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Sep 2015
It is too early to decide whether the government's move to fast track the building of three new urea units at Gorakhpur, Sindri and Barauni should be applauded or criticized.
8This is one of the classical cases of state sponsored investments which a free market adherent will not approve because it is more politics than economics that drive this investment.
8All three urea sites are close to demand centres but far away from raw material sources which begs the essential question of whether it makes sense to produce urea in India when it does not have comparative advantage in doing so in comparison to, say, the Gulf where the cost of gas is very low.
8The point to note is that fertilizer units did exist in Gorakhpur, Sindri and Barauni but they became defunct out of a combination of using bad technology, labour trouble and gross mismanagement.
8New state of art units will come in the place of old ones but will the underlying economics be any different what it was when the earlier units were in existence?
8Eventually if private capital does not come, then will the public sector be roped in to put up these units like in the case of Ramagundam and Talcher?
8If public sector banks then end up loaning money to these projects, then what will really happen is that it will be public and private money that will be sunk into the new units.
8The additional subsidy on the output from these units will also go from the government's exchequer.
8It may well be that the route to self sufficiency in urea production will be an entirely state sponsored programme.
8The moot question then is: Wasn't there a better way to spend public money than putting them in units in which India does not have a comparative advantage? Details
8This is one of the classical cases of state sponsored investments which a free market adherent will not approve because it is more politics than economics that drive this investment.
8All three urea sites are close to demand centres but far away from raw material sources which begs the essential question of whether it makes sense to produce urea in India when it does not have comparative advantage in doing so in comparison to, say, the Gulf where the cost of gas is very low.
8The point to note is that fertilizer units did exist in Gorakhpur, Sindri and Barauni but they became defunct out of a combination of using bad technology, labour trouble and gross mismanagement.
8New state of art units will come in the place of old ones but will the underlying economics be any different what it was when the earlier units were in existence?
8Eventually if private capital does not come, then will the public sector be roped in to put up these units like in the case of Ramagundam and Talcher?
8If public sector banks then end up loaning money to these projects, then what will really happen is that it will be public and private money that will be sunk into the new units.
8The additional subsidy on the output from these units will also go from the government's exchequer.
8It may well be that the route to self sufficiency in urea production will be an entirely state sponsored programme.
8The moot question then is: Wasn't there a better way to spend public money than putting them in units in which India does not have a comparative advantage? Details
Iran has chalked out a plan to setup the world’s largest gas refinery complex in the country which is expected to change the global naphtha and condensate balance.
8This is being anticipated on the fact that half a million b/d of condensate production is targeted from the refinery.
8With this Iran is also expected to become a huge supplier of naphtha which is of keen interest to Asian buyers.
8In the future, refinery will convert naphtha to high quality gasoline and petrochemicals.
8The increased production will play a critical role as most of the US condensate streams do not match Asian quality requirements and need naphtha blending.
8So now with the removal of the sanctions and new condensate production from Iran, the only challenge for the Iranians is to understand the condensate flows and target the Asian market.
8As Indian refineries move towards more value added products, Iranian supplies can be tapped by domestic users.
Click on details for more. Details
8This is being anticipated on the fact that half a million b/d of condensate production is targeted from the refinery.
8With this Iran is also expected to become a huge supplier of naphtha which is of keen interest to Asian buyers.
8In the future, refinery will convert naphtha to high quality gasoline and petrochemicals.
8The increased production will play a critical role as most of the US condensate streams do not match Asian quality requirements and need naphtha blending.
8So now with the removal of the sanctions and new condensate production from Iran, the only challenge for the Iranians is to understand the condensate flows and target the Asian market.
8As Indian refineries move towards more value added products, Iranian supplies can be tapped by domestic users.
Click on details for more. Details
Gujarat State Petroleum Corporation Ltd (GSPC) has plans to conduct the following drilling programme in its onland blocks in Gujarat:
-- Drilling of 66 wells in CB-ON/2 (Tarapur) Block.
-- Drilling of 13 wells in CB-ONN-2002/3 (Sanand Miroli Block).
-- 3D Seismic Survey in CB-ON/2 (Tarapur) block, total 676 Sq. KM.
8The company is now planning to go through the environmental clearance process for the drilling activity>
8Bids have been invited to assist GSPC to to carry out public hearings and other environment clearance activities.
8Contracts for the drilling programme are likely to be finalized before the environment clearances come in, so that work can begin soon after the government nod comes in.
Click on Reports for more Details
-- Drilling of 66 wells in CB-ON/2 (Tarapur) Block.
-- Drilling of 13 wells in CB-ONN-2002/3 (Sanand Miroli Block).
-- 3D Seismic Survey in CB-ON/2 (Tarapur) block, total 676 Sq. KM.
8The company is now planning to go through the environmental clearance process for the drilling activity>
8Bids have been invited to assist GSPC to to carry out public hearings and other environment clearance activities.
8Contracts for the drilling programme are likely to be finalized before the environment clearances come in, so that work can begin soon after the government nod comes in.
Click on Reports for more Details
The G-20 agreement is not going to be so easy to implement on account of political compulsions in each country.
8For transparency purposes, independent assessment of a country’s effort and a comparison with the effort of its peers is part of the process, along with regular surveillance. For those countries failing to deliver policy reforms in line with their commitments, a credible review mechanism has been worked int.
8Clearly, in designing a system of transparency, expert review by third parties can serve as a credible source of information. Drawing from experts among various international organizations to evaluate fossil fuel subsidy reforms mirrors the approaches taken by the IMF, OECD, and the World Trade Organization so far. Relying on external experts at established international organizations also mitigates concerns about politicization of the transparency mechanism and allows for a rapid ramping up of the review process.
8Lastly, coupling peer review with expert review enhances transparency in implementation, and can empower domestic stakeholders as well as peer nations’ within the G-20 to apply pressure to push a country to deliver on its commitment. Such a process could frame opportunities for pressuring peers, especially the laggards, to do more in the next round of negotiations.
Click on the reports for more. Details
8For transparency purposes, independent assessment of a country’s effort and a comparison with the effort of its peers is part of the process, along with regular surveillance. For those countries failing to deliver policy reforms in line with their commitments, a credible review mechanism has been worked int.
8Clearly, in designing a system of transparency, expert review by third parties can serve as a credible source of information. Drawing from experts among various international organizations to evaluate fossil fuel subsidy reforms mirrors the approaches taken by the IMF, OECD, and the World Trade Organization so far. Relying on external experts at established international organizations also mitigates concerns about politicization of the transparency mechanism and allows for a rapid ramping up of the review process.
8Lastly, coupling peer review with expert review enhances transparency in implementation, and can empower domestic stakeholders as well as peer nations’ within the G-20 to apply pressure to push a country to deliver on its commitment. Such a process could frame opportunities for pressuring peers, especially the laggards, to do more in the next round of negotiations.
Click on the reports for more. Details
Sep 27 : G-20 fossil fuel subsidy elimination programme-I: Surveillance mechanism still not in place
The G-20 fossil fuel subsidies agreement represents an important step towards mitigating greenhouse gas emissions.
8A distinctive design characteristic of the G-20 agreement is its transparency. Not only did leaders pledge to phase out their subsidies, but they also agreed to a system of policy surveillance.
8The agreement focuses on rationalizing fuel prices, and that will require the dismantling of the fuel subsidy structures in many of the G-20 countries.
8With about three-fifths of the world population living in countries with subsidized fuels and electricity, an efficient energy policy would first eliminate fossil fuel subsidies and then explore ways to price carbon.
8While the UN Framework Convention on Climate Change (UNFCCC) negotiations have been silent on fossil fuel subsidies, the Group of 20 (G-20) leaders, representing the largest developed and developing countries, agreed to phase-out fossil fuel subsidies at their 2009 Pittsburgh summit.
8Progress so far has been slow.
8But the agreement illustrates the potential for narrowly focused, small group approaches to coordinate international action on climate change. This agreement can leverage G-20 countries’ own economic and fiscal interests in reforming subsidies.
8Doing so could minimize incentives for free-riding and serve as an important building block to more effective climate policy.
8The G-20 secretariat is now looking at policy surveillance in order to generate and analyse information on fossil fuel subsidy reform strategies, including, energy prices, emission reductions, costs and cost-effectiveness, potential cross-order impacts, and ancillary benefits.
Click on the Reports for more. Details
8A distinctive design characteristic of the G-20 agreement is its transparency. Not only did leaders pledge to phase out their subsidies, but they also agreed to a system of policy surveillance.
8The agreement focuses on rationalizing fuel prices, and that will require the dismantling of the fuel subsidy structures in many of the G-20 countries.
8With about three-fifths of the world population living in countries with subsidized fuels and electricity, an efficient energy policy would first eliminate fossil fuel subsidies and then explore ways to price carbon.
8While the UN Framework Convention on Climate Change (UNFCCC) negotiations have been silent on fossil fuel subsidies, the Group of 20 (G-20) leaders, representing the largest developed and developing countries, agreed to phase-out fossil fuel subsidies at their 2009 Pittsburgh summit.
8Progress so far has been slow.
8But the agreement illustrates the potential for narrowly focused, small group approaches to coordinate international action on climate change. This agreement can leverage G-20 countries’ own economic and fiscal interests in reforming subsidies.
8Doing so could minimize incentives for free-riding and serve as an important building block to more effective climate policy.
8The G-20 secretariat is now looking at policy surveillance in order to generate and analyse information on fossil fuel subsidy reform strategies, including, energy prices, emission reductions, costs and cost-effectiveness, potential cross-order impacts, and ancillary benefits.
Click on the Reports for more. Details
In a view to be more energy efficient ONGC’s Energy Centre has proposed to design, develop and test electricity generating systems for harnessing the kinetic energy of flowing water streams.
8In this regard, the E&P major wants to jointly work with experts on this developmental project to envisage simulation studies to assist in optimization of the design and sizing of the system.
8The Various technicalities of the proposed project are as follows:
-- The net power output should lie between 3 – 5 kW at 220 V, 50 Hz at water surface speed of 1.5 – 2.0 m/s in freely flowing waters
-- Around 40% of the generating system should be submerged.
-- The minimum water velocity will be of 1 m/s and the system should remain stable in velocities up to 5m/s.
-- Water to power efficiency should be greater than 45% when measured at water surface speed of 1.5 -2.0 m/s.
-- The system should have been tested in flowing waters for a period of one year.
Click on Report section for more. Details
8In this regard, the E&P major wants to jointly work with experts on this developmental project to envisage simulation studies to assist in optimization of the design and sizing of the system.
8The Various technicalities of the proposed project are as follows:
-- The net power output should lie between 3 – 5 kW at 220 V, 50 Hz at water surface speed of 1.5 – 2.0 m/s in freely flowing waters
-- Around 40% of the generating system should be submerged.
-- The minimum water velocity will be of 1 m/s and the system should remain stable in velocities up to 5m/s.
-- Water to power efficiency should be greater than 45% when measured at water surface speed of 1.5 -2.0 m/s.
-- The system should have been tested in flowing waters for a period of one year.
Click on Report section for more. Details
The surveys will be carried out at various locations in North India
8Details of the locations are as under:
-- From Ch. 253.40 to 349.10 Km of SMPL Chaksu Panipat section under Panipat Jurisdiction.
-- From Ch.106.50 to 253.40 Km of SMPL Chaksu Panipat section under Rewari Jurisdiction.
-- From Ch.717.520 to 803.20 Km of SMPL Chaksu Mathura section under Bharatpur Mathura section Jurisdiction.
-- From Ch.0.0 to 70.0 Km of SnMPL Sonepat Meerut section under the Meerut Jurisdiction.
-- From Ch.0.0 to 22.5 Km of Mathura- Bharatpur (MBPL) section under Bharatpur Jurisdiction.
-- From Ch.0.0 to 57.0 Km) of Mathura- Tundla (MTPL) section under Tundla Jurisdiction.
