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May 2016

GAIL has also evolved its own vendor development plans.
8Bidders without a proven track record for line pipes have been allowed to come in through the "Demo Route">
8INDEG groups have been constituted to give preference to domestic bidders.
8GAIL's investments are likely to boost the following segments of the industry:
-- Line pipes
-- Pipe fittings
-- Valves
-- Metering skids,
-- Dispensers, smart meters, gas containers and special electro fusion fittings
-- District regulator stations, mother-daughter stations and gas detectors.
Click on Reports for more. Details
The website carries here a range of information on plans by Indian oil companies to boost indigenous supply of equipment and services under the Make in India programme.
8For example, ONGC has allowed new indigenous vendors to participate in tenders (even if they do not meet experience criteria) and supply a portion of total requirement (up to 20%), provided they meet other tender requirements.
8The government policy on giving Preference to Domestically Manufactured Electronic Products (DMEP) and MSME in government procurement has been adopted by ONGC.
8The company has also drawn up a collaborative research plan involving Indian educational institutions.
8KPMG has been hired to do a detailed feasibility study on the creation of a Petroleum Economic Zone.
8ONGC is also spearheading the upstream team under the Steering Committee constituted by the Ministry to devise a strategy and develop a roadmap to boost the Make-in- India programme.
Click on Reports for more. Details
BHP Billition had made out a strong case for investigating the deepwater plays in the Mumbai offshore areas.
8Pertinently, all of ONGC's discovered reserves lie on the Shelf and deepwater areas which have not been tapped so far.
8Only three deepwater wells were drilled in the area.
8The Mumbai deepwater zone can be the next big hydrocarbon province after the KG Basin, some industry experts claim.
8Going by discovered reserves and number of exploratory wells, these areas remain grossly under explored.
8The multinational's blocks were within the cretaceous and paleocene rift systems involving high attenuated crust and a rifted basin terrane pushing towards the platform terrance where the Mumbai High fields were discovered.
8The Russians, which discovered Mumbai High for ONGC, had once said that there was enough hydrocarbon lying offshore of Mumbai High to take care of India's energy needs.
8It is time now for the government to push ONGC to loosen its purse strings, leverage its balance sheets and drill a spate of exploratory wells in the areas that BHP Billiton had abandoned.
8The company has both the infrastructure and wherewithal to do so.
8The only other company that can sink in big money in such E&P work is RIL but will it be interested in venturing into such unknown areas?
8What the petroleum minister must do is to get the Indian Navy to drop its objections and then coax ONGC to step in. Details
Opportunities worth a massive Rs 555,750 crore awaits equipment and service providers wanting to do business with India's oil companies in the next five years.
8In dollar terms, it comes to a massive $84 billion over the next five years.
8ONGC had always been the biggest spender so far but IOC's investment plans far exceeds that of ONGC in the next five years.
8HPCL and BPCL are slated to spend around Rs 52,500 crore each.
8This is big money and an equally big opportunity for equipment and service providers.
8The oil marketing companies are going to use a combination of debt and internal resources to fund their investments.
Click on Details for more information on projected capex spending by individual public sector oil companies over the next five years. Details
For reference purposes the website carries here the following tenders:
8Statutory testing of Auto LPG Underground Vessels [IOC]  Details
8Hiring of Consultancy Service for Survey Design and Fixation of Acquisition parameters for high resolution 3D Survey [OIL]  Details
8Charter Hire of Effluent Treatment Plants and Management Service for on-shore drilling operations [OIL]  Details
8Hiring of Mud Logging Units and services for deployment in North East India [OIL]  Details
You can also click on Tenders for more
For reference purposes the website carries here the following Newsclips:
8RIL gives 8-10% hike to 20,000 junior & mid-level managers, 100% bonus to some  Details
8No big bang, but quiet reforms reshaping China's oil and gas sector  Details 
8Oil prices subdued in Asia after touching 2016 highs Details 
8Vedanta Resources' loss narrows to $3.5 billion in FY16  Details 
8Cairn India gains after erstwhile parent moves to settle tax dispute  Details
8ExxonMobil to expand Australia refinery to supply more diesel, jet fuel  Details
8Cairn India extends repayment of $1.25 billion loan by two years  Details
8Oil supply grows in India, falls at global level: IEA Details
8France's Engie eyes $500 mln from Asia oil and gas assets sales  Details
8BHP Billiton joins Rio in shifting focus to growth  Details
8GSPC's KG block holds 14.4 tcf gas: FM  Details
8India's MRPL says it owes about $2.6 Billion In Oil dues to Iran  Details
8The GSPC numbers don’t stack up  Details
8Petronet wish list awaiting State’s clearance  Details
You can also click on Newsclips for more Details
Investment projections made for the next five years by ONGC and OIL show the duo will spend Rs 170,000 crore between them in E&P sector in India.
8But the critical point is that all of that investment will happen with internal funding and zero debt.
8The Modi government is a proponent of big public sector spending to boost investment in the absence of private sector interest.
8The point to note is that the entire investment by ONGC and OIL will be without taking recourse to debt.
8These companies are not leveraging their vast financial reserves to boost domestic E&P investment by using debt instruments.
8In a risk averse environment, and under a revenue sharing model, global oil majors are unlikely to take much interest in India's E&P opportunities.
8There are vast reserves of oil and gas already available globally to be tapped and it can be safe to bet that significant foreign investments won't find their way to India for exploration work.
8BP's failed investment in India on account of regulatory hurdles has already sent a wrong signal globally. The fact that arbitrations are time consuming affairs and discouraged by the government will be another dampener.
