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Jul 2015

For reference purposes, the website carries here the latest government estimates of unit wise normative gas requirement of the urea industry, which is the biggest consumer of gas --  at 40 msmcmd -- in India
 The data is given in terms of:
 8Normative gas requirement up to reassessed capacity and for maximum achievable capacity
 8This information is sub-divided into those on the national gas grid and those which are not.
 8The highest individual requirement is by RCF`s Thal complex at 4 mmscmd up to reassessed capacity, going up to 5 mmscmd when maximum available urea capacity is taken into account. This is followed by Kribhco`s Hazira unit, with a consumption of 3.67 mmscmd and 4.69 mmscmd.
 8There is another set of data that shows the quantum of unit-wise subsidy paid in the last three years and up to June, 2015.
 Click on Details for more
 Click on our Reports section for more Details
The Ramgundam fertilizer project is progressing on schedule, according to the latest update from the DOF.
 This is the latest update:
 June, 2015:
 8Detailed Feasibility Report (DFR) finalized.
 8Technology Evaluation completed.
 8Overall Plot Plan has been finalized.
 8Engineering, Procurement and Construction Management (EPCM) contract to EIL has been signed by RFCL.
 July, 2015
 8Pre-project activities started at site. Details
GAIL is now looking for experienced and reputed rig providers to offer the following services:
 8Drilling rig services, along with work-over jobs
 8Cementing services with supply of additives and casing accessories
 8Mud engineering services with supply of mud chemicals and additives
 8Performance motor and directional drilling services
 8Wire line logging and perforation services
 8Mud logging services
 8Drilling, fishing and coring tools with services
 8Liner Hanger equipment and services
 8Well testing equipment and services
 8Surface well testing services.
 8Down hole measurement and sampling services with Slickline.
 8Completion tools rental services
 8Nitrogen pumping services with supply of nitrogen
 8Supply of drilling bits, wellhead, x-mas tree as well as casings and tubings Details
The report prepared also includes answers to the following questions relating to investment opportunities in India:
 8What parts of India’s oil and gas supply chain have opportunities for investment?
 8How is the new Indian government addressing oil and gas investors’ concerns?
 8How important are unconventional resources?
 8How can the new natural gas pricing formula incentivize upstream investments?
 8What is the best way to address under-recoveries made by oil marketing companies?
 8How is the gas supply deficit being addressed?
 8How will domestic production be increased?
 8What role can the private sector play in realizing the ministry’s strategic goals? Details
With a view to enhance domestic oil and gas production in the country, the government plans to survey around 1.4 million square kilometres of unexplored areas in the next five years.
 8A report available with this website points to the fact that India has 26 sedimentary basins which have not been exploited to the optimum level.
 8Geo-scientific data on nearly 48% of its 3 million square kilometres of sedimentary basins is either scarce or unavailable.
 8To encourage exploration, several measures are being taken by the government, which includes improvement of infrastructure, logistics, technology, data, security and workforce skills.
 8Government is also encouraging  multi-client speculative surveys under which service providers have already applied for survey of Indian offshore areas. Details
The government has claimed that around 31% of the regasification capacity in India remaiend unutilized in 2014-15 on account of lack of demand.
  8Out of the total re-gasification capacity of 62.10 MMSCMD, 19.25 MMSCMD remained unutilized during the year.
  8The actual demand of gas is price sensitive in India and the total utilization during 2014-15 was 116.78 MMSCMD, out of which 73.93 MMSCMD was domestic supply and 42.85 MMSCMD was imported LNG.
  8LNG is imported by different entities to meet the demand between the actual requirement and supply from various domestic sources.
 Ironically, the Working Group on Petroleum & Natural Gas sector for 12th Five Year Plan has projected the demand of natural gas by various sectors in 2015-16 at 446 MMSCMD, in 2016-17 at 473 MMSCMD, in 2017-18 at 494 MMSCMD and in 2018-19 at 523 MMSCMD.
 8While demand for gas does exist, it remains highly price sensitive. Details
8Legal disputes pending against GAIL:  A total of 201 cases pertaining to litigation arising out of contractual, service and black listing of vendors, take or pay/ship or pay are pending against GAIL.
 --Of these, there are 16 cases relating to GAIL pending with the Petroleum and Natural Gas Regulatory Board.
 --GAIL spent a total of Rs 34.12 crore as legal expenses during the last three financial years.
 --The amount spent by GAIL as legal expenses during the last three financial years are as under: Financial Year (FY) 2012-13: Rs 11.46 crore; FY 2013-14: Rs 12.54 crore; FY 2013-14: Rs 10.12 crore
8Status of oil and gas environment proposals taken up by UP Regional Office: The website carries here, for reference purposes, status of all oil and gas proposals decided by the Ministry Of Environment & Forests, Regional Office (Central Region).
 --List of all proposals starting from January 1, 1980, upto July 23, 2015, have been given.
 --Some of the projects whose details have been carried are: IOC's Kurukshetra-Roorkee-Najibabad pipeline, laying of crude oil pipeline in Chitrakoot, IOC's Dadri-Panipat gas pipeline, Mathura-Bharatpur pipeline, Dadri-Panipat pipeline and RIL's Shahdol-Phulpur gas pipeline.
 Click on our "Reports' section Details
Mahanagar Gas Limited (MGL) -- a JV of GAIL and the BG group (UK) -- is planning to strengthen its existing network of pipelines to serve the newly developing residential and commercial areas at Bhiwandi, Shilphata, Khidkali and Ambernath in Maharashtra.
 8For connecting these areas to its existing pipeline network, MGL is planning to lay two natural gas pipelines at different locations across the Ulhas river.
 8The first natural gas pipeline (Thane-Bhiwandi Looping) is proposed from the Balkum Fire Station in Thane to the Kalyan Naka in Bhiwandi, along the Old Agra Road crossing the Ulhas River, adjacent to the Kasheli North Bridge.
