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Sep 2015
After a marginal de growth during the previous month, the consumption of diesel (HSD) is up by 6.3% during August 2015 as against low growth in previous month.
8 In August 2015, the total all India sales volume of HSD was around 5444.4 MT .
8The other factor that seems have affected sales is the shift of consumer preference from diesel to petrol driven passenger vehicles.
Speculation and subsequent price reduction in diesel that happened on 1st September, 2015 prompted dealers to drop inventories at retail outlets, resulting in shifting of HSD sales to September, 2015 and therefore lower sales in August, 2015.
8Commercial vehicles sales registered a growth of 8% during August 2015. The medium and heavy commercial vehicles sales continued to record an impressive 35.3 % positive growth in August month.
Growth of 4.4% was also noticed in port traffic during August, 2015 which was due to the improvement in cargo handling at ports.
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8 In August 2015, the total all India sales volume of HSD was around 5444.4 MT .
8The other factor that seems have affected sales is the shift of consumer preference from diesel to petrol driven passenger vehicles.
Speculation and subsequent price reduction in diesel that happened on 1st September, 2015 prompted dealers to drop inventories at retail outlets, resulting in shifting of HSD sales to September, 2015 and therefore lower sales in August, 2015.
8Commercial vehicles sales registered a growth of 8% during August 2015. The medium and heavy commercial vehicles sales continued to record an impressive 35.3 % positive growth in August month.
Growth of 4.4% was also noticed in port traffic during August, 2015 which was due to the improvement in cargo handling at ports.
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The overall LPG consumption recorded a positive growth of 7.9% during August 2015 and a cumulative growth of 8.6% for the period April-August 2015.
8LPG for domestic consumption registered a 5.3% rise during August 2015 and 7.2% growth for the quarter April-August 2015. This happened mainly due to the release of 75.8 lakh new connections and 43.8 lakh DBCs during April-August 2015.
8LPG for non-domestic consumption registered a growth of 42.8% in August 2015 and a cumulative growth of 38.08% during April-August 2015. There was high growth too in Packed Non-Domestic LPG as a result of curbs in diversion of subsidized domestic cylinders use after the implementation of DBTL.
8Bulk LPG recorded a positive growth of 21.4% during August 2015 and negative growth of 0.2% during the April-August period, 2015.
Auto LPG registered a positive growth of 3.7% in August 2015. Cumulatively, for the April-August period, the growth rate stood at 7.4%.
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8LPG for domestic consumption registered a 5.3% rise during August 2015 and 7.2% growth for the quarter April-August 2015. This happened mainly due to the release of 75.8 lakh new connections and 43.8 lakh DBCs during April-August 2015.
8LPG for non-domestic consumption registered a growth of 42.8% in August 2015 and a cumulative growth of 38.08% during April-August 2015. There was high growth too in Packed Non-Domestic LPG as a result of curbs in diversion of subsidized domestic cylinders use after the implementation of DBTL.
8Bulk LPG recorded a positive growth of 21.4% during August 2015 and negative growth of 0.2% during the April-August period, 2015.
Auto LPG registered a positive growth of 3.7% in August 2015. Cumulatively, for the April-August period, the growth rate stood at 7.4%.
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Aug 31: Natural gas consumption witnessed a marginal increase of about 1.7% during August 2015, as compared to August 2014.
8In terms of volumes, total consumption during August 2015 was 3,311 MMSCM as compared to 3,254 MMSCM in August 2014.
Cumulatively, gas consumption for the April-August period declined by 4.62% from 16,216 MMSCM as compared to 15,467 MMSCM during the same period last year.
8Fertilizer sector's consumption stood at 1308.55 MMSCM showing a growth of 9.44% during August 2015. Cumulatively, consumption by the fertilizer sector increased by 3.3 % to 6170 MMSCM from 5970 MMSCM during April-August 2014.
8Power sector witnessed an overall increasesin volumes of around 6% from 723 MMSCM in August 2014 to 765 MMSCM in August 2015. On a cumulative basis, consumption declined by 4.28% to 3628 MMSCM during April-August 2015 from 3790 MMSCM during April-July 2014.
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8In terms of volumes, total consumption during August 2015 was 3,311 MMSCM as compared to 3,254 MMSCM in August 2014.
Cumulatively, gas consumption for the April-August period declined by 4.62% from 16,216 MMSCM as compared to 15,467 MMSCM during the same period last year.
8Fertilizer sector's consumption stood at 1308.55 MMSCM showing a growth of 9.44% during August 2015. Cumulatively, consumption by the fertilizer sector increased by 3.3 % to 6170 MMSCM from 5970 MMSCM during April-August 2014.
8Power sector witnessed an overall increasesin volumes of around 6% from 723 MMSCM in August 2014 to 765 MMSCM in August 2015. On a cumulative basis, consumption declined by 4.28% to 3628 MMSCM during April-August 2015 from 3790 MMSCM during April-July 2014.
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Aug 31: ATF consumption noticed a growth of 5.1% during August 2015. Cumulatively, for the April-August period, the growth was 6.1%.
8The higher sales in ATF can be attributed to a reduction in the number of flights operated by Spicejet which resulted in optimization of operations by other airlines.
