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Sep 2015
The Saudi Arabian Oil Company (Saudi Aramco) is the state-owned oil company of the Kingdom of Saudi Arabia (KSA). It manages the world's largest proven conventional crude oil and condensate reserves of approximately 265.8 billion barrels as at 2013, representing approximately 18 per cent of the world's proven crude oil reserves.
8In 2014, Saudi Aramco produced 9.7 mbpd of crude oil through its main oil facilities in Abqaiq, Haradh, Khurais, Khursaniyah, Nuayyim, Qatif and Shaybah. Of this, Saudi Aramco exported on average 7.1 mbpd or approximately 73 per cent of its production. Asia was the main importer of Saudi crude oil (67%) followed by North America (18%) and Europe (13%).
8The Saudi Arabian oil transportation market is closely linked to Saudi Aramco's oil production and exports. Between 70% to 90% of Saudi Aramco's export volumes are sold on FOB basis. For the remaining export volumes sold on Cost, Insurance and Freight basis, Bahri has been the primary provider of shipping services to Saudi Aramco.
8The Arabian gulf to East trade continues to serve as the principal trade route in the VLCC sector. Fast paced economic expansion in non-OECD Asia is driving demand.
8The Arabian Gulf to US trade decreased by 7% from 2013 levels, however it remains the second largest trade in the VLCC sector. Exports to the US have steadily decreased since 2003, sliding from 2.3 mbpd in 2003 to 0.8m mbpd in October, 2014, impacted by rising North American production.
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8In 2014, Saudi Aramco produced 9.7 mbpd of crude oil through its main oil facilities in Abqaiq, Haradh, Khurais, Khursaniyah, Nuayyim, Qatif and Shaybah. Of this, Saudi Aramco exported on average 7.1 mbpd or approximately 73 per cent of its production. Asia was the main importer of Saudi crude oil (67%) followed by North America (18%) and Europe (13%).
8The Saudi Arabian oil transportation market is closely linked to Saudi Aramco's oil production and exports. Between 70% to 90% of Saudi Aramco's export volumes are sold on FOB basis. For the remaining export volumes sold on Cost, Insurance and Freight basis, Bahri has been the primary provider of shipping services to Saudi Aramco.
8The Arabian gulf to East trade continues to serve as the principal trade route in the VLCC sector. Fast paced economic expansion in non-OECD Asia is driving demand.
8The Arabian Gulf to US trade decreased by 7% from 2013 levels, however it remains the second largest trade in the VLCC sector. Exports to the US have steadily decreased since 2003, sliding from 2.3 mbpd in 2003 to 0.8m mbpd in October, 2014, impacted by rising North American production.
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From Bahri's view point, which by default is the opinion of Saudi Arabia, the low price environment will raise the demand for crude and in turn increase the requirement for VLCCs to ferry the crude across oceans.
8With a fleet of 31 VLCCs, the 3rd largest globally, Bahri will be one of the key beneficiaries.
8Bahri expects freight rates to remain strong over the medium term, led by higher tonnage shipped (higher demand due to low oil prices) and tight supply of VLCCs.
8This is because there is likely to be an increase in demand for floating storage. Against this there is a 2.5-3 years lag period for any new capacity to come on stream.
8Higher freight rates along with lower bunker fuel prices will result in further margin improvement in the crude oil transportation segment, feels the company.
8The EBIT margin of the crude oil transportation segment may clock 28-29% by 2016/17.
8This will be attributable to the operating leverage in the system triggered by higher global freight rates and lower bunker fuel costs.
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8With a fleet of 31 VLCCs, the 3rd largest globally, Bahri will be one of the key beneficiaries.
8Bahri expects freight rates to remain strong over the medium term, led by higher tonnage shipped (higher demand due to low oil prices) and tight supply of VLCCs.
8This is because there is likely to be an increase in demand for floating storage. Against this there is a 2.5-3 years lag period for any new capacity to come on stream.
8Higher freight rates along with lower bunker fuel prices will result in further margin improvement in the crude oil transportation segment, feels the company.
8The EBIT margin of the crude oil transportation segment may clock 28-29% by 2016/17.
8This will be attributable to the operating leverage in the system triggered by higher global freight rates and lower bunker fuel costs.
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The fact that VLCC freight rates are performing better than the others is evident from the reasonably strong performance posted by Saudi owned Bahri, the world's third largest VLCC player globally.
8The company however is helped by a minimum guaranteed freight rate and likely stable volume (led by certain arrangements to ship Saudi Aramco’s VLCC sized crude cargoes) enhances revenue visibility and cushions earnings volatility.
8The company has a total of 31 VLCCs and it is likely to gain volumes as Saudi Arabia intends to keep increasing oil production in a bid to maintain or raise market share.
8Saudi crude output reached 10.6 mbpd in July 2015 from 9.5 mbpd in December 2014.
8Bahri’s recent order for 10 VLCCs (contracted with Hyundai Heavy Shipyard in Korea) to join the fleet in 2018, increasing the number of VLCCs to 41.
8The company claims that to cater to the demand of transporting Saudi Aramco’s Crude oil, a total of 50 VLCCs will be required, which will be met with its current fleet of 31 VLCCs and chartering others.
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8The company however is helped by a minimum guaranteed freight rate and likely stable volume (led by certain arrangements to ship Saudi Aramco’s VLCC sized crude cargoes) enhances revenue visibility and cushions earnings volatility.
8The company has a total of 31 VLCCs and it is likely to gain volumes as Saudi Arabia intends to keep increasing oil production in a bid to maintain or raise market share.
8Saudi crude output reached 10.6 mbpd in July 2015 from 9.5 mbpd in December 2014.
8Bahri’s recent order for 10 VLCCs (contracted with Hyundai Heavy Shipyard in Korea) to join the fleet in 2018, increasing the number of VLCCs to 41.
8The company claims that to cater to the demand of transporting Saudi Aramco’s Crude oil, a total of 50 VLCCs will be required, which will be met with its current fleet of 31 VLCCs and chartering others.
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Should a ship owner invest in a new vessel at this point in time or should it settle instead for a second-hand modern vessel?
8This seems to be a million dollar question at this point in time.
8The recent weeks have been the busiest in terms of reported new building activity with a reasonably long list of orders placed.
8But with the slowing down of the global economy and trade, it is likely that demand for carriers will also decelerate.
8This could well mean that the boyancy in the ordering of new builds may not last for too long.
Click on Reports for orders placed in recent times along with freight rate movements across the globe.
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8This seems to be a million dollar question at this point in time.
8The recent weeks have been the busiest in terms of reported new building activity with a reasonably long list of orders placed.
8But with the slowing down of the global economy and trade, it is likely that demand for carriers will also decelerate.
8This could well mean that the boyancy in the ordering of new builds may not last for too long.
Click on Reports for orders placed in recent times along with freight rate movements across the globe.
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It is still not known whether crude carrier freight rates will see an improvement or a decline in the coming weeks.
8There was a feeling that the worse may be over with the market with signs of stability noticed in the previous two weeks.
8The better performance of the VLCC segment was the backbone of the revival on health y middle eastern activity but the future remains uncertain.
8There is the projection that crude output will drop in the US on the back of falling prices but this juxtaposed against a likely deceleration of demand because of the slowing down of the Chinese and some Latin American economies.
8The West Africa Suezmax rates didn't manage to correct upwards though Aframaxes were looking for directions from other markets on most routes.
8The revival seems less likely going forward.
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8There was a feeling that the worse may be over with the market with signs of stability noticed in the previous two weeks.
8The better performance of the VLCC segment was the backbone of the revival on health y middle eastern activity but the future remains uncertain.
8There is the projection that crude output will drop in the US on the back of falling prices but this juxtaposed against a likely deceleration of demand because of the slowing down of the Chinese and some Latin American economies.
8The West Africa Suezmax rates didn't manage to correct upwards though Aframaxes were looking for directions from other markets on most routes.
8The revival seems less likely going forward.
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The success of IOC's Rs 5000 crore, 5 MMTPA LNG regasification terminal in Ennore -- to be completed in 2018 -- will depend critically on its success in getting the gas evacuation network in place.
8Or else it may face the same prospect as that of the Kochi refinery where the capacity utilization figure is in single digit on account of the fact that the supporting gas pipeline network is not in place.
8IOC in fact is planning to lay a 1,167-km pipeline to reach LNG imported at Ennore to Nagapattinam, Tuticorin, Madurai and Bengaluru.
8Whether the company will be able to elicit the support of farmers and state governments to lay the network remains a moot point.
8This pipeline, along with three other upcoming gas pipelines -- Mallavaram-Vijaipur, Mehsana-Bhatinda and Bhatinda-Srinagar pipelines -- would ensure a significant presence for IOCL in the gas transmission business.
8IOC is trying very hard to compete with GAIL for supplying LNG in India.
8In 2014-15, despite tough market conditions, IOCL achieved a 6 per cent growth in LNG sales. Besides making independent purchases, long-term LNG supplies have also been tied up from US and Canadian sources.
8IndianOil has also become the second largest non-APM gas seller in India, with a market share of 30 per cent in the R-LNG segment.
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8Or else it may face the same prospect as that of the Kochi refinery where the capacity utilization figure is in single digit on account of the fact that the supporting gas pipeline network is not in place.
8IOC in fact is planning to lay a 1,167-km pipeline to reach LNG imported at Ennore to Nagapattinam, Tuticorin, Madurai and Bengaluru.
8Whether the company will be able to elicit the support of farmers and state governments to lay the network remains a moot point.
8This pipeline, along with three other upcoming gas pipelines -- Mallavaram-Vijaipur, Mehsana-Bhatinda and Bhatinda-Srinagar pipelines -- would ensure a significant presence for IOCL in the gas transmission business.
8IOC is trying very hard to compete with GAIL for supplying LNG in India.