 8The second pipeline (Mahape-Dombivali Looping) is proposed to be laid from the MGL’s City Gate Station, Mahape, to Manpada junction in the Dombivali MIDC, along the Kalyan-Shilphata Road crossing the Ulhas River north side of the bridge near the Katai Naka.
 8The length of the first pipeline (Thane-Bhiwandi Looping) is expected to be around 2000 metres, while the second pipeline (Mahape-Dombivali Looping) is expected to have a length of 500 metres along the river crossings.
 8The two pipelines will be laid with the help of Horizontal Directional Drilling (HDD) technology. Details
The Kochi-Salem Pipeline Private Limited (KSPPL), which is a JV of BPCL and IOC, has secured environment clearance (EC) from the union environment ministry for the Kochi-Salem pipeline starting from the Kochi refinery upto the Kerala border.
 8The pipeline from the Kerala border to Salem will be executed separately after obtaining clearance from the Tamil Nadu government.
 8The Rs 1000 crore project is jointly undertaken by IOC and BPCL to avoid LPG tanker accidents and delays owing to traffic bottlenecks while transporting LPG through road from the Kochi refinery.
 8The LPG pipeline has been planned keeping in mind the planned expansion of the Kochi Refinery from the present 9.5 MMTPA to 15.5 MMTPA. Under the expanded capacity, among other things, the production of LPG is slated to increase to about 1.26 MMTPA.
 8While an amount of around 0.5 MMTPA is expected to get consumed at Kochi only, evacuation arrangement for the balance approximately 0.76 MMTPA of LPG need to be in place, by the time the refinery expansion comes on stream.
 8It is in this light that BPCL is laying the 12-inch LPG pipeline upto its bottling plant at Coimbatore to meet its own requirement as well as feed gas to IOC's bottling plants at Udayanperoor and Coimbatore and HPCL's bottling plant at Palakkad by providing tap-offs.
 8The pipeline section in Kerala, till Kanjikode in Palakkad district, comes under Phase-I of the project. The land acquisition is in progress and the project is expected to be completed in 2017. Details
The gas leakage incident that occurred in a well -- dubbed KSG-60 -- at the Kharsang field in Arunachal Pradesh could have been avoided if the well was stabilized during fishing operations, the Oil Industry Safety Directorate (OISD) has said.
 8The OISD was given the charge to conduct an enquiry to find the root cause behind the incident.
 8The incident of gas leakage took place on June 30, 2015, but it did not catch fire and was successfully brought under control on July 12, 2015.
 8As per OISD, no culpability has been established.
 8The enquiry into the matter has been completed and OISD has sent its recommendations to the operator, Geo Enpro Petroleum Limited, so that these kind of incidents do not recur. Details
Based on interpretation of the historic 2D seismic survey data, GAIL, the operator of the Cambay onland block CB-ONN-2010/11, has decided to drill a total of eight exploration wells in the contract area.
 8Of the eight wells, the company will drill five wells on a firm basis, while the remaining three wells will be drilled on a contingent basis, depending on the results of the firm wells.
 8The wells will either be drilled with straight vertical holes or with planned deviated holes with a normal formation pressure.
 8As the well depths are expected to be in the range 2000-2500 metres, the operator pans to deploy an electrical/mechanical drilling rig, equipped with single or double drum draw works, capable of drilling wells up to 3000 metres.
 8The total cost of the project is expected at Rs 160 crore.
 8The expected timeline to spud the first well is by end of December 2015.
 8The block -- covering an area of 131 sq. km in the Ahmedabad and Anand districts of Gujarat -- was awarded to a consortium of GAIL (as the operator), Bharat Petro Resources Limited (BPRL), Engineers India Limited (EIL), Bharat Forge Infrastructure Ltd (BFIL) and Monnet Ispat & Energy Limited (MIEL) under NELP-IX. Details
The government has set the commissioning date for the Talcher fertilizer plant has been set as December, 2018, according to a government statement last week.
 8This will be the first ever large sized fertilizer unit to come up using the gas gasification process to manufacture ammonia and then urea. The petroleum industry must look at this development with interest because the success of this method using high ash Indian coal can bring about a wholesale revolution in the technology required for manufacture of urea. In China around 70% of the urea is made using this technology and its success in India will have implications for natural gas demand and supply subject, of course subject to the availability of coal.
 8Interestingly, it was initially decided that two joint ventures will be set up for the plant, one for coal gasification and another for the urea-ammonia complex but there are now questions about following through with the two JVs.
 8What was also strange was that even though Coal India was part of the consortium, it was decided that GAIL and not the coal major will make an application on behalf of the JV that is meant to set up the coal gasification unit to the Coal Ministry for allotment of a coal block.
 8The gasification plant is slated for award to Lurgi and instead of two JVs, there is talk of just one.
 8As of now the latest official position is that "assets of Talcher Unit are being valued to decide the value of FCIL’s share in the JV, vetting of TEFR is also in the process, apart from Draft Joint venture Agreement being examined by the various PSU partners."
 8While these issues are sorted out, the date of commissioning of the project has been fixed as December, 2018. Details
Fertilizer JVs abroad makes complete business sense despite political and regulatory uncertainty and nothing proves the point better than the JV set up in Oman by fertilizer cooperatives, IFFCO and KRIBHCO.
 8Despite the fact that Oman had forced an increase in the gas price in the middle of the contract period, the cost of OMIFCO urea remained considerably lower than that of urea imported by the State Trading Enterprises (STE).
 8The fertilizer industry is planning to do more such JVs though the mid-term revision in gas price by the Oman government did make the industry skeptical for some time.
 8The point to note is that in 2014-15, around 14.63 LMT of urea was imported from OMIFCO against a much larger volume of 72.86 LMT through STEs.