Passengers carried by all Indian carriers during the month of August, 2015 recorded a growth of 18.66% by carrying 67.60 lakh passengers during the month as compared to 56.97 lakh during the month of August, 2014.
8The Passenger load factor has been also continuously improving . The average for the calendar year January-December 2014 was 76.4%, but this year till August 2015 the same has increased to 82.5%.
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Details
8The higher sales in ATF can be attributed to a reduction in the number of flights operated by Spicejet which resulted in optimization of operations by other airlines.
Passengers carried by all Indian carriers during the month of August, 2015 recorded a growth of 18.66% by carrying 67.60 lakh passengers during the month as compared to 56.97 lakh during the month of August, 2014.
8The Passenger load factor has been also continuously improving . The average for the calendar year January-December 2014 was 76.4%, but this year till August 2015 the same has increased to 82.5%.
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Details
8FO+LSHS registered de growth of sale by 3.7% in August 2015 as compared to August 2014, and pet coke witnessed a positive growth of 4.6% during the month.
On a cumulative basis too, there was a growth of 4.9% in April to August, 2015 for FO+LSHS whereas the cumulative growth of pet coke was 16.3% during April-August 2015.
8But the cumulative FO+LSHS data hides the fact that there has been a drop in consumption of LSHS. The consumption of LSHS has reduced due to shift to natural gas by major customers like power and fertilizer industries, such as GNFC and NFL.
8Other general trade sectors like petrochemical and steel also registered a growth in the consumption of FO as compared to the previous year.
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On a cumulative basis too, there was a growth of 4.9% in April to August, 2015 for FO+LSHS whereas the cumulative growth of pet coke was 16.3% during April-August 2015.
8But the cumulative FO+LSHS data hides the fact that there has been a drop in consumption of LSHS. The consumption of LSHS has reduced due to shift to natural gas by major customers like power and fertilizer industries, such as GNFC and NFL.
8Other general trade sectors like petrochemical and steel also registered a growth in the consumption of FO as compared to the previous year.
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During August 2015, sales of Light Diesel Oil (LDO) registered a growth of 11.6% Naptha too showed a healthy growth rate of 16.3% while Bitumen registered an increases of 52.7%
8LDO consumption recorded a growth during the month due to delay in onset of monsoon, leading to higher use of pumping sets, resumption of mining activities and improved port traffic
8The petrochemicals sector registered growth due to increased demand of naptha by RIL, IOCL,ONGC and APCL for use in their petrochemical plants.
Cumulatively too, there was a increases of 7.6% for the period April-August 2015, for LDO,where as for naptha it was 16.3%.
8The reason for the decline in sales can be attributed to the government's emphasis on building concrete roads.
8Bitumen consumption also registered an increase of 52.7% in the month of August, 2015.
Cumulatively, there was a growth of 2.5% between April-August 2015, which was mainly due lack of activity in infrastructure building .
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8LDO consumption recorded a growth during the month due to delay in onset of monsoon, leading to higher use of pumping sets, resumption of mining activities and improved port traffic
8The petrochemicals sector registered growth due to increased demand of naptha by RIL, IOCL,ONGC and APCL for use in their petrochemical plants.
Cumulatively too, there was a increases of 7.6% for the period April-August 2015, for LDO,where as for naptha it was 16.3%.
8The reason for the decline in sales can be attributed to the government's emphasis on building concrete roads.
8Bitumen consumption also registered an increase of 52.7% in the month of August, 2015.
Cumulatively, there was a growth of 2.5% between April-August 2015, which was mainly due lack of activity in infrastructure building .
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Cairn India Ltd, the operator of the offshore Ravva field intends to set up an automatic actuated rim seal fire detection and extinguishing system for its floating roof crude storage tanks in the terminal.
8The following services are envisaged to be completed by the contractor:
-- Design
-- Engineering
-- Supply
-- Installation and Commissioning
8In view of the nature of the scope, only those contractors possessing the requisite and proven record of performance in completing and fully commissioned at least one LSTK/EPC contract.
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8The following services are envisaged to be completed by the contractor:
-- Design
-- Engineering
-- Supply
-- Installation and Commissioning
8In view of the nature of the scope, only those contractors possessing the requisite and proven record of performance in completing and fully commissioned at least one LSTK/EPC contract.
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Domestic petroleum product consumption registered a robust 6.9 % growth in August 2015 as compared to corresponding month in the previous year.
8POL products here includes LPG, naphtha, MS (petrol), ATF, SKO (kerosene), HSD (diesel), LDO, FO/LSHS, bitumen and lubes and other minor products.
On a cumulative basis, except for lubes and greases,HSD and SKO, all other products have recorded a positive growth.
8The cumulative growth rate is 6.7% for the period April to August.
SKO is the only product which recorded a negative growth of 3.2 % on cumulative basis.
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8POL products here includes LPG, naphtha, MS (petrol), ATF, SKO (kerosene), HSD (diesel), LDO, FO/LSHS, bitumen and lubes and other minor products.
On a cumulative basis, except for lubes and greases,HSD and SKO, all other products have recorded a positive growth.
8The cumulative growth rate is 6.7% for the period April to August.
SKO is the only product which recorded a negative growth of 3.2 % on cumulative basis.