8In such an environment, the gap can be plugged by the public sector oil companies.
8Innovative thinking is the need of the hour.
8What the government can do is to turn the investment paradigm around by first looking at the amount of  the maximum leveragable financial resources available with these oil companies and then identify the E&P segments where they can be deployed to earn a double digit rate of return.
8The government needs to look within and not outside to boost the domestic E&P industry. Details
The big question is does India have enough E&P opportunities where big money can come in?
8Zero debt leverage by ONGC and OIL is a strong indicator of lack of enough opportunities in the domestic E&P industry at the right hurdle rate.
8Or else, the logic goes, the duo would have deployed larger sums of money into the business.
8The recent investment of Rs 34,000 crore in the KG-DWN-98/2 where inherent risk factors can bring down the return below the hurdle rate is an indication that there are no other areas where big money can flow in to allow for a higher ROI.
8The small and marginal field policy is being flaunted as a major policy success, and it is, to the extent that small players will get to tap resources which the oil majors found too tedious and expensive to tap. But in terms of incremental oil and gas, their contribution will not bring about any paradigm shift in the E&P industry.
8The government must now push both OIL and ONGC to invest heavily under the open acreage mechanism to look for hydrocarbons in untapped areas. Few foreign companies will come to do that job as India is seen as a low prospectivity country.
8So far, both companies have put in only perfunctory investments in frontier basins and it is time to step that up.
8There are also other KG Basin fields that require investments. Details
A deeper analysis of consumption data will show how gas demand is being impacted by competitive liquid fuels:
8Gas consumption was a flat 0.30% in 2015-16.
8On the other hand, FO consumption went up by 11.9% during the year.
8Petcoke, which is now actively competing with gas, had registered a rise of 25.9%.
8LDO consumption was up 11.4%
8Naphtha demand went up by 20.9% in 2015-16
8Commercial LPG growth was a massive 39.3%.
8All of this points to a really dismal picture for gas demand in the industrial sector outside the fertilizer and power segments.
8Clearly the price of gas has come down over the past one year but this has not spurred industrial demand.
8The demand for competitive fuels on the hand has spiked.
Click on Reports for more. Details
On the back of strong Chinese demand and firm fixing before different holidays across the globe, Middle East business shoot up last week, surpassing even the most optimistic expectation of a rebound in a market that had been quiet mid-April onwards.
8With Middle East activity seting the tone, rates for VLCCs over performed the rest of the market by a wide margin last week, restoring confidence in the market. Tonnages are clearing up for forward dares and the expectation is that rates will remain firm this week as well.
8Despite a small improvement just before the weekend, the West Africa Suezmax continued to lose ground last week, while Black Sea/Med rates were also tepid.
8A tonnage over supply ate into North Sea and Caribs Afra rates.
8On the other hand, a active Mediterranean  market boosted earnings with sentiments remaining positive into this week.
Click on Reports for more Details
The website carries here a detailed graphical analysis of the factors that drive global crude and commodity prices. Among them are:
8Crude oil prices react to a variety of geopolitical and economic events.
8World oil prices move together due to arbitrage.
8Crude oil prices are the primary driver of petroleum product prices.
8Changes in expectations of economic growth  can affect oil prices
8In OECD countries, price increases have coincided with lower consumption
8Changes in non-OPEC production can affect oil prices
8Changes in Saudi Arabian crude oil production can affect oil prices
8Unplanned supply disruptions tighten world oil markets and push prices higher
8Inventory builds go hand-in-hand with increases in future oil prices relative to current prices (and vice versa)
8Open interest in crude oil futures grew over the last decade as more participants entered the market
8Money managers tend to be net long in the U.S. oil futures market
8Crude oil plays a major role in commodity investment
8Commodity index investment flows have tended to move together with commodity prices
8Correlations (+ or -) between daily price changes of crude oil futures and other commodities generally rose in recent years
8Correlations (+ or -) between daily returns on crude oil futures and financial investments have also strengthened.
Click on Reports for more Details
The PNGRB has come out with the draft Petroleum & Natural Gas Regulatory Board (Technical Standards and Specifications including Safety Standards for Liquefied Natural Gas Facilities) Regulations, 2016.
 8These standards are intended to ensure uniform application of design principles. They will set the benchmarks for selection and application of materials and components, equipment and systems and uniform operation and maintenance of the LNG Terminals
8The aspects that are covered include design and layout, electrical and process systems, maintenance, inspection, competency assessment, fire prevention, leak detection as well as fire fighting and safety management systems.
8The board will monitor the compliance to these regulations either directly or through an accredited third party.
8To begin with, a terminal operator will have to first conform with PESO regulations before seeking approval from the board.
8An operator will have to submit a detailed Quantitative Risk Analysis (QRA) of its infrastructure.
8The regulations will apply for existing LNG units as well and they will have to submit their QRAs within six months of the notification.
8Penal action will be taken in case of default
Click on Reports for more Details
US government estimates have revised the price of crude which is likely to prevail in 2016 and 2017.
8WTI spot prices are expected to go up by 16% and 25% in the two years from the previously estimates.
The price is now expected to be $40/bbl and $50/bbl in the two years. 
8Other crude markers go up too in the same proportion though product prices are slated to go up at a much lower pace.
8Gas prices have not been revised upwards from earlier estimates.
8Henry Hub prices are slated to stay at $2.25/mmbtu in 2016 and at $3.02/mmbtu in 2017.
Click on Reports for more. Details
It is time for the petroleum ministry to draw up a more realistic picture of gas demand in India.
8The government last week quoted from the Working Group Report on Petroleum & Natural Gas Sector to claim that the demand for gas will be around 606 mmscmd in 2021-22.