-- (From Ch.0.0 to 132.0 Km) of Dadri- Panipat (DPPL) section under Panipat- Meerut Jurisdiction.
Click on the Reports for more. Details
8Details of the locations are as under:
-- From Ch. 253.40 to 349.10 Km of SMPL Chaksu Panipat section under Panipat Jurisdiction.
-- From Ch.106.50 to 253.40 Km of SMPL Chaksu Panipat section under Rewari Jurisdiction.
-- From Ch.717.520 to 803.20 Km of SMPL Chaksu Mathura section under Bharatpur Mathura section Jurisdiction.
-- From Ch.0.0 to 70.0 Km of SnMPL Sonepat Meerut section under the Meerut Jurisdiction.
-- From Ch.0.0 to 22.5 Km of Mathura- Bharatpur (MBPL) section under Bharatpur Jurisdiction.
-- From Ch.0.0 to 57.0 Km) of Mathura- Tundla (MTPL) section under Tundla Jurisdiction.
-- (From Ch.0.0 to 132.0 Km) of Dadri- Panipat (DPPL) section under Panipat- Meerut Jurisdiction.
Click on the Reports for more. Details
IOCL is planning to conduct detailed safety surveys of its 610 km of underground pipelines in the Northern region.
8The surveys will look for signs for corrosion, problems in cathodic protection, likely leakages, among other snags
8The following survey’s are planned to be conducted:
-- Closed Interval Polarized Potential Survey (CIPS) to check the effectiveness of the cathodic protection system. The CIPS survey is carried out measuring the ON potentials and OFF polarized potentials along the pipeline right of way {ROW}, at every one-meter interval which is then graphically plotted to indicate the level of protection.
-- Current Attenuation (CAT) survey will be conducted at 100 meter intervals to find any current loss along the mainline using radio detection instruments.
-- Direct Current Voltage Gradient (DCVG) survey will be conducted in one meter interval to check for the voltage gradient.
-- AC Interference Survey detect the presence of AC induced voltage in the pipelines that are crossing or are parallel to AC transmission voltage lines with more than 33 kV capacity.
-- DC Interference Survey will be conducted to recognize, test correcting stray current corrosion, if any.
Click on the Reports for more. Details
8The surveys will look for signs for corrosion, problems in cathodic protection, likely leakages, among other snags
8The following survey’s are planned to be conducted:
-- Closed Interval Polarized Potential Survey (CIPS) to check the effectiveness of the cathodic protection system. The CIPS survey is carried out measuring the ON potentials and OFF polarized potentials along the pipeline right of way {ROW}, at every one-meter interval which is then graphically plotted to indicate the level of protection.
-- Current Attenuation (CAT) survey will be conducted at 100 meter intervals to find any current loss along the mainline using radio detection instruments.
-- Direct Current Voltage Gradient (DCVG) survey will be conducted in one meter interval to check for the voltage gradient.
-- AC Interference Survey detect the presence of AC induced voltage in the pipelines that are crossing or are parallel to AC transmission voltage lines with more than 33 kV capacity.
-- DC Interference Survey will be conducted to recognize, test correcting stray current corrosion, if any.
Click on the Reports for more. Details
The good thing about public sector companies is that they continue to conduct energy audits at regular frequency.
8One such audit is being planned by IOC in 29 auto LPG dispensation stations in UP
8The Audit shall cover the electrical supply arrangements at ALDS including diesel generator sets if the same is connected to the power supply arrangement of ALDS.
8The various electrical equipment available at the ALDS include CVT, stabilizer, MCB, MCCB, switches, relays, solenoids, air compressor, motors, pump, electrical panel, electronic gadgets etc. constitute the Auto LPG Electrical system.
8The Earth Pit testing, Grid measurement, continuity and cable insulation test shall form part of testing which has to be carried out at the site.
Click on Report for more details. Details
8One such audit is being planned by IOC in 29 auto LPG dispensation stations in UP
8The Audit shall cover the electrical supply arrangements at ALDS including diesel generator sets if the same is connected to the power supply arrangement of ALDS.
8The various electrical equipment available at the ALDS include CVT, stabilizer, MCB, MCCB, switches, relays, solenoids, air compressor, motors, pump, electrical panel, electronic gadgets etc. constitute the Auto LPG Electrical system.
8The Earth Pit testing, Grid measurement, continuity and cable insulation test shall form part of testing which has to be carried out at the site.
Click on Report for more details. Details
General Electric is aggressively positioning itself as a state of art technology supplier in the E&P space.
8GE’s experience on how to optimize operations, drive flexibility and availability, by understanding each kind of application and process in order to provide customers with value when generating trustful energy that directly impact on business and community developments.
8One of GE’s most important and innovative solutions to support the industry is the Industrial Internet, a source of operational efficiency that benefit from machines connectivity to establish optimized processes that generate profits by using less resources.
8Report indicates that artificial Lift market will soon report a two digit growth in the upcoming years, achieving around $16 billion until 2018. To reach these numbers, GE developed the Well Performance Services (WPS) unit, dedicated to provide not only different Artificial Lift technologies (Eletro Submersible Pump, Mechanical Pump Systems, Artificial Lift, etc) but also solutions tailored technologies to field production improvement.
Click on Details for more Details
8GE’s experience on how to optimize operations, drive flexibility and availability, by understanding each kind of application and process in order to provide customers with value when generating trustful energy that directly impact on business and community developments.
8One of GE’s most important and innovative solutions to support the industry is the Industrial Internet, a source of operational efficiency that benefit from machines connectivity to establish optimized processes that generate profits by using less resources.
8Report indicates that artificial Lift market will soon report a two digit growth in the upcoming years, achieving around $16 billion until 2018. To reach these numbers, GE developed the Well Performance Services (WPS) unit, dedicated to provide not only different Artificial Lift technologies (Eletro Submersible Pump, Mechanical Pump Systems, Artificial Lift, etc) but also solutions tailored technologies to field production improvement.
Click on Details for more Details
WTI crude was trading $45.84 with prices volatile as high US Inventories and Fed rate hike delay continue to lead huge swings. As per some Reports WTI crude could even dip to $ 30’s levels as US and OPEC continue to pump record output amidst huge supply glut and weak demand. Saudi Arabia has rejected any idea to hold a joint summit to defend prices indicating, its support for the market forces to determine the prices.
8Last week US crude oil Inventory fell by 2.1 mn bl to 455.60 bl mn approx, still up by almost 95 mn bl from its 5 year average of 360 mn bl. Also as per reports, Saudi Arabia is still left with massive $ 700 bn of reserves which it could deploy to sustain lower crude oil prices with burning cash of almost $ 10 b per month to sustain the economy due to revenue loss from low crude prices.
8US crude oil Rigs fell by 10 last week to 644 from 652 as lower oil realizations affect the viability of small shall oil producers.
8A relative calm in Middle East, breakthrough in Iran talks which could ramp up the production by 0.5 mn /bl when sanctions are lifted and eventually increase of 1 mn bl/day will only lead to increase in the supply in near future with the silver lining being the sustained lower prices of crude oil will lead to fall in production of Oil produced from the Shale gas the cost of Shale crude is higher than the crude pumped through traditional sources.
8Reportedly, US Shale bakken play could even be profitable at as low as $ 30/bl prices which could have some real effect on crude prices and could even break $ 40/bl as scale of economies and latest technology is leading to lower prices for shale oil production.
8Natural gas continues to trade weak with prices currently trading at $ 2.56/mmbtu breaching its lower boundary of $2.60 on bearish inventories last week.
Outlook: Energy prices remain under pressure as weak Global Economic outlook and huge Supply glut due created by focus on defending market share by oil producers. Any news on Production cuts could lead to short term spurt in prices while WTI currently seems to basing out in $ 40 bl-42/bl area
WTI NYMEX Crude currently trading at $ 45.85/bl could attract selling at $49 and $52 as around high levels Shale oil producers could become active and ramp up production which would lead to OPEC producers become more aggressive to protect the market share. Overall it could test $ 38/bl on lower side and $ 52.00/bl on higher side. On MCX prices jumped from our mentioned.
Click on our Reports section for more Details
8Last week US crude oil Inventory fell by 2.1 mn bl to 455.60 bl mn approx, still up by almost 95 mn bl from its 5 year average of 360 mn bl. Also as per reports, Saudi Arabia is still left with massive $ 700 bn of reserves which it could deploy to sustain lower crude oil prices with burning cash of almost $ 10 b per month to sustain the economy due to revenue loss from low crude prices.
8US crude oil Rigs fell by 10 last week to 644 from 652 as lower oil realizations affect the viability of small shall oil producers.
8A relative calm in Middle East, breakthrough in Iran talks which could ramp up the production by 0.5 mn /bl when sanctions are lifted and eventually increase of 1 mn bl/day will only lead to increase in the supply in near future with the silver lining being the sustained lower prices of crude oil will lead to fall in production of Oil produced from the Shale gas the cost of Shale crude is higher than the crude pumped through traditional sources.
8Reportedly, US Shale bakken play could even be profitable at as low as $ 30/bl prices which could have some real effect on crude prices and could even break $ 40/bl as scale of economies and latest technology is leading to lower prices for shale oil production.
8Natural gas continues to trade weak with prices currently trading at $ 2.56/mmbtu breaching its lower boundary of $2.60 on bearish inventories last week.
Outlook: Energy prices remain under pressure as weak Global Economic outlook and huge Supply glut due created by focus on defending market share by oil producers. Any news on Production cuts could lead to short term spurt in prices while WTI currently seems to basing out in $ 40 bl-42/bl area
WTI NYMEX Crude currently trading at $ 45.85/bl could attract selling at $49 and $52 as around high levels Shale oil producers could become active and ramp up production which would lead to OPEC producers become more aggressive to protect the market share. Overall it could test $ 38/bl on lower side and $ 52.00/bl on higher side. On MCX prices jumped from our mentioned.
Click on our Reports section for more Details
BHP Billiton is one of the largest mining companies in the world and it has published an "Economic contribution and payments to governments Report 2015" that transparently lays down all the payments it has made to governments around the world.
8Mining has been one of the least transparent businesses in the world and the multinational's publication is the step in the right direction.
8In 2015, the multinational paid $ 7.3 billion globally in taxes, royalties and other payments to governments.
8The data is drilled down the project wise payments so that local communities have a clear understanding about the revenue gained by their governments from the extraction of natural resources and how this is allocated in their country’s economic and social development.
8When companies provide transparent information about revenue, the potential for corruption is reduced. Countries that transparently and effectively allocate natural resource wealth for the benefit of their communities have the potential to attract greater, more responsible and longer-term business investment.
8It is imperative that businesses, governments and civil society work in partnership to support transparency.
8Corruption directly impedes development, denying millions of people around the world their rights to the education and training necessary to earn a livelihood, to basic health services and to the essential infrastructure to improve their lives.
8Large Indian companies can take some cues on how the data is laid down and the the disclosures that BHP Billiton has made.
8Regulators can also lean from the process.
Click on Reports for more Details
8Mining has been one of the least transparent businesses in the world and the multinational's publication is the step in the right direction.
8In 2015, the multinational paid $ 7.3 billion globally in taxes, royalties and other payments to governments.
8The data is drilled down the project wise payments so that local communities have a clear understanding about the revenue gained by their governments from the extraction of natural resources and how this is allocated in their country’s economic and social development.
8When companies provide transparent information about revenue, the potential for corruption is reduced. Countries that transparently and effectively allocate natural resource wealth for the benefit of their communities have the potential to attract greater, more responsible and longer-term business investment.
8It is imperative that businesses, governments and civil society work in partnership to support transparency.
8Corruption directly impedes development, denying millions of people around the world their rights to the education and training necessary to earn a livelihood, to basic health services and to the essential infrastructure to improve their lives.
8Large Indian companies can take some cues on how the data is laid down and the the disclosures that BHP Billiton has made.
8Regulators can also lean from the process.