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MS (petrol) consumption was up by 10.6% during August 2015 as compared to August 2014 while the cumulative growth was12.1% for the period April to August 2015.
8The oil companies had sold around 1790 TMT of petrol during August 2015 .
8The high growth in MS consumption may be attributed to the increased usage of cars and two wheelers.
8The cumulative growth in passenger vehicle sales has been up by 4 % for the period August, 2015.
8The two wheeler segment registered a de growth of 2.98% on for the period August, 2015.
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8The oil companies had sold around 1790 TMT of petrol during August 2015 .
8The high growth in MS consumption may be attributed to the increased usage of cars and two wheelers.
8The cumulative growth in passenger vehicle sales has been up by 4 % for the period August, 2015.
8The two wheeler segment registered a de growth of 2.98% on for the period August, 2015.
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Bharat Petroleum Corporation Ltd (BPCL) will be conducting a maintenance check of its ATF pipeline connecting Kochi refinery to Nedumbassery Airport.
8The pipeline will be surveyed by cathode protection monitoring technique.
8The 8 inch pipeline is used for the transportation Aviation Turbine Fluid ( ATF ) from BPCL's Kochi refinery over a length of 32.113 KM. The pipeline is currently protected by "Impressed Current Cathodic Protection System ( ICCP)".
8Maintenance checks will cover the following:
-- ICCP stations
-- A.C./D.C Units
-- Two insulating joints
-- Total of 60 test lead points (TLPs)
8Contract duration for the work is two year.
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8The pipeline will be surveyed by cathode protection monitoring technique.
8The 8 inch pipeline is used for the transportation Aviation Turbine Fluid ( ATF ) from BPCL's Kochi refinery over a length of 32.113 KM. The pipeline is currently protected by "Impressed Current Cathodic Protection System ( ICCP)".
8Maintenance checks will cover the following:
-- ICCP stations
-- A.C./D.C Units
-- Two insulating joints
-- Total of 60 test lead points (TLPs)
8Contract duration for the work is two year.
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Oil India Limited (OIL), the operator of the KG-ONN-2004/ 1 block, is planning to go ahead with additional exploratory drilling in the fields of Andhra Pradesh and Punducherry, with an estimated cost is Rs.775 crore.
8OIL has identified 23 locations out of which 15 wells will be appraisal and rest exploratory.
8As per the minimum work program for the already aprroved clearance, OIL was committed to drill 8 wells in a time bound manner.
8But till now only two exploratory wells were drilled, out of which Dangeru-1, struck gas on very first attempt whereas Balusuttipa-1, was abandoned as no prospective sands were not found.
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8OIL has identified 23 locations out of which 15 wells will be appraisal and rest exploratory.
8As per the minimum work program for the already aprroved clearance, OIL was committed to drill 8 wells in a time bound manner.
8But till now only two exploratory wells were drilled, out of which Dangeru-1, struck gas on very first attempt whereas Balusuttipa-1, was abandoned as no prospective sands were not found.
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In a candid confession in an interaction organized by the International Society of Petroleum Engineers, Jose Gutierrez the head of technology in Transocean said that there is a shocking lack of innovation in the offshore drilling industry today.
8He said that that a total of 36,279 patents have been filed for offshore drilling technologies, that amount to 788 patents annually within the entire industry.
8In contrast, Gutierrez said even individual companies in other industries, such as telecommunications, file anywhere from 700 to 1,300 patents annually.
8In the last 20 years, only 331 patents have been filed for subsea technologies related to offshore drilling.
8The complex nature of offshore drilling operations hinders innovation, Gutierrez said. The sector contains a mix of technologies, and different technologies are often bundled with minimal integration.
8Gutierrez said the execution of new technology within the industry must be reimagined.
8He described a seven-stage systems-engineering-based innovation process used by companies in other industries. He said innovation in offshore drilling too oftern focuses on improving individual components.
8By focusing more on system improvement, the innovation process can lead to more lasting change.
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8He said that that a total of 36,279 patents have been filed for offshore drilling technologies, that amount to 788 patents annually within the entire industry.
8In contrast, Gutierrez said even individual companies in other industries, such as telecommunications, file anywhere from 700 to 1,300 patents annually.
8In the last 20 years, only 331 patents have been filed for subsea technologies related to offshore drilling.
8The complex nature of offshore drilling operations hinders innovation, Gutierrez said. The sector contains a mix of technologies, and different technologies are often bundled with minimal integration.
8Gutierrez said the execution of new technology within the industry must be reimagined.
8He described a seven-stage systems-engineering-based innovation process used by companies in other industries. He said innovation in offshore drilling too oftern focuses on improving individual components.
8By focusing more on system improvement, the innovation process can lead to more lasting change.
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All the well locations have been selected based on seismic surveys and geological data interpretation though soil testing may be required for site preparation.
8An approximate area of about 8000 sq. m per location will involved
8The maximum depth of 5500 m.
8Efforts will be made to arrange the electric power from the local electricity supply agencies, if available nearby for living camps.
8About 5 KLPD of HSD will be required during peak rig operation. 8Dedicated DG sets will be used.
8OIL will only use bio-degradable oil field chemicals to maximum extent.
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8An approximate area of about 8000 sq. m per location will involved
8The maximum depth of 5500 m.
