They are the best candidates for real-time remote monitoring to quickly detect production problems and launch remedial actions. In the medium term, wells with these types of production challenges need to be grouped together and studied collectively to improve operators’ understanding of downhole conditions that can boost productivity;
 Comatose wells with low and stable flowrates. These wells represent either a cost-reduction opportunity, if no action is taken, or a production-increase opportunity through a heavy intervention (e.g., workover, perforation) designed to change the well’s production configuration. Selecting the type of intervention would first require an economic business case for the activity in question.
 Opportunities for increasing production from surface facilities can be identified by combining unplanned shortfalls with a criticality analysis
8Some examples of production-increase opportunities from surface facilities include:
 -- Real-time monitoring of critical assets to detect anomalies early and implement mitigation plans;
 -- Reviewing preventive maintenance schedules to reduce the number of failures and increase equipment availability (Mean Time between failures versus Mean Time Between Preventive Maintenance);
 -- Reducing mean time to repair critical assets by stocking more spare parts in the warehouse.
 Click here for more. Details
Clearly the Indian upstream industry will have to move away from ad-hoc cost negotiations with suppliers which only leads to one-time budget cuts. ONGC's capex cut in the KG deepwater block KG-DWN-98/2 is one such short term exercise. For over a longer period of time, such cuts bring about new cost increases and therefore diminishing returns.
 8Instead, longer terms cost cuts can occur when cost reduction strategies are thought through and deployed in sequence.
 8This will have to be followed up with prioritized monitoring and analytics to sustain cost reduction
 8The difficult part is for companies to convince their owners, such as the government, to shift from focusing on production to looking at margins. The emphasis of PIB releases must shift from glorifying production targets.
 8Cost and production curves can be generated for multiple production scenarios, with the objective of determining optimal production levels at a given oil price.
 8Deliberately prioritizing profitable volume growth can oblige a company such as ONGC to focus its efforts on the best assets and ensure they do not waste valuable resources developing unprofitable ones. In a world where supply is never going to be a problem, the bottomline rather than volumes should be the priority.
 8In some cases, such as with Cairn India, this might even mean temporarily shutting in of some production in order to establish conditions for faster growth when market conditions improve.
 8Systematically developing cost and production curves also helps set clear objectives, such as an achievable cost target along the cost curve.
 8This approach requires a bold reorientation of strategies to deliver on agreed cost-reduction targets.
 Click here for more. Details
The collaboration model will have its own challenges but there is nothing that cannot be overcome.
 8The problem is to reconcile long-term engagement with activity unpredictability.
 8Then again, how will members of the same ecosystem compete with each other and how can they comply with competition regulations? How will the collaboration IT platforms interface with the systems of each ecosystem member?
 8What is the bigger picture—the “end-game” for the eco-system—and what role will each of the participants play in its development?
 8The big guns in the global oil and gas industry are already experimenting with the early stages of these concepts.
 8Shell, for instance, has teamed up with Technip and Samsung to design, construct and install multiple floating liquefied natural gas (FLNG) facilities for the next 10 years, planning to enjoy the benefits of standard solutions and a supply chain ecosystem
 8Another example is Anadarko, which has chosen to work intensively with FMC and Technip on a segment of its offshore developments.
 8The questions that remain to be asked is how can a company such as ONGC create a contracting structure that allows for forging of such long term relationships. How would the risk reward paradigm work out?
 Click here for more. Details
It is time for the government now to do some out-of-the-box thinking in the E&P sector.
 8The petroleum minister has a Prime Minister who is willing to listen to new ideas and Dharmendara Pradhan's real contribution can come if he can establish a collaborative environment between all oil and gas operators in the country.
 8All E&P operators work in  silos now but the time has come to break the walls and create new collaborations.
 8While cutting costs by 30% has been easy, this may still not be enough for companies to survive in a below $50/bbl environment.
 8The next round of cost cutting and efficiency improvements will now have to be undertaken.
 8The petroleum ministry must encourage a relook at the entire oil and gas contracting regime so as to make the supplier of equipment and services a collaborator instead of looking at him as just another L-1 bidder among technically qualified peers.
 8Globally, the automobile and aerospace industries have been able to bring down costs by as much as 70% by finding an alternative to what is called the "exit" procurement policy.
 8The new global trend is for upstream players to deploy a full suite of changes—standardization, lean engineering, and collaboration—to derive greater value and Indian companies must join this game.
 8Companies such as ONGC will first have to decide which portion of its project pipeline is best suited for such exercises.
 8The operator would then select one or two of its most trusted EPCs, and the top leadership from all companies would agree on their commitment to the long-term vision: building a common supply chain ecosystem that will boost performance across the segment in the next 10 years.
 8The government must help in paving the contractual framework for such collaborations. And the sky is the limit in terms of benefits that such collaborations can deliver. In the staid Indian structure, a lot of walls have to broken, but with a motivated leadership, this can be done.
 8ONGC, for example, can evaluate if it makes sense to recruit one or two other operators -- such as RIL, GSPC and OIL --  facing similar development challenges to increase the size of the pie.
 8From there, this team of “founding members” would jointly define the nascent ecosystem's principles, components and supporting platform: the shared philosophy and the governance model; the client-supplier engagement models; and the collaboration and coordination systems. For example, RIL's redundant capacities in the KG Basin can be tapped by ONGC and others to save costs.