8In 2014-15, despite tough market conditions, IOCL achieved a 6 per cent growth in LNG sales. Besides making independent purchases, long-term LNG supplies have also been tied up from US and Canadian sources.
8IndianOil has also become the second largest non-APM gas seller in India, with a market share of 30 per cent in the R-LNG segment.
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Gujarat Gas, as part of the GSPC group, is expected to strike a balance between right volumes and margins.
8According to a report, with the help of domestic gas allocation to residential PNG, CNG customers and a decline in global LNG prices for industrial customers, Gujarat Gas has been able to increase its gross margins from Rs 4.3/scm in FY14 to Rs 6.1/scm in FY15.
8In future it is expected that the company will pass on most of the lower raw material costs to its customers to increase volume growth and stabilise margins at Rs. 6/scm.
8Moreover, better gas sourcing arrangements due to strong parentage -- from GSPC -- will enable Gujarat Gas to maintain steady margins over the next two years.
8Post amalgamation, Gujarat Gas has a net debt of Rs 2100 crore, which will steadily decline over the years due to strong cash flow generation from the core business.
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8According to a report, with the help of domestic gas allocation to residential PNG, CNG customers and a decline in global LNG prices for industrial customers, Gujarat Gas has been able to increase its gross margins from Rs 4.3/scm in FY14 to Rs 6.1/scm in FY15.
8In future it is expected that the company will pass on most of the lower raw material costs to its customers to increase volume growth and stabilise margins at Rs. 6/scm.
8Moreover, better gas sourcing arrangements due to strong parentage -- from GSPC -- will enable Gujarat Gas to maintain steady margins over the next two years.
8Post amalgamation, Gujarat Gas has a net debt of Rs 2100 crore, which will steadily decline over the years due to strong cash flow generation from the core business.
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Oil imports during August, 2015 were valued at $ 7357.47 million which was 42.59 % lower than oil imports valued at $ 12814.77 million in the corresponding period last year.
8Oil imports during April-August, 2015-16 were valued at $ 41502.37 million which was 38.79 % lower than the oil imports of $ 67805.81 million in the corresponding period last year.
8Non-oil imports during August, 2015 were estimated at $ 26386.81 million which was 7.01 % higher than non-oil imports of $ 24658.01 million in August, 2014.
8The non-oil imports during April-August, 2015-16 were also valued at $ 127108.19 million which was 3.39 per cent higher than the level of such imports valued at US $122941.87 million in April-August, 2014-15.
8Lower oil prices were responsible for the lower cost of oil imports.
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8Oil imports during April-August, 2015-16 were valued at $ 41502.37 million which was 38.79 % lower than the oil imports of $ 67805.81 million in the corresponding period last year.
8Non-oil imports during August, 2015 were estimated at $ 26386.81 million which was 7.01 % higher than non-oil imports of $ 24658.01 million in August, 2014.
8The non-oil imports during April-August, 2015-16 were also valued at $ 127108.19 million which was 3.39 per cent higher than the level of such imports valued at US $122941.87 million in April-August, 2014-15.
8Lower oil prices were responsible for the lower cost of oil imports.
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Oil India Ltd is planning to set up a 50 MW wind energy project split up between Gujarat and Madhya Pradesh as part of its efforts to ensure a larger footprint in this segment.
8The capacity is going to be up quickly, within 9 months from the date of issue of the LOA.
8Power & Energy Consultants (PEC), Delhi has been appointed as consultant for bid evaluation and site supervision work by OIL for this project.
OIL has already commissioned the following non-conventional energy projects so far:
8A 13.6 MW wind energy project at Ludurva, Jaisalmer, Rajasthan. This project which was commissioned on March, 2012
8A 54 MW wind energy project at Dangri, Jaisalmer, Rajasthan. This project which was commissioned in March, 2013
8A 100 KWp solar power plant (Grid interactive) at Joypur Oil Collecting Station at it's field headquarters at Assam . This project was commissioned in March 2012.
8A 30 KWp roof top solar plant (grid connected) at it’s corporate office in Noida in July, 2012.
8A 100 KWp solar plant (grid connected) at Tanot Village complex, Tanot, Rajasthan. This project was commissioned in March 2013.
8A 5 MW solar plant (Grid Connected) at Ramgarh, Jaisalmer, Rajasthan. This project which was commissioned in January, 2014
8The 54 MW wind energy project that OIL is currently contemplating is to be split between Madhya Pradesh (38 MW at Chandgarh) and Gujarat (16 MW at Patan)
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8The capacity is going to be up quickly, within 9 months from the date of issue of the LOA.
8Power & Energy Consultants (PEC), Delhi has been appointed as consultant for bid evaluation and site supervision work by OIL for this project.
OIL has already commissioned the following non-conventional energy projects so far:
8A 13.6 MW wind energy project at Ludurva, Jaisalmer, Rajasthan. This project which was commissioned on March, 2012
8A 54 MW wind energy project at Dangri, Jaisalmer, Rajasthan. This project which was commissioned in March, 2013
8A 100 KWp solar power plant (Grid interactive) at Joypur Oil Collecting Station at it's field headquarters at Assam . This project was commissioned in March 2012.
8A 30 KWp roof top solar plant (grid connected) at it’s corporate office in Noida in July, 2012.
8A 100 KWp solar plant (grid connected) at Tanot Village complex, Tanot, Rajasthan. This project was commissioned in March 2013.
8A 5 MW solar plant (Grid Connected) at Ramgarh, Jaisalmer, Rajasthan. This project which was commissioned in January, 2014
8The 54 MW wind energy project that OIL is currently contemplating is to be split between Madhya Pradesh (38 MW at Chandgarh) and Gujarat (16 MW at Patan)
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British Gas plans to pump in a massive $ 10 billion into world class assets in the pre-salt offshore discoveries in Brazil.
8One of the very early entrants into the Brazilian oil and gas sector, the multinational has benefited from first-mover advantages in terms of the caliber of assets it has acquired in the country by significant acreage positions especially in the unique Santos Basin with an estimated 6-8 billion BOE net to the company.
8BG’s track record for value creation is founded on a number of competitive advantages including a unique LNG model (of flexible contracts to respond to changes in demand and customer requirements) and commercial agility.
8BG is on the lookout for a business model when it extracts gas from its Brazalian assets.
8In this context, Indian companies may be interested in hitching up with BG.
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8One of the very early entrants into the Brazilian oil and gas sector, the multinational has benefited from first-mover advantages in terms of the caliber of assets it has acquired in the country by significant acreage positions especially in the unique Santos Basin with an estimated 6-8 billion BOE net to the company.
8BG’s track record for value creation is founded on a number of competitive advantages including a unique LNG model (of flexible contracts to respond to changes in demand and customer requirements) and commercial agility.
8BG is on the lookout for a business model when it extracts gas from its Brazalian assets.
8In this context, Indian companies may be interested in hitching up with BG.
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8Details of product storage capacities are as follows:
-- MS (Motor Spirit) 56620 KL
-- HSD (High Speed Diesel) 60115 KL
-- ETHANOL 200 KL
-- SLOP ( Mixed Products) 100 KL
-- TOTAL 117035 KL
8The proposed terminal will have following tanks:
-- Six above the ground vertical petroleum product tanks
-- Two above the ground horizontal petroleum products tanks
-- Four petroleum underground tanks
-- Two water tanks
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-- MS (Motor Spirit) 56620 KL
-- HSD (High Speed Diesel) 60115 KL
-- ETHANOL 200 KL
-- SLOP ( Mixed Products) 100 KL
-- TOTAL 117035 KL
8The proposed terminal will have following tanks:
-- Six above the ground vertical petroleum product tanks
-- Two above the ground horizontal petroleum products tanks
-- Four petroleum underground tanks
-- Two water tanks
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BPCL has again applied for the approval from the environment ministry to set up a storage and distribution facility for the petroleum products at Ennore in Tamil Nadu.
8The proposed facilities were expected to be completed by November, 2016 but will now be delayed by a few more months as clearances will have to be solicited from the environment ministry.
8The petroleum storage facility will have a capacity of 1,17,035 KL.
The products will be fed from the company's Mumbai and Kochi refineries through coastal tankers.
8The distribution of products will be to the entire state of Tamil Nadu and also to the northern parts of Andhra Pradesh through tank lorries.
8In addition to that, laying of a 16 inch diameter pipeline for MS and 20 inch diameter pipeline for HSD from the adjacent HPCL installation has also been proposed.
8The project cost includes Rs.144 crore for construction and Rs. 225 crore for plant and machinery.
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8The proposed facilities were expected to be completed by November, 2016 but will now be delayed by a few more months as clearances will have to be solicited from the environment ministry.
8The petroleum storage facility will have a capacity of 1,17,035 KL.
The products will be fed from the company's Mumbai and Kochi refineries through coastal tankers.
8The distribution of products will be to the entire state of Tamil Nadu and also to the northern parts of Andhra Pradesh through tank lorries.
8In addition to that, laying of a 16 inch diameter pipeline for MS and 20 inch diameter pipeline for HSD from the adjacent HPCL installation has also been proposed.
8The project cost includes Rs.144 crore for construction and Rs. 225 crore for plant and machinery.
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8India's JBF industries holds a BP license for produce 1.25 MTPA of PTA .
8The BP license is now being extended to a 1.20 MMTPA PTA plant to a Chinese company by the name of Ningxia Baota.
8Ningxia Baota intends to build the unit at the Ningxia Ningdong Energy and Chemical Zone in the Ningxia Hui Autonomous Region, China
8PTA, the primary feedstock for polyesters used in the textile and packaging industry. Baota expects the PTA plant to come on stream in 2018.
8The technology is substantially more energy efficient, uses less water, and produces less solid waste.
8It looks like India and China is now in the race for large capacity production using the PTA technology from BP.
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8The BP license is now being extended to a 1.20 MMTPA PTA plant to a Chinese company by the name of Ningxia Baota.