8Efforts will be made to arrange the electric power from the local electricity supply agencies, if available nearby for living camps.
8About 5 KLPD of HSD will be required during peak rig operation. 8Dedicated DG sets will be used.
8OIL will only use bio-degradable oil field chemicals to maximum extent.
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Crude oil production increased by 5.6% in August, 2015 over August, 2014. Its cumulative index during April to August, 2015-16 increased by 0.5% over the corresponding period of previous year.
8The natural gas production increased by 3.7% in August, 2015. Its cumulative index during April to August, 2015-16 declined by 2.7% over the corresponding period of previous year.
8Petroleum refinery production increased by 5.8% in August, 2015. Its cumulative index during April to August, 2015-16 increased by 4.3% over the corresponding period of previous year.
8Fertilizer production increased by 12.6% in August, 2015. Its cumulative index during April to August, 2015-16 increased by 5.9% over the corresponding period of previous year.
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8The natural gas production increased by 3.7% in August, 2015. Its cumulative index during April to August, 2015-16 declined by 2.7% over the corresponding period of previous year.
8Petroleum refinery production increased by 5.8% in August, 2015. Its cumulative index during April to August, 2015-16 increased by 4.3% over the corresponding period of previous year.
8Fertilizer production increased by 12.6% in August, 2015. Its cumulative index during April to August, 2015-16 increased by 5.9% over the corresponding period of previous year.
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India reduced the price of locally produced natural gas by 18 percent for six months beginning Oct. 1, hurting producers including ONGC, OIL and RIL.
8The price will be cut to $3.82/mmbtu based on the gross heat value, according to the oil ministry’s Petroleum Planning and Analysis Cell.
8Rates were fixed at $4.66 per million Btu for the last six months.
8The price based on the net heat value will be $4.24, an oil ministry official said.
8The reduction will squeeze profit margins of explorers such as Reliance Industries and state-owned ONGC, while benefiting power producers and fertilizer makers.
8Low prices may deter exploration companies from investing and increasing output, essential for Prime Minister Narendra Modi’s target of cutting India’s dependence on imported energy to 50 percent by 2030 from 80 percent now. Details
8The price will be cut to $3.82/mmbtu based on the gross heat value, according to the oil ministry’s Petroleum Planning and Analysis Cell.
8Rates were fixed at $4.66 per million Btu for the last six months.
8The price based on the net heat value will be $4.24, an oil ministry official said.
8The reduction will squeeze profit margins of explorers such as Reliance Industries and state-owned ONGC, while benefiting power producers and fertilizer makers.
8Low prices may deter exploration companies from investing and increasing output, essential for Prime Minister Narendra Modi’s target of cutting India’s dependence on imported energy to 50 percent by 2030 from 80 percent now. Details
Prices at Henry Hub, the U.S. natural gas benchmark, can also affect global pricing through LNG trade.
8By 2020, when all current U.S. liquefaction projects are expected to be completed, the United States will account for almost one-fifth of global liquefaction capacity and will become the third-largest LNG export capacity holder in the world, after Qatar and Australia.
8Almost 80% of U.S. LNG export volumes for projects currently under construction have been contracted on pricing terms directly linked to the Henry Hub price, or under a hybrid pricing mechanism with links to Henry Hub.
8The flexibility in destination clauses in U.S. LNG export contracts and the introduction of hub indexes are expected to promote greater liquidity in global LNG trading and shift pricing away from oil-based indexes, contributing to the development of the Asian regional trading hubs and pricing indexes.
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8By 2020, when all current U.S. liquefaction projects are expected to be completed, the United States will account for almost one-fifth of global liquefaction capacity and will become the third-largest LNG export capacity holder in the world, after Qatar and Australia.
8Almost 80% of U.S. LNG export volumes for projects currently under construction have been contracted on pricing terms directly linked to the Henry Hub price, or under a hybrid pricing mechanism with links to Henry Hub.
8The flexibility in destination clauses in U.S. LNG export contracts and the introduction of hub indexes are expected to promote greater liquidity in global LNG trading and shift pricing away from oil-based indexes, contributing to the development of the Asian regional trading hubs and pricing indexes.
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Although long-term crude oil-indexed contracts remain Asia's dominant pricing mechanism, natural gas is beginning to be traded on the spot market as one-time transactions, or under short-term contracts, which more closely reflect international natural gas supply and demand balances.
8Asia Pacific spot LNG trade almost tripled between 2010-14 and represented 21% of all global LNG trade and 7% of total global natural gas trade in 2014.
8Several Asian countries -- including Japan, China, and Singapore -- are developing regional trading hubs with the goal of increasing price formation transparency:
-- In September 2014, Japan launched an LNG futures contract on the Japan over-the-counter exchange (JOE), settled against Rim Intelligence Co.'s Daily Pricing Index. However, only one trade has been made on JOE since its inception. The country's lack of pipeline connectivity with other markets, low volumes of flexible LNG, and lack of LNG price transparency and liquidity have contributed to limited spot LNG trading activity on JOE.
--China launched the Shanghai Oil and Gas Exchange on July 1, 2015, which will trade both pipeline gas and LNG. China's diversified natural gas market, with expanding pipeline infrastructure and gas-on-gas competition, may offer a more liquid Asian natural gas price index, but high levels of government regulation make it less attractive as a regional benchmark.