 8They would then engage with the broader supplier community to jointly work toward a common framework for technical standards, libraries of standard modules and concepts, certification and quality assurance guidelines, and a continuous improvement philosophy.
 8The KG Basin deepwaters  allow for such a common approach and even though ONGC has already rolled out its capex plans, it is never too later to look at new business and engagement models.
 8As the work progresses and the activity develops, new suppliers would be qualified to join the ecosystem and leverage its collaboration mechanisms.
 8The contract model rules will have to change and CVC guidelines modified but eventually the benefits will be immense.
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For reference purposes, the website carries here the full matrix of how recent cost cutting exercises were conduced by the E&P industry today.
 8Pressures on suppliers have reduced costs by 30% across offshore oil and gas projects.
 8Renegotiations with drilling contractors have brought about a 30% cut in costs.
 8Renegotiations of opex and other capex overheads have shaved off an extra 15%
 8Leaner designs have caused a 30% cut in capex.
 8More effective design changes have caused a 10% fall in opex
 8Together the advantage has been a fall in overall cost of 30%.
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The government may also have to take the lead in opening new and transparent lines of communications with the oil and gas industry.
 8A one-off online questionnaire asking for suggestions will just not do.
 8Public hearings have to be introduced by the government directly. There has to be an open call to present face-to-face on special subjects so as to be able to receive direct suggestions. Presentation of plans, contract terms, blocks, awarding schemes, among others, should be called, and policy refinements done at the level of the ministry rather than the government.
 8Focused surveys including circulation of detailed questionnaires to compile specialist views on specific topics from main industry players, will have to be initiated. The idea is to catch the outside perception on specific topics such as investments, terms and conditions in licensing rounds and deduction schemes.
 8Individual interviews with oil company executives to understand their strategic objectives, scope and expectations will have to be part of a standardized interaction process. Strategic objectives and main concerns of potential investors in the country will have to be gathered, analyzed and procative action taken.
 8The government in fact will need to keep one step ahead by identifying an optimal oil and gas production goal for India that will not only maximize potential resource utilization, but also serves the nation’s political, economic, and social agendas. The production exercise can no longer be an addition of future oil growth production of existing players.
 8And that’s just the beginning.
 8Equally important (and difficult) will be for the government to develop a clear investment plan that defines the appropriate level of government engagement and private investors’ roles, and then go ahead and implement the policy framework that private investors find attractive.
 8The government really has no margin for error, and that’s especially true in today’s volatile and competitive environment.
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The government has come out with a series of policy pronouncements on the oil and sector. The footwork was done by the earlier government on almost all of these pronouncements but the govenrment was quick to put them into action with the right kind of changes.
 8But these pronouncements were low hanging fruits which the government has already picked upon, and it is time now to get down to tackling the really tough issues.
 8In the face of the dramatic changes in the oil and gas industry, the government just can't sit pretty anymore.
 8Just announcing the new exploration policy is not enough. It needs to be closely monitored.
 8India is not known for its hydrocarbon riches and for a potential investor, opportunities have opened up right across the world, where better returns are going to be available.
 8Moving from a Production Sharing Contract to a Revenue Sharing model could not have come at a less opportune time, as the sharing of risk is transferred entirely to the investor.
 8Given the over supply situation, low prices and massive volatility, exploration investments are expected to dry up completely, unless proactive steps are taken and alternative business models are kept ready just in case the current model does not work.
 8In a high-oil-price environment -- with its implicit assumption of oil scarcity -- it was easy to assume that oil would be produced as long as it met internally consistent economic production criteria. Today, it’s evident that cash will only flow to the most competitive resources, which means that an in-depth understanding of the relative profitability terms among nations has become crucial.
 8The international oil majors have long had the ability to analyze their international portfolio to gain such insight.
 8Today, this ability must also be a basic element in the government's analysis tool kit.
 8In all probability, government intervention will have to be raised not lowered.
 8A huge amount of work has to be done to build a robust initial geological information database which will enable stakeholders to identify attractive, low-risk areas that will demand a premium during the bidding processes.
 8Thankfully, petroleum minister Dharmendra Pradhan has a first rate team in place, with KD Tripathi at the helm and Atanu Chakravorty as the DGH.
 8There is the possibility of large chunks of acerages going without any bids. The government has to prepare for single bid scenarios or award of blocks on nomination basis on public sector oil companies.
 8Alternative systems -- such as allowing for technical evaluation agreements without formal bid commitments, among other measures  -- may have to be deployed to attract private investments.
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Dramatic changes are taking place in the oil and gas space. In the past few years, the industry has shifted from “managing the peak oil with increasing demand” to “managing oversupply with softening demand growth.”
 8The latest projections show that under some scenarios, exploration would be stopped altogether as not much output is required to be produced from future discoveries and development capex would be slashed.
 8As they eliminate exploration risk, operators will likely become similar to Oil Field Services companies, which would require a deep transformation of their current business models.
 8One approach could be for E&P companies to shift to another staffing business model to match new business requirements: bring more flexibility, refocus skillsets and competencies, and remain attractive to talent.
 8E&P companies also should invest saved cash in value-accretive projects outside their traditional focus areas.