 8Against this, the cost of OMIFCO urea was just $179 per tonne as against $303 per tonne via the STEs. The import of cheaper OMIFCO urea brings down the weighted average cost of overall urea imports into the country.
 8The cost of urea stood at $172 for OMIFCO urea in 2013-14 as against $322 per tonne for urea through the STEs.
 8Interestingly, 21 LMT of urea was imported from OMIFCO in 2013-14 while imports through STEs stood at 49.68 LMT.
 8In 2012-13, urea prices were higher, at $277 per tonne for OMIFCO urea and $417.40 for imports through STEs.
 8For reference purposes, the website also carries here details of imports, production and state-wise sale of all fertilizers over the last three years Details
Petronet LNG Ltd seems to be attracting some critical attention of late.
 8On April 27, 2015, the petroleum and natural gas minister informed Parliament that Petronet LNG was being investigated for alleged irregularities in gas purchase contracts.
 8In an article written earlier this week, Surya P Sethi,  former Principal Advisor for Power and Energy in the Government of India, has alleged that Petronet has indulged in massive irregularities since inception. These irregularities have cost the nation tens of billions of dollars.
 8Sethi goes on to claim that the company had entered into dubious contracts at the behest of vested interests that benefit from keeping Indian LNG import prices high.
 8"Establishing mala fides would provide Government of India the legal basis for renegotiating these contracts," insists Sethi
 Click on Details to find out more on the specific charges levied by Sethi. Details
The state-wise estimated requirement as per best estimates for all the three OMCs combined together is as under:
 8Tamil Nadu (Karur/Coimbatore/Irugur/Ennore/Tondiarpet): 1,20,506 KL
 8Maharashtra (Loni/Pune/Manmad/Panewadi): 1,17,392 KL
 8Karnataka (Bangalore/Devangunthi/Mangalore): 82,525 KL
 8Rajasthan (Jaipur/Salawas/Jodhpur): 73,776 KL
 8Haryana (Rewari): 64,549 KL
 8Telangana (Ghatkesar/Cherlapalli): 63,822 KL
 8Uttar Pradesh (locations Amousi/Panki/ Kanpur/Mathura/Aonla): 57,117 KL
 8Andhra Pradesh (Vizag/Vijaywada): 54,838 KL
 8Punjab (Bhatinda): 47,180 KL
 8Delhi (Bijwasan/Tikrikalan/Delhi): 38,589 KL
 8Gujarat (Nandesari/Koyali): 36,551 KL
 8Madhya Pradesh (Indore/Manglia): 30,751 KL
 8Odisha (Paradeep): 28,132 KL
 8West Bengal (Haldia): 13,335 KL Details
The three Oil Marketing Companies (OMCs) -- IOC, BPCL and HPCL -- have floated a tender for procurement of 85 crore litres (0.85 million KL) of bio-diesel from August 2015 to March 2016.
 8At an estimated price of Rs 50/liter, the cost of the procurement works out to a whopping Rs 4,250 crore.
 8As per the OMCs requirement, the bidder must be an indigenous manufacturer of bio-diesel (B-100 grade), complying with IS 15607:2005 specifications.
 8The procured bio-diesel will be supplied to the various depots and terminals of IOC, BPCL and HPCL across the country.
 8The tender is basically for signing of a rate contract and the quantities are not guaranteed. However, plant-wise estimated requirement of all the three OMCs is pegged at 85 crore litres.
 8Of the total 85 crore litres, IOC plans to procure the maximum at 33.1 crore litres, followed by BPCL at 27.2 crore KL and HPCL at 24.2 crore litres.
 8The bids can be submitted on or before August 19, 2015 (1400 hrs). Details
According to the data furnished by the PPAC for June 2015, domestic petroleum product sales registered a robust 2.8% growth as compared to corresponding month in the pervious year. 
 8Notably, POL products include LPG, naphtha, MS (petrol), ATF, SKO (kerosene), HSD (diesel), LDO, FO/LSHS, bitumen and lubes as well as greases.
 8Total POL sales for June 2015 stood at 14,404 TMT as opposed to 14,007 TMT last year.
 8Cumulatively, POL sales touched 44,297.5 TMT during the April-June 2015 period, registering a growth of 5.2% as against the sale of 42,096.6 TMT during same period in 2014.
 8Except for SKO, Naphtha, FO and Bitumen, all other products recorded a positive growth during the month. Details
MS (petrol) sales were up by 9.9% during June 2015 as compared to June 2014.
 8In June 2015, Oil Marketing Companies (OMCs) sold a total of 1,769.4 TMT of MS, as compared to 1,610.7 TMT sold during the same month last year.
 8Cumulatively, 5,386.2 TMT of petrol was sold during the April-June period, registering a growth of 12.3% as compared to 4,796.3 TMT last year.
 8The high growth in MS consumption can be attributed to a shift in consumer preference from diesel to petrol driven vehicles and continuous high sales of passenger vehicles. The cumulative growth in passenger vehicle sales has been 6.17% for the April-June, 2015, period.
 8Another reason for the increase in petrol sales can be attributed to the rise in sales of two-wheelers which registered a growth of 3.5% during June 2015. Of the total two-wheelers, scooter/scooterette segment alone recorded a growth of 14.2%. Details
After a de-growth during the previous month, sales of diesel (HSD) recorded a growth of 2.5% during June 2015 and a cumulative growth of 3.6% during April-June 2015.
 8In June 2015, the total all India sales volume of HSD stood at 6,292.9 TMT as opposed to 6,139 TMT last year.
 8Cumulatively, 19,225.7 TMT of diesel was sold during the April-June period, registering a growth of 3.6% as compared to 18,550.5 TMT last year.
 8One of the reason for the increase in diesel sales can be attributed to the rise in port traffic. The port traffic registered a growth of 2.9% in June 2015.
 8Sales of commercial vehicles (CV) also registered a marginal growth of 0.72% during June 2015.