--In June 2015, Singapore's Stock Exchange launched the Singapore SGX LNG Index Group (SLInG). The index will provide a price for LNG cargoes from Singapore to different destinations reflecting regional spot prices, but trading volumes to date have been very low.
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8Asia Pacific spot LNG trade almost tripled between 2010-14 and represented 21% of all global LNG trade and 7% of total global natural gas trade in 2014.
8Several Asian countries -- including Japan, China, and Singapore -- are developing regional trading hubs with the goal of increasing price formation transparency:
-- In September 2014, Japan launched an LNG futures contract on the Japan over-the-counter exchange (JOE), settled against Rim Intelligence Co.'s Daily Pricing Index. However, only one trade has been made on JOE since its inception. The country's lack of pipeline connectivity with other markets, low volumes of flexible LNG, and lack of LNG price transparency and liquidity have contributed to limited spot LNG trading activity on JOE.
--China launched the Shanghai Oil and Gas Exchange on July 1, 2015, which will trade both pipeline gas and LNG. China's diversified natural gas market, with expanding pipeline infrastructure and gas-on-gas competition, may offer a more liquid Asian natural gas price index, but high levels of government regulation make it less attractive as a regional benchmark.
--In June 2015, Singapore's Stock Exchange launched the Singapore SGX LNG Index Group (SLInG). The index will provide a price for LNG cargoes from Singapore to different destinations reflecting regional spot prices, but trading volumes to date have been very low.
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The price discovery in the Asian gas and LNG market is a complicated task.
8Unlike the natural gas market in the United States, natural gas prices in Asian markets typically reflect contracts that are indexed to crude oil or petroleum product prices and typically US Henry Hub prices have been lower than Asian prices as a consequence.
8But the fall in crude prices have also brought about a decline in crude indexed LNG prices.
8Asian countries are developing regional trading hubs so that natural gas prices better reflect natural gas market dynamics.
8In Asia most natural gas is imported as LNG, and the price is indexed to crude oil on a long-term, contractual basis. The Asia Pacific market accounts for three-quarters of global LNG trade and one-third of global natural gas trade.
8Last year, almost 30% of global liquefied natural gas (LNG) was traded on a spot and short-term basis, of which Asia Pacific trade accounted for three-quarters of the total.nally
8In Asia, gas has been largely indexed to crude oil prices such as North Sea Brent or Japan customs-cleared crude (JCC) because of the liquidity and transparency of crude oil prices and the substitutability of natural gas and petroleum products in certain markets.
8For example, some Asian countries have the option to burn either natural gas or petroleum for electricity generation.
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8Unlike the natural gas market in the United States, natural gas prices in Asian markets typically reflect contracts that are indexed to crude oil or petroleum product prices and typically US Henry Hub prices have been lower than Asian prices as a consequence.
8But the fall in crude prices have also brought about a decline in crude indexed LNG prices.
8Asian countries are developing regional trading hubs so that natural gas prices better reflect natural gas market dynamics.
8In Asia most natural gas is imported as LNG, and the price is indexed to crude oil on a long-term, contractual basis. The Asia Pacific market accounts for three-quarters of global LNG trade and one-third of global natural gas trade.
8Last year, almost 30% of global liquefied natural gas (LNG) was traded on a spot and short-term basis, of which Asia Pacific trade accounted for three-quarters of the total.nally
8In Asia, gas has been largely indexed to crude oil prices such as North Sea Brent or Japan customs-cleared crude (JCC) because of the liquidity and transparency of crude oil prices and the substitutability of natural gas and petroleum products in certain markets.
8For example, some Asian countries have the option to burn either natural gas or petroleum for electricity generation.
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In India there are always two sides to the same story. And while we pride ourselves on our achievements, a study covering the country's most deprived states of Bihar, Jharkhand, Madhya Pradesh, Uttar Pradesh, Odisha and West Bengal, which was released today by power minister Piyush Goel, has established that 800 million people have no access to LPG and they continue to use firewood, dung cakes, charcoal or crop residue to meet their cooking energy needs.
8Clearly India has a long way to go.
8The figures are heavily fudged too.
8The survey done along scientific lines have established that only 14 per cent households in rural areas across the six states have stated that Biogas, LPG, Electricity or Natural Gas as their primary source of cooking.
8In sharp contrast, the total fraction of households in these states that are reported by oil marketing companies to have LPG connections ranges from 26 per cent in Jharkhand and Odisha to more than 50 per cent in Uttar Pradesh.
8Either the survey is wrong or the oil companies have trumped the data. The divergence is too wide and a better investigation of the data has now become a prerequisite to establish the impact of LPG access and subsidy on India's poor.
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8Clearly India has a long way to go.
8The figures are heavily fudged too.
8The survey done along scientific lines have established that only 14 per cent households in rural areas across the six states have stated that Biogas, LPG, Electricity or Natural Gas as their primary source of cooking.
8In sharp contrast, the total fraction of households in these states that are reported by oil marketing companies to have LPG connections ranges from 26 per cent in Jharkhand and Odisha to more than 50 per cent in Uttar Pradesh.