 8That also implies a shift to alternative business models, such as massively investing in renewables or gas-CCS technologies to increase gas market potential.
 8In the longer term, if companies find no viable alternative business model, the consequences could be extreme: They would cease to exist and the remaining net asset value would be given back to investors.
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Latest projections show that Russia would account for 32 percent of unburnable gas reserves in the world and half of its gas reserves would be stranded.
 8Canada would have the highest percentage of stranded oil reserves in the world at 74 percent, largely because of highly polluting and expensive production of oil sands
 which predominate in Canada’s oil reserves.
 8The US would have the lowest percentage of stranded oil (6 percent) and gas (4 percent) assets, mainly because of the proximity of production to consumption.
 8Indeed, the US could produce its reserves for its own consumption while reducing fuel imports.
 8The reality is that the regional distribution of stranded fossil reserves is a very sensitive topic.
 8Governments own 50 percent to 70 percent of global fossil fuels. And every country that signed the COP21 final agreement theoretically agrees to implement policies consistent with limiting global warming to 2°C, which may indirectly require those governments to not produce their stranded assets.
 8However, one can imagine that governments will not easily relinquish their fossil-fuel reserves -- whether it is because some economies, especially those in the Middle East, are simply too dependent on their fossil fuels and have yet to transform themselves to reduce this dependence; or because of the highly variable share of stranded assets across countries and regions.
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Independent studies are now looking a demand scenarios that allow for oil demand to be somewhere between -0.9 percent a year (low demand) and +0.5 percent
 a year (high demand) between now and 2040.
 8Much lower demand under a climate change-compliant scenario would involve dramatic changes with regard to the origin of future oil production: In such low-demand
 scenario, only 13 percent of oil produced over 2020-2040 would come from yet-to-be-developed reserves (versus 27 percent in our high-demand scenario), and no production would come from future discoveries, meaning that exploration would end as the oil and gas industry has already discovered sufficient reserves to match its share of the carbon emission budget.
 8This scenario can translate into the industry not developing all its current discoveries leave alone future discoveries.
 These kind of scenarios could well mean that, depending on the outcome of future climate policies, exploration will be significantly reduced, though it might continue in the short to medium term. Reduced investments would be driven by the cancellation of exploration and much lower development expenses.
 8In turn, much lower investment, coupled with the fact that some E&P companies’ reserves might never be developed, will upend the sector’s economics and financial equation.
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It is not just the shale revolution in the US that is changing the nature of the industry.
 8In the past few years, the plethora of technically feasible supply sources -- not just in the US but across the world -- has increased by an order of magnitude.
 8More importantly, the band of feasibility for the various geographies and asset classes has widened, with considerable overlap.
 8For example, deepwater production in parts of Brazil can be viable at $50/barrel, while that in West Africa may not break-even at $70/barrel.
 8Similarly, in North America, intra-basin break-even estimates can range from $35 to $60/barrel, not to mention variation across major plays.
 8Large blocks of supply by source are now overlapping. Complicating matters, operators in some cases may not have full visibility on the landing point for the economics of their developments until fairly late in the game.
 8As a result, at various price trigger points, several different assets classes and geographies may be activated (or deactivated) by operators and governments -- again overshooting (or undershooting) the required production levels to achieve balance.
 8Looking ahead, this picture may only get muddier as even more sources come into play (including Iran, unconventionals in the rest of the world, and Russia offshore) driving further volatility.
 8It’s no hidden secret that OPEC’s power as a moderating force in the oil and gas world has waned, though not entirely dissipated.
 8This has coincided with a rise in production of certain non-OPEC countries (in particular, the US).
 8But more interestingly, the number of productive and independent operators has gone up globally.
 8As a result of this shift, there are, and will be, more disparate actors playing their own tune -- optimizing their individual timing, operating plans and performance metrics.
 8This lack of synchronization would make managing emerging imbalances difficult and, in fact, exacerbate them on both the short and long ends, further adding to the volatility.
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Latest data and documentation accessed by this website paints a grim picture of the Indian upstream industry.
 8The projections are that as much as one third of the oil reserves discovered in India will never get tapped.
 8The more disturbing news is that more than 50% of India's gas reserves will not get to the production stage as the cost economics will not be viable.
 8There is a good possibility that India's gas assets in Mozambique -- acquired at an investment of $5 billion --  may get stranded too.
 8Research suggests that a sea change in industry supply dynamics -- coupled with a somewhat less seismic but still significant shift in demand -- foretells a tighter and lower price band over the long haul.
 8US production is not showing any tangible signs of slowing down. From its peak in June 2014, the rig count in shale assets are down 66% and yet production has barely budged -- it fell only 5 percent -- revealing not only the resiliency but also the favorable economics of this relatively new source of production.
 8As Argentina and China fully explore their unconventional land production, and the lifting of the ban on Iran enables that country to bring to market additional production, even more supply is likely to be created.
 The supply deluge is here to stay
 8Even if the world sees brief periods of market tightening, the supply deluge is real.
 8The new reality is that that huge tranches of production could come online very quickly as soon as the markets tighten. In other words, the incremental supply curve (new supply that comes online every year) is projected to remain completely flat at a low price.
 Demand will slow down
 8The secular reduction in crude oil demand from developed countries will continue unabated, contrary to IEA projections.