 8Of the total CV, medium and heavy CV alone recorded a growth of 20.7% but due to a negative growth of (-)10.52% in the light CV segment, the CV sales registered a marginal growth. Details
The overall LPG consumption recorded a positive growth of 10.2% during June 2015 and a cumulative growth of 8.5% for the period April-June 2015.
 8This is the 22nd month in a row that LPG sales have recorded a positive growth.
 8LPG for domestic consumption registered a positive growth of 10.3% during June 2015 and 7.1% growth for the quarter April-June 2015. This happened mainly due to release of 43.2 lakh new connections and 26.26 lakh DBCs during April-June 2015.
 8LPG for non-domestic consumption registered a growth of 28.2% in June 2015 and a cumulative growth of 35.3% during April-June 2015. This high level of growth can be attributed to implementation of the direct transfer of subsidy (DBTL) scheme, resulting in curbing in diversion of subsidized domestic cylinders.
 8Bulk LPG recorded a negative growth of (-)21.6% during June 2015 and a marginal growth of 0.6% during the April-June period, 2015.
 8Auto LPG registered a positive growth of 6.5% in June 2015, mainly due to a low base of last year and curb in diversion of subsidized domestic cylinders. Cumulatively, for the April-June period, the growth stood at 9.5%. Details
Natural gas consumption witnessed an overall decline of about 4.29% during June 2015, as compared to June 2014.
 8In terms of volumes, total consumption during June 2015 was 3,077 MMSCM as compared to 3,214 MMSCM in June 2014
 8Cumulatively, gas consumption for the April-June period declined by 9.55% from 9,862 MMSCM as compared to 8,920.51 MMSCM during the same period last year.
 8Fertilizer sector's consumption stood at 1,223 MMSCM showing a marginal growth of 3.31% during June 2015. Cumulatively, consumption by the fertilizer sector declined by 0.16% to 3,585 MMSCM as compared to 3,591 MMSCM during the same period last year.
 8Power sector witnessed an overall decline in volumes of around 2% from 803 MMSCM in June 2014 to 786 MMSCM in June 2015. On a cumulative basis, consumption declined by 10.39% to 2,143 MMSCM during April-June 2015 from 2,391 MMSCM during April-June 2014. Details
Aviation turbine fuel (ATF) sales for June 2015, registered a 3.9% growth over June 2014, while naphtha witnessed a decline of 5.6%.
 8ATF
 --ATF consumption growth was 3.9% during June 2015. Cumulatively, for the April-June period, the growth was 3.5%.
 --The higher sales in ATF can be attributed to a reduction in the number of flights operated by Spicejet which resulted in optimization of operations by other airlines.
 --Sales volume during June 2015 stood at 468 TMT as compared to 450.3 TMT last year. Cumulatively, for the April-June 2015 period, ATF sales registered a growth of 3.5% from 1,389.8 TMT to 1,437.8 TMT. 
 8Naphtha
 --Offtake of naphtha by fertilizer, petrochemicals and power companies during June 2015 was down by 5.6% at 891.9 TMT, as compared to 945.1 TMT in the corresponding month of the previous year.
 --Cumulatively, sales registered a positive growth of 10.8% to 3131.5 TMT as against sales of 2826.7 TMT during same period in 2014.
 --The main reason for de-growth during the month was because of low off-take by power and fertilizer industries.
 --Despite overall decline, the petrochemical sector registered a growth on the back of increased demand by RIL, IOC, ONGC and APCL's petrochemical plants. Details
FO+LSHS registered a drop of sale by 5.2% in June 2015 as compared to June 2014, while pet coke witnessed a positive growth of 8.1%.
 8FO+LSHS
 --FO+LSHS consumption registered a de-growth of (-)5.2% during June 2015.
 --On a cumulative basis too, there was a de-growth of (-)3.5% for the April to June, 2015, period.
 --The decline has been mainly because of drop in consumption of LSHS. The consumption of LSHS has reduced due to shift to natural gas by major customers like power and fertilizer industries, such as GNFC and NFL.
 --Other sectors like petrochemicals and steel registered a growth in the consumption of the product as compared to the previous year.
 8Pet coke
 --Pet coke consumption continued to register consistent growth of 8.1% during June 2015, at 1212 TMT as compared to 1121.6 TMT in June 2014.
 --Cumulatively, sales for the April-June 2015, period, stood at 3533.6 TMT, registering a growth of 11.1% from 3180.3 TMT witnessed during the same period in the previous year. Details
During June 2015, sales of Light Diesel Oil (LDO) registered a growth of 36.2%, while bitumen sales went down by 19.4% as compared to corresponding month of the previous year.
 8LDO
 --Total sales of LDO during June 2015 stood at 40.8 TMT as against 30 TMT witnessed in the corresponding month of the previous year. 
 --LDO consumption recorded a growth during the month due to delay in the onset of monsoon, leading to higher use of pumping sets, resumption of mining activities and improved port traffic.
 8Bitumen
 --Total bitumen sales during June 2015, went down by 19.4% at 416.1 TMT as against 519.9 TMT witnessed in the corresponding period of the previous year. 
 --Cumulatively too, there was a drop of 8.4% for the period April-June 2015, at 1506 TMT as compared to 1643.9 TMT in the same period last year.
 --The reason for the decline in sales can be attributed to the government's emphasis on building concrete roads. Details
While it is easier to predict long term trends, it is in the short run that problems arise.
8Spot prices for crude had been over $100 per barrel and has now come down to around $55 per barrel but there is wide disagreement over how prices are going to behave going ahead.
8In June, 2014, when spot prices were above $100 per barrel, the Nymex futures price band ranged from $125 to $60 per barrel.
8In June, 2015, the price Nymex futures confidence band is $125 to $35 dollars a barrel by end 2016.