8In 2015-16, the demand for gas was just 143 mmscmd.
8Clearly, these figures are unrealistic as demand under the most optimistic of circumstances cannot go up by over 400% in five years.
8The ministry cannot depend on hypothetical demand figures to peg policy changes. Unless the data is right, all policy decisions will go wrong.
8The PPAC does not have the technical ability to use sophisticated models to estimate demand in the complex environment prevalent in India.
8Deeper analysis is required of different demand segments and estimates will have to take into account the role that competing fuels will play in India.
8If crude prices remain low, as is projected, liquid fuels will stay highly competitive.
8New pipeline penetration and the consequent creation of incremental demand for gas will also have to be accurately predicted.
8Crude and gas price projections will have to be realistic and the models will have to be tested for sensitivity.
8This is an exercise that only a global consultancy can do and the PPAC and other government agencies will have to assist in providing the requisite support and data infrastructure so that the exercise is grounded in reality. The consultancy will have be acclimatized to the peculiarities of the Indian market lest it tries to adapt a developed country model on to Indian data.
 Avoid local management consultants
8It will be imperative for the government to reach over the top of the three management consultancies -- E&Y, PWC and Deloitte -- which among them have grabbed most of the consultancy projects in India. These are management consultancies without the ability to conduct rigorous demand modeling exercises. Firms good in econometrics and involved in core oil and gas sector work should be picked up for the exercise.
8Unless an accurate estimate is made, two things will go wrong:
 -- Government policy making will suffer as it will be based on inaccurate data.
 -- New gasification facilities may lie under utilized as they will be based on wrong and inflated demand figures. Details
With only a handful of orders surfacing in the past couple of weeks, the newbuilding market will have to look well beyond 2016 for a significant improvement in prices. Evidence of the weakness of the market is borne out by the fact that there is a continuous softening of prices.
8Prices at which deals are being done are now kept secret, leading to the assumption that these have been agreed at startlingly low levels and that the actual discounts or newbuilding prices  are likely to be far greater than what is presumed.
8In terms of recently reported deals, Fredriksen had signed an LOI for two firm plus two optional VLCCs (320,000dwt) at Jinhai HI, in China, for a price in the region of $ 78 million and delivery set in 2018.
8In the second hand market, in the VLCC sector, the sale of the “DS CHIEF” (311,224dwt-blt 99, S.Korea) to Taiwanese owner, Winson Shipping, for a price in the region of $25.2 million was reported.
8In the same sector, there was also the sale of the “FRONT VAN-GUARD” (300,058dwt-blt 98, Japan) at a price tag of $24.3 million.
Click on Reports for more Details
A reasonably large price difference has already started emerging between spot prices and the long term price of LNG sold by RasGas to India.
 8According to CGD players fighting pitched battles in the market place against liquid fuels, the differential is large enough to hurt sales.
 8The industrial market in India has become highly price sensitive.
 8However juxtaposed against this is the fact that a bulk buyer like the fertilizer industry is happy with long term gas contracts. Around 80% of RLNG consumed by the industry is through long term contracts. GAIL calls for tenders from other suppliers of gas for only 20% of the requirement.
 8This is because short term contracts, based on spot gas cargoes, are complicated to handle. These cargoes have to be adjusted in the consumption matrix of the unit. What is more, short term pipeline capacity has to be booked through GAIL's monopoly networks. Take off pay provisions have to be incorporated whereas with long term supplies made by GAIL, such provisions are usually waived if the gas major can find buyers somewhere else in its vast network. Then again, the fertilizer industry is not cost sensitive as gas prices are a pass-through under the retention pricing system.
8It will take a long time for such a structure to change.
8Eventually however the differential between the RasGas price and spot price is going to hurt the offtake of the former.
8RasGas had already reduced the high price differential that had once existed and there will come a time when another adjustment will have to be made if sport prices remain consistently low, which now seems to be increasingly likely.
8For unless gas prices are low enough in India to compete directly with liquid fuels in an environment where crude prices are projected to stay low for some time to come, making inroads into the general industrial market is going to remain very tough. Details
Promoters of new LNG gasification plants in both the East and the West Coast are desperately looking for customers for their gas.
 8For all of them, the great spike in demand for gas in India hasn't happened yet and to their dismay that are realizing that there are really not many takers for their gas
 8The lack of pipeline infrastructure is greatly inhibiting the search for the incremental consumer of gas.
8New investors are looking at smaller floating gasification terminals which will provide them greater flexibility to take on a market where consumers are hard to find.
8Terminal owners are now looking at ways to ferry LNG by trucks to demand centres.
8The low capacity utilization of some of the trunk pipelines also prove that even if the necessary infrastructure is available, a spike in demand for gas does not necessarily follow, particularly when there is intense competition from liquid fuels. These fuels also have the advantage of greater supply flexibility, as they can be transported by road, rail and pipeline.
8GAIL has been struggling to construct the Jagdishpur-Haldia gas pipeline for want of anchor customers.
8The tepid response of the private sector to bids taken out to set up new urea units along the pipeline has forced the government to strong arm cash rich public sector companies to put them up even though the manufacture of urea is not their core area of specialization.
8Beyond a point however the government can do only do that much and not more to shore up gas demand in India Details
Industrial consumption of gas, except by the power and fertilizer sector, has gone down according to macro data released by the government.
 8Even as gas consumption remained flat in 2015-16, consumption of power and fertilizer units went up smartly.
8Power sector consumption has gone up by 7.7% to 9,190 mmscmd from 8.525 mmscmd in 2015-16
8Offtake by fertilizer units went up by 5%, to 14,676 mmscmd from 14,012 mmscmd in the same year.