Click on Reports for more Details
Cairn plans to invest a massive $ 566 million in the EOR plan, according to the Field Development Plan (FDP) of the Mangla field using the polymer flooding technique
8Effective liquid management, voidage replacement and injection water distribution are the key focus areas in maximizing the oil production rate from the field.
8Production will be maximized by ensuring production from unswept zones and cutting down on zones contributing water.
8The idea is to divert water to unswept zones so that a Voidage Replacement Ratio (VRR) is achieved.
8Cairn has already done the tie-in of the connecting spools for the EOR activity, along with the de-bottlenecking of the MPT and sulphate removal.
8The Magala field is currently producing a massive 150,000 barrels per day of crude.
8The actual oil recovery from the Mangala field till date is around 12.3% of the Stock Tank Oil Initially In-Place (STOIIP).
8The EOR project is expected to improve oil recovery to 32.1% of the STOIIP and yield an incremental production of 70 million barrels by the end of the PSC, that is, by May 2020.
Click on Details for more information. Details
8Effective liquid management, voidage replacement and injection water distribution are the key focus areas in maximizing the oil production rate from the field.
8Production will be maximized by ensuring production from unswept zones and cutting down on zones contributing water.
8The idea is to divert water to unswept zones so that a Voidage Replacement Ratio (VRR) is achieved.
8Cairn has already done the tie-in of the connecting spools for the EOR activity, along with the de-bottlenecking of the MPT and sulphate removal.
8The Magala field is currently producing a massive 150,000 barrels per day of crude.
8The actual oil recovery from the Mangala field till date is around 12.3% of the Stock Tank Oil Initially In-Place (STOIIP).
8The EOR project is expected to improve oil recovery to 32.1% of the STOIIP and yield an incremental production of 70 million barrels by the end of the PSC, that is, by May 2020.
Click on Details for more information. Details
An economic analysis of the Mangala EOR project has been carried out and the project is found to be viable with an IRR of 39.21%.
8In fact, an economic analysis of all the four major fields together -- Mangala, Aishwariya, Raageshwari and Saraswati (better known as MARS) -- in the Rajasthan block was carried out. The pipeline cost was apportioned accordingly on the basis of the ratio of the revised total production profiles.
8Based on the various assumptions and cash flow projections made, the NPV in both cases -- MARS standalone and with the proposed EOR -- turned out to be positive.
8Considering the present framework of fiscal terms and conditions with royalty becoming cost recoverable, the project has been found to be robust and financially viable even for ONGC.
8ONGC has independently done a viability exercise. The results of the economics for ONGC`s share of 30% (Cairn holds the rest of the equity) upto PSC expiry period of May 2020 shows that with the implementation of the EOR schemes, considering a 14% discount rate, the NPV for the revised FDP for the Mangala field, by including the EOR project, works out to a staggering $1,558.28 million, providing an IRR of 39.21%. The total FDP cost for the Mangla project, including the EOR plan, is $2,969.88 million
8The project has been evaluated by Deloitte, which has concluded that the polymer flood EOR FDP is viable and therefore recommended for investment.
Comment: Given that the money is good, Cairn, along with ONGC, must ensure that the environmental damage is limited and workers are well protected. For otherwise the cost is going really very high.
(Click on Details for more information) Details
8In fact, an economic analysis of all the four major fields together -- Mangala, Aishwariya, Raageshwari and Saraswati (better known as MARS) -- in the Rajasthan block was carried out. The pipeline cost was apportioned accordingly on the basis of the ratio of the revised total production profiles.
8Based on the various assumptions and cash flow projections made, the NPV in both cases -- MARS standalone and with the proposed EOR -- turned out to be positive.
8Considering the present framework of fiscal terms and conditions with royalty becoming cost recoverable, the project has been found to be robust and financially viable even for ONGC.
8ONGC has independently done a viability exercise. The results of the economics for ONGC`s share of 30% (Cairn holds the rest of the equity) upto PSC expiry period of May 2020 shows that with the implementation of the EOR schemes, considering a 14% discount rate, the NPV for the revised FDP for the Mangala field, by including the EOR project, works out to a staggering $1,558.28 million, providing an IRR of 39.21%. The total FDP cost for the Mangla project, including the EOR plan, is $2,969.88 million
8The project has been evaluated by Deloitte, which has concluded that the polymer flood EOR FDP is viable and therefore recommended for investment.
Comment: Given that the money is good, Cairn, along with ONGC, must ensure that the environmental damage is limited and workers are well protected. For otherwise the cost is going really very high.
(Click on Details for more information) Details
There has been much agonizing over achieving the collective benefits from addressing global climate change.
8However, pricing carbon dioxide (CO2) emissions from fossil fuel use can produce important national co-benefits.
8Most obviously, as carbon charges reduce use of coal, natural gas, and petroleum products, this reduces the amount of people killed by outdoor air pollution, currently estimated at 3.7 million a year worldwide.
8To take another example, if congestion, accidents, and other externalities from motor vehicle use are not fully internalized through other pricing policies, again there are potentially significant cobenefits to the extent that carbon charges reduce vehicle use.
8The potential for co-benefits suggests that countries need not wait on internationally coordinated efforts if some carbon mitigation is in their own national interests—that is, the domestic environmental benefits exceed the CO2 mitigation costs, leaving aside climate benefits.
Click on our Reports section for more Details
8However, pricing carbon dioxide (CO2) emissions from fossil fuel use can produce important national co-benefits.
8Most obviously, as carbon charges reduce use of coal, natural gas, and petroleum products, this reduces the amount of people killed by outdoor air pollution, currently estimated at 3.7 million a year worldwide.
8To take another example, if congestion, accidents, and other externalities from motor vehicle use are not fully internalized through other pricing policies, again there are potentially significant cobenefits to the extent that carbon charges reduce vehicle use.
8The potential for co-benefits suggests that countries need not wait on internationally coordinated efforts if some carbon mitigation is in their own national interests—that is, the domestic environmental benefits exceed the CO2 mitigation costs, leaving aside climate benefits.
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Kalsi has clearly hit the proverbial gold at the end of the rainbow with his E&P bet.
8Kalsi deserves full credit for his entrepreneurship, for it is indeed a gigantic leap of faith to go from being a shoe manufacturer from Kanpur to a successful E&P operator that the world is now waking up and taking notice.
8Both Vikram Mehta and Sashi Mukundan -- both Indians -- are better known in the E&P circuit in India and around the world than the low profile Kalsi.
8But Mehta and Mukundan are the biggest destroyers of corporate wealth in the country. While Mehta, as the Indian manger of Shell, gave away the lucrative RJ-ON-90/1 to Cairn India for a song, Mukundan has run the $7.4 billion investment of BP to the ground.
8In this context, Kalsi, bereft of pedigree of the kind possessed by Mehta or Mukundan, has, by sheer dint of courage and enterprise, built an E&P asset that can easily fetch him a very large sum of money.
8Kalsi is now busy building the infrastructure to produce gas and sell it.
8A Rs 4000 crore investment is planned and more is likely to follow.
Click on our Reports section for full details on Kalsi's plans for the block Details
8Kalsi deserves full credit for his entrepreneurship, for it is indeed a gigantic leap of faith to go from being a shoe manufacturer from Kanpur to a successful E&P operator that the world is now waking up and taking notice.
8Both Vikram Mehta and Sashi Mukundan -- both Indians -- are better known in the E&P circuit in India and around the world than the low profile Kalsi.
8But Mehta and Mukundan are the biggest destroyers of corporate wealth in the country. While Mehta, as the Indian manger of Shell, gave away the lucrative RJ-ON-90/1 to Cairn India for a song, Mukundan has run the $7.4 billion investment of BP to the ground.
8In this context, Kalsi, bereft of pedigree of the kind possessed by Mehta or Mukundan, has, by sheer dint of courage and enterprise, built an E&P asset that can easily fetch him a very large sum of money.
8Kalsi is now busy building the infrastructure to produce gas and sell it.
8A Rs 4000 crore investment is planned and more is likely to follow.
Click on our Reports section for full details on Kalsi's plans for the block Details
Who says small players cannot make money in the E&P business in India?
8No one illustrates this better than Ajay Kalsi, whose claim to fame before he entered the E&P business, was as the manufacturer of Action shoes, a business he inherited from his Kanpur based family.
8Kalsi has made good in a business where more experienced players have failed.
8The evidence of his success comes from the fact that he has posted revenues of $ 41.39 million from its gas sales in the RJ-ON/6 block and an operating profit of whopping $ 30.02 million in 2014-15.
8And there is more to come.
8Kalsi claims that there are huge reserves of gas over and above the discoveries made in the SGL field in the block.
8The best case estimates advanced by Kalsi is that reserves can be as high as 2 TCF of gas.
8The point to note is that the cost of production is low and even at current gas prices, Kalsi makes good money.
Click on our Reports section for more details on what Kalsi has done and is planning to do in his Rajasthan block. Details
8No one illustrates this better than Ajay Kalsi, whose claim to fame before he entered the E&P business, was as the manufacturer of Action shoes, a business he inherited from his Kanpur based family.
8Kalsi has made good in a business where more experienced players have failed.
8The evidence of his success comes from the fact that he has posted revenues of $ 41.39 million from its gas sales in the RJ-ON/6 block and an operating profit of whopping $ 30.02 million in 2014-15.
8And there is more to come.
8Kalsi claims that there are huge reserves of gas over and above the discoveries made in the SGL field in the block.
8The best case estimates advanced by Kalsi is that reserves can be as high as 2 TCF of gas.
8The point to note is that the cost of production is low and even at current gas prices, Kalsi makes good money.
Click on our Reports section for more details on what Kalsi has done and is planning to do in his Rajasthan block. Details
Cairn India is pumping in a huge quantum of cancer-causing chemicals into the Rajasthan geological structures where these chemicals are capable of getting into the ground water system and spread its contamination around.
8While such EOR schemes are common around the world, it is not known what kind of monitoring mechanism is in place to ensure that it does not do damage to the ecology of the region.
8Is there adequate monitoring done by the MOEF and the state government?
8Then again, are workers, geologists and engineers working in the Mangla field, who are exposed to such high volumes of PAM, being adequately equipped with protective gear?
8Who sets these standards for protection of employees? Or are standards really in place? If they are in place, is the monitoring system water tight?
8These questions are expected to answered loudly and clearly by the Cairn management or otherwise the dangers are immediate and acute of exposure to such high volumes of PAM.
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8While such EOR schemes are common around the world, it is not known what kind of monitoring mechanism is in place to ensure that it does not do damage to the ecology of the region.
8Is there adequate monitoring done by the MOEF and the state government?
8Then again, are workers, geologists and engineers working in the Mangla field, who are exposed to such high volumes of PAM, being adequately equipped with protective gear?
8Who sets these standards for protection of employees? Or are standards really in place? If they are in place, is the monitoring system water tight?
8These questions are expected to answered loudly and clearly by the Cairn management or otherwise the dangers are immediate and acute of exposure to such high volumes of PAM.
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The pumping of huge volumes of Partially Hydrolysed Polyacrylamide Polymer (PAM) into the Mangla field has its adverse environmental and health implications.
8Acrylamide is absorbed by animals and humans via ingestion or inhalation or through the skin. Extensive efforts have been made to assess human exposure to acrylamide by monitoring several metabolites excreted in the urine as well as products resulting from biological alkylations by acrylamide, and the results are not good.
8On the basis of numerous studies, the International Agency for Research on Cancer has classified acrylamide as “carcinogenic to humans”
8Then again, workers exposed to acrylamide exhibited symptoms of peripheral neuropathy, suggesting that the compound is a human neurotoxin.
8Feeding water solutions of acrylamide (50-200 ppm) to female and male rats prior to breeding and through the gestation and lactation period (up to 10 weeks) produced disruptions in mating, interference with sperm ejaculation, depression in body weight gain and food intake, and depression in pup body weight at birth and weight gain during lactation.
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8Acrylamide is absorbed by animals and humans via ingestion or inhalation or through the skin. Extensive efforts have been made to assess human exposure to acrylamide by monitoring several metabolites excreted in the urine as well as products resulting from biological alkylations by acrylamide, and the results are not good.