8Clearly, the estimates vary widely among punters on how oil prices are going to behave over the next 18 months
8The projections show that world supply and demand will rebalance by the end of 2016, with the gap closing between production and consumption of crude oil.
8Lower prices have already slowed down production growth in the US. Growth is currently negative in the country.
8The rebalancing will also take place because OPEC's surplus production capacity is currently in the "moderate to low" region though petroleum stocks will continue to remain high, thereby moderating prices.
Click on Reports for more. Details
While it is easier to predict long term trends, it is in the short run that problems arise.
8Spot prices for crude had been over $100 per barrel and has now come down to around $55 per barrel but there is wide disagreement over how prices are going to behave going ahead.
8In June, 2014, when spot prices were above $100 per barrel, the Nymex futures price band ranged from $125 to $60 per barrel.
8In June, 2015, the price Nymex futures confidence band is $125 to $35 dollars a barrel by end 2016.
8Clearly, the estimates vary widely among punters on how oil prices are going to behave over the next 18 months
8The projections show that world supply and demand will rebalance by the end of 2016, with the gap closing between production and consumption of crude oil.
8Lower prices have already slowed down production growth in the US. Growth is currently negative in the country.
8The rebalancing will also take place because OPEC's surplus production capacity is currently in the "moderate to low" region though petroleum stocks will continue to remain high, thereby moderating prices.
Click on Reports for more. Details
Projections made up to the year 2040 by a US government agency shows that China's energy use will be double that of the US whereas India's usage will be only half of that of the US.
8Chinese energy usage will be a massive 210 quadrillion BTU as against 105 of the US and about 55 for India.
8Despite a higher rate of growth of the Indian economy, the Chinese energy consumption will be at least four times that of India by 2040.
8This will happen despite a higher GDP growth expected from India on account of a lower economic base.
8Even though Chinese energy use will go up, Chinese net oil imports will remain stable at around 7 million barrels a day over the next 25 years while that of the US will also be steady at 4 million barrels.
Click on Reports for more. Details
Clearly, Petronet LNG is unwilling to keep buying expensive gas from Qatar anymore given the sharp difference between the spot price and the long term contract price
 8Take or pay obligations can be invoked by RasGas but clearly the Indian company is willing to take the risk as it continues to reduce its exposure to high cost LNG
 8Petronet in turn is pushed by the bulk buyers -- in this case GAIL, IOC and BPCL -- who are finding it difficult to deal with irate Indian customers who are unwilling to pay such a high price for gas when spot gas is significantly cheaper.
 8Petronet`s conduct is technically not a breach of contract with RasGas as take or pay accounting is meant to be done at the end of the calendar year.
 8When it comes to the other way round, Gulf countries too break contracts as was evident when Oman insisted on a gas price increase right in the middle of a 15-year deal to supply gas at $0.77/mmbtu to OMIFCO, a JV between the Oman Oil Company and two fertilizer cooperatives, Iffco and Kribhco.
 8Oman in 2012 demanded that the price of gas be raised by $0.5/mmbtu every year up to a ceiling of $3/mmbtu.
 8The Omanese were adamant, claiming that the price rise has to happen regardless of the agreement.
 8The Oman government cited the firming up of international prices to enforce a higher price.
 8In the face of an obstinate Oman, the Indian government had no option but to agree to the price hike. 
 Comment: It must be remembered that when crude prices were high, spot gas prices were significantly higher than the long contract price of LNG that Petronet LNG recieved from RasGas. This was because there is a ceiling on the crude price which is indexed to the LNG price. Now that the tables have turned, it may not be fair for Petronet LNG to throw in the towel.  It is also not the Indian company`s argument that it is reneging on the take or pay agreement, for alll that it is doing is postponing the impact of the take or pay clause until the end of the calendar year when books will be tallied. Details
As customers are not willing to pay higher prices for the gas offered under the long-term contract, Petronet LNG Ltd`s (PLL) sales during the quarter ended June 2015, slipped to Rs 8,225 crore from Rs 10,065 crore seen in the corresponding quarter of the previous year.
 8Despite this, PLL`s net profit for the June quarter, grew by more then 58% year-on-year to Rs 247.5 crore, aided by operational performance and lower tax cost.
 8The company`s revenue declined 17.6% to Rs 8,377 crore from Rs 10,161 crore during the same period.
 8Operating profit grew by 1% year-on-year to Rs 361 crore and margin expanded by 80 basis points in first quarter of FY16 against expectations of 7% fall in operating profit and 20 basis points expansion in margin.
 8Tax expenses in June quarter dropped 93% to Rs 5.6 crore from Rs 81 crore seen in the corresponding quarter in the previous year.
 8Not only this, finance cost also fell 22% to Rs 61.2 crore compared to same quarter last year when it was Rs 78.42 crore. Details
The Take-or-Pay obligations resulting because of a cut in LNG supplies by Petronet LNG Ltd (PLL) from Qatar will be determined alter the close of the calendar year (CY) as per the contractual provisions under the Iong-lerm contracts which PLL has signed with RasGas.
 8Petronet has a 25-year deal with Qatar`s RasGas to buy 7.5 million tonnes of LNG annually. But because of the low gas prices in the spot market R-LNG off-take by PLL under the long-term sales contracts was around 63% of the quantity planned for the six months ended June 30, 2015, against the agreed Annual Plan for the Calendar Year (CY 2015).
 8The price of LNG from Qatar comes close to $13 per million British thermal unit as compared to the $6-7 rate at which it is available in the spot or current market.
 8In other words, spot LNG prices are about $6-$7 (per mBtu) cheaper than those under the long-term deal so customers are not willing to pay higher prices for the gas offered under the long-term deal.
 8Prior to 2009, the long-term deal included a rebate in order to stimulate India`s gas demand, but with the discount now gone the spot market has become more attractive. Details
The presentation specifically looks at the US long term energy supply and demand projections (up to the year 2040) to establish that US crude oil production will depend upon how crude prices are going to behave going ahead.