8Ningxia Baota intends to build the unit at the Ningxia Ningdong Energy and Chemical Zone in the Ningxia Hui Autonomous Region, China
8PTA, the primary feedstock for polyesters used in the textile and packaging industry. Baota expects the PTA plant to come on stream in 2018.
8The technology is substantially more energy efficient, uses less water, and produces less solid waste.
8It looks like India and China is now in the race for large capacity production using the PTA technology from BP.
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A World Bank assessment on how easy it is to do business in India followed a December 2014 meeting of the Chief Secretaries of states participating in the “Make in India” workshop that finalized a 98-point Action Plan on “Ease of Doing Business”.
8The World Bank assessment ranks states in terms of their implementation of the 98-point action plan after a detailed analysis on each of the 285 questions studied in the assessment, and outlines which States are leading on each.
The study came to the following conclusion:
Leaders: States with an overall implementation status of at least 75% of the reforms package that has been drawn up by the government. This assessment revealed that no states had attained this status.
Aspiring Leaders: States with an overall implementation status between 50% and 75%. 7 states were found to be within this group: Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Odisha and Rajasthan.
Acceleration Required: States with an overall implementation status between 25% and 50%. 9 states were found to be within this group: Delhi, Haryana, Karnataka, Maharashtra, Punjab, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal
Jump Start Needed: States with an overall implementation status between 0% and 25%. 16 states were found to be within this group: Andaman and Nicobar, Arunachal Pradesh, Assam, Bihar, Chandigarh, Goa, Himachal Pradesh, Jammu and Kashmir, Kerala, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Tripura and Uttarakhand.
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8The World Bank assessment ranks states in terms of their implementation of the 98-point action plan after a detailed analysis on each of the 285 questions studied in the assessment, and outlines which States are leading on each.
The study came to the following conclusion:
Leaders: States with an overall implementation status of at least 75% of the reforms package that has been drawn up by the government. This assessment revealed that no states had attained this status.
Aspiring Leaders: States with an overall implementation status between 50% and 75%. 7 states were found to be within this group: Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Odisha and Rajasthan.
Acceleration Required: States with an overall implementation status between 25% and 50%. 9 states were found to be within this group: Delhi, Haryana, Karnataka, Maharashtra, Punjab, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal
Jump Start Needed: States with an overall implementation status between 0% and 25%. 16 states were found to be within this group: Andaman and Nicobar, Arunachal Pradesh, Assam, Bihar, Chandigarh, Goa, Himachal Pradesh, Jammu and Kashmir, Kerala, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Tripura and Uttarakhand.
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In 2014, the Prime Minister of India, Shri Narendra Modi, requested the World Bank Group to support India’s efforts to enhance India’s competitiveness by moving up on the Bank's Ease of Doing Business ranking.
8The growth of business in India requires concerted action on several fronts – infrastructure, capital markets, trade facilitation and skills – but the stark reality is that India remains a difficult place to do business. A disproportionately high regulatory burden is borne by businesses in India today.
8This difficult regulatory burden is exemplified by India’s current rank of 142 among 189 nations in the World Bank’s Doing Business 2015 study. India does not feature in the top 100 countries on 8 of the study’s 10 indicators, in Getting Credit and Protecting Minority Investors India is ranked 7th and 32nd respectively. On Dealing with Construction Permits and Enforcing Contracts, India ranks among the bottom 10 economies in the world. Thus the need of the day is reform, and the reforms must be led by the Government at both Central and State levels.
8Under Narendra Modi's tutelage, the government has embarked on ambitious reforms focused on improving India’s performance in the World Bank’s Doing Business rankings.
These efforts, among other things, focus on implementing reforms relating to starting a business, resolving insolvency, enforcing contracts, and trading across borders.
8While efforts at improving India’s ranking in the Doing Business Report do cover some of the regulatory issues pertaining to state governments, much more is required to be done at state governments’ level to achieve the Prime Minister’s vision of making India an easy place to do business.
8A majority of the regulatory burden imposed on business is due to the plethora of laws, rules, regulations and procedures enforced by the States. This gives rise to a wide number of registrations, licenses and NOCs that businesses must obtain and file compliance returns on.
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Details
8The growth of business in India requires concerted action on several fronts – infrastructure, capital markets, trade facilitation and skills – but the stark reality is that India remains a difficult place to do business. A disproportionately high regulatory burden is borne by businesses in India today.
8This difficult regulatory burden is exemplified by India’s current rank of 142 among 189 nations in the World Bank’s Doing Business 2015 study. India does not feature in the top 100 countries on 8 of the study’s 10 indicators, in Getting Credit and Protecting Minority Investors India is ranked 7th and 32nd respectively. On Dealing with Construction Permits and Enforcing Contracts, India ranks among the bottom 10 economies in the world. Thus the need of the day is reform, and the reforms must be led by the Government at both Central and State levels.
8Under Narendra Modi's tutelage, the government has embarked on ambitious reforms focused on improving India’s performance in the World Bank’s Doing Business rankings.
These efforts, among other things, focus on implementing reforms relating to starting a business, resolving insolvency, enforcing contracts, and trading across borders.
8While efforts at improving India’s ranking in the Doing Business Report do cover some of the regulatory issues pertaining to state governments, much more is required to be done at state governments’ level to achieve the Prime Minister’s vision of making India an easy place to do business.
8A majority of the regulatory burden imposed on business is due to the plethora of laws, rules, regulations and procedures enforced by the States. This gives rise to a wide number of registrations, licenses and NOCs that businesses must obtain and file compliance returns on.
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Details
IOC plans to find more ways to process higher volumes of cheaper and heavy crude oil at its refineries. As of now, IOCL is capable of processing over 170 grades from over 40 different sources.
8The corporation is also exploring ways to expand capacities of its brown-field plants in Burauni, Mathura and Panipat refineries.
8The company is also exploring the possibility of additional capacity building on the west coast.
8IOC's pipeline projects valued at over Rs. 12,000 crore are still under implementation, which would add an additional 22 million tonnes in capacity and about 6,000 km in length to the existing network.
8On the marketing front also IOCL is planning to set up new LPG bottling plants and bulk storage installations in parallel with the expansion of the retail network for LPG especially rural markets.
8The gas major is also implementing several projects for producing value-added products and special grades from refinery streams for enhanced profitability.
8IOC has also drawn up plans for the required up-gradation of its refineries at an investment of about Rs. 12,000 crore.
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8The corporation is also exploring ways to expand capacities of its brown-field plants in Burauni, Mathura and Panipat refineries.
8The company is also exploring the possibility of additional capacity building on the west coast.
8IOC's pipeline projects valued at over Rs. 12,000 crore are still under implementation, which would add an additional 22 million tonnes in capacity and about 6,000 km in length to the existing network.
8On the marketing front also IOCL is planning to set up new LPG bottling plants and bulk storage installations in parallel with the expansion of the retail network for LPG especially rural markets.
8The gas major is also implementing several projects for producing value-added products and special grades from refinery streams for enhanced profitability.
8IOC has also drawn up plans for the required up-gradation of its refineries at an investment of about Rs. 12,000 crore.
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BPCL's LPG plants are currently undergoing ISO 50001:2011 certification.
The following steps are usually taken for such certification:
8Preparation of Energy Policy
8Identification of Significant Energy Users ( SEU)
8Fixing of Energy Performance Indicators ( EnPIs’)
8Fixing of Base line for the EnPI’s
8Preparation of Procedure Manuals
8Training of the Employees on ISO- 50001
8Documentation Related to ISO-50001:2011 EnMS
8Management review meeting on the processes involved
8Helping out till Certification is done
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Details
The following steps are usually taken for such certification:
8Preparation of Energy Policy
8Identification of Significant Energy Users ( SEU)
8Fixing of Energy Performance Indicators ( EnPIs’)
8Fixing of Base line for the EnPI’s
8Preparation of Procedure Manuals
8Training of the Employees on ISO- 50001
8Documentation Related to ISO-50001:2011 EnMS
8Management review meeting on the processes involved
8Helping out till Certification is done
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Details
According to a report, the increase in Shale gas activity in recent past is a result of energy majors using their financial strength to obtain access to shale reserves, which previously had been the domain of small independents.
8Major oil companies have invested significant dollars in domestic shale plays, betting on shale’s ability to meet growing U.S. demand.
8The mergers and acquisition trend is also being driven by a belief that future environmental laws will mandate the use of cleaner-burning fuels such as natural gas.
8In addition, attractive economics – based in part on advances in drilling technology and reservoir optimization programs –have lowered the cost of production, giving shale plays lower breakeven thresholds than conventional sources.
8Finally, improving midstream infrastructure – a result of pipeline companies’ response to shale potential – has made it easier to get produced gas to market.
8Recently there has been debate as to whether this heightened level of activity around shale is sustainable.
8Some industry experts point out that the market is currently focusing upon the quantum of gas being produced rather than its value and the overall supply/demand equation.
8Given the number of projects currently under way or in the planning stages, there is the risk that gas prices may continue to face sustained downward pressures in the foreseeable future.
8Potential mitigating factors include demand growth as natural gas plays a more meaningful role in electricity generation; demand from China and other Asian economies as economic activity rebounds; and continuing advancements in fracturing technologies that further improve the economics of shale gas production.
M&A activity in shale plays have come down dramatically after the price crash but nevertheless the arithmetic behind these deals is something that everyone in the oil and gas industry must understand.
Click on our Reports section for more Details
8Major oil companies have invested significant dollars in domestic shale plays, betting on shale’s ability to meet growing U.S. demand.
8The mergers and acquisition trend is also being driven by a belief that future environmental laws will mandate the use of cleaner-burning fuels such as natural gas.
8In addition, attractive economics – based in part on advances in drilling technology and reservoir optimization programs –have lowered the cost of production, giving shale plays lower breakeven thresholds than conventional sources.