8On the basis of numerous studies, the International Agency for Research on Cancer has classified acrylamide as “carcinogenic to humans”
8Then again, workers exposed to acrylamide exhibited symptoms of peripheral neuropathy, suggesting that the compound is a human neurotoxin.
8Feeding water solutions of acrylamide (50-200 ppm) to female and male rats prior to breeding and through the gestation and lactation period (up to 10 weeks) produced disruptions in mating, interference with sperm ejaculation, depression in body weight gain and food intake, and depression in pup body weight at birth and weight gain during lactation.
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Cairn India Ltd has been able to keep output up in its Rajasthan block by an active Enhanced Oil Recovery scheme.
8It hase used the polymer flooding technique to keep output at steady levels.
8EOR work is going on in Mangla, its primary producing field.
8The polymer used is Partially Hydrolysed Polyacrylamide Polymer (PAM).
8The company is now seeking bids for supply of around 40,000 tonnes of polymers per year.
8This will arguably be one of the largest polymer flooding exercise globally.
8The supply contract is for three years
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8It hase used the polymer flooding technique to keep output at steady levels.
8EOR work is going on in Mangla, its primary producing field.
8The polymer used is Partially Hydrolysed Polyacrylamide Polymer (PAM).
8The company is now seeking bids for supply of around 40,000 tonnes of polymers per year.
8This will arguably be one of the largest polymer flooding exercise globally.
8The supply contract is for three years
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Given the fall in oil prices are rapidly on the decline, E&P investments over the next several years will be significantly lower than the previous 10-year annual average.
8Data reveals that upstream investment is highly sensitive to changes in oil price levels.
8Decrease in crude prices could result in substantially lower annual oil and gas investment over the 2015-20 period than the annual average of $122 billion spent during the 2005-14 investment cycle.
8Crude oil prices are a key driver of upstream investment, but several other firm-specific factors also influence decision-making:
-- Besides managing existing assets and maintaining and replacing property and equipment, E&P firms have a portfolio of prospective projects of varying cost, risk, and technical complexity. Portfolio reviews occur as project proposals mature at varying points of time and then go through management for approval.
-- While E&P firms have their own future expectations, upstream investments are generally not developed solely on current commodity prices, but instead are structured to provide returns under a wide range of price outcomes.
-- Additionally, company investment cycles cannot be easily separated into specific periods, but instead depend on specific project approvals. The sum of anticipated costs for these approved projects make up the investment plan in any given year.
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8Data reveals that upstream investment is highly sensitive to changes in oil price levels.
8Decrease in crude prices could result in substantially lower annual oil and gas investment over the 2015-20 period than the annual average of $122 billion spent during the 2005-14 investment cycle.
8Crude oil prices are a key driver of upstream investment, but several other firm-specific factors also influence decision-making:
-- Besides managing existing assets and maintaining and replacing property and equipment, E&P firms have a portfolio of prospective projects of varying cost, risk, and technical complexity. Portfolio reviews occur as project proposals mature at varying points of time and then go through management for approval.
-- While E&P firms have their own future expectations, upstream investments are generally not developed solely on current commodity prices, but instead are structured to provide returns under a wide range of price outcomes.
-- Additionally, company investment cycles cannot be easily separated into specific periods, but instead depend on specific project approvals. The sum of anticipated costs for these approved projects make up the investment plan in any given year.
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India will also rope in the US for help in its ambitious plans to provide 24x7 power across India by 2019 by creating cost effective infrastructure which was sustainable and inclusive of clean energy solutions.
8Thegovernment is serious about the deployment of 175 GW renewable power capacities by 2022, including 100 GW of solar and 60 GW of wind, which may require investment of around $150 billion in the next seven years.
8The government also has the objective of construction of 100 smart cities which would include in its blueprint adequate provisions for power generation, usage of renewables and energy efficiency technologies, comprehensive waste management programme; usage of waste to energy technologies.
8India-US collaboration in the energy sector will involve participation in this programme.
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8Thegovernment is serious about the deployment of 175 GW renewable power capacities by 2022, including 100 GW of solar and 60 GW of wind, which may require investment of around $150 billion in the next seven years.
8The government also has the objective of construction of 100 smart cities which would include in its blueprint adequate provisions for power generation, usage of renewables and energy efficiency technologies, comprehensive waste management programme; usage of waste to energy technologies.
8India-US collaboration in the energy sector will involve participation in this programme.
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Narendra Modi's US trip was preceded by an India-US Ministerial Energy Dialogue where strategic tieups are being promoted for tapping US technology for shale oil and gas extraction in India.
8US based companies is likely to invest, especially in the field of exploration and exploitation of alternate energy sources such as shale oil, shale gas and gas hydrates.
8Moreover collaboration in the areas of fracking of shale gas, especially water less fracking in India will be the first priority.
8The energy dialogue agreed to expeditiously conclude the following MoUs:
-- Between National Energy Technology Laboratory (NETL) of the US and NTPC of India to improve power plant efficiency;
-- To enhance cooperation on energy security, clean energy and climate change; as well as
-- On gas hydrates.
This dialogue is also an affirmation of the fact that both countries have a strong commitment to collaborate in the energy sector and promote greater technological innovation, scientific collaboration, trade, research and development, deploying environment-friendly technologies and products, and promote sound regulatory frameworks to deliver energy solutions for sustainable growth.
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8US based companies is likely to invest, especially in the field of exploration and exploitation of alternate energy sources such as shale oil, shale gas and gas hydrates.
8Moreover collaboration in the areas of fracking of shale gas, especially water less fracking in India will be the first priority.
8The energy dialogue agreed to expeditiously conclude the following MoUs:
-- Between National Energy Technology Laboratory (NETL) of the US and NTPC of India to improve power plant efficiency;
-- To enhance cooperation on energy security, clean energy and climate change; as well as
-- On gas hydrates.
This dialogue is also an affirmation of the fact that both countries have a strong commitment to collaborate in the energy sector and promote greater technological innovation, scientific collaboration, trade, research and development, deploying environment-friendly technologies and products, and promote sound regulatory frameworks to deliver energy solutions for sustainable growth.
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8Development wells drilled RJ-ON/6 Block during 2014-15r are as follows:
-- SGL-SB1, 3277m Gas Producer (Pariwar Formation)
-- SGL-15, 3286m Gas Producer (Pariwar Formation)
-- SGL-16 (SGL SB-2), 3196m Gas Producer (Pariwar Formation)
-- SGL-SB3, 3344m Gas Producer (Pariwar Formation)
-- SGL-18, 3325m Gas Producer (Pariwar Formation)
-- SGL-19, 3299m Gas Producer (Pariwar Formation)
-- SGL-20, 3411m Development well (Pariwar Formation)
-- SGL-21, 3357.6m Gas Producer (Pariwar Formation)
-- SGL-23, 3409m Gas Producer (Pariwar Formation)
-- SGL-28, 3270m Development well (Pariwar Formation)
Click on the Reports section for more details about the wells.
Details
-- SGL-SB1, 3277m Gas Producer (Pariwar Formation)
-- SGL-15, 3286m Gas Producer (Pariwar Formation)
-- SGL-16 (SGL SB-2), 3196m Gas Producer (Pariwar Formation)
-- SGL-SB3, 3344m Gas Producer (Pariwar Formation)
-- SGL-18, 3325m Gas Producer (Pariwar Formation)
-- SGL-19, 3299m Gas Producer (Pariwar Formation)
-- SGL-20, 3411m Development well (Pariwar Formation)
-- SGL-21, 3357.6m Gas Producer (Pariwar Formation)
-- SGL-23, 3409m Gas Producer (Pariwar Formation)
-- SGL-28, 3270m Development well (Pariwar Formation)
Click on the Reports section for more details about the wells.
Details
During last year Focus has completed many appraisal wells and has encountered gas in the majority of wells.
8Most of these wells are in testing stages and are critical in establishing their right to retain the maximum area in the block in line with the DOC application and establishing additional reserves and resources.
8Since many of these wells have multi-zone gas shows, the company is evaluating an optimum strategy for multi-zone testing and completion.
List of some of the appraisal wells completed in the year is as follows:
-- A-11-7N, 3378.3m Appraisal well with gas shows (Pariwar Formation)
-- S-EPN-1, 3489m Appraisal well with minor gas shows (Pariwar Formation)
-- SX-7, 4581m Appraisal well with gas (Pariwar and B&B Formations)
-- S-97S, 132m Appraisal well with gas (Pariwar and B&B Formations)
-- EPN-2, 1651m Gas Producer (Pariwar Formation)
Click on the Reports section for more details about the wells. Details
8Most of these wells are in testing stages and are critical in establishing their right to retain the maximum area in the block in line with the DOC application and establishing additional reserves and resources.
8Since many of these wells have multi-zone gas shows, the company is evaluating an optimum strategy for multi-zone testing and completion.
List of some of the appraisal wells completed in the year is as follows:
-- A-11-7N, 3378.3m Appraisal well with gas shows (Pariwar Formation)
-- S-EPN-1, 3489m Appraisal well with minor gas shows (Pariwar Formation)
-- SX-7, 4581m Appraisal well with gas (Pariwar and B&B Formations)
-- S-97S, 132m Appraisal well with gas (Pariwar and B&B Formations)
-- EPN-2, 1651m Gas Producer (Pariwar Formation)
Click on the Reports section for more details about the wells. Details
Petronet LNG Ltd (PLL) has made it clear that the low offtake of long term LNG contracted with Qatar will continue in 2016-17 as spot prices will remain lower than long term contracts.
8The company has claimed that the LNG prices in the spot markets declined sharply due to the declining crude prices.
8However, the prices under the long-term contract, which have benefited the Indian consumers for the past decade, will take a longer time to align with the current market prices due to the contract price being linked to the 60-month JCC average
8This has led to a decline in the RLNG off-take by the Petronet off-takers – GAIL, IOCL and BPCL – citing low acceptability of the RLNG prices among their consumers.
8This low off-take situation is expected to continue in the next year.
8Company is currently "urgently working" on plans to alleviate the situation but did not specify what kind of action will be taken. "Your Company is working to mitigate impact
of high priced LNG due to sharp decline of crude oil prices along-with off-takers GAIL, IOCL and BPCL," is all that PLL is willing admit for the time being.
8Clearly the floor price of Qatar LNG, aligned to the price of crude, has to be revised downwards for the price of long term contacts to come down and no indications are available from the company on whether the terms are being renegotiated.
8As per the terms of the agreement, PLL will have to account for take or pay arrangements as per the contract with Qatar but how exactly this is going to pan out is till not know. Clearly, PLL has to account for the outstanding payments under the take or pay head as contingent liability pending resolution of the tussle.
8During 2014-15, the Dahej Terminal handled 154 LNG cargoes and supplied 520.78 TBTUs of re-gasified LNG in India. As many as 2666 LNG road tankers were loaded and dispatched during the year
Comment:It will be grossly unfair for PLL to soft-pedal its responsibility to revise the Take or Pay arrangement with RasGas for supply of LNG. The cost of gas is very low for Qatar and the bulk of the JCC-linked price elicited for the gas is sheer rent. In this context, it will not be fair to pick up Take or Pay penalties from customers and pay RasGas for the gas that has not been supplied. Many options are possible including deferred delivery. But whatever be the options, the floor price for crude linked to PLL's LNG price has to come down. Or else, given that there is ample supply of LNG in the market, RasGas should be told in no uncertain terms that the agreement stands void. Oman did the same thing with the OMIFCO JV, when they just dictated a higher price of gas despite the fact that a long term agreement was place for supply of gas at a confessional rate. Standing on niceties will not help.
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8The company has claimed that the LNG prices in the spot markets declined sharply due to the declining crude prices.