8The shale oil revolution has made the US a big balancing factor in the determination of output and price globally.
8If prices remain high, US oil output will go up to about 17 million barrels per day as against less than 10 million barrels per day if prices were to remain low.
8The swing element here is shale oil output which will remain sensitive to price of crude.
8Similarly, shale gas output will scale 15 billion cubic feet per day if prices are favourable but falling to 10 billion cubic feet if prices are low.
Click on Reports for more. Details
Subsequent to the shale oil and gas revolution, there is an intense debate going on the US over lifting the ban on export of crude oil.
8The domestic producers lobby is seeking a reversal of the ban in the face of falling prices so that they can elicit higher prices.
8But there is a domestic consumers lobby that is vehemently opposed to such a move.
8Those oppose to lifting the ban has projected the following consequences:
--Allowing the export of crude would cause domestic gasoline, jet fuel, diesel, and heating oil prices to increase
--Lower fuel prices in recent months have created material benefits for American consumers
--Domestic refining capacity and utilization is at an all-time high
--Allowing exports of domestic crude would have a negative impact on the U.S. trade balance
8Indian analysts will need to keep a close watch on these developments as such a move will have implications for global crude prices. Also, such a move may lead to lower refinery utilization and/or possible refinery closures, and this may have an impact on global refinery margins.
Click on Reports for more.
  Details
The estimates show that renewal energy will be the fastest growing segment in the world energy basket between 2015-2040.
8Nuclear energy share will grow from 5 to 7%
8Renewables from 11 to 15%
8Gas from 22 to 23%
8Share of coal in global energy use will slow down from 28% to 27%
8Share of liquid hydrocarbons, including biofuels, will decline from 34% to 28%.
Click on Reports for more. Details
8Kumar Sanjay Krishna and Upendra Prasad Singh are new Additional Secretaries in Petroleum Ministry: The Appointments Committee of the Cabinet (ACC) has approved the following appointments:
 --Kumar Sanjay Krishna, IAS, Joint Secretary, Department of Disinvestment, Ministry of Finance has been appointed as Additional Secretary and Financial Advisor (AS&FA), Ministry of Petroleum and Natural Gas.
 --Upendra Prasad Singh, IAS, Joint Secretary, Ministry of Petroleum and Natural Gas, has been appointed as Additional Secretary, Ministry of Petroleum and Natural Gas by upgrading the post of Joint Secretary as Additional Secretary for a period of two years or till a vacancy of Additional Secretary arises in the Ministry.
 8Prabhat Singh appointed as Managing Director & CEO, PLL: Prabhat Singh has been appointed as Managing Director & CEO of Petronet LNG Ltd (PLL) in place of Dr. A. K. Balyan.
 --Prabhat Singh was till recently working as Director (Marketing), GAIL.
 8Q1 results: The following companies will declare their Q1 (quarter ended June 30, 2015) results as under:
 --Aban Offshore: August 3, 2015
 --IGL: August 5, 2015
 --GSPL: August 7, 2015
 --MRPL: August 9, 2015 Details
The power requirement for the electrical equipment will be met through DG sets.
8During construction phase:
-- Entire pipeline will be constructed in six spreads with each spread consuming 15 kVA.
-- Thirty three remote main line valves (MLVs) and two intermediate pigging stations (IPS) will require 50 kVA (portable) per station.
-- Metering and regulating station (M&R) has energy requirement of 50 kVA each at HMD and NMD.
-- Two pump station at DMD will require two 50 kVA sets
8During operation phase:
-- Pump Station`s energy requirement of 3750 kVA to be sourced from RIL’s DMD Plant.
-- Thirty three MLVs and two IPSs power requirement will be 100 kVA per station at 2 locations, which will be met with grid power and the other half through solar power in the remaining locations.
-- Metering and Regulating (M&Rs) Stations will require power input of 1.6 MVA at the HMD Plant and 125 kVA at the NMD Plant which will be provided by RIL’s manufacturing division.
Click on Reports for more. Details
Greka Drilling is an expert in LiFaBriC wells that have turned out to be successful in raising gas output in China.
8Essar had tried to replicate the Chinese success and inked an agreement with Greka. The drilling plan has now been suspended though one such well will now be drilled.
8The new technology is a version of horizontal drilling used in conventional drilling and for reference purpose, the website carries here more details on the methodology. 
Clik on details for more. Details
Greka Drilling has announced that Essar Oil Ltd has suspended the drilling of what are called LiFaBriC wells in the Raniganj CBM block.
8A LiFaBriC project involves a vertical well and radius bend, a lateral section traversing the coal seam and an intersection with a vertical well to facilitate dewatering and ultimately gas flow to the surface.
8“In India, Essar has now suspended its drilling campaign but still intends to drill a single LiFaBriC test well to measure the results from the application of this technology to their CBM reservoirs and we hope this will complete in H2 this year. Whilst Essar`s current suspension of its drilling campaign will reduce the initially forecasted revenue in the current year from India by the value of the remaining contract value, we remain confident about the Company`s longer term prospects in India,” a statement by Greka drilling said.
8It is not known why the drilling of these wells have been stopped.
8The LiFaBriC method has key advantages over traditional vertical or multilateral horizontal drilling as commonly used for CBM development.
8Compared with vertical drilling, the LiFaBriC approach has the advantages of much greater contact with the coal seam, which helps overcome the problem of impermeability, fewer wells and no potentially hazardous fracking requirements. With LiFaBriC, gas effectively flows continuously between the horizontal and vertical wells.
8According to GDG, one in seam well saves approximately five verticals. This not only reduces costs but also lessens the environmental footprint. Given the absence of fracking, water from the LiFaBriC process can be used for irrigation.