8Either the survey is wrong or the oil companies have trumped the data. The divergence is too wide and a better investigation of the data has now become a prerequisite to establish the impact of LPG access and subsidy on India's poor.
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The survey has also gone on to show that more than three quarters of the rural households rely totally on traditional biomass for cooking.
8But the problem is that these rural poor would rather stick their traditional modes of cooking than opt for LPG.
8The high upfront cost to secure an LPG connection is cited as the biggest hurdle (for 95 per cent of households) to adopting LPG.
8Furthermore, the high recurring monthly expenditure (88 per cent), and lack of distributors for the fuel in the local area (72 per cent) were also stated to be significant impediments to LPG adoption.
8Moreover, there is poor awareness about adverse health impacts of the use of traditional chulhas.
8Nearly 45 per cent of households without an LPG connection are unaware of the positive health benefits of using LPG over traditional chulha.
8Such poor levels of awareness of the impact of cooking fuels on health, could also be a reason for the low demand and adoption of the clean fuel.
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8But the problem is that these rural poor would rather stick their traditional modes of cooking than opt for LPG.
8The high upfront cost to secure an LPG connection is cited as the biggest hurdle (for 95 per cent of households) to adopting LPG.
8Furthermore, the high recurring monthly expenditure (88 per cent), and lack of distributors for the fuel in the local area (72 per cent) were also stated to be significant impediments to LPG adoption.
8Moreover, there is poor awareness about adverse health impacts of the use of traditional chulhas.
8Nearly 45 per cent of households without an LPG connection are unaware of the positive health benefits of using LPG over traditional chulha.
8Such poor levels of awareness of the impact of cooking fuels on health, could also be a reason for the low demand and adoption of the clean fuel.
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The study has come out with some startling findings.
8In all states, households that rely exclusively on biomass, and pay for some or all of it, end up spending more money on cooking energy than those who exclusively use LPG.
8Analysis of responses in UP indicate that though the distribution infrastructure for LPG is poor, they show higher subscription rate for LPG.
8This could partially be explained by the fact that a significant proportion of population rely on market procured firewood (as opposed to collecting it for free), and hence subsidised LPG (at the prevailing prices) becomes an economically economically competitive option.
8There is also a significant amount of mixed use.The mixed use of traditional fuels and LPG is a result of availability of free-of-cost biomass and its use alongside LPG, since it does allow for some cost savings.
8However, the adverse health associated with emissions from the use of traditional fuels are not accounted for by the decision makers of these households.
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8In all states, households that rely exclusively on biomass, and pay for some or all of it, end up spending more money on cooking energy than those who exclusively use LPG.
8Analysis of responses in UP indicate that though the distribution infrastructure for LPG is poor, they show higher subscription rate for LPG.
8This could partially be explained by the fact that a significant proportion of population rely on market procured firewood (as opposed to collecting it for free), and hence subsidised LPG (at the prevailing prices) becomes an economically economically competitive option.
8There is also a significant amount of mixed use.The mixed use of traditional fuels and LPG is a result of availability of free-of-cost biomass and its use alongside LPG, since it does allow for some cost savings.
8However, the adverse health associated with emissions from the use of traditional fuels are not accounted for by the decision makers of these households.
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Clearly, government intervention is a prerequisite in the provision of LPG to the poor.
8But survey shows that there is no knowledge within the government on how these interventions should happen.
8The optimal route is till to be figured out.
8Those who think that subsidies should be withdrawn are wrong as a vast mass of people cannot afford an LPG connection or a replacement of a cylinder. Even subsidized LPG is out of their reach
8Across the states, there is a divergence in opinion about the appropriate level of government (in particular state vs. central government).
8Everyone was unanimous in the survey that households should have access to LPG.
8Improved biomass cook stoves received a cold response, whereas biogas for cooking was not preferred at all.
8This reflects a loss of confidence in these technologies, stemming from the very limited successful experiences with these technologies, despite three decades of dedicated programme implementation.
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8But survey shows that there is no knowledge within the government on how these interventions should happen.
8The optimal route is till to be figured out.
8Those who think that subsidies should be withdrawn are wrong as a vast mass of people cannot afford an LPG connection or a replacement of a cylinder. Even subsidized LPG is out of their reach
8Across the states, there is a divergence in opinion about the appropriate level of government (in particular state vs. central government).
8Everyone was unanimous in the survey that households should have access to LPG.
8Improved biomass cook stoves received a cold response, whereas biogas for cooking was not preferred at all.
8This reflects a loss of confidence in these technologies, stemming from the very limited successful experiences with these technologies, despite three decades of dedicated programme implementation.
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Corruption in the delivery of services such as PDS SKO or LPG is another revelation of the survey.
8A vast majority of rural population believe that public delivery systems are steeped in inefficiency and corruption.
8Since kerosene is subsidized, people may find it profitable to resell it at a higher cost to people who need more than their quota.
8Similarly reselling of subsidised LPG cylinders is also rampant in rural areas.
8West Bengal has the highest self-reported rate of reselling of 48.9 per cent. These cylinders are of course sold at a premium because accessibility to legitimate LPG is limited or denied to many households.
8These findings will strengthen the argument that direct transfer of subsidies will be able to bring down the incidence of corruption in the delivery of LPG and SKO.