 8In addition, demand in non-OECD countries, which has now surpassed OECD demand, is likely to slowdown for two reasons: declining economic growth in countries like China and increased fuel efficiency and emission regulations in non-OECD countries. When considering the net impact of these two factors, demand growth will likely slow to 0.5 million bpd/year in the foreseeable future. In comparison, supply can go up by a much higher figure.
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8Electronics transmitters (pressure / dp/ temperature Transmitter),  Pressure switches, Differential pressure switches / Temperature switches, Pneumatic pressure switch/ Hi-Lo pilots (indicating dial type),  Pressure switches (explosion proof), Flow switches (pneumatic & electrical), Pressure safety valve/relief valves, Pressure gauges & receiver gauges, Differential pressure gauges, Pneumatic indicating controllers, Temperature elements & thermowells, Temperature gauges, Orifice plates and flanges and restriction orifices, Single/ dual chamber orifice fittings, Ultrasonic flowmeters (liquid and gas), Mass flow meters/ coriolis flowmeters and net oil computers, Water meters, Turbine meters – liquid services, Magnetic flow meters, Vortex flow meters, Averaging pitot tubes, Flow computers, Flow totalizers.
8Level gauges (reflex / transparent), Gauge glass & cocks, Level transmitters (displacer type – leveltrol), Level switches (displacer type), Level switches (capacitance type), Tank level indicators (mechanical float & tape), Tank level indicators (servo type tgm / radar type, Level instruments (radar type/ultrasonic),Ccontrol panel.
8Electronic controllers (control panel instrument, Alarm annunciators (control panel instrument), Receiver instruments (control panel instrument -- Indicators/recorders/signal distributors / alarm cards), Intrinsic safety barriers & receiver switches, Gas & fire detection system / portable gas detectors, Smoke/ thermal detectors, Manual call points (for firestation), L/P converters, Air filter regulators, Solenoid valves, Control valves- body type globe and angle/butterfly body, On-off valves (butterfly body, plug, gate), Self actuated pressure control valves, High pressure control valves (hcv), Actuators (for shutdown valves, Limit switches, Deluge valve with test facility, Junction boxes & cable glands, Instrumentation cables (alarm, signal, control & thermo couple  extn. cables), Communication cables, Optical fibre cable, FRP cable trays, Instrument fittings (SS - tube and tube fitting), Fusible plugs, Erection hardware, Remote ignitors, Flame arrestors, Ph meters, Dew point monitors, B&SW monitors/ water, Conductivity analysers, Water quality analyzers, Oxygen analysers, Chlorine analyzers, Process gas analysers,Specific gravity analyzers, Viscosity analysers, Hydrogen analyzers, Moisture analyzer system integrators.
8Machine monitoring systems, CCTVs, Telemetry interface cabinets, Distributed control systems, Programmable logic controllers (plc subsystem),  Auto samplers, Draft gauges, Flow elements (venturi, flow nozzles), Instrument valves & manifolds, Pilot operated safety valve, Pressure regulators & slam shut valves, Skin thermocouples, Special control valves, Magnetic level instruments, Special level instruments (rf type), Special level instruments (rf type), Special  level instruments-guided wave radar, Temperature recorders, Rupture discs, Plant communication systems, Fire alarm systems, Special level instruments (tunning fork), Ambient air quality/stack emmission monitoring systems, Suspended particulate matter (spm) measurement systems (in ambient air)
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The PNGRB is looking for fresh ideas to identify Geographical Areas (GAs) for city gas distribution (CGD) networks after it was severely criticized for providing very little information or facilitation to potential CGD bidders.
 8Currently, the following considerations are taken into account by the regulator while zeroing in on a GA:
 8The GA is based on a district concept so as to avoid cherry-picking and allow for uniform distribution of a network over rural and urban areas within a district.
 8EOIs received from any entity under regulation 4(1) or any proposal by PNGRB on suo-motu basis under regulation 4(2) are taken cognizance of.
 8There has to be a a natural gas pipeline connectivity to the respective GA so as to ensure gas supply for the proposed CGD network. Any district falling within the tariff corridor of any natural gas pipeline is also considered.
 8Additionally, feeding of a GA through LNG supplies by tank trucks or tank  wagons and CNG by cascades are considered based upon the specific requests.
 8Requests from the respective State Governments or Member of Parliaments representing their constituency or Government of India but subject to the conditions above are also taken into account.
 8Projects like Smart City development, Green Corridor development etc. requiring inclusion of GA for CGD development are taken into consideration.
 8Prevalent market conditions in a specific area or sector requiring inclusion of GA for CGD development are also factored in.
 8The PNGRB has been criticized over its selection of GAs and its inability to provide adequate information on gas availability or connectivity or other such parameters to potential bidders, prompting the regulator to now seek a wider debate on the criteria to be adopted for selection of new GAs.
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In case it hasn't come to the notice of some of you, Upamanyu Chatterjee, the secretary of the PNGRB, is also a celebrated author and novelist.
 8Between adjudicating tariff rates for gas pipelines and confronting irate city gas distributors over the regulator's plans to impose common carrier principles on their networks, does Chatterjee feel like one of the characters in his award winning classic, An English August, who is at odds with the world around, like a round peg in a square hole?