8Importantly, it is the government and not market forces which is keeping the demand for gas up.
8The government engineered an offtake of gas by the power sector even as it is evident that coal based power is cheaper.
8The pooling system and a cost pass-through mechanism in the retention pricing policy has allowed fertilizer units to raise urea production using a higher quantum of gas.
8If the consumption growth by these two segments are taken out, the demand is steeply negative for the rest of the industrial sector.
8The fact that liquid fuel demand has gone up means they are substituting gas in Indian furnaces Details
For reference purposes the website carries here the following tenders:
8Supply and Commissioning of Gas Detection System, Hazira [GAIL]  Details
8Procurement of Dew Point Analysers, Panipat Refinery [IOC]  Details
8Supply of Instrument Cables for Gas Detectors, Paradip [IOC]  Details
8Annual Rate Contract for Hydrotesting of CO2 Gas Cartridges and Cylinders, Panipat Refinery [IOC]  Details
8Insulation work during plant shutdown of Coker-A, Barauni Refinery [IOC]  Details
You can also click on Tenders for more
For reference purposes the website carries here the following Newsclips:
8Congress seeks discussion on 'irregularities' by Gujarat govt in its KG basin gas project  Details
8Asia’s top consumers paid more than $10/MMBtu for gas in 2015: IGU Details 
8Saudi Aramco finalises IPO options and plans global expansion  Details 
8Easy tax for Indian Oil Paradip to cost Odisha govt Rs 25,000 cr  Details 
8OECD and IEA ponder divorce after years of friction: Document  Details
8EIA sees 2016 U.S. natgas production, consumption at record highs  Details
8Brazil to open subsalt to some non-Petrobras oil operators Details
8E.ON says Gazprom deal propped up profits in Q1 Details
8Indian Oil gets 40% response to staff share sale offer  Details
8DGH floats tenders for India's first marginal fields auction  Details
8Iran ends free shipping of oil to India: Dharmendra Pradhan  Details
8Cairn offers to pay 15% of principal amount in pending tax case  Details 
8Gas Connections in villages: A report  Details
You can also click on Newsclips for more Details
Gas suppliers seem to be finding it increasingly difficult to fight off competition from liquid fuels 
8Garnering new customers seems to have become near-impossible and even hanging on to existing customers is turning out to be a tough job.
8City Gas Distribution companies are fighting pitched battles in the market against commercial LPG and the winds are not blowing in the right direction for them.
8Industrial customers too seem to be uninterested in taking RLNG as it is significantly more expensive than fuel oil. Some units which had used RLNG are now moving back to using liquid fuels such as FO.
8Then again, customers who are using coal find it more economical to use low ash, high calorific imported coal than RLNG.
8"It is impossible to compete with these kind of price differentials," an RLNG seller told this website
Click on Details to find out the price differentials between RLNG and other competing fuels and why RLNG cannot compete with fuels such as naphtha, fuel oil and even pet coke when crude prices rule low. Details
Even as the industrial and commercial segments of the gas market stay highly competitive, CGD players in India are likely to do well.
8There are significant entry barriers for third party marketers as CGD players enjoy physical exclusivity of their networks.
8The supply of domestic gas at low prices is another big help.
8Regulatory risk has eased up after the Supreme Court ruled that the PNGRB does not have the powers to determine network tariffs, compression charges or in any other manner fix prices for CGD companies with their own network.
8This allows the CGD industry greater freedom to build in reasonable cushions in the final prices of CNG and PNG for consumers.
8It is the industrial and commercial segments of the market where competition is likely to remain intense on account of supply of low priced liquid fuels laced with heavy discounting by refiners.
Click on Reports for more Details
The Department of Fertilizers has claimed that it has received six proposals for setting up of greenfield and brownfield projects in India. Five of them are in the private sector.
 8Each of these units provide a business development opportunity for gas suppliers in the market as gas consumption is in the range of 2.24 mmscmd per unit.
8It is pertinent to note these are mere proposals and and they are a long time away from capital approval.
8A hefty bank guarantee is required to be submitted for setting up urea units in India by the private sector.
8These proposals are over an above the revival process that is now going on for four closed units of Fertilizer Corporation of India Limited (FCIL) namely Ramagundam, Talcher, Sindri and Gorakhpur as well as the Barauni unit of Hindustan Fertilizer Corporation Ltd
8Each of these revival proposals are for unit sizes of 1.27 million metric tonne per annum (MMTPA) of urea.
8The incremental gas demand, as and when it emerges, is likely to be picked up by GAIL as it has a monopoly in the gas supply chain to fertilizer units.
8Private suppliers such as Shell will have a tough time entering this market unless it lobbies hard for a new set of rules. So far the multinational's efforts to sensitize the industry or the Department of Fertilizers has been in vain.
Click here for more information. Details
The PNGRB's main control mechanism over the segments of the oil and gas industry under its ambit is through the use of  accredited Third Party Inspection Agencies (TPIAs)
8The Board is now keen on keeping these agencies up to speed through capacity building workshops.
8The regulator is worried that the blame will fall squarely on itself if such assessments come out with faulty conclusions
8The Board has published a series of technical standards, involving gas pipelines, CGD networks, refining, LNG terminals, LPG installations, POL depots and retail outlets.
8The regulator has now warned the TPIAs of serious implications if there is any lapse.
Click on Reports for more Details
For reference purposes, the website carries here details of the contract signed by GAIL with Air Service India Ltd for use of high resolution drones for surveillance work for a 200 km stretch of the Hazira Vijaipur Jagdishpur and the Dahej Vijaipur (DVPL) pipelines.