8Finally, improving midstream infrastructure – a result of pipeline companies’ response to shale potential – has made it easier to get produced gas to market.
8Recently there has been debate as to whether this heightened level of activity around shale is sustainable.
8Some industry experts point out that the market is currently focusing upon the quantum of gas being produced rather than its value and the overall supply/demand equation.
8Given the number of projects currently under way or in the planning stages, there is the risk that gas prices may continue to face sustained downward pressures in the foreseeable future.
8Potential mitigating factors include demand growth as natural gas plays a more meaningful role in electricity generation; demand from China and other Asian economies as economic activity rebounds; and continuing advancements in fracturing technologies that further improve the economics of shale gas production.
M&A activity in shale plays have come down dramatically after the price crash but nevertheless the arithmetic behind these deals is something that everyone in the oil and gas industry must understand.
Click on our Reports section for more Details
The 22nd IORS summit was successfully held in Mumbai.
8This year's conference theme was 'Changing game: Opportunities, Challenges, Solutions'.
8Following key subjects were discussed in the IORS summit:
--Exploration and production
--Refining
--Safety and security
--Logistics
--Pipelines
--Gas retailing
--Finance
Click on Report for more details Details
8This year's conference theme was 'Changing game: Opportunities, Challenges, Solutions'.
8Following key subjects were discussed in the IORS summit:
--Exploration and production
--Refining
--Safety and security
--Logistics
--Pipelines
--Gas retailing
--Finance
Click on Report for more details Details
Oil India Limited plans to hire two more drilling rigs of capacity 1400 HP having top drive system and associated equipment and services for a period of 3 years.
8The first mobilization will be done in the districts of Dibrugarh, Tinsukia and Sibsagar.
8The wells will either be straight vertical holes or planned deviated holes with formation pressure to be near or above hydrostatic.
8Well depths are expected to be in the range of 2000-4500 meters.
Click on the Reports for the equipment list and their specifications. Details
8The first mobilization will be done in the districts of Dibrugarh, Tinsukia and Sibsagar.
8The wells will either be straight vertical holes or planned deviated holes with formation pressure to be near or above hydrostatic.
8Well depths are expected to be in the range of 2000-4500 meters.
Click on the Reports for the equipment list and their specifications. Details
Despite the fact that the Indian economy is growing at a strong 7.4% in 2015 and is likely to grow at 7.6% in 2015, there are still areas of concern for those who track such indicators.
GDP growth moderated to 7.0% y-o-y in 2Q15, falling slightly from 7.5% in the 1Q15.
8Domestic demand has failed to pick up in any notable fashion: investment is slightly better, but consumer spending has slowed. Combined with a persistent weakness in exports, this makes for a less sanguine near-term outlook.
8Weak expansion in output in the agricultural and mining sectors dragged down overall output. At 7.0% y-o-y, the pace of growth in the demand-side was slower than during the previous three months.
8The benign interpretation is that the economy is continuing to advance at a healthy rate, even though efforts to boost its performance are taking longer to bear fruit.
8The more alarmist interpretation is that, even as private demand remains sluggish, domestic demand itself is showing signs of deterioration. Regardless which of these two views is
proven right in the coming quarters, it is fair to say that, for the time being, India's economic performance remains uninspiring.
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GDP growth moderated to 7.0% y-o-y in 2Q15, falling slightly from 7.5% in the 1Q15.
8Domestic demand has failed to pick up in any notable fashion: investment is slightly better, but consumer spending has slowed. Combined with a persistent weakness in exports, this makes for a less sanguine near-term outlook.
8Weak expansion in output in the agricultural and mining sectors dragged down overall output. At 7.0% y-o-y, the pace of growth in the demand-side was slower than during the previous three months.
8The benign interpretation is that the economy is continuing to advance at a healthy rate, even though efforts to boost its performance are taking longer to bear fruit.
8The more alarmist interpretation is that, even as private demand remains sluggish, domestic demand itself is showing signs of deterioration. Regardless which of these two views is
proven right in the coming quarters, it is fair to say that, for the time being, India's economic performance remains uninspiring.
Click on Reports for more Details
India's indigenous oil production is expected to fall by 20,000 barrels per day in 2015, according to latest estimates.
8The country's oil supply is seen to average 0.86 mb/d in 2015, a decline of 20 tb/d compared with one year ago, revised down in growth by 10 tb/d from what was previously estimated. India's crude oil production has been more or less flat at 0.87 mb/d in 1H15 compared with the same period one year earlier, but output is expected to decrease by 20 tb/d in 2H15.
8Weak production indicates that India -- the world's fourth largest energy consumer -- will remain a strong oil importer.
On a quarterly basis, India’s oil supply is seen to stand at 0.87 mb/d, 0.86 mb/d, 0.85 mb/d and 0.84 mb/d, respectively.
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8The country's oil supply is seen to average 0.86 mb/d in 2015, a decline of 20 tb/d compared with one year ago, revised down in growth by 10 tb/d from what was previously estimated. India's crude oil production has been more or less flat at 0.87 mb/d in 1H15 compared with the same period one year earlier, but output is expected to decrease by 20 tb/d in 2H15.
8Weak production indicates that India -- the world's fourth largest energy consumer -- will remain a strong oil importer.
On a quarterly basis, India’s oil supply is seen to stand at 0.87 mb/d, 0.86 mb/d, 0.85 mb/d and 0.84 mb/d, respectively.
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Mumbai Port Trust is planning to conduct a non destructive testing (NDT) of its various oil pipelines along with other pipelines in its Jawahar Dweep and Pir Pau region.
8The authority have appointed Third Party Inspection Agency (TPIA) for the supervision of this work. 8The entire work tests shall be carried under supervision of TPIA and in accordance with the approved QAP.
8The entire work should be completed in not more than 150 calendar days from the date of award of contract.
Following are the details of the pipeline:
-- (Naptha – 30”) : J3 to Landfall point at JD
– (HSD – 30”) : J3 to Landfall point at JD
– (Motor Spirit – 30”) : J3 to Landfall point at JD
– (Black Oil – 36”) : J3 to Landfall point at JD
– (Crude – 42”) : J3 to Landfall point at JD
-- BF (16”) : MOT Tankfarm to Jetty head J3
-- B2 (12”) : MOT Tankfarm to Jetty head J3
-- SB (16”) : MOT Tankfarm to Jetty head J3
-- SL (6”) : MOT Tankfarm to Jetty head J3
-- BS (16”) : MOT Tankfarm to Jetty head J3
-- SR (12”) : MOT Tankfarm to MOT Manifold
-- Fire water pipeline at Pirpau (14”)
-- Fire water pipeline at Jawahar Dweep (24”/16”)
Click on the Reports for more details on length grade and wall thikness.
Details
8The authority have appointed Third Party Inspection Agency (TPIA) for the supervision of this work. 8The entire work tests shall be carried under supervision of TPIA and in accordance with the approved QAP.
8The entire work should be completed in not more than 150 calendar days from the date of award of contract.
Following are the details of the pipeline:
-- (Naptha – 30”) : J3 to Landfall point at JD
– (HSD – 30”) : J3 to Landfall point at JD
– (Motor Spirit – 30”) : J3 to Landfall point at JD
– (Black Oil – 36”) : J3 to Landfall point at JD
– (Crude – 42”) : J3 to Landfall point at JD
-- BF (16”) : MOT Tankfarm to Jetty head J3
-- B2 (12”) : MOT Tankfarm to Jetty head J3
-- SB (16”) : MOT Tankfarm to Jetty head J3
-- SL (6”) : MOT Tankfarm to Jetty head J3
-- BS (16”) : MOT Tankfarm to Jetty head J3
-- SR (12”) : MOT Tankfarm to MOT Manifold
-- Fire water pipeline at Pirpau (14”)
-- Fire water pipeline at Jawahar Dweep (24”/16”)
Click on the Reports for more details on length grade and wall thikness.
Details
The hire rates for crude carriers have seen a dramatic decline in August, 2015.
8VLCCs registering the highest rate drop in the dirty segment, down by 40% from the previous month.
8Freight rates remained under pressure mainly due to high tonnage availability and limited demand, as is usual during the summer season.
8This is good news from Indian refiners as the fall in crude price is aided by a fall in carrier rates.
8Suezmax freight rates came under pressure in August on low requirements, leading to tonnage buildups.
8Aframax freight rates dropped on all reported routes in August, with no exception. On average, Aframax freight rates were 15% lower than a month earlier.
8Generally, ship owners preferred to fix short-haul voyages in anticipation that the downward trend will be corrected ahead of winter season demand.
8Clean tanker rates were also down as a result of lower freight rates seen in the West of Suez.
8An inactive market and low product trade affected ocean tankers in several classes.
8In August, bunker prices reached their lowest level in multiple years, and this helped to balance voyage costs and maintained ship owners’ earnings.
8The website here also carries the details of the Tanker Spot chartering rates, Sailings and Arrivals ( mb/d) data from across the world.
Click on Reports for more Details
8VLCCs registering the highest rate drop in the dirty segment, down by 40% from the previous month.
8Freight rates remained under pressure mainly due to high tonnage availability and limited demand, as is usual during the summer season.
8This is good news from Indian refiners as the fall in crude price is aided by a fall in carrier rates.
8Suezmax freight rates came under pressure in August on low requirements, leading to tonnage buildups.
8Aframax freight rates dropped on all reported routes in August, with no exception. On average, Aframax freight rates were 15% lower than a month earlier.
8Generally, ship owners preferred to fix short-haul voyages in anticipation that the downward trend will be corrected ahead of winter season demand.
8Clean tanker rates were also down as a result of lower freight rates seen in the West of Suez.
8An inactive market and low product trade affected ocean tankers in several classes.
8In August, bunker prices reached their lowest level in multiple years, and this helped to balance voyage costs and maintained ship owners’ earnings.