 8Chatterjee, not unlike the redoubtable Agastya Sen, his cult anti-hero from the novel, seems to have learnt to celebrate the strange disjunctions that life throws up, demystifying all that is revered.
 8How does Upamanyu Chatterjee, one wonders, bridge the gulf between being an author and a bureaucrat, transiting from the dark and decadent world of his imagination to something as real and hard as 'oil and gas' policy making in Lutyens' Delhi? Or is this Janus-headed view of the world enabling to both roles?
 8In his novel, Agastya Sen’s friend had wryly exclaimed while trying in vain to open the newly designed seal of a gas cylinder: “the world is turning modern without warning…”.
 8Those words seem to ring with an uncanny providence for Upamanyu Chatterjee, nearly thirty years on. Details
8List of API certified companies making standard fiber glass pipes for hydrocarbon flow lines, effluent water, injection water, produced water, and fire water services onshore.
8Empanelled design engineering consultants for onshore E&P projects
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8Ceramic tiles for building flooring/skirting/dado, Ceramic/glazed tiles for toilet flooring / dado, Antistatic PVC flooring/tiles, Kerbing / Pre-finished Cement Tiles, Distemper / acrylic emulsion  Paint / Primer Waterproofing cement paint, CI Rain water/Soil pipes and CI accessories, MS Pipe / G.I. Pipes, MS/G.I. Fittings, Pre-laminated/Plain particle boards, Glazing/ Glass, BWP Ply / Plywood/ Common ply/ Flush door.
 8Sanitary ware (Water closet/ wash basins/ urinals/ flushing Cisterns/WC covers etc.), C.P. brass fittings, Flush Valves, Bib Cocks/Stop Cocks/ Wheel valves/ gate valves (brass). Brass float valves with Copper floats, Floor Traps/Nahani Traps.
 8Mirrors, PVC Pipes, PVC Pipe Fittings, A.C. Sheets, PVC Tanks, Hydraulic Door closers.
 8Aluminum section , Locks, Anodized aluminum hardware fittings, Water proofing compounds.
 8Floor Hardenesr, PVC handrails, Rigid PVC Conduits with Medium Gauge wall thickness ISI & FIA approved & manufactured from virgin material (Precision/ AKG), Accessories for conduits, Flexible Copper Wires, Switches, Telephone wires/CAT 6 wires,  PVC tapes,  Switch Plates.
 8Button holders/ Angle holders/Ceiling roses. M.S. Conduits, Ceiling Fans, Exhaust Fans, Steel Doors & Windows, Aluminum Doors, Windows & Wall spans, PA System/ Amplifiers, Speakess and mikes. EPABX/Telephone instruments, Air-conditioners, Televisions, DVD Players, Water Coolers, R.O. Plants, Furniture (Modular),  PCs, Printers, TMT Bars, Structural Steel (Including plates), Cement.
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8CS pipes (EW, LSAW, HSAW & Seamless) as per API 5l for main pipe lines
 8Pipeline valves as per API 6D and fire safe as per API 6FA 
 8Coaltar enamel & synthetic primers
 8Fibre glass inner wraps,
 8Coaltar impregnated glass fibre outer wrap(awwa c-203)
 83 layer polyethylene coatings
 8Shrink Sleeves
 8Concrete coatings
 8Monolithic isolation joints
 8Pig indicators
 8Srapper tees
 8Hinged closures
 8Launchers / receiver assemblies (asme-b31.4/31.8) -(asme sec viii div1)Corrosion probes
 85D bends.
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8Batteries (ni-cd / lead acid/ vrla), UPS systems, Protection relays), Earth leakage relays, Auxiliary relay, LT switchgears, Control switches, Timers, Instrument s& meters, Ldb / Mldb / Dcdb, Earth leakage circuit breakers,Cable power (hv & mv) & controls, Cable glands, Cable lugs, Metal clad plugs & sockets (including welding socket), Flameproof plugs/sockets/hand-lamps (DGMS approved with approval nos. and certificate for specific model type), Light fixtures (non flame proof), HRC fuses/bases, Indicating lamps/fittings, Terminal blocks, 415V switchgear panel s(pmcc / mcc) Transformers (ltg / control / potential / current / auto), Air circuit breakers.
8Auto transformer starters, Battery chargers, Energy meters, Termination/jointing kits, Metal clad switches, D with HRC/ rewirables, Fuses, changeover switches, Lightning arrestors, Neutral grounding resistors, Motors, Submersible pumps, DG sets (alternator- mv), Synchronous (foreign), Flameproof push button stations (DGMS approved with approval nos and certificate for specific model type), Capacitor Bank, APFC panels, HV switch gears, HT capacitor bank systems, Gang operated switches & isolators, Pin insulators, Porcelain bushes, Discs and post insulators, Surge suppressors, Power & distribution transformers, Fibre glass cable trays.
8Flameproof lighting & distribution board (DGMS approved with approval no. and certificate for specific model type), Flameproof junction boxes (DGMS approved with approval no. and certificate for specific model type, Flame proof lighting fixtures & accessories (DGMS approved with approval nos and certificate for specific model types.
8Relay & control panels, Switch boards fixed for package equipments, High mast lighting systems, Actuators - mov,AC variable speed drive, Bimetal relays.