8Also carried here are the details of accidents in GAIL's pipeline networks for the period 2013-14 to 2015-16.
8Multiple incidents have been recorded in this period, including the loss of 21 lives in a early dawn blast in GAIL’s 18”x 205 Km Tatipaka-Kondapalli gas pipeline in Andhra Pradesh.
Click on Reports for more Details
For reference purposes, the website carries here state-wise details of CGD infrastructure built in the country so far. In all, there are 46 cities in which CGD networks are available today.
The data is given in the following format:
8Name of the state
8Name of the cities of geographical areas in which CGD networks are available
8Name of the CGD entity
8Number of domestic, industrial and commercial customers of each CGD entity
8Number of CNG stations and the latest prices of PNG and CNG in these each entity.
Click on Reports for more Details
There is a wide variation in PNG and CNG prices across different states in India.
8Siti Energy supplies PNG in Moradabad at Rs 21.50/SCM whereas within the same state of Uttar Pradesh, the price charged by Adani Gas in Khurja is a Rs 27/SCM.
8In the North East, the price charged is just Rs 17/CM.
8There are wide intra-state and inter-state variations in prices.
8As far as CNG is concerned, the variations are even wider.
8GAIL, for example, charges Rs 57/kg of CNG in Dibiyapur in UP while in Gautam Budh Nagar, the rate is just Rs 42/kg.
8Among different operators across states, the differentials are also very wide.
Click on Reports for more Details
India is meant to have a huge appetite for natural gas.
8A government working group has pegged the demand for natural gas at a massive 600 mmscmd by 2021-22.
8But the data on the ground shows consumption has stagnated over the last three years.
8While total consumption was 143 mmscmd in 2013-14, it fell to 140.33 mmscmd in 2014-15. In 2015-16, demand has only climbed back up to the 2013-14 level.
8In the face of falling domestic output, the share of LNG has gone up from 48 mmscmd in 2013-14 to 58 mmscmd in 2015-16. There are signs that demand is now picking up but will it stay up going ahead?
8Lack of pipeline infrastructure and fall in prices of competing liquid fuels that lead to lower offtake of gas are advanced as reasons for the poor show by the gas sector in India.
Click on Reports for more Details
For reference purposes, the website carries here the following year-wise data:
8Total domestic production of crude oil and gas between 2008-09 and 2015-16
8ONGC's production during this period and share of the public sector company in total domestic production.
8The data shows that ONGC's crude output has been stagnant for the last four years.
8While gas production was stagnant between 2011-12 to 2013-14, the last two years have witnessed a fall in output.
8But there are now signs that output will go up once the Daman field in the west coast comes into production, adding up to 10 msmcd to total production.
8By 2019, the KG-DWN-98/2 field will add further to output.
8The website carries here a series of reasons for what ails the domestic gas sector in India.
Click on Reports for more Details
This report provides a review of Good International Petroleum Industry Practices (GIPIP) in the following areas:
8Exploration
8Discovery
8Appraisal
8Declaration of Commerciality
8Field Development
8Production
8Testing and Analysis – Reservoir and Production
8Health, Safety and Environment (HSE) / Abandonment
8Procurement Procedures
8Other miscellaneous issues
Click on Reports for more Details
For reference purposes, the website carries here the 500-page document that the government has put together on Good International Petroleum Practices (GIPIP) for the E&P sector.
 8The new codes of conduct will help take out some of the subjectivity that was noticed in E&P practices in India, resulting in disputes.
8There is a wide array of operators with varying experience working in India and fresh guidelines in the form of a compendium are expected to help stakeholders in conducting petroleum operations.
8The DGH has now made it clear that the GIPIP codes cannot override existing  PSC provisions or any law of India or any active ministry of petroleum notification or any other statutory provisions of India. These will continue to prevail under all circumstances.
8What is more, GIPIP guidelines are generally applicable for E&P operations in the realm of conventional hydrocarbons. Some of these guidelines may not apply  to E&P operations for unconventional hydrocarbons.
8It has been also clarified that there could be variances from the guidelines provided in this report for technical or commercial reasons as technology continues to evolve and facts on the ground change.
8Discussions will have to be held amongst the DGH, the MoPNG and the operator in case of unresolved variances.
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UAE's national oil company ADNOC and even Kuwait Petroleum Corporation and Iran too have shown interest in using the capacities that are thrown open by strategic crude storage caverns.
8Discussions were held with them and there is keen interest
8The issues that needed hammering out boiled down to adequate tax exemption and unfettered entry and exits and a certain commitment from India to offtake the reserves.
8They did not want the reserves to be just "dead" stocks.
8As of now, the government has stated publicly that there is no deal in place yet.
 Click on Details for more Details
Is there a innovative way of filling up India's strategic storage capacities than using sovereign funds?
8The world is already bursting at the seams with excess storage of crude as supply has significantly outstripped supply.
8One way out is to rope in international trading companies to use this capacity.
8Discussions were held with a wide range of stakeholders in the past.
8Among the companies were Chevron, Vitol, ANZ, Standard Chartered, JP Morgan, Bank of Tokyo, Mercuria Trading, BPCL, Kuwait Petroleum, Essar Oil, Trafugura, Stratoil, Morgan Stanley, BP, SOCAR Trading, ENI Trading and Morgan Stanley.
8But the talks did not yield results.
8Find out more about what went wrong Details
The strategic crude caverns in Mangalore and Padur are now ready to receive crude, according to latest information.
8The snag in Mangalore was over ROU acquisition for laying of a pipeline to the 1.5 MMT Mangalore cavern has now been resolved, an the facility is ready to take in crude oil.