8The website here also carries the details of the Tanker Spot chartering rates, Sailings and Arrivals ( mb/d) data from across the world.
Click on Reports for more Details
In September, the Henry Hub natural gas price decreased after net injections to storage, in line with market expectations during the month.
8The average price was down 7¢ or 2.4% to $2.76 per million British thermal units (mbtu) after trading at an average of $2.83/mbtu the previous month.
8The EIA said utilities put 94 billion cubic feet (Bcf) of gas into storage during the week ending 28 August.
8This was above market expectations of an 86 Bcf increase. Total working gas in storage stood at 3,193 Bcf, which was 18% higher than the previous
year at the same time and 4% higher than the previous five-year average.
8One month ago, it was 2.2% below that average. The EIA noted that temperatures during the reported week were cooler than both the previous year as well as the 30-year average. Details
8The average price was down 7¢ or 2.4% to $2.76 per million British thermal units (mbtu) after trading at an average of $2.83/mbtu the previous month.
8The EIA said utilities put 94 billion cubic feet (Bcf) of gas into storage during the week ending 28 August.
8This was above market expectations of an 86 Bcf increase. Total working gas in storage stood at 3,193 Bcf, which was 18% higher than the previous
year at the same time and 4% higher than the previous five-year average.
8One month ago, it was 2.2% below that average. The EIA noted that temperatures during the reported week were cooler than both the previous year as well as the 30-year average. Details
GAIL is not taking any chances and in is hiring out all services relating to maintenance and safety. The services sought by GAIL are:
8Operational support service: The service includes round the clock monitoring of the performance and operation of various terminals, control room management and monitoring and recording of all operational parameters.
8Technical maintenance support: The scope of work includes providing assistance in maintenance of all types of critical equipments of the IP/SV stations, the gas pipeline itself and it’s associated installations such as RTs to attain 100% un-interrupted gas supply through DBPL.
8Technical maintenance support electrical service: This work consists of operation and maintenance jobs like the solar systems, AC & DC power panels , cleaning, tightness checking, faulting finding, rectification and replacements of the components in these systems wherever required in all the SV/IP/RT/DT stations.
8Patrolling services: It includes carrying out a line walk daily in city areas to identify for any damages /potential damages to GAIL's installations. Reporting of encroachments in the ROU, pipe exposures, leaks, construction /drilling /other such activities nearer to the ROU, washouts etc will be the job of the petrolling services
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8Operational support service: The service includes round the clock monitoring of the performance and operation of various terminals, control room management and monitoring and recording of all operational parameters.
8Technical maintenance support: The scope of work includes providing assistance in maintenance of all types of critical equipments of the IP/SV stations, the gas pipeline itself and it’s associated installations such as RTs to attain 100% un-interrupted gas supply through DBPL.
8Technical maintenance support electrical service: This work consists of operation and maintenance jobs like the solar systems, AC & DC power panels , cleaning, tightness checking, faulting finding, rectification and replacements of the components in these systems wherever required in all the SV/IP/RT/DT stations.
8Patrolling services: It includes carrying out a line walk daily in city areas to identify for any damages /potential damages to GAIL's installations. Reporting of encroachments in the ROU, pipe exposures, leaks, construction /drilling /other such activities nearer to the ROU, washouts etc will be the job of the petrolling services
Click on Report for more details Details
After a series of accidents that have claimed many lives, GAIL is now trying to spruce up its act.
8The company is now seeking third party help for all kinds of pipeline safety services, including operational support services, technical maintenance support services and patrolling services for the Dabhol-Bangalore gas pipeline.
8For these services, the pipeline has been divided into two segments
--Section A-comprising Singasandra /Bangalore,Bidadi,Chitradurga and Hubli maintenance bases.
--Section B -comprising Belgaum,Kolhapur and Gow maintenance base.
8The DBPL pipeline system and its spur lines have a length of more than 1000 Km, consisting of 43 Km main line from Dabhol (Maharashtra) to Bidadi (near Bangalore, Karnataka) and spur lines to Bangalore and Goa
8The pipeline transports regasified Liquefied Natural Gas (LNG) from Dabhol to various customers located enroute the pipeline in Maharashtra, Goa and Karnataka states.
8The work site under this job include seven maintenance bases covering 36 sectionalizing valve stations (SV’s), 8 intermediate pigging stations (IPs) , 3 receiving terminals (RTs) and 10 customer terminals.
Click on Report for more details. Details
8The company is now seeking third party help for all kinds of pipeline safety services, including operational support services, technical maintenance support services and patrolling services for the Dabhol-Bangalore gas pipeline.
8For these services, the pipeline has been divided into two segments
--Section A-comprising Singasandra /Bangalore,Bidadi,Chitradurga and Hubli maintenance bases.
--Section B -comprising Belgaum,Kolhapur and Gow maintenance base.
8The DBPL pipeline system and its spur lines have a length of more than 1000 Km, consisting of 43 Km main line from Dabhol (Maharashtra) to Bidadi (near Bangalore, Karnataka) and spur lines to Bangalore and Goa
8The pipeline transports regasified Liquefied Natural Gas (LNG) from Dabhol to various customers located enroute the pipeline in Maharashtra, Goa and Karnataka states.
8The work site under this job include seven maintenance bases covering 36 sectionalizing valve stations (SV’s), 8 intermediate pigging stations (IPs) , 3 receiving terminals (RTs) and 10 customer terminals.
Click on Report for more details. Details
Oil and gas technology is evolving at a frightening fast pace.
8Many technological advances have taken place that has dramatically changed the oil and gas business.
New concepts have come into existence such as:
8Waterless stimulation
8New replacements for traditional cement
8New alloys to stop corrosion
8New technology for blowout preventers
8Sub sea processing
8Sequestering CO2 while improving recover in hydrocarbons
8Technology to counter induced seismicity
8Control of methane leaks
8Reducing subsurface footprints
8Emerging techniques in offshore oil spill prevention
8Gas hydrates: Safe and effective production possibilities
8Advances in chemical conversion of gas to liquid fuels
Click on Reports for a complete understanding of all major technological advancements in the oil and gas sector internationally. Details
8Many technological advances have taken place that has dramatically changed the oil and gas business.
New concepts have come into existence such as:
8Waterless stimulation
8New replacements for traditional cement
8New alloys to stop corrosion
8New technology for blowout preventers
8Sub sea processing
8Sequestering CO2 while improving recover in hydrocarbons
8Technology to counter induced seismicity
8Control of methane leaks
8Reducing subsurface footprints
8Emerging techniques in offshore oil spill prevention
8Gas hydrates: Safe and effective production possibilities
8Advances in chemical conversion of gas to liquid fuels
Click on Reports for a complete understanding of all major technological advancements in the oil and gas sector internationally. Details
Royal Dutch Shell has launched its first floating oil production, storage and offloading vessel in the Gulf of Mexico.
8The facility will operate in 9,500 feet of water, making it the deepest of its kind in the world.
8The vessel named Turritella, named after a genus of sea snails with a long conical, spiraled shell, is part of the company’s multibillion-dollar Stones development project about 200 miles southwest of New Orleans in the ultra-deep waters of the Gulf of Mexico.
8The facility, known as a Floating Production, Storage and Offloading (FPSO) vessel, was designed to safely process and hold oil from ultra-deep oilfields
8The Turritella has several unique features. Shell is using a type of flexible pipe made of buoyant steel to carry oil and gas from the seafloor to the vessel. In the case of a strong storm, the vessel can disconnect its mooring lines and risers from the well system and sail to a safer area.
Click on Report for more details. Details
8The facility will operate in 9,500 feet of water, making it the deepest of its kind in the world.
8The vessel named Turritella, named after a genus of sea snails with a long conical, spiraled shell, is part of the company’s multibillion-dollar Stones development project about 200 miles southwest of New Orleans in the ultra-deep waters of the Gulf of Mexico.
8The facility, known as a Floating Production, Storage and Offloading (FPSO) vessel, was designed to safely process and hold oil from ultra-deep oilfields
8The Turritella has several unique features. Shell is using a type of flexible pipe made of buoyant steel to carry oil and gas from the seafloor to the vessel. In the case of a strong storm, the vessel can disconnect its mooring lines and risers from the well system and sail to a safer area.
Click on Report for more details. Details
IOCL is planning a new LPG pipeline from Panipat refinery to its Karnal LPG bottling plant.
8LPG produced at the is presently being transported to the bottling plat through a 7 km, 10.75"OD LPG pipeline
8The existing pipeline was comissioned in 1998 and is non-piggable now due to corrosion and erosion.
8Considering the expansion of Panipat refinery to 20.2 MMTPA, it is proposed to design the LPG pipeline from Panipat to the bottling plant for a capacity of 1.3 MMTPA.
8The approximate length of proposed pipeline is taken as 7 km with a flow rate of 437 kl/hr.
Five MoVs will be installed in the pipeline area for pumping of LPG from the refinery and there will be a pig launching facility inside the refinery.
Configuration of the pipeline system broadly involves the following.
--Laying of 7 km long 12.75” OD x 0.25” WT, API 5L-X52 grade, internally epoxy coated pipe with internal field joint coating, from Panipat refinery to Kohand LPG bottling plant
-- Existing pumping units at Panipat refinery will be used to achieve the required flow rate of 437 kl/hr, which will meet the throughput requirement
-- Scrapper launching facilities at Panipat and receiving facilities at Karnal
-- Connectivity of horton sphere at Karnal to the Panipat-Jhalandar product pipeline
Click on Report for more details Details
8LPG produced at the is presently being transported to the bottling plat through a 7 km, 10.75"OD LPG pipeline
8The existing pipeline was comissioned in 1998 and is non-piggable now due to corrosion and erosion.
8Considering the expansion of Panipat refinery to 20.2 MMTPA, it is proposed to design the LPG pipeline from Panipat to the bottling plant for a capacity of 1.3 MMTPA.