8However, the prices under the long-term contract, which have benefited the Indian consumers for the past decade, will take a longer time to align with the current market prices due to the contract price being linked to the 60-month JCC average
8This has led to a decline in the RLNG off-take by the Petronet off-takers – GAIL, IOCL and BPCL – citing low acceptability of the RLNG prices among their consumers.
8This low off-take situation is expected to continue in the next year.
8Company is currently "urgently working" on plans to alleviate the situation but did not specify what kind of action will be taken. "Your Company is working to mitigate impact
of high priced LNG due to sharp decline of crude oil prices along-with off-takers GAIL, IOCL and BPCL," is all that PLL is willing admit for the time being.
8Clearly the floor price of Qatar LNG, aligned to the price of crude, has to be revised downwards for the price of long term contacts to come down and no indications are available from the company on whether the terms are being renegotiated.
8As per the terms of the agreement, PLL will have to account for take or pay arrangements as per the contract with Qatar but how exactly this is going to pan out is till not know. Clearly, PLL has to account for the outstanding payments under the take or pay head as contingent liability pending resolution of the tussle.
8During 2014-15, the Dahej Terminal handled 154 LNG cargoes and supplied 520.78 TBTUs of re-gasified LNG in India. As many as 2666 LNG road tankers were loaded and dispatched during the year
Comment:It will be grossly unfair for PLL to soft-pedal its responsibility to revise the Take or Pay arrangement with RasGas for supply of LNG. The cost of gas is very low for Qatar and the bulk of the JCC-linked price elicited for the gas is sheer rent. In this context, it will not be fair to pick up Take or Pay penalties from customers and pay RasGas for the gas that has not been supplied. Many options are possible including deferred delivery. But whatever be the options, the floor price for crude linked to PLL's LNG price has to come down. Or else, given that there is ample supply of LNG in the market, RasGas should be told in no uncertain terms that the agreement stands void. Oman did the same thing with the OMIFCO JV, when they just dictated a higher price of gas despite the fact that a long term agreement was place for supply of gas at a confessional rate. Standing on niceties will not help.
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The government's ambitious target of doubling the gas pipeline infrastructure to around 30,000 km has not found enthusiastic takers in the Indian industry.
8Capacity utilization levels of gas pipelines are currently low as gas availability is a problem.
8It is GAIL that is now putting up new pipeline coaxed by the government to do so but the private sector may not be all that keen to get in just yet.
8Fixing of tariff rates by the PNGRB on normative basis and non-availability of anchor customers have come in the way.
8Land acquisition has become a more complex issue over the last few years and this poses a significant challenge for new pipeline projects.
8Various options being placed on the drawing board are a partnership between GAIL (India) and Gujarat-based GSPC, taking up certain strategic pipeline projects based on budgetary support, public-private partnership (PPP) and bidding on viability gap funding (VGF).
8The proposed pipelines are expected to significantly improve the connectivity all over India.
8But there are no takers yet from the private sector because of uncertainties on several fronts.
8A key issue the industry faces is timely approvals of RoUs as projects have been stuck due to protests and political hindrances.
8Concerns related to gas supply and RLNG competitiveness have also discouraged the players to start work on many already awarded projects.
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8Capacity utilization levels of gas pipelines are currently low as gas availability is a problem.
8It is GAIL that is now putting up new pipeline coaxed by the government to do so but the private sector may not be all that keen to get in just yet.
8Fixing of tariff rates by the PNGRB on normative basis and non-availability of anchor customers have come in the way.
8Land acquisition has become a more complex issue over the last few years and this poses a significant challenge for new pipeline projects.
8Various options being placed on the drawing board are a partnership between GAIL (India) and Gujarat-based GSPC, taking up certain strategic pipeline projects based on budgetary support, public-private partnership (PPP) and bidding on viability gap funding (VGF).
8The proposed pipelines are expected to significantly improve the connectivity all over India.
8But there are no takers yet from the private sector because of uncertainties on several fronts.
8A key issue the industry faces is timely approvals of RoUs as projects have been stuck due to protests and political hindrances.
8Concerns related to gas supply and RLNG competitiveness have also discouraged the players to start work on many already awarded projects.
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In the immediate context, CGD companies stand to gain from lower domestic gas prices.
8A September revision of gas prices is due and it is expected that the price will come down to around $5.1/mmbtu to close to $3.8/mmbtu according to the pricing formula that is in vogue.
8This going to be beneficial for CGD entities because they will be fend off competition from liquid fuels even if crude prices are low.
8There are now projections that crude prices will go up, and there is a call from OPEC for a return to the $80/bbl price for crude. Speculators are now active on hope of a higher price trajectory for crude oil.
8This will of course have a concomitant impact on gas prices but with a lag effect.
8For the time being, the lower domestic gas price will also support the PNG domestic segment sales which have traditionally been less competitive against subsidized LPG.
8Despite some increase in prices of industrial fuels in recent months, competitiveness of PNG (industrial) continues to remain weak partly due to relatively high long-term R-LNG price contracts and as a result, demand and margins of PNG (industrial) segment would remain under pressure in the near term.
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8A September revision of gas prices is due and it is expected that the price will come down to around $5.1/mmbtu to close to $3.8/mmbtu according to the pricing formula that is in vogue.
8This going to be beneficial for CGD entities because they will be fend off competition from liquid fuels even if crude prices are low.
8There are now projections that crude prices will go up, and there is a call from OPEC for a return to the $80/bbl price for crude. Speculators are now active on hope of a higher price trajectory for crude oil.
8This will of course have a concomitant impact on gas prices but with a lag effect.
8For the time being, the lower domestic gas price will also support the PNG domestic segment sales which have traditionally been less competitive against subsidized LPG.
8Despite some increase in prices of industrial fuels in recent months, competitiveness of PNG (industrial) continues to remain weak partly due to relatively high long-term R-LNG price contracts and as a result, demand and margins of PNG (industrial) segment would remain under pressure in the near term.
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To many players in the gas sector, the Petroleum & Natural Gas Regulatory Board (PNGRB) is looked upon with fear and dread.
8The sharp downward revision in pipeline tariffs by the PNGRB has come as a shock to transmission and distribution companies in India.
8Appeals have been filed with higher authorities but the regulator seems unfazed and is going through with process of finalizing tariffs.
8The PNGRB will fix pipeline tariffs based on normative parameters and that will be tough on transmission players.
8The litigation process is likely to be long, and may stretch up to the higher judiciary levels.
8The profitability of transmission players are likely to be subdued in the short to medium-term due to lower-than-expected pipeline tariffs approved by PNGRB as well as inadequate gas availability.
8While transmission companies are in trouble, CGD entities can heave a sigh of relief because the Supreme Court has held that the regulator does not have the powers to determine network tariffs, compressions charges or in any other manner fix the prices for CGD companies with their own network
8This alleviates the regulatory risk and allows the CGD industry incumbents greater freedom to fix the final prices of CNG and PNG for consumers.
8The availability of domestic gas for CGD units is another strong point.
8But there are problems ahead. The bidding rounds are likely to see tough competition, with bidders quoting zero tariffs and high bid bonds but if pipeline laying and PNG connections are not as per work programmes submitted, these bonds can be forfeited.
8Existing players also face third party competition as their exclusivity clauses come to an end.
8Then again there is competition coming up from the liquid fuels segment as the price of crude are very low.
8Clearly, the there will be a lot of traction on the CGD front but only time will tell which way the wind blows.
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8The sharp downward revision in pipeline tariffs by the PNGRB has come as a shock to transmission and distribution companies in India.
8Appeals have been filed with higher authorities but the regulator seems unfazed and is going through with process of finalizing tariffs.
8The PNGRB will fix pipeline tariffs based on normative parameters and that will be tough on transmission players.
8The litigation process is likely to be long, and may stretch up to the higher judiciary levels.
8The profitability of transmission players are likely to be subdued in the short to medium-term due to lower-than-expected pipeline tariffs approved by PNGRB as well as inadequate gas availability.
8While transmission companies are in trouble, CGD entities can heave a sigh of relief because the Supreme Court has held that the regulator does not have the powers to determine network tariffs, compressions charges or in any other manner fix the prices for CGD companies with their own network
8This alleviates the regulatory risk and allows the CGD industry incumbents greater freedom to fix the final prices of CNG and PNG for consumers.
8The availability of domestic gas for CGD units is another strong point.
8But there are problems ahead. The bidding rounds are likely to see tough competition, with bidders quoting zero tariffs and high bid bonds but if pipeline laying and PNG connections are not as per work programmes submitted, these bonds can be forfeited.
8Existing players also face third party competition as their exclusivity clauses come to an end.
8Then again there is competition coming up from the liquid fuels segment as the price of crude are very low.
8Clearly, the there will be a lot of traction on the CGD front but only time will tell which way the wind blows.
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A key challenge for the new terminals is their ability to tie up LNG supplies through long-term contracts at competitive prices and the competition faced by RLNG from liquid fuels.
8The risk related to tie up of LNG is partly mitigated by the fact that the global LNG supply demand balance is expected to ease from FY 16 onwards.
8Besides, for terminals planning to operate on tolling basis, the ability to achieve optimum utilisation of terminals through long-term commitment of booking slots of terminals on use or pay basis by gas marketers would be critical from credit perspective.
8Overall, the ability to complete the projects in a timely manner without material cost and time overrun and to tie up with the LNG suppliers as well as RLNG customers or to book the optimum capacity on tolling basis would be key risks for the regasification segment, where the competition is expected to increase significantly over the longer term.
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8The risk related to tie up of LNG is partly mitigated by the fact that the global LNG supply demand balance is expected to ease from FY 16 onwards.
8Besides, for terminals planning to operate on tolling basis, the ability to achieve optimum utilisation of terminals through long-term commitment of booking slots of terminals on use or pay basis by gas marketers would be critical from credit perspective.
8Overall, the ability to complete the projects in a timely manner without material cost and time overrun and to tie up with the LNG suppliers as well as RLNG customers or to book the optimum capacity on tolling basis would be key risks for the regasification segment, where the competition is expected to increase significantly over the longer term.
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A study has shown that new regasification terminals that are going to be set up in India are likely to suffer from significant under utilization.
8This is on account of high capacity additions.
8The price sensitivity of RLNG demand would be critical in this regard.
8If the regasification terminals, as planned, come on stream over the next 4-5 years, the new entrants would face significant pressure on volumes and margins as they will have to compete with the existing terminals / brownfield expansion which are more cost efficient due to lower capital intensity.
8Sub-optimal capacity utilisation and lower regasification margins could put significant pressure on returns and credit profile of new entrants especially in the initial few years of operations.
8The total regasification capacity in India is currently around 25 MMTPA; however, the operational capacity is about 17 MMTPA as the 5 MMTPA Kochi terminal of Petronet LNG Ltd (PLL) lacks full pipeline connectivity and 5 MMTPA Dabhol terminal is being operated at low capacity utilizations in the absence of breakwater required for protecting LNG ships during
the monsoon season.
8Going forward, additional RLNG capacity of 10-15 MMTPA would be available with expansions at Dahej and Hazira along with possible improvement in capacity utilisation of Kochi terminal upon pipeline connectivity coming in place.
8The major greenfield projects, finalized by the sponsors and expected to be executed in the next 4-5 years are: 1) Floating Storage & Regasification Unit (FSRU)/RLNG terminal at Kakinada port, Andhra Pradesh (by GAIL, AP Gas Distribution Company, GDF, Shell and Kakinada port); 2) FSRU / RLNG terminal Pipavav, Gujarat (by Swan Energy Ltd); 3) Terminal at Mundra, Gujarat (by GSPC-Adani JV); and 4) Terminal at Ennore, Tamil Nadu (by Indian Oil Corporation Ltd).
8Apart from above, many other terminals are proposed and are still in the preliminary stage. Based on relatively “firm” regasification terminals plans in India, the regasification capacity is likely to significantly increase to around 47 MMTPA (~165 MMSMCD) by FY 20 and around 55 MMTPA (~190 MMSMCD) by FY 25.
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8This is on account of high capacity additions.