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8A vast majority of rural population believe that public delivery systems are steeped in inefficiency and corruption.
8Since kerosene is subsidized, people may find it profitable to resell it at a higher cost to people who need more than their quota.
8Similarly reselling of subsidised LPG cylinders is also rampant in rural areas.
8West Bengal has the highest self-reported rate of reselling of 48.9 per cent. These cylinders are of course sold at a premium because accessibility to legitimate LPG is limited or denied to many households.
8These findings will strengthen the argument that direct transfer of subsidies will be able to bring down the incidence of corruption in the delivery of LPG and SKO.
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It is time now for most corporates begin to look at the compatibility of their portfolio of assets with the demands of climate change.
8The predictions as well all know are ominous. Under the current policy scenario after taking into account climate control policies that are in place till 2014, the long term global temperature increase is a catastrophic 5.5 degrees centigrade
8Even after taking policy proposals as of mid-2014, the increase is going to be in the range of 3.6 degrees
8And it will really need a lot of hard work to contain temperature increases to just 2 degrees
8In this context, companies such as BHP Billiton, among the world largest mining and energy companies, have mandated that all of its businesses are required to identify and implement suitable green house gas reduction opportunities.
8A company wide audit is taken of GHG emissions and tags are kept on the reduction achieved.
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8The predictions as well all know are ominous. Under the current policy scenario after taking into account climate control policies that are in place till 2014, the long term global temperature increase is a catastrophic 5.5 degrees centigrade
8Even after taking policy proposals as of mid-2014, the increase is going to be in the range of 3.6 degrees
8And it will really need a lot of hard work to contain temperature increases to just 2 degrees
8In this context, companies such as BHP Billiton, among the world largest mining and energy companies, have mandated that all of its businesses are required to identify and implement suitable green house gas reduction opportunities.
8A company wide audit is taken of GHG emissions and tags are kept on the reduction achieved.
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BHP Billiton believes that it will not be possible to contain the increase in temperature to just 2 degree centigrade.
8The company's modeling has shown that the increase will be in the region of 3 degrees.
8The multinational is now looking at a 20-year plan based on the central based on such a temperature increase and after taking into account shock events to test the resilience of its portfolio of assets across a range of possible futures.
8The evaluation of the assets are determined by what will the cost attributed by governments to carbon emissions. One estimate is that the average price will reach US$50/tCO2-e by 2030. This reflects key global economies such as China, the United States and the European Union going beyond their current climate commitments and significantly increasing demand for long-term emissions reductions. The higher ambitions are matched by stronger policy support to help deliver emissions reduction potential.
8In the unlikely and extreme shock event, the carbon price rises up to US$80/tCO2-e by 2030, driven by very ambitiousgovernment targets.
8Carbon markets are currently limited but if there is a global accord, such markets are likely to expand.
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8The company's modeling has shown that the increase will be in the region of 3 degrees.
8The multinational is now looking at a 20-year plan based on the central based on such a temperature increase and after taking into account shock events to test the resilience of its portfolio of assets across a range of possible futures.
8The evaluation of the assets are determined by what will the cost attributed by governments to carbon emissions. One estimate is that the average price will reach US$50/tCO2-e by 2030. This reflects key global economies such as China, the United States and the European Union going beyond their current climate commitments and significantly increasing demand for long-term emissions reductions. The higher ambitions are matched by stronger policy support to help deliver emissions reduction potential.
8In the unlikely and extreme shock event, the carbon price rises up to US$80/tCO2-e by 2030, driven by very ambitiousgovernment targets.
8Carbon markets are currently limited but if there is a global accord, such markets are likely to expand.
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The new carbon and asset costing structures are likely to be in place by 2030 and that is not far from now.
8There will be a heavy discount on high emission commodities such as coal and oil and gas.
8Renewal energy is likely to make gigantic strides and there is now even talk of a fossil fuel free world by 2050.
8Even if this is not possible, current assets of companies will have to be dramatically reevaluated taking into account climate change considerations.
8Some of the oil and gas assets may never get developed particularly if they need to elicit income streams over a longer time frame to be viable, as they are likely to run into governmental controls and high carbon emission costs by around 2025 to 2030.
8Many of these assets may just be "dead" as low prices make them unviable, and if climate change is factored in, the implications are severe.
8It is time for companies such as ONGC and Oil India to build a 2030 model taking into account climate change possibilities.
8What is more, these companies need to look at climate change more holistically than they do now.
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8There will be a heavy discount on high emission commodities such as coal and oil and gas.
8Renewal energy is likely to make gigantic strides and there is now even talk of a fossil fuel free world by 2050.
8Even if this is not possible, current assets of companies will have to be dramatically reevaluated taking into account climate change considerations.
8Some of the oil and gas assets may never get developed particularly if they need to elicit income streams over a longer time frame to be viable, as they are likely to run into governmental controls and high carbon emission costs by around 2025 to 2030.
8Many of these assets may just be "dead" as low prices make them unviable, and if climate change is factored in, the implications are severe.
8It is time for companies such as ONGC and Oil India to build a 2030 model taking into account climate change possibilities.
8What is more, these companies need to look at climate change more holistically than they do now.
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There is one interesting point of view that has emerged from an European Central Bank research paper that says that the shale oil revolution is not responsible for the dramatic collapse in crude oil prices.