8The approximate length of proposed pipeline is taken as 7 km with a flow rate of 437 kl/hr.
Five MoVs will be installed in the pipeline area for pumping of LPG from the refinery and there will be a pig launching facility inside the refinery.
Configuration of the pipeline system broadly involves the following.
--Laying of 7 km long 12.75” OD x 0.25” WT, API 5L-X52 grade, internally epoxy coated pipe with internal field joint coating, from Panipat refinery to Kohand LPG bottling plant
-- Existing pumping units at Panipat refinery will be used to achieve the required flow rate of 437 kl/hr, which will meet the throughput requirement
-- Scrapper launching facilities at Panipat and receiving facilities at Karnal
-- Connectivity of horton sphere at Karnal to the Panipat-Jhalandar product pipeline
Click on Report for more details Details
Every analyst is looking for a comprehensive write-up on the oil and gas industry that he can use at his convenience.
8The website carries here a document that makes the job of an analyst easier when being forced to come out with a quick report or a primer.
The document contains, among others, the following issues:
8The crude oil supply chain
8The oil value chain
8Oil & energy security
8Oil & climate
Click on our Reports section for more Details
8The website carries here a document that makes the job of an analyst easier when being forced to come out with a quick report or a primer.
The document contains, among others, the following issues:
8The crude oil supply chain
8The oil value chain
8Oil & energy security
8Oil & climate
Click on our Reports section for more Details
For our readers reference, the website carries here the details of the standard specifications for fabrication and erection of product and fire fighting pipelines.
8This is a must read for anyone wanting to get into the business.
The document contains the following details:
8Prefabrication work
8Alignment
8Layout, cutting and fitting
8Mitre bends and fabricated reducers
8Cleaning of pipes
8Welding
8Erection
8Fitting of valves
8Supports
8Trenching and laying of pipelines
8Backfilling
Click on Reports for more Details
8This is a must read for anyone wanting to get into the business.
The document contains the following details:
8Prefabrication work
8Alignment
8Layout, cutting and fitting
8Mitre bends and fabricated reducers
8Cleaning of pipes
8Welding
8Erection
8Fitting of valves
8Supports
8Trenching and laying of pipelines
8Backfilling
Click on Reports for more Details
Replacing the pipeline network after an upgradation of the TLF pump is ordinarily a simple job as is the case with BPCL's plans to do so at tis Irimpanam installation in Kochi.
8The pipeline sizes are to be increased and existing pumps have to be replaced with new ones.
The following jobs are involved:
--Construction of new pipeline supports by taking tapping from existing manifold supports.
--Construction of new structural platforms
--Installation of loading arms.
--Pipeline works in the TLF pump gantry
--Shutdown works.
--Disconnection of existing pipelines
Click on Report for more details Details
8The pipeline sizes are to be increased and existing pumps have to be replaced with new ones.
The following jobs are involved:
--Construction of new pipeline supports by taking tapping from existing manifold supports.
--Construction of new structural platforms
--Installation of loading arms.
--Pipeline works in the TLF pump gantry
--Shutdown works.
--Disconnection of existing pipelines
Click on Report for more details Details
Focus is expecting a lot out of the Declaration of Commeciality (DOC) are of as much as 2000 sq km in the RJ-ON/06 block.
8The DOC was approved in September 2014.
8The hydrocarbon areas are defined by the SSG-1 location in the {ariwar Formation and SSF-2 in the Balsakshi-Badeshwar formation.
8The FDP is meant to be submitted by November, 2015 but was extended by three months to February, 2016.
8After the submission of the FDP, a mining lease will be obtained.
8The pipeline construction to Mehsana will begin in time for the gas output to be ferried onwards.
8For reference purposes, the website carries here the derails of the gas production projections from the current facility up to 2020 and additional gas that is likely to be produced along with the pipeline capacity that will become available. Details
8The DOC was approved in September 2014.
8The hydrocarbon areas are defined by the SSG-1 location in the {ariwar Formation and SSF-2 in the Balsakshi-Badeshwar formation.
8The FDP is meant to be submitted by November, 2015 but was extended by three months to February, 2016.
8After the submission of the FDP, a mining lease will be obtained.
8The pipeline construction to Mehsana will begin in time for the gas output to be ferried onwards.
8For reference purposes, the website carries here the derails of the gas production projections from the current facility up to 2020 and additional gas that is likely to be produced along with the pipeline capacity that will become available. Details
The Focus pipeline will go to Mehsana and connect with GSPL's High Pressure Gujarat Gas Grid authorized by PNGRB.
8The natural gas demand within the power and fertilizer sector which holds top priority under Government's Gas Utilization Policy, has an existing demand of around 35 MMSCMD in the State of Gujarat.
8Focus has made it clear that there is no option left but to build the pipeline all the way to Mehsana because there is no demand along the pipeline route up until Mehsana
8From Mehsana of course the pipeline networks will be able to ferry to the gas onwards.
8Focus claims that there is a huge demand-supply gap for gas in India and the gas piped to Mehsana can be easily absorbed. Details
8The natural gas demand within the power and fertilizer sector which holds top priority under Government's Gas Utilization Policy, has an existing demand of around 35 MMSCMD in the State of Gujarat.
8Focus has made it clear that there is no option left but to build the pipeline all the way to Mehsana because there is no demand along the pipeline route up until Mehsana
8From Mehsana of course the pipeline networks will be able to ferry to the gas onwards.
8Focus claims that there is a huge demand-supply gap for gas in India and the gas piped to Mehsana can be easily absorbed. Details
Focus Energy plans to lay a 24 inch pipeline which is capable of transporting more than 6 mmscmd of gas from Langtala, Jaisalmer to Mehsana, Gujarat.
8As per initial estimate of Focus, it plans to ramp-up to peak gas rate of 4 mmscmd and will have 2 mmscmd available for open access to third party use which equates to 33% of total capacity as stipulated in the regulations.
8Focus has taken up development of the various gas field in Jaisalmer, Rajasthan on a fast track basis to increase the gas production from Rajasthan block (RJ-ON/06).
8While a Field development plan has been already been approved for the DGL field in the block, an initial estimate of gas reserve of 872 bcf 2P reserve and 5223 bcf 2C reserve is expected in the remaining areas of the block.
8The resources are capable of sustaining a daily production of 42 mmscfd .
Click on the Reports for more. Details
8As per initial estimate of Focus, it plans to ramp-up to peak gas rate of 4 mmscmd and will have 2 mmscmd available for open access to third party use which equates to 33% of total capacity as stipulated in the regulations.
8Focus has taken up development of the various gas field in Jaisalmer, Rajasthan on a fast track basis to increase the gas production from Rajasthan block (RJ-ON/06).
8While a Field development plan has been already been approved for the DGL field in the block, an initial estimate of gas reserve of 872 bcf 2P reserve and 5223 bcf 2C reserve is expected in the remaining areas of the block.
8The resources are capable of sustaining a daily production of 42 mmscfd .
Click on the Reports for more. Details
After Cairn and GSPL, it is now the turn of ONGC to question GAIL's proposal for a tie-in at the Suvali terminal.
8For one, ONGC claims that from the layouts appended by GAIL for the proposal, the connectivity is to Kribhco and NTPC and not the HVJ and DUPL trunk lines of the gas major.
8Then again, Cairn's Suvali terminal is at a lower proessure than the HVJ and DUPLK networks but no provision has been made for compression of gas in the tie-in proposal submitted by GAIL.
8What is more, ONGC is of the view that GAIL's pipeline connection to Hazira and Kawas could further reduce the gas evacuation from the E&P major's Hazira plant. ONGC wants evaucation to run smoothly both from Suvali and Hazira wihout any failure.
8ONGC now wants GAIL's pipeline to Suvali to have an additional injection point from where additional gas of around 5.5 mmscmdproposal can be delivered from its Hazira plant.
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8For one, ONGC claims that from the layouts appended by GAIL for the proposal, the connectivity is to Kribhco and NTPC and not the HVJ and DUPL trunk lines of the gas major.
8Then again, Cairn's Suvali terminal is at a lower proessure than the HVJ and DUPLK networks but no provision has been made for compression of gas in the tie-in proposal submitted by GAIL.
8What is more, ONGC is of the view that GAIL's pipeline connection to Hazira and Kawas could further reduce the gas evacuation from the E&P major's Hazira plant. ONGC wants evaucation to run smoothly both from Suvali and Hazira wihout any failure.
8ONGC now wants GAIL's pipeline to Suvali to have an additional injection point from where additional gas of around 5.5 mmscmdproposal can be delivered from its Hazira plant.
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GSPL has also claimed that GAIL goes through a circuitous route of swapping North Tapti Gas allocated to NTPC and Kribhco using its own HVJ/ DUPL network when this is not required due to presence of a GSPL pipeline.
8GAIL being the marketer of North Tapti Gas is creating an unnecessary swap arrangement so as to transport gas through its own network in spite of the fact that such swap arrangement would not be required if gas is transported directly through the GSPL network.
8It seems that GAIL is simply misguiding PNGRB by proposing the tie-in connectivity, claiming that this will cease the "unnecessary" swap arrangement.
8Hence, GSPL has argued that GAIL's investment is infructuous
8GSPL's has available the Gujarat Gas Grid, a common carrier network in place to ferry the North Tapti gas.
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8GAIL being the marketer of North Tapti Gas is creating an unnecessary swap arrangement so as to transport gas through its own network in spite of the fact that such swap arrangement would not be required if gas is transported directly through the GSPL network.
8It seems that GAIL is simply misguiding PNGRB by proposing the tie-in connectivity, claiming that this will cease the "unnecessary" swap arrangement.
8Hence, GSPL has argued that GAIL's investment is infructuous
8GSPL's has available the Gujarat Gas Grid, a common carrier network in place to ferry the North Tapti gas.