8The price sensitivity of RLNG demand would be critical in this regard.
8If the regasification terminals, as planned, come on stream over the next 4-5 years, the new entrants would face significant pressure on volumes and margins as they will have to compete with the existing terminals / brownfield expansion which are more cost efficient due to lower capital intensity.
8Sub-optimal capacity utilisation and lower regasification margins could put significant pressure on returns and credit profile of new entrants especially in the initial few years of operations.
8The total regasification capacity in India is currently around 25 MMTPA; however, the operational capacity is about 17 MMTPA as the 5 MMTPA Kochi terminal of Petronet LNG Ltd (PLL) lacks full pipeline connectivity and 5 MMTPA Dabhol terminal is being operated at low capacity utilizations in the absence of breakwater required for protecting LNG ships during
the monsoon season.
8Going forward, additional RLNG capacity of 10-15 MMTPA would be available with expansions at Dahej and Hazira along with possible improvement in capacity utilisation of Kochi terminal upon pipeline connectivity coming in place.
8The major greenfield projects, finalized by the sponsors and expected to be executed in the next 4-5 years are: 1) Floating Storage & Regasification Unit (FSRU)/RLNG terminal at Kakinada port, Andhra Pradesh (by GAIL, AP Gas Distribution Company, GDF, Shell and Kakinada port); 2) FSRU / RLNG terminal Pipavav, Gujarat (by Swan Energy Ltd); 3) Terminal at Mundra, Gujarat (by GSPC-Adani JV); and 4) Terminal at Ennore, Tamil Nadu (by Indian Oil Corporation Ltd).
8Apart from above, many other terminals are proposed and are still in the preliminary stage. Based on relatively “firm” regasification terminals plans in India, the regasification capacity is likely to significantly increase to around 47 MMTPA (~165 MMSMCD) by FY 20 and around 55 MMTPA (~190 MMSMCD) by FY 25.
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For reference purposes, the website carries here comprehensive details of the US investments in environment mitigation technologies, both by the private and public sector.
8The total investment is large, at around $431 billion between 2000 to 2014.
8And the bulk of the money is invested by the oil & gas industry.
8There are also investments in end-use technology, fuel substitution and non-hydrocarbon (such as bio fules and enabling technologies.
8The data is disaggregated and can provide the oil and gas industry an idea of where to put in their money in case they want to.
8Pertinently these investments provide a return on capital besides mitigating the emission of green house gases.
8There are lessons to learn for India from this data.
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8The total investment is large, at around $431 billion between 2000 to 2014.
8And the bulk of the money is invested by the oil & gas industry.
8There are also investments in end-use technology, fuel substitution and non-hydrocarbon (such as bio fules and enabling technologies.
8The data is disaggregated and can provide the oil and gas industry an idea of where to put in their money in case they want to.
8Pertinently these investments provide a return on capital besides mitigating the emission of green house gases.
8There are lessons to learn for India from this data.
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VLCC hire rates are likely to go up on account of higher demand triggered off by lower crude prices.
8It is expected that oil demand growth will accelerate in coming years, and the forecast is of an increase of 1.6 to 1.8 MMB/d for the 2015 and 2016, which will benefit the oil tanker business.
8Moreover high Mid East OPEC crude production has always supported the VLCC earnings. During the first quarter, where oil production from Mid East increased from 22.25 million bpd to 23 million bpd, VLCCs also showed an increase in their spot prices which from $ 50000 per day to $ 65000 per day.
8Output from Non OPEC countries also bring in a positive push, as production is expected to grow at a steady rate, touching 60 million bpd mark by 2019.
8The shipping business is now expected to sail comfortably as a consequence of higher output.
8There are however certian trade shifts which occurred on a global level but that is unlikely to affect the shipping industry. Among the shifts are:
-- USA no longer imports light crude but its heavy crude imports from Middle East remain intact.
-- Asian demand is said to remain strong which is underpinned by China’s efforts at expanding refinery capacity and filling up strategic reserves.
-- WAF (West Africa) light crude trade lane to USA has dried up and it has shifted its attention to Asian markets.
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8It is expected that oil demand growth will accelerate in coming years, and the forecast is of an increase of 1.6 to 1.8 MMB/d for the 2015 and 2016, which will benefit the oil tanker business.
8Moreover high Mid East OPEC crude production has always supported the VLCC earnings. During the first quarter, where oil production from Mid East increased from 22.25 million bpd to 23 million bpd, VLCCs also showed an increase in their spot prices which from $ 50000 per day to $ 65000 per day.
8Output from Non OPEC countries also bring in a positive push, as production is expected to grow at a steady rate, touching 60 million bpd mark by 2019.
8The shipping business is now expected to sail comfortably as a consequence of higher output.
8There are however certian trade shifts which occurred on a global level but that is unlikely to affect the shipping industry. Among the shifts are:
-- USA no longer imports light crude but its heavy crude imports from Middle East remain intact.
-- Asian demand is said to remain strong which is underpinned by China’s efforts at expanding refinery capacity and filling up strategic reserves.
-- WAF (West Africa) light crude trade lane to USA has dried up and it has shifted its attention to Asian markets.
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For reference purposes, the website carries here a comprehensive set of petroleum statistics for August, 2015. The data includes:
-- Indigenous Crude Oil Production
-- Domestic Oil & Gas Production vis a vis Overseas Production
-- Coal Bed Methane (CBM) Gas development in India
-- Refineries: Installed Capacity and Crude Oil Processing
-- Gross Refining Margins (GRM) of Refineries
-- Natural Gas at a Glance
-- Consumption of Petroleum Products
-- LPG Monthly Consumption Report
-- Industry Marketing Infrastructure
-- Pipelines Infrastructure
-- Gas Pipelines under execution / construction
-- Existing and Expected LNG Terminals
-- Status of PNG Connection and CNG Station across the India
-- Information on Prices, Taxes and Under-recoveries
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-- Indigenous Crude Oil Production
-- Domestic Oil & Gas Production vis a vis Overseas Production
-- Coal Bed Methane (CBM) Gas development in India
-- Refineries: Installed Capacity and Crude Oil Processing
-- Gross Refining Margins (GRM) of Refineries
-- Natural Gas at a Glance
-- Consumption of Petroleum Products
-- LPG Monthly Consumption Report
-- Industry Marketing Infrastructure
-- Pipelines Infrastructure
-- Gas Pipelines under execution / construction
-- Existing and Expected LNG Terminals
-- Status of PNG Connection and CNG Station across the India
-- Information on Prices, Taxes and Under-recoveries
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Halliburton has agreed to pay a whopping $18,29 milliom to its 1,016 employees as overtime allowance which was not accounted for earlier.
It is one of the largest overtime wages award in recent year’s for the US Department of Labour.
8The US Deaprtment of Labour found that Halliburton had incorrectly categorized employees in 28 job positions as exempt from overtime.
8The company did not pay overtime to these salaried employees — working as field service representatives, pipe recovery specialists, drilling tech advisors, perforating specialists and reliability tech specialists.
8The company also failed to keep accurate records of hours worked by these employees.
8This settlement will put millions of dollars in the pockets of hardworking people and their families.
Comment: In India too, salary practices must be brought to account in the oil and gas industry. The public sector does have certain well laid down procedures but what about the private sector? Are all categories of employees entitled to overtime, if not why not? These are questions that must be asked and parameters should be laid down and followed across the industry
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It is one of the largest overtime wages award in recent year’s for the US Department of Labour.
8The US Deaprtment of Labour found that Halliburton had incorrectly categorized employees in 28 job positions as exempt from overtime.
8The company did not pay overtime to these salaried employees — working as field service representatives, pipe recovery specialists, drilling tech advisors, perforating specialists and reliability tech specialists.
8The company also failed to keep accurate records of hours worked by these employees.
8This settlement will put millions of dollars in the pockets of hardworking people and their families.
Comment: In India too, salary practices must be brought to account in the oil and gas industry. The public sector does have certain well laid down procedures but what about the private sector? Are all categories of employees entitled to overtime, if not why not? These are questions that must be asked and parameters should be laid down and followed across the industry
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Sep 23 : Crude prices to bring in mixed outcomes-II: Bent crude to remain below $51 till end of 2015
>As per a recent report, Brent crude is expected to trade within the narrow range of $48–$51 per barrel for the remainder of 2015.
8Moving into 2016, the Report expects that oil market may face several uncertainties, which includes:
-- The speed and volume at which Iran will re-enter the oil market following the easing of sanctions against it,
-- The responsiveness of both demand and supply to low oil prices,
-- The unexpected outages caused by unforeseen geopolitical events.
8According to the report, barring additional major supply disruptions, the price of Brent crude is forecast to average $55 per barrel in 2015 before recovering to $60 in 2016.
8As demand growth is catching up with supply growth more slowly than previously expected; the current forecast is for a milder price rebound.
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8Moving into 2016, the Report expects that oil market may face several uncertainties, which includes:
-- The speed and volume at which Iran will re-enter the oil market following the easing of sanctions against it,
-- The responsiveness of both demand and supply to low oil prices,
-- The unexpected outages caused by unforeseen geopolitical events.
8According to the report, barring additional major supply disruptions, the price of Brent crude is forecast to average $55 per barrel in 2015 before recovering to $60 in 2016.
8As demand growth is catching up with supply growth more slowly than previously expected; the current forecast is for a milder price rebound.
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Gross domestic product for the current fiscal year, which ends March 2016, is expected to be at 7.4 percent, down from the bank's estimate in March of 7.8 percent.
8For fiscal year 2016, growth is forecast at 7.8 percent, down from the earlier GDP growth forecast of 8.2 percent.
8Slow global economic growth and a general lack of investor confidence are dragging on India's growth.
8“On the upside, inflation is trending down, crude oil import prices have fallen sharply, and tax revenue and net foreign direct investment inflows are up, which augurs well for a bounce back in the economy," the report said
8India is likely to be benefited from the low crude oil prices, but an up tick in prices for commodities, including crude oil, are expected to boost inflation in FY2016.
8The slump in exports in the first quarter is likely to continue with listless global demand and a drop in exports of refined oil products.
8According to report, some recovery in oil prices and improved demand for industry and investment will likely push import growth to 8.0% in FY2016 for India.
8Moreover, exports are also likely to recover, growing by 3.5% as higher petroleum prices boost the value of exports of refined petroleum products and as external demand improves.
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8For fiscal year 2016, growth is forecast at 7.8 percent, down from the earlier GDP growth forecast of 8.2 percent.
8Slow global economic growth and a general lack of investor confidence are dragging on India's growth.
8“On the upside, inflation is trending down, crude oil import prices have fallen sharply, and tax revenue and net foreign direct investment inflows are up, which augurs well for a bounce back in the economy," the report said
8India is likely to be benefited from the low crude oil prices, but an up tick in prices for commodities, including crude oil, are expected to boost inflation in FY2016.
8The slump in exports in the first quarter is likely to continue with listless global demand and a drop in exports of refined oil products.
8According to report, some recovery in oil prices and improved demand for industry and investment will likely push import growth to 8.0% in FY2016 for India.
8Moreover, exports are also likely to recover, growing by 3.5% as higher petroleum prices boost the value of exports of refined petroleum products and as external demand improves.
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HMEL wants certain amendments in the already approved expansion project in its Bhatinda refinery, from 9 MMTPA to 11.25 MTPA..
8It was advocated that the membership of common treatment storage disposal facility (TSDF) should be obtained for the disposal of hazardous waste and the copy of authorization or membership of TSDF should be submitted to Ministry's Regional Office.
8The chemical sludge should be sent to the treatment storage disposal facility for hazardous waste.
8But HMEL, instead of directing the waste to the TSDF, wants to dump the waste at its operational "Secured Landfill" (SLF) inside the site.
8The company claims that the SLF has been designed to CPCB standards and has the capacity to store 20000m3 of hazardous waste.
8To validate its argument, the company puts forward the authorization letter from PPCB for the operation of the SLF facility till 31.3.2019.