8The 2.5 MMT Padur cavern will be ready to take in oil by June, 2016.
8The Vizag cavern already stands commissioned, and was filled with crude in October, 2015.
8No deals have been reached yet with any foreign oil company on funding the crude oil reserves in the two facilities.
Click on Reports for more Details
For reference purposes the website carries here the following tenders:
8Procurement of Ultrasonic Level Transmitters, Panipat Refinery [IOC]  Details
8Coating refurbishment of SMPL mainline with PU coating [IOC]  Details
8Rate contract for carrying out repair & maintenance works of tanks and pipelines [IOC]  Details
8Bio-remediation of sludge obtained after cleaning of Crude Oil tank, Paradip [IOC]  Details
8Procurement of Intrinsically Safe Ultrasonic Thickness Gauge, Vadodara [GAIL]  Details
You can also click on Tenders for more
For reference purposes the website carries here the following Newsclips:
8Novatek still working on Gydan Peninsula Arctic LNG plan  Details
8Alberta premier says oil city saved from worst of wildfire Details 
8Statoil to get rare respite from green criticisms at AGM  Details 
8Concerted efforts needed to bring down blanket of pollution in NCR: Expert  Details 
8Nagarjuna Oil in talks with Saudi royal family to revive refinery  Details
8Odisha gets Oil Ministry's 1st skill development institute  Details
8Stable non-OPEC output decline key to oil price recovery: Goldman Sachs Details
8Gujarat State Petroleum Corporation Ltd’s overseas dreams gas out Details
8Low prices causing major shake-up of oilfield industry: Moody's  Details
8Lack of distributors and low purchasing power to hit government's drive to expand LPG base  Details
8Despite Modi push, gas grid stays stuck  Details
8India gradually moving to gas-based economy  Details
8Idemitsu, AltaGas suspend LNG project in Canada  Details
8DBT for subsidies leads to significant savings  Details
8Oil & gas fields auction this month to be on simpler terms  Details
You can also click on Newsclips for more Details
The website carries here details of business development opportunities for two petroleum product storage enhancement projects:
8One involves raising the storage capacity by around 75,000 KL.
-- The new requirement is for  3 X 300 KL for ethanol, 3 X 24,000 KL for HSD and 1 X 4020 KL for MS and 4 additional TLF bays
8The other opportunity is for raising the capacity by around 200,000 KL
-- The requirement is for raising of tankage facilities for MS, SKO, HSD, DHPP ATF, FO, LDO and Ethanol. A total of --10 additional TLF bays will be constructed.
8The third opportunity is for raising the storage capacity from 82,000 KL to 200,000 KL
-- This will involve construction of new capacity for MS, SKO, HSD and ethanol storage.
8Request for quotations are expected shortly
 Click on Reports for more Details
For reference purposes, the website carries here a comprehensive pictorial depiction of Indian Oil Corporation's refinery, terminal and pipeline infrastructure in India.
Information (in terms of completed and under construction) is given on:
8Crude pipelines
8Product pipelines
8RLNG lines
8LPG pipelines
8Single Point Mooring Systems
8IOC has a total of 11,221 km of pipelines as on February, 2016.
Click on Reports for more Details
For reference purposes, the website carries here the full details of all gas pipeline related incidents between October 2015 and April 2016.
The information is given in terms of:
8Date, time, location of the incident along with the entity involved
8Description of the incident
8Cause of the incident
8Recommendations on measures to follow to avoid such incidents in the future
Click on Reports for more Details
The website carries here the latest set of projections on LNG demand and supply going up to the year 2025.
8The supply projections are based on liquefaction plants that are already operational or under construction. Those projects which are post financial investment decisions are also included.
8The data shows that while the gap between supply and demand narrows towards the year 2025, there is a massive threat of potential new supply.
8Actual supply will be in the range of around 375 MMTPA by 2025 while demand stays lower than supply.
8But potential new supply can be as high as 500 MMTPA by that period.
8The possibility of new supply coming in is what is expected to keep LNG prices from going up.
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Low prices are projected to slash and an estimated $213 worth of deepwater investments have already been suspended. The impact of these delays will be a roughly 1.5 million bbl/d reduction in deepwater production and 500,000 bbl/d reduction in shallow water production by 2025.
8However those companies who remain active in the sector will benefit from an oversupply of new rigs.
8With a multi-year average construction time, many offshore rigs under construction were contracted in an environment of higher oil prices.
8Considering the overabundance of new rigs, rig day rates are likely to be depressed until the supply overhang is absorbed. In addition, declining rig utilization and supply costs will lower operation costs and provide incentives for rigs to stay in operation.
8Day rates for contractors have dropped 20 to 40 percent globally
8Though cost savings vary by region, major operators have seen their breakeven points drop between 7 and 21 percent.
Click on Reports for more Details
The international oil and gas equipment market is characterized by a large presence of heavy manufacturing for the ships and offshore platforms in South Korea, low cost inputs originating from China and high-tech components and advanced manufacturing from the United States, Germany and Japan.
8South Korea is the world’s largest exporter, exporting $36 billion of equipment to global markets last year, while China and the United States are the next largest exporters to the world with $30 billion and $27 billion in exports, respectively.
8South Korea represented 15 percent of global exports; China represented 12 percent, and the United States 11 percent of these exports by value.
8U.S. exports are particularly competitive in high-end sinking and boring parts and parts for derricks
8South Korean exports are concentrated in vessels with derricks with few sinking or boring parts
8Chinese exports are concentrated in vessels with drilling platforms and equipment and pipe.