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Opposition to the GAIL tie-in has also come from Gujarat State Petronet Ltd which said that it was already evacuating around 1.3 MMSCMD of gas from Suvali terminal and there is no real need for GAIL to go in for the tie-in and creating a parallel network.
8There is already sufficient capacity available in the GSPL's pipelines to evacuate and transport gas.
8Therefore said proposal considered by GAIL on the basis of increase in gas availability from North Tapti field is without any merit.
8Further, customers like NTPC's Kawas plant and Kribhco's Hazira fertilizer plant, for whom GAIL has proposed the pipeline connectivity is being planned, will only end up bearing the additional burden of investing in the project planned by GAIL in spite of there being sufficient capacity in the GSPL pipeline which is connected to these customers as well as connected to the source.
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8There is already sufficient capacity available in the GSPL's pipelines to evacuate and transport gas.
8Therefore said proposal considered by GAIL on the basis of increase in gas availability from North Tapti field is without any merit.
8Further, customers like NTPC's Kawas plant and Kribhco's Hazira fertilizer plant, for whom GAIL has proposed the pipeline connectivity is being planned, will only end up bearing the additional burden of investing in the project planned by GAIL in spite of there being sufficient capacity in the GSPL pipeline which is connected to these customers as well as connected to the source.
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GAIL's proposal for a tie-in with the Suvali terminal in the CB-OS/3 block operated by a JV headed by Cairn India Ltd (other partners are ONGC and Tata Petrodyne) so that the gas major can connect the gas coming out of ONGC's North Tapti field to its Hazira -Vijaipur- Jagdishpur and Dahej-Uran-Panvel networks has elicited a howl of protest from other stakeholders.
8The first to complain was Cairn who claimed that the tie-in will reduce the flow of gas from the CB-OS/3 block to GSPC's pipeline network given that the volume of gas to be pumped from the terminal has gone up.
8Then again, Cairn said that it would want to be compensated for any loss of gas.
8What is more, Cairn seemed skeptical about GAIL's proposal for tieing in 1.2 mmscmd of gas whereas the capacity of ONGC's North Tapti fields is in excess of 1.20 mmscmd.
8On successful connectivity, GAIL will be able to transport ONGC's North Tapti gas to its consumers.
The scope of work will also include the following:
-- 16" x 12.5 KM pipeline from Cairn's facilities at Suvali to Kribhco
-- 16" pipeline to NTPC Kawas power plant
-- Associated facilities Details
8The first to complain was Cairn who claimed that the tie-in will reduce the flow of gas from the CB-OS/3 block to GSPC's pipeline network given that the volume of gas to be pumped from the terminal has gone up.
8Then again, Cairn said that it would want to be compensated for any loss of gas.
8What is more, Cairn seemed skeptical about GAIL's proposal for tieing in 1.2 mmscmd of gas whereas the capacity of ONGC's North Tapti fields is in excess of 1.20 mmscmd.
8On successful connectivity, GAIL will be able to transport ONGC's North Tapti gas to its consumers.
The scope of work will also include the following:
-- 16" x 12.5 KM pipeline from Cairn's facilities at Suvali to Kribhco
-- 16" pipeline to NTPC Kawas power plant
-- Associated facilities Details
There is much equipment that is common to the midstream and downstream oil & gas industry and the fertilizer industry.
8The website has begun a service that will provide specific business opportunities in the fertilizer industry by predicting the RFQ dates of specific equipment and services in the fertilizer sector along with key contactrs.
8The service will then be extended to petroleum sector projects.
8The website has learnt that a major fertilizer company has the requirement for the following equipment:
Reactors: Two primary and one auxiliary
Exchangers: HP carbanate condenser, HP stripper, MP condenser, First vacumn evaporator, LP absorber pre-cooler
Separators: Urea tank solution, buffer tank, first vacumn separator, second vacumn separator, steam saturator for HP stripper, condensate separators for first and second vacumn evaporator
Pumps and compressors: CO2 compressor, MP carbonate pumps, urea solution crystallizer pumps, process condensate pumps, urea solution pumps, urea melt pumps and filer pumps, additional filter pump, HP absorber pump
Miscellaneous: Mixing tree
Package: Prilling tower (including fans and dusting system) and vacumn package (including ejectors and condensate)
8The website has learnt that the RFQs are going to be out sometime in December for what is an expansion cum modernization programme for the urea unit. Currently the project is undergoing environment approvals which are likely to be completed soon.
8The RFQs are to be taken out by the owner in coordination with the EPC contractor.
8In all, contracts are worth around Rs 580 crore.
8Click on Reports for equipment specifications as well for key contacts in the urea facility where these requirements exist.
8Also visit our sister website www.indianfertilizer.com for all that you may want to know about the fertilizer industry. Details
8The website has begun a service that will provide specific business opportunities in the fertilizer industry by predicting the RFQ dates of specific equipment and services in the fertilizer sector along with key contactrs.
8The service will then be extended to petroleum sector projects.
8The website has learnt that a major fertilizer company has the requirement for the following equipment:
Reactors: Two primary and one auxiliary
Exchangers: HP carbanate condenser, HP stripper, MP condenser, First vacumn evaporator, LP absorber pre-cooler
Separators: Urea tank solution, buffer tank, first vacumn separator, second vacumn separator, steam saturator for HP stripper, condensate separators for first and second vacumn evaporator
Pumps and compressors: CO2 compressor, MP carbonate pumps, urea solution crystallizer pumps, process condensate pumps, urea solution pumps, urea melt pumps and filer pumps, additional filter pump, HP absorber pump
Miscellaneous: Mixing tree
Package: Prilling tower (including fans and dusting system) and vacumn package (including ejectors and condensate)
8The website has learnt that the RFQs are going to be out sometime in December for what is an expansion cum modernization programme for the urea unit. Currently the project is undergoing environment approvals which are likely to be completed soon.
8The RFQs are to be taken out by the owner in coordination with the EPC contractor.
8In all, contracts are worth around Rs 580 crore.
8Click on Reports for equipment specifications as well for key contacts in the urea facility where these requirements exist.
8Also visit our sister website www.indianfertilizer.com for all that you may want to know about the fertilizer industry. Details
For the catalyst plant, IOCL plans to hire consultancy services for the preparation of detailed process package.
8The timeline for preparation of the package is as follows:
-- Submission of the detailed process package will be done within 30 days,
-- Review and comments by IOCL on the detailed process package will be completed in the next 7 days.
-- The final submission of the detailed process package after incorporating IOCL’s comments will be completed in the next 8 days.
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Details
8The timeline for preparation of the package is as follows:
-- Submission of the detailed process package will be done within 30 days,
-- Review and comments by IOCL on the detailed process package will be completed in the next 7 days.
-- The final submission of the detailed process package after incorporating IOCL’s comments will be completed in the next 8 days.
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Details
IOCL has planned to setup a 1500 MTPA catalyst manufacturing plant in its Panipat refinery.
8The plant will be configured for the production of 500 MTPA of fluid catalytic cracking (FCC) catalyst along with 1000 MTPA of diesel hydro desulfurization (DHDS) catalyst.
8Moreover the plant will additionally manufacture the key raw materials required for the catalysts such as alumina and ZSM-5 zeolite.
8The design capacity of key raw materials, zeolite and alumina will be around 250 MTPA and 750 MTPA respectively.
8The catalyst produced from the plant with initial capacity will be kept for the captive use.
8In the long term, the proposed plant will have the scope for future expansion to meet domestic demand and also cater to the export market.
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8The plant will be configured for the production of 500 MTPA of fluid catalytic cracking (FCC) catalyst along with 1000 MTPA of diesel hydro desulfurization (DHDS) catalyst.
8Moreover the plant will additionally manufacture the key raw materials required for the catalysts such as alumina and ZSM-5 zeolite.
8The design capacity of key raw materials, zeolite and alumina will be around 250 MTPA and 750 MTPA respectively.
8The catalyst produced from the plant with initial capacity will be kept for the captive use.
8In the long term, the proposed plant will have the scope for future expansion to meet domestic demand and also cater to the export market.
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There will be a requirement for around 0.6 to 0.7 mmscmd of additional gas for the expansion cum modernization of this urea-ammonia complex.
8The problem here is that GAIL has a near monopoly over the supply of gas to the fertilizer industry. It is a GAIL pipeline that ships gas into the already existing complex.
8It is now learnt that while GAIL is the operator of the gas pooling system for the fertilizer industry, other gas suppliers have been told by the government to look for fertilizer customers for supply of gas.
8But given GAIL's leveraging power, will other gas suppliers be able to make an inroad to capture the incremental gas demand by fertilizer units?
8Issues regarding whether a spur line or a dedicated line can be part of the common carrier network are still being worked out.
8In this context, the PNGRB must be supported to end GAIL's near absolute stranglehold in the supply and market of natural gas in India.
8For suppliers of gas, the website carries here the key details of the project along with key contacts in the company with whom discussions can be undertaken for supply of incremental gas under the common carrier principle. Details
8The problem here is that GAIL has a near monopoly over the supply of gas to the fertilizer industry. It is a GAIL pipeline that ships gas into the already existing complex.
8It is now learnt that while GAIL is the operator of the gas pooling system for the fertilizer industry, other gas suppliers have been told by the government to look for fertilizer customers for supply of gas.
8But given GAIL's leveraging power, will other gas suppliers be able to make an inroad to capture the incremental gas demand by fertilizer units?
8Issues regarding whether a spur line or a dedicated line can be part of the common carrier network are still being worked out.
8In this context, the PNGRB must be supported to end GAIL's near absolute stranglehold in the supply and market of natural gas in India.