8Therefore, HMEL does not feel the need for taking membership of the common TSDF again.
Comment: The refinery must be subjected to more stringent environment management. Adequate precautions must be taken for an accident or a miscalculation can have serious consequences.
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8It was advocated that the membership of common treatment storage disposal facility (TSDF) should be obtained for the disposal of hazardous waste and the copy of authorization or membership of TSDF should be submitted to Ministry's Regional Office.
8The chemical sludge should be sent to the treatment storage disposal facility for hazardous waste.
8But HMEL, instead of directing the waste to the TSDF, wants to dump the waste at its operational "Secured Landfill" (SLF) inside the site.
8The company claims that the SLF has been designed to CPCB standards and has the capacity to store 20000m3 of hazardous waste.
8To validate its argument, the company puts forward the authorization letter from PPCB for the operation of the SLF facility till 31.3.2019.
8Therefore, HMEL does not feel the need for taking membership of the common TSDF again.
Comment: The refinery must be subjected to more stringent environment management. Adequate precautions must be taken for an accident or a miscalculation can have serious consequences.
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The Environment Clearance also stipulates that 33 % of the total project area will be developed within plant premises with at least 10 metre wide green belt on all sides along the periphery of the project area.
8HMEL claims that a Green Belt of 300 acres has been developed in compliance with EC. And this Green Belt is of 100 metre average width along the periphery of the refinery.
8In addition to the Green belt, 80 acres of land has been developed with gardens and lawns.
8But the problem is that only 19.5 percent of the refinery site has been dedicated to greenery.
8HMEL claims that the it has planned and designed the layout of the Green belt, existing facilities and future facilities based on the stipulation given in the original EC letter.
8Now HMEL said, It is not possible for them to allocate more land for Green Belt purposes as it would require purchase of a large amount of land from the surrounding areas at prohibitive costs.
8But should the EC stipulation be waived? Perhaps not, for the green belt is a prerequisite and the refinery will have to adhere to the stipulation at any cost.
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8HMEL claims that a Green Belt of 300 acres has been developed in compliance with EC. And this Green Belt is of 100 metre average width along the periphery of the refinery.
8In addition to the Green belt, 80 acres of land has been developed with gardens and lawns.
8But the problem is that only 19.5 percent of the refinery site has been dedicated to greenery.
8HMEL claims that the it has planned and designed the layout of the Green belt, existing facilities and future facilities based on the stipulation given in the original EC letter.
8Now HMEL said, It is not possible for them to allocate more land for Green Belt purposes as it would require purchase of a large amount of land from the surrounding areas at prohibitive costs.
8But should the EC stipulation be waived? Perhaps not, for the green belt is a prerequisite and the refinery will have to adhere to the stipulation at any cost.
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The Bhatinda refinery of HMEL seems to have run foul of the specifications set in the environment clearance for the expansion of the refinery from 9 MMTPA to 11.25 MTPA.
8The clearance has mandated that no effluent will be discharged outside the plant premises, thereby ensuring a zero effluent discharge.
8But HMEL is not prepared for to obey the stipulation, claimg that even after reuse in the refinery, 450 m3/hr of water is designed to be discharged outside the refinery for irrigation purposes. This scheme apparently has the approval of the government of Punjab.
8HMEL is arguing that the quality of the treated effluent discharged from the ETP is monitored periodically by the Refinery Quality Control Laboratory and online analysers to ensure that the water discharged meets the latest MoEF standards.
8The expansion project comprises of modification of units within the premises of the existing refinery and though all the efforts have been at the design phase to maximise recycle and reuse of the treated effluent water, the refinery will still be left with 450 m3/hr for discharge outside.
HMEL is now seeking an amendment to EC stipulation.
8But the point to note is that, no matter how high the standards are kept, the mandate is that no effluent should be discharged from the refinery
8It remains a moot point however whether treated affluent water can ever be safe enough for use as irrigation water for crops..
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8The clearance has mandated that no effluent will be discharged outside the plant premises, thereby ensuring a zero effluent discharge.
8But HMEL is not prepared for to obey the stipulation, claimg that even after reuse in the refinery, 450 m3/hr of water is designed to be discharged outside the refinery for irrigation purposes. This scheme apparently has the approval of the government of Punjab.
8HMEL is arguing that the quality of the treated effluent discharged from the ETP is monitored periodically by the Refinery Quality Control Laboratory and online analysers to ensure that the water discharged meets the latest MoEF standards.
8The expansion project comprises of modification of units within the premises of the existing refinery and though all the efforts have been at the design phase to maximise recycle and reuse of the treated effluent water, the refinery will still be left with 450 m3/hr for discharge outside.
HMEL is now seeking an amendment to EC stipulation.
8But the point to note is that, no matter how high the standards are kept, the mandate is that no effluent should be discharged from the refinery
8It remains a moot point however whether treated affluent water can ever be safe enough for use as irrigation water for crops..
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8The following are the details of the concerned pipeline system where GAIL will conduct its cleaning and pigging operations:
-- 30 inch DUPL (Dahej to Panvel) pipeline, with 4 pigging segments, of which 2 are in Gujarat region, total length 389 Km,
-- 30 inch DPPL (Panvel to Usarghar) pipeline, 2 pigging segments, 101 Km length segment
-- 30 inch DPPL (Ambewadi to Usar) pipeline of length 50 Km, withone pigging segment
-- 30 inch Kargaon- Pune pipeline, one pigging segment in 68 Km legth pipeline
-- 24 inch DUPL-Panvel -Mahagenco pipeline, one pigging segment, pipeline length of 32 Km
-- 26 inch URAN-Thal, 20 Km pipeline, one pigging segment.
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-- 30 inch DUPL (Dahej to Panvel) pipeline, with 4 pigging segments, of which 2 are in Gujarat region, total length 389 Km,
-- 30 inch DPPL (Panvel to Usarghar) pipeline, 2 pigging segments, 101 Km length segment
-- 30 inch DPPL (Ambewadi to Usar) pipeline of length 50 Km, withone pigging segment
-- 30 inch Kargaon- Pune pipeline, one pigging segment in 68 Km legth pipeline
-- 24 inch DUPL-Panvel -Mahagenco pipeline, one pigging segment, pipeline length of 32 Km
-- 26 inch URAN-Thal, 20 Km pipeline, one pigging segment.
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Wary of more trouble like the pipeline blast that killed 22 people, GAIL intends to carry out a pigging and cleaning operation for its pipeline system in Maharashtra and Gujarat region.
8In Maharashtra, GAIL is transporting gas from Dahej to Uran
8In addition to that, it supplies gas to various consumers along the pipeline network.
Out of 10 segments considered for cleaning, two 30 inch segments (1st and 2nd segments of DUPL with a total length of 222KM) will be in Gujarat.
8All the lines listed for cleaning and pigging under this work has been pigged in the year 2012-13.
8Subsequently, GAIL intends to carry out cleaning and pigging in about 10 sections of the pipeline, out of which 2 sections are in the Gujarat area and rest 8 sections are in Maharashtra region.
8The 30 inch and 24 inch pipeline segments are internally coated with liquid epoxy. There is no internal coating for the 26” pipeline segment.
8Time period to complete of work is 2 years.
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8In Maharashtra, GAIL is transporting gas from Dahej to Uran
8In addition to that, it supplies gas to various consumers along the pipeline network.
Out of 10 segments considered for cleaning, two 30 inch segments (1st and 2nd segments of DUPL with a total length of 222KM) will be in Gujarat.
8All the lines listed for cleaning and pigging under this work has been pigged in the year 2012-13.
8Subsequently, GAIL intends to carry out cleaning and pigging in about 10 sections of the pipeline, out of which 2 sections are in the Gujarat area and rest 8 sections are in Maharashtra region.
8The 30 inch and 24 inch pipeline segments are internally coated with liquid epoxy. There is no internal coating for the 26” pipeline segment.
8Time period to complete of work is 2 years.
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LNG Bharat Private Limited (LNGBL) has proposed to set up a 5 MMTPA Floating Storage Unit (FSU) LNG facility with onshore storage tanks, cryogenic road tanker loading and regasification facilities at the existing Krishnapatnam Port in Andhra Pradesh.
8The proposal was submitted initially with 40 acres as land requirement; however, after detailed engineering and considering safety regulations, it was found that 40 acres of land was not sufficient for the proposed LNG handling terminal.
8Hence, an additional 80 acres of land adjacent to the existing 40 acre land within the Krishnapatnam port area has also been acquired.
8Accordingly, an addendum to the original MoU with the Krishnapatnam port indicating allotment of additional 80 acres has been signed.
8Moreover, the Comprehensive Environmental Impact Assessment (CEIA) studies (including Marine modelling, Risk assessment and CRZ studies) has also been conducted for the entire 120 acres of land.
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8The proposal was submitted initially with 40 acres as land requirement; however, after detailed engineering and considering safety regulations, it was found that 40 acres of land was not sufficient for the proposed LNG handling terminal.
8Hence, an additional 80 acres of land adjacent to the existing 40 acre land within the Krishnapatnam port area has also been acquired.
8Accordingly, an addendum to the original MoU with the Krishnapatnam port indicating allotment of additional 80 acres has been signed.
8Moreover, the Comprehensive Environmental Impact Assessment (CEIA) studies (including Marine modelling, Risk assessment and CRZ studies) has also been conducted for the entire 120 acres of land.
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In a recent public notice, PNGRB intends to declare the end of exclusivity period for many city gas distributors across India.
8A total of 21 gas distributors will lose their exclusivity over their respective CGD networks.
8The exclusivity includes, declaring, laying and building of common carrier networks for CGD networks.
8The regulatory board has asked all the stakeholders to submit their objections and suggestions within 21 days.
8The exhaustive will end for cities such as Pune, Sonipat, Hyderabad, Delhi and Surat among others.
Comment: The end of exclusivity theoretically mean that other parties can set up CGD networks in the same city. But how far is it going to be feasible? There are many other barriers that have to be overcome before a parallel network can be set up. In any case, the end of exclusivity augurs well for customers. If there is choice then there is competition and the end consumer always benenfits.
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8A total of 21 gas distributors will lose their exclusivity over their respective CGD networks.
8The exclusivity includes, declaring, laying and building of common carrier networks for CGD networks.
8The regulatory board has asked all the stakeholders to submit their objections and suggestions within 21 days.
8The exhaustive will end for cities such as Pune, Sonipat, Hyderabad, Delhi and Surat among others.
Comment: The end of exclusivity theoretically mean that other parties can set up CGD networks in the same city. But how far is it going to be feasible? There are many other barriers that have to be overcome before a parallel network can be set up. In any case, the end of exclusivity augurs well for customers. If there is choice then there is competition and the end consumer always benenfits.
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The Competition Commission's observations can have wide ranging implications for buyers of RLNG that had been contracted through Petronet LNG under a crude oil linked long term agreement with RasGas of Qatar.
8PLL in turn has similar Take or Pay obligation with RasGas and these accounts have to be settled by the end of the year.
8With customers unwilling to take the expensive gas because the floor price for crude at which the RLNG was contracted by PLL is far too high and this makes the gas more expensive than spot LNG at the moment.
8If PLL has to pay penalties for not offtakign RLNG cargoes from RasGas, PLL in turn may have to ask offtakers like GAIL to pay up. The gas major will have to raise the money from customers of gas who have rejected RLNG supplies despite long term GSAs.
8"The prices of RLNG imported in the country by PLL are governed by the fuel oil linkages as part of the contracts signed between individual companies like RasGas and PLL. The end user price of RLNG is not subsidized by the Government of India and is a complex mix of various components such as purchase price, exchange rate, regasification charges, transmission charges, taxes, contractual risks, competing fuel pricing etc. Accordingly, the relevant product market in the instant case does not need categorization on the basis of pricing mechanism," the Commission observed, thereby ruling out any anti-competitive pricing behaviour. Details
8PLL in turn has similar Take or Pay obligation with RasGas and these accounts have to be settled by the end of the year.