8These trends are likely to continue with U.S. exports weighted more toward specialized high-tech equipment, especially relating to unconventional and ultra-deepwater O&G exploration and production.
Click on Reports for more Details
For reference purposes, the website carries here a global annual projection of the oil and gas equipment market up the year 2019.
8While investments in the oil and gas industry is being slashed, the market for a few select categories of equipment will shows a continued upward trajectory.
The projection pertains to the following equipment:
8Submersible and semi-submersible drilling platforms
8Oil and gas field machinery and equipment
8Oil and gas processing equipment and machinery
8Field derricks
8Pipes and tubes
Click on Reports for more Details
India is ranked 27th in a list of 74 countries in terms of business opportunities and ease of doing business for the international oil and gas equipment industry.
The ranking is based on the following parameters:
8Declared oil and gas reserves
8Institutional risks
8Business regulations
8Qualitative environment
Click on Reports for more Details
A large number of bids are expected to come in for the Discovered Small Fields Bid Round that the Petroleum Minister is slated to announce on May 25, 2016 at the Ashoka Hotel in New Delhi.
8The terms of the offer are a vast improvement over the earlier lot and a lot of small to medium companies are expected to actively participate in the bids.
8A total of 67 discoveries will be offered in 46 contract areas through a new revenue sharing model
8Since the costs can be kept under control, the low price environment is not likely to be a deterrent for the players.
8The onland cost of production in India continues to be highly competitive.
For queries and registration, click on Reports Details
For reference purposes the website carries here the following tenders:
8ARC for pipeline foot patrolling under Hazira Jurisdiction [GAIL]  Details
8Chemical De-Contamination of FCCU, Mathura Refinery [IOC]  Details
8AMC for Piping Stress Analysis Software, Guwahati Refinery [IOC]  Details
8Supply of Consumable spares of Reciprocating Compressor, Guwahati Refinery [IOC]  Details
8Annual Maintenance Contract for Access Control System, Guwahati Refinery [IOC]  Details
8Supply of Heat Exchangers, Digboi Refinery [IOC]  Details
You can also click on Tenders for more
For reference purposes the website carries here the following Newsclips:
8Piyush Goyal blames "corrupt" DMK, AIADMK for losses in Tamil Nadu power sector  Details
8Managing Saudi Arabia's new energy mega-ministry may bring challenges Details 
8Oil up 2 pct as wildfires threaten Canada supply  Details 
8Iran strives to save billions of dollars wasted by gas flaring  Details 
8Saudi's former oil minister Ali al-Naimi cuts a lonely figure in oil battle  Details
8Saudi Arabia to maintain 'stable' oil policies: New Minister  Details
8ONGC crude oil output up at 22.37 MTPA, natural gas production declines further in FY16 Details
8Low prices causing major shake-up of oilfield industry: Moody's  Details
831.62 lakh households connected with piped natural gas: Government  Details
8Government’s drive to widen LPG customer base faces twin hurdles  Details
8GSPC in talks with ONGC on selling gas field stake  Details
8Crude cloud on ONGC  Details
8Auction of 67 small oil and gas fields to kick off on May 25  Details
You can also click on Newsclips for more Details
It is now longer a question of whether GAIL is going to lose money on its 5.8 million tonnes of LNG capacity booked with US liquefaction terminals but how much money is it going to lose.
8The website projects that fixed charge of $3/mmbtu that GAIL had booked in the Sabine Pass and Cover Point terminals will now have tp be considered a sunk cost as the ferrying of gas even to Europe, leave alone India, may turn out to be unviable as Russia prepares to fight off competition from US based LNG supplies by bring down the cost of pipeline gas to below $4/mmbtu. The Russians will want to hang in to their market share and they can bring down the price to as low as $ 3/mmbtu to stay competitive.
8This will mean that GAIL will only be able to recoup the variable cost and not the fixed cost of $3/mmbtu that it pays to LNG terminals over and above the cost of gas.
8It is estimated that the fixed cost element will be around $150 million for every million tonnes of LNG capacity processed in the terminals.
8GAIL contracts call for offtake of 3.5 million metric tons of LNG a year for two decades from Sabine Pass, which is expected to start supplies in March 2018. It has also booked 2.3 million tonnes a year capacity at the Cove Point LNG liquefaction terminal in Maryland, which is set to commence deliveries in December 2017.
8At 5.8 million tonnes, the fixed cost turns out to be a whopping $850 million.
8This is now projected to be the yearly loss that GAIL is going to incur from 2018 onwards.
8There is in fact worse news.
8There are projections that even variable costs may not be covered if Henry Hub prices swing above the $2/mmbtu mark, which is a possibility as the US appetite for domestic gas is going up, with coal being replaced rapidly with gas in the power sector.
Click on Reports to find out more Details
If working in an environment where the variable costs of US LNG shipments may not get covered is bad news, the situation can turn worse for GAIL.
8One nightmare scenario is where GAIL may have to keep all 9 LNG vessels, which it is planning to contract out, idle for want of viable cargoes to ship.
8Supply will outstrip demand for LNG vessels at around the time that GAIL is meant to take delivery of these vessels, especially as that will be the time when LNG will be in gross over supply but demand will stay cool in countries such as China, Japan and Korea.
8This will mean GAIL will have to pay fixed charter hire charges or make losses by putting its vessels up for hire in a bloodied market at below breakeven prices.
8That's another set of liabilities that GAIL will end up incurring, according to one set of projections, over and above the $850 billion hit on their US cargoes.
8Thankfully for GAIL, the contracts for the vessels have not yet been signed.
8The tenders are in the process of being evaluated.