8Bus ducts (MV), Bus duct (HV.), Buchholz relays, Circuit breakers sf-6 outdoor ehv, Heavy duty switches, Lighting & power panels (safe area, MCBs,MCCBs, Magnetic oil level gauges, Oil temperature indicators, Vacuum interrupters, Winding temperature indicators, CP systems, Control panel flps, Push buttons.
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8CC pipes (welded 1239 & 3589), CS pipes,  SS pipes,  Rubber lined pipes, FRP / HDPE pipes, CS and SS pipe fittings, CS and SS forged flanges, Gates, Globe & check valves (CS and SS),  Ball valves (nace),   Ball valve (cs and ss, cs nace, cs non nace, ss nace and ss non nace), Butterfly valves,  Needle valves (normal, CS non-nace, SS-nace), Hose pipes (steam, gas, air, water, chemical), FW/FM reels and utility reels (UL, USCG, FM India approval), Diaphragm valves (steel), Flanges (normal, duplex SS,CS nace,SS nace & non nace), SW pipe fittings, BW fittings.
 8Valve plugs (pressure balanced NFS, FS),  Ball valves (duplex SS),   Other valves (gate globe, check: duplex SS),  Shutdown valves (duplex SS),  Pipes (CS nace),  Fittings (CS. nace),  Shutdown valves (CS nace), Globe & check valves (SS nace), 
 8Pipes (cu-ni), Pipes & fittings (CU-NI), Ball valves (aluminium bronze). Ball/ gate/ globe/ check/ needle valve (AL-bronze, Leaded-tin Bronze), Check valves (AL-bronze), Titanium valves, Ball valves (Incoloy/Titanum CS, Cpvc/Pvc), Shutdown valves (CPVC), Corrosion probes (CS nace and CS non-nace), Strainers (basket type as per ASME Sec viii div 1 and others), Spray nozzles (NFPA 15 and approved by UL,USA/VJTI, India), Continuous drainers,  Bends ((asme b 31.4 / 31.8), Choke valves, Sample bomb (asme secVIII div1), Launcher/receivers  (asme-b31.4/31.8 and asme sec viii div1),  Gaskets,  Flanges (super DS).
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For reference purposes, the website carries here the list of companies producing the following types of mechanical and process equipment required in the  E&P and oil and gas processing industry.
 8As far as equipment suppliers are concerned, find out whether your name figures in the list and if it doesn't, get yourself enlisted soon
 8Hdpe tank, Strainers, CS plates, Fire fighting, systems, Rotary positive displacement pumps, Rrotary.screw pumps, Pressure filters, Cartridge type filters, Filter separators, Filter-baskets, Quick opening closure filter-separators, Centrifugal pumps (GPP-general purpose pump),  Centrifugal pumps (SPP-special purpose pumps, GWS-general water services and, ICWS -large capacity water services), Centrifugal multi stage pumps (SSP-special purpose pumps), Main injection/ main oil line pumps, Reciprocating dosing /metering pumps, Reciprocating pumps  (API 675,Plunger/diaphragm), Chemical storage & dosing systems, Dosing packages (skid mounted), Fire water pumps (as per NFPA-20) and UL listed diesel engines.
 8Screw air compressors, Reciprocating air compressors, High pressure compressor (for plant & instrument air services),, Air dryers, Air/gas dries, Reciprocating hydrocarbon gas compressors, Blowers, Hot/ Eot cranes, Chain pulley blocks, Flare stacks, Pressure vessel and shop fabricated tanks, Vessels (ASME "U" code stamped), Pressure vessels CS (26-50 mm, pressure vessel-CS (51-100mm, >100 mm, up to 25 mm),26-50 mm), Stainless steel clad vessels, Paint, Mixer and agitators, Reciprocating pumps (API 674).
 8Pump-air operated diaphragm, Air floatation units (DAF), Plate interceptors, Centrifuges, Oil skimmers (drum/disctype, slotted pipe type), Carifier/clariflocculators, Surface aerators, DG sets, Utility generator (engine supplier and packager), Diesel engines, Separators (oil & gas), Tertiary separators, Heater treaters & bath heaters, Heat exchangers (carbon steel, stainless steel, shell-tube TEMA code, Pneumatic pumps, Fuel gas conditioning and compressors, Gas conditioning skids, HVACs, Air conditioning systems (central and system-package units), Ventilation & pressurisation systems.
 8Process gas compressors (API 617), Gas turbines (API- 616), Turbine generator sets, Gas turbines, Air fin coolers (CS & SS), Silencers, Waste heat exchangers, Membrane type N2 generators, Nitrogen generator package & air dryer packages, Air/HC gas driven pumps, Electro chlorinators, Hydrocyclones, CO2 snuffing systems, Portable fire extinguishers, Eye washs and safety showers, Personnel protection equipments from H2S exposure, Coalescers, Scrubbers (spray types, venturi types), Lining (rubber, FRP tanks & vessels, pvc/pe/pp), Electric heaters. Demisters (wire mesh type, vane type), Dished ends presses, Carbon steel, Dished ends (press stainless steel, spun-carbon steel, Secondary seal floating roof tanks, Gas dehydration units, Loading arms, Induced gas floatations (IGF), Nutshell filters (NSF).