8For suppliers of gas, the website carries here the key details of the project along with key contacts in the company with whom discussions can be undertaken for supply of incremental gas under the common carrier principle. Details
EIA expects global consumption of petroleum and other liquids to grow by 1.2 million b/d in 2015 and by 1.3 million b/d in 2016.Growth in global consumption for 2016 was revised downward by almost 0.2 million b/d, compared with last month’s forecast, as China and other Asian economies continue to show signs of weakness.
8EIA expects non-OPEC liquids production to grow by 1.4 million b/d in 2015, but to remain roughly flat in 2016.
8EIA forecasts OPEC crude oil production to increase by 0.8 million b/d in 2015 and remain relatively flat in 2016.
8The total world consumption of petroleum and other liquids is projected for the year 2015 as 93.62 million b/d.
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8EIA expects non-OPEC liquids production to grow by 1.4 million b/d in 2015, but to remain roughly flat in 2016.
8EIA forecasts OPEC crude oil production to increase by 0.8 million b/d in 2015 and remain relatively flat in 2016.
8The total world consumption of petroleum and other liquids is projected for the year 2015 as 93.62 million b/d.
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It is very difficult to predict how global gas prices are going to behave, particularly the sensitive Henry Hub index.
8Current options and futures prices show a wide range of possibilities. The lower and upper bounds for the 95% confidence interval for December 2015 contracts are at $2.08/MMBtu and $4.06/MMBtu, respectively.
8At this time in 2014, the natural gas futures contract for December 2014 delivery averaged $4.07 /MMBtu, and the corresponding lower and upper limits of the 95% confidence interval were $3.09/MMBtu and $5.35/MMBtu, respectively.
8This means that prices have inched significantly lower by all indications.
8The Henry Hub natural gas spot price averaged $2.77/MMBtu in August, a decrease of 7 cents/MMBtu from the July price.
8The EIA's short term estimate lowers the projection for prices slightly from last month's forecast; monthly average spot prices remain lower than $3/MMBtu through November, and lower than $4/MMBtu through the remainder of the forecast.
8The projected Henry Hub natural gas price averages $2.84/MMBtu in 2015 and $3.11/MMBtu in 2016. Details
8Current options and futures prices show a wide range of possibilities. The lower and upper bounds for the 95% confidence interval for December 2015 contracts are at $2.08/MMBtu and $4.06/MMBtu, respectively.
8At this time in 2014, the natural gas futures contract for December 2014 delivery averaged $4.07 /MMBtu, and the corresponding lower and upper limits of the 95% confidence interval were $3.09/MMBtu and $5.35/MMBtu, respectively.
8This means that prices have inched significantly lower by all indications.
8The Henry Hub natural gas spot price averaged $2.77/MMBtu in August, a decrease of 7 cents/MMBtu from the July price.
8The EIA's short term estimate lowers the projection for prices slightly from last month's forecast; monthly average spot prices remain lower than $3/MMBtu through November, and lower than $4/MMBtu through the remainder of the forecast.
8The projected Henry Hub natural gas price averages $2.84/MMBtu in 2015 and $3.11/MMBtu in 2016. Details
The US Energy Information Administration (EIA) has projected India's petroleum and other liquids consumption will increase to 3.97 million b/d in 2015 and 4.14 million b/d 2016, compared with 3.78 million b/d in 2014.
8This is on account of rising economic and manufacturing growth.
8Consumption for 2nd, 3rd and 4th quarter for the year 2015 is projected as 4.06 , 3.72 and 4.02 million barrels per day, which averages to 3.97 million barrel per day in 2015.
8The average consumption for the year 2016 is projected to be 4.13 million barrel per day.
8Petroleum and other liquid supply from within India for the year 2015 is projected as 1.01 millions b/d which is same as 2014 supply whereas for the year 2016, domestic supply is projected as 1.03 millions b/d.
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8This is on account of rising economic and manufacturing growth.
8Consumption for 2nd, 3rd and 4th quarter for the year 2015 is projected as 4.06 , 3.72 and 4.02 million barrels per day, which averages to 3.97 million barrel per day in 2015.
8The average consumption for the year 2016 is projected to be 4.13 million barrel per day.
8Petroleum and other liquid supply from within India for the year 2015 is projected as 1.01 millions b/d which is same as 2014 supply whereas for the year 2016, domestic supply is projected as 1.03 millions b/d.
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The Polypropylene unit of Panipat Naphtha Cracker has been ranked number one globally under the categories “Internal Stream Factor” and “Specific Monomer (Ethylene) consumption” for the year 2014-15, as part of the benchmark study conducted by the licensor M/s Lyondell Basell.
8The PP unit has achieved a remarkable internal stream factor of 100% and 99.78%, respectively against the world average of 97.91%.
8The HDPE unit has attained a specific monomer (ethylene) consumption of 1000.55 against the global average of 1006.54 Kg/MT.
8Both the units performed much better than the global average in parameters like catalyst specific consumption, electricity specific consumption, co-monomer specific consumption, additive specific consumption etc.,
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8The PP unit has achieved a remarkable internal stream factor of 100% and 99.78%, respectively against the world average of 97.91%.
8The HDPE unit has attained a specific monomer (ethylene) consumption of 1000.55 against the global average of 1006.54 Kg/MT.
8Both the units performed much better than the global average in parameters like catalyst specific consumption, electricity specific consumption, co-monomer specific consumption, additive specific consumption etc.,
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As per a recent release, the goverment has announced that it would share under-recovery upto Rs. 12 /litre on SKO (PDS) while the balance under-recovery on kerosene would be borne by the PSU upstream companies.
8A study now shows that Rs. 2.95 /litre out of total under-recovery of Rs. 14.95 /litre on kerosene for August 2015 would be borne by upstream companies, while their burden would be nil for September 2015 as total under-recovery on kerosene decreased to Rs. 11.76 /litre (less than Rs. 12 /litre).
8With regards to LPG (domestic), the government has approved a fixed subsidy capped upto Rs. 18/kg under the Direct Benefit Transfer for Domestic LPG (DBTL), which translates to Rs. 255.6 per cylinder (against the current subsidy of Rs. 141.68 per cylinder for September 2015).
8As per the current international LPG prices, there is material cushion in the subsidy cap fixed for LPG which will allow refining companies to absorb some increase in prices in the future.
8However, there is lack of clarity as to whether the refining companies will bear the subsidy or it will be passed on to the consumers in case global crude oil and LPG prices increase significantly from the current levels.
8All of this means that the under-recovery burden on the PSU upstream companies is expected to significantly decrease in FY16..
8However, the under-recovery burden on the PSU upstream companies could be driven by level of crude oil prices as the government has capped its share and any significant rise in crude oil prices would lead to an increase in burden on upstream companies.
8At the same time, in case of prevailing low crude prices, the burden on the upstream companies would be extremely low thereby providing support to their net crude oil realisation levels.
8The study estimates that the upstream discount going forward would be low ranging from nil to US$ ~5 /bbl for gross crude oil realisations of US$ 40 /bbl to US$ 60/bbl.
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8A study now shows that Rs. 2.95 /litre out of total under-recovery of Rs. 14.95 /litre on kerosene for August 2015 would be borne by upstream companies, while their burden would be nil for September 2015 as total under-recovery on kerosene decreased to Rs. 11.76 /litre (less than Rs. 12 /litre).
8With regards to LPG (domestic), the government has approved a fixed subsidy capped upto Rs. 18/kg under the Direct Benefit Transfer for Domestic LPG (DBTL), which translates to Rs. 255.6 per cylinder (against the current subsidy of Rs. 141.68 per cylinder for September 2015).
8As per the current international LPG prices, there is material cushion in the subsidy cap fixed for LPG which will allow refining companies to absorb some increase in prices in the future.
8However, there is lack of clarity as to whether the refining companies will bear the subsidy or it will be passed on to the consumers in case global crude oil and LPG prices increase significantly from the current levels.
8All of this means that the under-recovery burden on the PSU upstream companies is expected to significantly decrease in FY16..
8However, the under-recovery burden on the PSU upstream companies could be driven by level of crude oil prices as the government has capped its share and any significant rise in crude oil prices would lead to an increase in burden on upstream companies.
8At the same time, in case of prevailing low crude prices, the burden on the upstream companies would be extremely low thereby providing support to their net crude oil realisation levels.
8The study estimates that the upstream discount going forward would be low ranging from nil to US$ ~5 /bbl for gross crude oil realisations of US$ 40 /bbl to US$ 60/bbl.
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The study projects gross under-recoveries (GURs) of OMCs to go down by 54% from Rs. 723 billion for FY15 to Rs. 335 billion for FY16 (estimated at the average Indian basket crude oil price of US$ 55/bbl and INR/US$ 65 for FY16).
8GURs have declined to Rs. 87.4 billion (including cash reimbursement under DBTL) in Q1 FY16 from Rs. 286.9 billion in Q1 FY15 in line with lower global prices of crude oil at US$ ~62 /bbl in Q1 FY16 against US$ 107 /bbl in Q1 FY15.
8Indian basket of crude oil prices have remained lower than US$ 60-65 /bbl over the last eight months (averaging US$ ~56 in January to August 2015 period).
8Soft level of crude oil prices are expected to lead to materially lower under-recoveries on LPG and Kerosene, while deregulated diesel and petrol prices would ensure no subsidy burden on auto fuels (viz. diesel and petrol).
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8GURs have declined to Rs. 87.4 billion (including cash reimbursement under DBTL) in Q1 FY16 from Rs. 286.9 billion in Q1 FY15 in line with lower global prices of crude oil at US$ ~62 /bbl in Q1 FY16 against US$ 107 /bbl in Q1 FY15.
8Indian basket of crude oil prices have remained lower than US$ 60-65 /bbl over the last eight months (averaging US$ ~56 in January to August 2015 period).
8Soft level of crude oil prices are expected to lead to materially lower under-recoveries on LPG and Kerosene, while deregulated diesel and petrol prices would ensure no subsidy burden on auto fuels (viz. diesel and petrol).
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