Click on details for more. Details
Everyone is waiting with interest for scaled up commercial production from Essar`s Raniganj CBM field. The company has promised to go up the peak production target of 2.5 to 3 mmscmd by May, 2016. Output is currently at 0.65 mmscmd but this will go up to 1.2 mmscmd in the next few months, according to the company.
8There is keen interest from the fertilizer industry too because the CBM from the field is to be supplied to the ammonia-urea complex owned by Matix Fertilizers that is currently stranded because the Essar field is not able to supply the requisite quantum of CBM to the plant, This will the first full scale urea plant to be based on CBM in India.
8There are several problems with the field and with gas supply that have to be sorted out first.
8The 47-km pipeline from the Raniganj field to the fertilizer plant, for example, has not been completed and Essar has to step up CBM production very significantly before Matix can run at full capacity.
8More then 260 wells have been drilled, a 350 km network of pipelines under completion to gather the gas into Gas Gathering Stations. There is a lot water that comes out of the operation and the consequent high volume dewatering exercise is not a very easy job.
8A long time was spent in eliciting environmental clearances and now a battle is on to acquire more land.
Click on Details for much more on the issues connected with the Raniganj field as well as with gas supply and connectivity to Matix and the attendant problems. Details
The length of the mainline from Dahej to Nagothane is around 440 km. Approximately 256 km of the pipeline passes through the state of Gujarat and approximately 230 km passes through the state of Maharashtra.
8The length of spur pipeline to Hazira Manufacturing Division is about 46 km.
8The entire DNEPL system will consist of a main 12-inch pipeline from Dahej to Nagothane while the 46 km spur pipeline to Hazira will have a diameter of eight inches, one Mainline Pump Station (PS) at Dhaej, 33 Mainline Block Valves (MLV), two Intermediate Pigging Stations (IPS), two Metering and Regulating (M&R) stations.
8The pipeline will be buried throughout its length except at intermediate locations.
8The proposed pipeline will be laid in common RoU for a length of about 304 km of the existing East West Gas Pipeline (EWPL) and about 80.5 km of the existing Hazira Dahej Gas Pipeline. 
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 Details
Reliance Gas Pipelines Limited (RGPL), a wholly owned subsidiary of Reliance Industries Limited (RIL), proposes to build and operate a 486 km long pipeline for transportation of hydrocarbon liquid (Ethane) at a cost of Rs. 1,428 crores.
8The pipeline will transport liquid made available from RIL’s Dahej Manufacturing Division to RIL’s Hazira Manufacturing Division and to RIL’s Nagothane Manufacturing Division.
8The dedicated pipeline network, named as Dahej - Nagothane Ethane Pipeline (DNEPL) is designed to transport 1.25 MMTPA of ethane which is equivalent to 159 TPH ( 89 TPH for NMD and 70 TPH for HMD) of liquid Ethane.
8DNEPL will originate from Dahej in Gujarat and terminate at Nagothane in Maharashtra with a spur pipeline to Hazira.
Click on Reports for more. Details
The Petroleum and Natural Gas Regulatory Board (PNGRB) has given more time to Niko Resources and GSPL to file their replies on their dispute over the process of tariff determination for the Hazira pipeline so that it can take a final decision.
 8It will be only after the written submissions on behalf of both the parties, that the matter will be  taken up by the Board for final adjudication, the Board has said.
 8The dispute is over whether Niko deserves to be heard during the process of tariff determination of the Hazira pipeline or only GSPL can do go ahead and finalize the tariff and get it approved by the PNGRB.
 8GSPL had argued that the matter should be viewed in the light of APTEL`s judgment (Appeal No. 222 of 2014) in the case between RIL vs PNGRB/GSPL, where APTEL had directed that customers and consumers of common carrier or contract carrier pipelines should only be allowed to participate in the tariff determination proceedings.
 8Niko, on the contrary, has pointed that the term "stakeholder" is a wide term and the company (Niko) should also be included, along with consumers, in determination of tariff.
 8Both the parties recently made their arguments after which PNGRB asked Niko to file its written reply, with a copy to GSPL, within 15 days, and thereafter, a written submission may be filed by GSPL within 10 days. Details
Pan India Consultants Pvt Ltd ( PICPL) has proposed to carry out exploratory drilling of four (04) wells and 3D Seismic survey in its CB-ONN-2010/5 block in Patan and Mehsana districts of Gujarat to explore the possibility of commercial production of hydrocarbons.
Pan India is the operator of the block, while
A standard electric onshore rig of 750 to 1000 BHP with Rotary/Top drive System will be installed at the potential site of drilling after thorough inspection for its working capability and quality standards.
8Approximately, 1.5 hectare (120 m x120 m) land in total would be required for exploration drilling of each well.
8Drilling of each exploratory well is proposed to a maximum up to 3000m depth.
8Seismic survey will be carried out on specific straight lines along which the seismic crew moves fast performing the required activity covering 4 to 6 km a day.
8Meanwhile, five exploratory wells dubbed as CVAA-1, Mehsana-17, Mehsana-Horst-1, DNDR-1 and Lanwa-1 were already drilled within the block.
8However, the wells drilled within the block were being abandoned as no commercial hydrocarbon was interpreted in the well logs except Mehsana-19 well, which is oil bearing, and is located just outside the southeast boundary of the block.
Click on Reports for more. Details
The power requirement of drill rig will be met by four (04) x 500 KVA DG sets.
8At a time, a maximum three DG sets shall be in operation except during test flaring and one DG set will be kept as stand by.
8During test flaring, only one DG set shall be in operation to meet the power requirement.
8The power requirement for the campsite will be catered through one DG Set of 100 KVA.
8The water requirements for drilling and domestic purposes at drill site will be to the order of 20 kilolitres per day (KLD).
8Estimated consumption of HSD shall be about 4-5 KL for entire operation and majority of it will be used for power generation via DG sets and stored temporarily in 200 litre drums at the drilling site.