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ONGC is setting up a Central Processing Facility (CPF) for oil and gas close to MD#3 well in the NELP Block  CY-ONN 2002-2 at Madanam in the company's Cauvery Asset.
 The block is made up of a gas field (9 wells) and an oil field (9 wells).
 BharatPetroleum Resource  Limited (BRPL) has a 40% PI while ONGC has a 60% stake.
 ONGC is all set to begin construction of the CPF, having already built an Early Production Terminal ( EPT) near MD#3
 The EPT after having outgrown its utility, once construction of the CPF is completed, will be used as testing facilities.
 Storage of crude until now has been via overhead loading tanks which is then evacuated to the Narimanam GGS through road tankers but with the CPF, the processing will be done at Madanam and the hydrocarbon will then be transported via pipeline to Narimanam.
 This pipeline facility will stretch from the Madanam CPF to Narimanam GGS with road/river crossovers with sectionalising valve and hook up facilities along the terminals, with Pig Launchers installed at Madanam CPF and Pig Receivers at Narimanam GGS.
 The Madanam PSC is confined to a 280 sq km contract area comprising 5 segments, of which segments I, II and III are currently being developed by ONGC in partneship with BPRL.
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New ship building building activity has dropped more than 60% during the first quarter of 2016 compared with the same period in 2015.
 8As far as dry bulk, tanker, container and gas carriers are concerned, the drop in orders is calculated at 71%, with dry bulkers recording, as expected, the biggest drop, thus weighing down heavily on the industry as a whole.
 8While the freight market is showing some buoyancy, silver linings are very difficult to find in the newbuild market.
 No substantial positive impact on newbuilding activity is expected as the dry bulk market is showing no signs of recovering whereas the  slowdown in tanker ordering continues to persist
 8The bottomlines of ship builders will continue to be under severe pressure going forward.
 8In terms of recently reported deals, K Line placed an order for two firm Aframaxes (115,000dwt) at Sasebo, in Japan with delivery set for 2018-2019.
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BPCL is planning to setup a “Lignocellulosic Ethanol Biorefinery” for production of ethanol and other chemicals.
8The biomass feed that the company is looking for can be any viable material and not necessarily limited to the usual feedstocks such as sugarcane baggasse, rice straw, wheat straw, corn cobs or cotton stalks.
8The biomass supplier would be responsible for aggregation, storage and supply to the bio refinery.
8An independent technology provider would provide end-to-end process technology, preparation of detail engineering & design of the plant, supply of supplementary raw materials (such as enzymes), maintaining the product quality and providing  performance guarantees. It will also ensure that the cost economics are such that an adequate return on capital is guaranteed.
8The minimum capacity of the proposed bio refinery would be around 15,000 tonnes of ethanol per annum.
Correspondingly, the biomass supplier is expected to supply a minimum of 75,000 – 80,000 tonnes of dry biomass per annum (minimum 220 tonnes dry biomass per day).
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Consumption of petroleum products galloped at 11% in March, 2016.
 8Consumption was up 15% over the corresponding month of the previous year whereas HSD was up 8%.
 8Importantly, low prices saw a surge in naphtha consumption, going up by a whopping 21%.
 8In other words, liquid fuel consumption by the industrial sector has seen a healthy growth.
 8Has this increase been at the expense of natural gas?
 8LPG consumption too was up 9% whereas SKO was expected down 4%.
 8With the uptake in road construction, bitumen consumption is up 10%.
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It is time for the government to act against the GAIL brass for its various acts of commission and omission in the conduct of the company's affairs.
 8To begin with, there is no reason why the GAIL brass should not be arrested and jailed for the pipeline blast that killed 22 people in their sleep on June 27, 2014.
 8The GAIL management was found directly responsible both by the OISD and the PNGRB for gross lapses and dereliction of duty.
 8Under the eyes of the law, this amounts to criminal conduct, tantamount to culpable homicide and there is a need for immediate arrest of the culprits.
 8But clearly the government seems to have looked the other way.
 8The PNGRB has refused to invoke stricter provisions enshrined in the PNGRB Act for willful misbehavior that led to the blast. It has capitulated to the pressure and clout of the gas major to settle for a light rap on the knuckles by imposing a fine of mere Rs 20 lakh.
 8In what is a blatant act of immorality, and perhaps safe in its assumption that it will be shielded by the powers that be, the GAIL management has gone ahead and challenged the imposition of the token fine on legal points.
 8In the US, such incidents would have resulted in not just imprisonment of the management but also fines worth billions of dollars.
 8A full investigation is also needed on the decision making process that lead to the booking of 5.8 MMTPA of LNG capacity in the US with a recurring yearly liability of $ 1 billion in fixed charges. In a grossly over supplied market, it is doubtful if GAIL will be able to find markets anywhere in the world where it can sell its LNG at a profit. This is over and above the fixed charges that the gas major will incur in maintaining its LNG fleet.
 8Some would argue that it was a business decision that has gone wrong but nevertheless the file notings require investigation to check for inconsistencies and malafide intention.
 8There are always many wheels within wheels in such billion dollar decisions.