8Sober voices will say that GAIL should cancel the tender altogether.
8But that in itself can be a risk.
8The gas major will then be at the mercy of the spot markets for vessels while incurring a fixed liability of offtaking 5.8 million tonnes of LNG every year.
8GAIL seems to have run itself into a really tight corner here.
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GAIL has finally begun the process of building critical segments of the long delayed 884 km Kochi-Koottanad-Mangalore-Bangalore pipeline that will ferry gas from the Kochi LNG terminal.
8The Kerala line will extend from Udyogmandal to Koottanad and then connect to Bangalore and Mangalore.
8This part of the pipeline is designed to take 10 mmscmd of RLNG.
8GAIL is targeting mechanical completion in 24 months and another two months for drilling, commissioning and gas-in.
Click on Reports for more. Details
For reference purposes, the website carries here details of a total of 69 oil and gas related bankruptcies filed in the US in 2015 and 2016.
8At stake are total loans worth a whopping $ 34 billion.
8These cases have come as a big boon for bankruptcies lawyers in the US.
8Most of the bankruptcies have emanated from the states of Texas, Delaware and New York.
8Bankruptcy filing have been steadily rising every month.
8April, 2016 saw the highest number of filings so far.
8For some Indian cash rich oil and gas players, these bankruptcies can emerge as investment opportunities.
Click on Reports for more. Details
There is another smarter way in which the government can make the KG Basin gas discoveries work for India.
8And that is to use the collaborative model that the website had spoken about earlier. where promoters of all adjacent blocks (which includes ONGC in one, the formidable RIL-BP combine in another and GSPC in the Deendayal field) work in tandem to keep costs low.
8The model calls for a band of operators to join hands with a select group of suppliers.
8India in fact will have a first mover advantage as such models have rarely been deployed elsewhere in the world.
8Internationally, individual companies are working on some aspects of this model. Shell, 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. Another example is Anadarko, which has chosen to work intensively with FMC and Technip on a segment of its offshore developments.
8The advantage with the KG Basin is that BP is already present there. It has the finest minds and the best-in-class expertise to drive change. And BP, with over $7 billion in sunk cost, is under tremendous pressure to bring in returns. The multinational will only be too happy to drive change if it is given the opportunity.
8All the KG Basin players among them have massive financial, managerial and technological muscle power that only a few others can put together elsewhere in the world.  
8The collaborative model will require inputs from the finest consultancies in the world. 
8The model can allow for each player to concentrate on its strengths. 
8Studies have tried to look at emulating the collaborative environments in industries such as automobiles and aerospace in the oil and gas sector.
8It is estimated that equivalent developments in the oil and gas industry could well achieve 50 percent less capex, 20 percent lower lifting costs, 50 percent faster time to first oil, and a five-year lead time on new technology implementation. 
8There is no reason why the KG Basin cannot be an innovation centre that the world would like to imitate.
8The Make in India programme is not just about manufacturing in India but bringing in global scale and technological innovation to a local environment. The KG Basin can be the best place to put the finest tenets of this programme into play.
8No other business segment in India provides the fiscal and technological breadth to innovation as the KG Basin deepwater development programme does.
Click on Reports to find out more. Details
It one sense, it will be easy for Indian policy planners to provide a 12% return on investment made in deepwater gas by Indian companies.
8The framework is already there.
8The PSC mechanism is based on a profit sharing system where all costs are accounted for and the DGH as well as the Management Committees ensure that operators do not gold plate their costs.
8Just like the retention policy for fertilizers, a normative cost structure can be evolved using best practices, and returns can be pegged to it.
8It will indeed be a unique system but India is no stranger to cost plus pricing mechanisms.
8There is a cost to energy security. And the government must work out a price, just like it does for urea.
8ONGC was once given a floor price when the global price of crude dipped low many years ago.
8It may well be time now to work on such a formula once again, this time for gas production from India's deepwater discoveries.
8All kinds of combinations are possible and no one knows the cost-plus permutations better than the Indian policy maker.
8To what extent deepwater gas is going to be more expensive than imported LNG is not yet known. If ONGC's cost is going to be $6.7/mmbtu, then assuming an ex-ship price of  $4/mmbtu or less and a liquefaction cost of $1/mmbtu, a deepwater gas cess or even an anti dumping duty can be imposed on LNG (and this can be justified if Qatar indulges in predatory pricing), so as to ensure that the public sector E&P giant finds it viable to keep on producing gas from its KG-DWN-98/2 field.
Click on Reports to find out more. Details
Having announced a ceiling price for gas, will the Indian government be forced to backpedal and introduce a floor price instead for domestic gas just so as to be able to prop up India's deepwater production?
8Nothing it seems is impossible anymore.
8Will a pooled price mechanism be set in place that will work the other way round than it does now, by mixing significantly higher priced deepwater gas with lower priced onland gas with reasonably priced LNG?
8The logic will be the same used to prop up domestic production of urea, even though India does not have the comparative advantage to manufacture it. The rationale behind encouraging urea plants to come up in India, even though it is cheaper to produce it abroad and ship here, is that India needs security of supply of this vital crop input.
8The same logic can be extended to deepwater gas.
8RIL and ONGC's gas discoveries in the KG Basin are capable of producing a large quantity of gas.  If these supplies are shut down, and in the face of India's rising appetite for gas, the dependency on imported gas will go up very sharply.
8India is 80% dependent on imported oil.
8Will the same story be repeated in gas?
8This is a corner that India should not push itself into.
8It will become imperative therefore for Indian energy planners and security analysts to look at this galling prospect and come up with the right policy prescriptions.
Click on Reports to find out more. Details
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