8With customers unwilling to take the expensive gas because the floor price for crude at which the RLNG was contracted by PLL is far too high and this makes the gas more expensive than spot LNG at the moment.
8If PLL has to pay penalties for not offtakign RLNG cargoes from RasGas, PLL in turn may have to ask offtakers like GAIL to pay up. The gas major will have to raise the money from customers of gas who have rejected RLNG supplies despite long term GSAs.
8"The prices of RLNG imported in the country by PLL are governed by the fuel oil linkages as part of the contracts signed between individual companies like RasGas and PLL. The end user price of RLNG is not subsidized by the Government of India and is a complex mix of various components such as purchase price, exchange rate, regasification charges, transmission charges, taxes, contractual risks, competing fuel pricing etc. Accordingly, the relevant product market in the instant case does not need categorization on the basis of pricing mechanism," the Commission observed, thereby ruling out any anti-competitive pricing behaviour. Details
In decision that may have a dramatic implications on industrial users of gas, the Competition Commission of India has rejected a complaint by Gujarat State Fertilizers & Chemcials Ltd and Gujarat Industries Power Company Ltd of unfair practices.
8The two companies had petitioned that GAIL incorporated anti-competitive clauses in the Gas Supply Agreement GSA in order to enforce the purchase a specified quantity of natural gas from it each year for a period of twenty years, failing which the gas major involved the ‘take or pay’ clause introduced in the GSA.
8t was alleged that there were other discriminatory practices too, including unconditional letter of credit to be furnished by buyers, exorbitant prices charged, refusal to furnish details regarding computation of price of RLNG, no provision of modification or termination, payment of full amount before resolution of disputes, continuous performance of obligations, that were unfair and discriminatory.
8Both companies had offered to return their entire contracted quantity for the year 2015 and yet they were being slapped with very high Take of Pay liabilities.
8The Commission held that GAIL did enjoy a "position of strength" in the market and was in a position to dictate terms for the GSA.
8After going through the material and relevant emails leading up to the signing of the GSAs, the Commission held that it was "unable to construe abusive conduct on the part of GAIL". It went to say that "safeguarding commercial interest or invoking contractual clauses which were not unfair per se cannot be termed as unfair just because they are invoked by one of the parties to the contract. The GSAs, when they were entered into appears to have been entered into after thorough negotiations and discussions." Details
8The two companies had petitioned that GAIL incorporated anti-competitive clauses in the Gas Supply Agreement GSA in order to enforce the purchase a specified quantity of natural gas from it each year for a period of twenty years, failing which the gas major involved the ‘take or pay’ clause introduced in the GSA.
8t was alleged that there were other discriminatory practices too, including unconditional letter of credit to be furnished by buyers, exorbitant prices charged, refusal to furnish details regarding computation of price of RLNG, no provision of modification or termination, payment of full amount before resolution of disputes, continuous performance of obligations, that were unfair and discriminatory.
8Both companies had offered to return their entire contracted quantity for the year 2015 and yet they were being slapped with very high Take of Pay liabilities.
8The Commission held that GAIL did enjoy a "position of strength" in the market and was in a position to dictate terms for the GSA.
8After going through the material and relevant emails leading up to the signing of the GSAs, the Commission held that it was "unable to construe abusive conduct on the part of GAIL". It went to say that "safeguarding commercial interest or invoking contractual clauses which were not unfair per se cannot be termed as unfair just because they are invoked by one of the parties to the contract. The GSAs, when they were entered into appears to have been entered into after thorough negotiations and discussions." Details
Saudi Arabia's crude oil exports dipped by 89,000 barrels per day (bpd) in July, while volumes used by local refineries and the country's refined products shipments rose from a month earlier, official data showed on Sunday.
8The world's biggest crude exporter trimmed its production by around 200,000 bpd in July pumping 10.361 million bpd, but Riyadh shows no signs of wavering on its strategy of defending market share and feeding a growth in global as well as domestic demand.
8The OPEC heavyweight shipped 7.276 million bpd in July down from 7.365 million bpd in June, figures published by the Joint Organisations Data Initiative (JODI) showed.
8Exports of refined oil products in July rose to 1.075 million bpd from 1.008 million bpd in June, the JODI data showed.
8The kingdom's rapid transition into one of the largest oil refiners adds an extra dimension to global oil markets.
8State oil giant Saudi Aramco has stakes in more than 5 million bpd of refining capacity, at home and abroad, landing it a place among the global leaders in making oil products. Details
8The world's biggest crude exporter trimmed its production by around 200,000 bpd in July pumping 10.361 million bpd, but Riyadh shows no signs of wavering on its strategy of defending market share and feeding a growth in global as well as domestic demand.
8The OPEC heavyweight shipped 7.276 million bpd in July down from 7.365 million bpd in June, figures published by the Joint Organisations Data Initiative (JODI) showed.
8Exports of refined oil products in July rose to 1.075 million bpd from 1.008 million bpd in June, the JODI data showed.
8The kingdom's rapid transition into one of the largest oil refiners adds an extra dimension to global oil markets.
8State oil giant Saudi Aramco has stakes in more than 5 million bpd of refining capacity, at home and abroad, landing it a place among the global leaders in making oil products. Details
Under the present situation, with the growth in demand and increasing fossil fuel prices, electricity supply cost in India is expected to rise from today’s $ 84 billion per year to more than $ 471 billion in 2050.
8That is a massive investment level by any yardstick.
8But increasing energy efficiency and shifting energy supply to renewables lead to long term costs for electricity supply that are 3% higher than conventional energy, despite a 19% increase in electricity production.
8India would shift up to 95% of the entire investment towards renewables and cogeneration. by 2030, and the fossil fuel share of power sector investment would be focused mainly on gas power plants.
8Because renewable energy has no fuel costs, the fuel cost savings could reach a total of $ 3,430 billion up to 2050, and $ 88 billion per year.
8The total fuel cost savings therefore would cover 110% of the total additional investments
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8That is a massive investment level by any yardstick.
8But increasing energy efficiency and shifting energy supply to renewables lead to long term costs for electricity supply that are 3% higher than conventional energy, despite a 19% increase in electricity production.
8India would shift up to 95% of the entire investment towards renewables and cogeneration. by 2030, and the fossil fuel share of power sector investment would be focused mainly on gas power plants.
8Because renewable energy has no fuel costs, the fuel cost savings could reach a total of $ 3,430 billion up to 2050, and $ 88 billion per year.
8The total fuel cost savings therefore would cover 110% of the total additional investments
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India provides an interesting test case for renewable energy generation and use.
8India's total energy demand by double by 2050.
8Electricity will become the major renewable ‘primary’ energy, not only for direct use for various purposes but also for the generation of synthetic fuels for fossil fuels substitution. Around 1,190 TWh are used in 2050 for electric vehicles and rail transport in 2050, about 440 TWh for hydrogen and 540 TWh for synthetic liquid fuel generation for the transport sector (excluding bunkers)
The prediction is that by 2050, 93% of the electricity produced in India will come from renewable energy sources
8‘New’ renewables – mainly wind, Pv, CSP and geothermal energy – will contribute 71% to the total electricity generation.
8Already by 2020 the share of renewable electricity production will be 23% and 56% by 2030.
8The installed capacity of renewables will reach about 770 GW in 2030 and 2,240 GW by 2050.
8A 100% electricity supply from renewable energy resources leads to around 3,260 GW installed generation capacity in 2050.
8Up to 2020 wind and Pv will become the main contributors to the growing market share.
8After 2020, the continuing growth of wind and Pv will be complemented by electricity from solar thermal, geothermal and ocean energy.
8The future scenarios show a high share of fluctuating power generation sources (Pv, wind and ocean) of already 38% to 47% by 2030 and 62% to 70% by 2050.
8Therefore, smart grids, demand side management (DSM), energy storage capacities and other options need to be expanded in order to increase the flexibility of the power system for grid integration, load balancing and a secure supply of electricity.
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8India's total energy demand by double by 2050.
8Electricity will become the major renewable ‘primary’ energy, not only for direct use for various purposes but also for the generation of synthetic fuels for fossil fuels substitution. Around 1,190 TWh are used in 2050 for electric vehicles and rail transport in 2050, about 440 TWh for hydrogen and 540 TWh for synthetic liquid fuel generation for the transport sector (excluding bunkers)
The prediction is that by 2050, 93% of the electricity produced in India will come from renewable energy sources
8‘New’ renewables – mainly wind, Pv, CSP and geothermal energy – will contribute 71% to the total electricity generation.
8Already by 2020 the share of renewable electricity production will be 23% and 56% by 2030.
8The installed capacity of renewables will reach about 770 GW in 2030 and 2,240 GW by 2050.
8A 100% electricity supply from renewable energy resources leads to around 3,260 GW installed generation capacity in 2050.
8Up to 2020 wind and Pv will become the main contributors to the growing market share.
8After 2020, the continuing growth of wind and Pv will be complemented by electricity from solar thermal, geothermal and ocean energy.
8The future scenarios show a high share of fluctuating power generation sources (Pv, wind and ocean) of already 38% to 47% by 2030 and 62% to 70% by 2050.
8Therefore, smart grids, demand side management (DSM), energy storage capacities and other options need to be expanded in order to increase the flexibility of the power system for grid integration, load balancing and a secure supply of electricity.
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The worldwide photovoltaics (Pv) market has been growing at 25% per annum in recent years, reaching 40 GW of new installed capacity in 2014 and is starting to make a significant contribution to electricity generation.
8Photovoltaics are important because of its decentralised and centralised character, its flexibility for use in an urban environment and huge potential for cost reduction. The Pv industry has been increasingly exploiting this potential during the last few years, with installation prices more than halving in the last few years. Current development is focused on improving existing modules and system components by increasing their energy efficiency and reducing material usage.
8Technologies like Pv thin film (using alternative semiconductor materials) or dye sensitive solar cells are developing quickly and present a huge potential for cost reduction. The mature technology crystalline silicon, with a proven lifetime of 30 years, is continually increasing its cell and module efficiency (by 0.5% annually), whereas the cell thickness is rapidly decreasing (from 230 to 180 microns over the last five years). Commercial module efficiency varies from 14 to 21%, depending on silicon quality and fabrication process.
8The learning factor for Pv modules has been fairly constant over the last 30 years with costs reducing by 20% each time the installed capacity doubles, indicating a high rate of technical learning.
8Assuming a globally installed capacity of 5,000 to 7,000 GW between 2040 and 2050, and with an electricity output of 7,000 to 10,000 TWh/a, generation costs of around 4-7 cents/kWh (depending on the region) will be achieved.
8Pv has already become competitive with retail electricity prices in some parts of the world, and will become competitive with fossil fuel costs soon.
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8Photovoltaics are important because of its decentralised and centralised character, its flexibility for use in an urban environment and huge potential for cost reduction. The Pv industry has been increasingly exploiting this potential during the last few years, with installation prices more than halving in the last few years. Current development is focused on improving existing modules and system components by increasing their energy efficiency and reducing material usage.
8Technologies like Pv thin film (using alternative semiconductor materials) or dye sensitive solar cells are developing quickly and present a huge potential for cost reduction. The mature technology crystalline silicon, with a proven lifetime of 30 years, is continually increasing its cell and module efficiency (by 0.5% annually), whereas the cell thickness is rapidly decreasing (from 230 to 180 microns over the last five years). Commercial module efficiency varies from 14 to 21%, depending on silicon quality and fabrication process.
8The learning factor for Pv modules has been fairly constant over the last 30 years with costs reducing by 20% each time the installed capacity doubles, indicating a high rate of technical learning.
8Assuming a globally installed capacity of 5,000 to 7,000 GW between 2040 and 2050, and with an electricity output of 7,000 to 10,000 TWh/a, generation costs of around 4-7 cents/kWh (depending on the region) will be achieved.
8Pv has already become competitive with retail electricity prices in some parts of the world, and will become competitive with fossil fuel costs soon.
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