 8It is also time for the government to give up its resistance to the PNGRB's suggestion to split up GAIL into transmission and trading entities. There is too much of a conflict of interest between the two and this is only impeding and not promoting the gas business in India. As its many consumers will vouch, GAIL is not a company greatly known for its ethics. Years of abuse of its monopoly position has led to an entrenched mindset that is out of tune with the changing times.
 8This is as good a time as any to take punitive action on the GAIL management.
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RIL has issued an Expression of Interest for engineering and design inputs for its deepwater KG Basin discoveries, signaling its intent to do the homework on getting its discoveries off the ground.
 8The idea is to first do the design changes and then look for price offers.
 8Contractors have been asked to submit proposals on conceptual engineering and FEED for RIL's deepwater gas fields
 8After the designing is over, the contractors will also be asked to offer turnkey contract quotes.
 8It is however learnt that the evaluation exercise will take time and it will be a while before actual RFQs for equipment and services are sought.
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There is no expectation of  a deal from OPEC's April 17th Doha meeting
 8With global inventories swelling and signs that some OPEC members are losing market share, the meeting is unlikely to do much to prop up prices
 In this scenario, it remains to be seen how much further oil prices go up from here.
 8The absolute rise in crude inventories in the US -- the highest in the history of the United States -- is a cause of concern for oil markets
 8But there are many who still believe that the market is turning around
 8Speculators are raising their net long position in crude oil. The Commodity Futures Trading Commission (CFTC) report at the end of March said that money managers are long on crude at the net level.
 8The expectation by some brokerage houses is that the  WTI oil  price will move higher, towards $45 mark while the MCX price may reach the Rs.3000 mark.
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The Make in India programme is doing some hard selling of business prospects in India.
 Here is a list of the petroleum projects where foreign investment is being solicited:
 8Visakh Refinery Modernization Project
 8Integrated Refinery Expansion Project at Kochi Refinery
 8Development of Green Field Port at Colachel (Enayam) in Tamil Nadu
 8Mumbai Refinery Expansion Project (MREP)
 8Development of Outer Harbour at Paradip Port
 8Vijaipur-Auraiya-Phulpur Pipeline Project
 8Phulpur-Haldia Pipeline Project Phase-I
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The prolonged collapse in oil prices could not have come at a worse time for GAIL, as it dramatically narrowed the difference between oil indexed prices in Asia and Europe and the US HH price.
 8The closer proximity of European markets to the US means that Europe is more likely to feature as a destination point for GAIL LNG, or at least until Asian LNG prices start to show some strength again.
 8Transportation costs will be lower to Europe compared to deliveries to Asia. Meanwhile, several European countries, such as those in the Baltic region, are seeking to diversify sources of supply, which will be of benefit to US LNG exporters.
 8Even then, it is very likely that some of GAIL's booked capacity may not be fully utilized until global prices and demand growth recovers.
 8The gas major is staring at the prospect of paying fixed charges for booked liquefaction capacity as well as rentals for the LNG fleet that it is now in the process of acquiring without delivering the cargoes anywhere because there may be no takers for them as other, more agile, suppliers grab market share. It won't make sense for GAIL to deliver LNG if its fixed costs are not covered.
 8A more likely scenario is where its fixed costs are partially covered. This will still translate into heavy losses on its US LNG transactions.
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It took only a short period of time for outlook on the LNG market to change.
 8Japan has begun the re-start some of its nuclear plants, Australian LNG exports have surged ahead, and gas consumption growth in Asian markets, such as China and Korea, has slowed due to lower economic growth and competition from renewables and coal.
 8Meanwhile, gas demand in Europe has struggled to recover from post-recession lows and much of the continent’s regasification capacity remains underutilised.
 8GAIL is now confronted with a glut rather than a shortage, with substantial Australian and US LNG capacity expecting to enter the market right up to the early 2020s.
 8This does not even take into account LNG from other potential sources, such as Canada and East Africa, or the fact that in many key markets, LNG demand growth is showing worrying signs of weakening.
 8In addition, the oil price collapse that began in the middle of 2014 has also contributed to the precipitous drop in oil-indexed natural gas prices, especially in Asia.
 8As a result, the arbitrage opportunity, even allowing for the concomitant fall in the US HH gas price, has drastically narrowed.
 8Currently Henry Hub (HH) gas prices are at just below US$2/mmbtu, but spot LNG prices in Asia has gone down concommitantly to $4-4.5/mmbtu.
 8As a result, taking into account transportation costs, and a high fixed cost of $3/mmbtu for liquefaction, GAIL is left with heavy negative margins if its US cargoes are imported to India.
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Expect severe hits in the balance sheet of GAIL in 2018-19 on account of huge losses from its US LNG transactions, unless the global LNG market miraculously changes course in less than two years.
 8The other option is for the gas major to somehow push the US terminal operators to drastically cut the fixed charges and remove the 15% premium charged on the Henry Hub price.
 8With sagging margins and bearish markets, US terminal operators may fight back any attempt to cut their margins on fixed capacity utilization.
 8The US operators are a tough lot and it is unlikely that GAIL will browbeat them to a deal they find unpalatable.
 8Currently, GAIL is reported to be in negotiations with the terminal operators for a cut in fixed costs but sources said that it would be premature to arrive at any conclusion.
 8It is not going to be easy to push the US operators into a corner as they in turn have back to back arrangements with their lenders.
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