Click on Reports for more. Details
Researchers at the Queen's University, Belfast, have come up with a revolutionary method of reducing the carbon dioxide content of natural gas extracted from reservoirs under the sea.
 8This process is aimed at reducing the global environmental and economic costs of purifying natural gas in the oil and gas industry.
 8As per the process, a mixture of water and ionic liquids (salts which are liquid under ambient conditions) is used  to remove carbon dioxide from the raw natural gas.
 8This new ionic liquid system is safer, more efficient and more environment friendly in comparison to current conventional purifying systems (amine), which uses volatile and corrosive materials.
 8This newly-developed system is compact enough to be utilised on off-shore platforms or installed on land-based gas-processing plants.
 8Once captured, the carbon dioxide may be stored, reprocessed or used for enhanced oil recovery.
 8The technology has been jointly developed by the Queen's University Ionic Liquid Laboratories (QUILL) Research Centre and the global energy company Petronas. Details
Gulf Oil Lubricants India Limited, a Hinduja Group Company, has reported a gross turnover of Rs 265.6 crore and a Profit After Tax (PAT) of Rs 20.5 crore during the April-June quarter (Q1), 2015-16.
 8The company has achieved quarter-on-quarter growth of 1.9% in its net revenues at Rs 230.4 crores as compared to corresponding quarter in the previous year, when it was Rs 226.1 crore.
 8The Profit Before Tax (PBT) of the company has grown by 17% for the quarter as compared to the previous year quarter.
 8Company's EBIDTA for the quarter has also shown a healthy growth of 16% compared to previous year same period. Company's EBIDTA margins at 15.1% have shown sequential improvement of nearly 180 bps for the quarter over the previous year. Details
Essar Oil, India’s second largest private refiner, has reported its highest ever Current Price Gross Refining Margin (CP GRM) of $11.05/bbl in the first quarter of FY 2015-16. This is up 22% from
 $9.04/bbl achieved in the same quarter during FY 2014-15.
 8During the quarter (April-June 2015), the Vadinar Refinery operated above its rated capacity, registering a throughput of 5.17 million tonnes.
 8With its increased complexity, post the expansion and optimisation projects that were completed in 2012, the refinery continues to process a high volume of heavy and ultra-heavy crudes that enable better refining margins.
 8In terms of finished products, the refinery continues to produce a high proportion of light and middle distillates that also had a positive impact on margins.
 8The gross revenues for the quarter stood at Rs 20,572 crore, which is 25% lower than the Rs 27,317 crore reported in Q1, FY15. This dip in revenues is mainly because of lower crude oil prices prevailing in the global market. Details
 8Refining margins to go up after October shutdown: Essar Oil has planned a 30-day refinery maintenance shutdown between September and October this year to complete its Diesel Maximisation Project (DMP) at the Vadinar refinery.
 --This shutdown will enable the refinery to convert lower margin intermediates like VGO to higher margin distillates like diesel.
 --With the commencement of the DMP, the refining margins are expected to improve further.
 8Retail sales go up from 2% to 9%: During the quarter, 65% of Essar Oil’s revenues came from the domestic market, while the rest came from exports.
 Retail sales volumes of diesel have seen a consistent rise post deregulation and has contributed to the overall rise in domestic sales.
 Retail sales accounted for 9% of Essar Oil’s revenues in Q1FY16 against 2% in the corresponding quarter last fiscal.
 81,600 Retail Outlets currently in various stages of implementation: During the quarter, Essar Oil commissioned 51 new outlets.
 --The company currently has about 1,550 operational retail outlets nationwide, with another 1,600 in various stages of implementation. Details
The website carries here, for reference purposes, a presentation on BPCL`s activities in the oil and gas sector. The presentation includes details on:
 8Company`s ngoing and upcoming projects
 8Sales growth vis-a-vis industry`s growth during FY 2015
 8Refining throughput at Kochi. Mumbai, Numaligarh and Bina refineries
 8Upstream footprint (domestic and global)
 8Company`s marketing operations
 8Important milestones starting from 1976 to 2015
 8Subsidiaries and JVs
 8Key business verticals
 Click here to access the presentation Details
RIL and Essar have posted highly attractive gross margins of $8.70 and $9.04 per barrel respectively in the first quarter of 2015. Both have built what are among the world's most efficient refineries and they are now reaping the benefits that have accrued as a consequence.
8But competition is around the corner from Saudi Arabia, which has quickly become the fourth largest refiner in the world.
8The entry of Saudi Arabia has already cut refining margins in Asia by a whopping 50% and they are meant to drop by a further 30% in the months ahead.
8Saudi is offering almost 2.8 million barrels of low-sulphur diesel to the world markets and they are now directly competing with Asian refiners, potentially sparking a price war.
8What should worry both RIL and Essar is that the Saudis have the muscle power to wait out the competition. Details
Prime Minister Narendra Modi has kick started the construction of GAIL's  Rs 11,000 crore, 2050 km Jagdishpur-Haldia gas pipeline.
8The BJP government is trying to sell the pipeline as an instrument that will help Bihar, where are assembly elections are now due, as the pipeline will help foster CGD networks in in major cities of Bihar including capital Patna, Gaya, Barauni.
8The pipeline is touted as helping 40% of the population in Bihar as it will traverse  13 districts in the state.
8The capacity of Phase-I of the Jagdishpur – Haldia Pipeline will be 7.4 MMSCMD while that of the entire pipeline will be 16 MMSCMD.
8The central government is now putting together a list of anchor customers who will help make the pipeline viable, and among them are a few fertilizer plants along the route of  the pipeline.
8GAIL had been resisting the building of the pipeline on the plea that it may not be able to find enough customers  because of the high cost of LNG that will be ferried through the pipeline.
8The government has now pooled the price of gas so as to enable new fertilizer plants, each consuming around 2.3 mmscmd of gas, to come up along the pipeline. These plants will serve as anchor customers for the pipeline. Details
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