8Higher shale oil output was apparently already factored into crude prices.
8The paper claims that the decline in price was due to increase in non-US supply by roughly 1.5 mb/d between June and December, 2014
8The paper underlines the weak connection between the shale oil revolution, which is an anticipated long-term phenomenon, and the recent collapse in prices, which is the consequence of unanticipated shocks in the market.
8The study goes on to claim that the oil price impact of the increase in shale supply amounts to changes of less than ±$ 4 per barrel.
8The paper works in a mathematical model to so that it is lent with due credence.
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8Higher shale oil output was apparently already factored into crude prices.
8The paper claims that the decline in price was due to increase in non-US supply by roughly 1.5 mb/d between June and December, 2014
8The paper underlines the weak connection between the shale oil revolution, which is an anticipated long-term phenomenon, and the recent collapse in prices, which is the consequence of unanticipated shocks in the market.
8The study goes on to claim that the oil price impact of the increase in shale supply amounts to changes of less than ±$ 4 per barrel.
8The paper works in a mathematical model to so that it is lent with due credence.
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Auction of 69 small and marginal fields will test private sector’s appetite for revenues sharing model. It increases the risks for an operator in terms of de-linking profit sharing from the recovery of capex incurred by the operator. From the government perspective however, the revenue sharing model allows greater transparency and lower room for government interference. Additionally, the new model safeguards the government interests in case of any windfall gains arising out of i) any quantum jump in production arising out of unexpected finds and/or ii) steep hike in realizations. The revenue share model was sharply criticized by the private sector at the proposal stage, stating that it will not encourage maximization of production and will misalign risk-reward structure. Given that initial response, the private sector’s appetite for investment in the upstream sector under this regime will be tested
Please click on reports for more on the following topics:
8Under-recovery burden of PSU upstream companies increased marginally in Q1 FY16 as compared to nil in Q4 FY15
8Material fall in GURs expected in FY 16 following soft crude oil prices and MDBTL
8Revised under-recovery sharing formula is a positive for the PSU upstream companies
8Marginal upside to crude oil production expected Details
Please click on reports for more on the following topics:
8Under-recovery burden of PSU upstream companies increased marginally in Q1 FY16 as compared to nil in Q4 FY15
8Material fall in GURs expected in FY 16 following soft crude oil prices and MDBTL
8Revised under-recovery sharing formula is a positive for the PSU upstream companies
8Marginal upside to crude oil production expected Details
Oil India Ltd is going for recertification of ISO:14001:2004 and OHSAS: 18001:2007 standards for its LPG recovery plant at Diliajan.
8The LPG recovery plant has the following facility:
Gas Throughput: 2.215 MMSCMD
LPG Production: 50,000 TPA
Condensate Production: 24,000 TPA
Plant availability: 99.87 %
Plant Efficiency: 98.50 % (on Butane recovery)
8The storage capacity of plant is the following:
LPG: 1800 Tonnes
Condensate: 204 Tonnes
The plant utility is as follows:
Electricity: 2,29,00,080 KWh
Industrial water: 700 KL/ hour
Water Reservoir for Fire hydrant Network: 3000 KL
Air: 110 cfm
8The services required by the plant are as follows:
Plant operation: Shift duty round the clock
Mechanical maintenance
Electrical maintenance
Instrumentation maintenance
Quality control laboratory
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8The LPG recovery plant has the following facility:
Gas Throughput: 2.215 MMSCMD
LPG Production: 50,000 TPA
Condensate Production: 24,000 TPA
Plant availability: 99.87 %
Plant Efficiency: 98.50 % (on Butane recovery)
8The storage capacity of plant is the following:
LPG: 1800 Tonnes
Condensate: 204 Tonnes
The plant utility is as follows:
Electricity: 2,29,00,080 KWh
Industrial water: 700 KL/ hour
Water Reservoir for Fire hydrant Network: 3000 KL
Air: 110 cfm
8The services required by the plant are as follows:
Plant operation: Shift duty round the clock
Mechanical maintenance
Electrical maintenance
Instrumentation maintenance
Quality control laboratory
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After the GAIL pipeline blast that took the lives of 23 people, no one wants to be taking a chance with pipeline security.
There has been a sharp hike in the need for pipeline security and safety realted services.
Oil india Limited's (OIL) pipelines are also no exception to this trend.
The company is now planning to conduct intensive policing of itsr its gas pipeline network located in Dibrugarh and Tinsukia districts of Assam.
8The entire ROWs have been divided in three sectors as detailed below:
-- Sector A = 87.5 KM
-- Sector B = 92 KM
-- Sector C = 77.5 KM
8The grand total for three sectors is 257 KM.
8The idea is to get line walkers in each sector cover a minimum length of 6 to 7 KM per day.
8Whoever gets the contract will get for two years, extendable by another one year at the discretion of the company.
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There has been a sharp hike in the need for pipeline security and safety realted services.
Oil india Limited's (OIL) pipelines are also no exception to this trend.
The company is now planning to conduct intensive policing of itsr its gas pipeline network located in Dibrugarh and Tinsukia districts of Assam.
8The entire ROWs have been divided in three sectors as detailed below:
-- Sector A = 87.5 KM
-- Sector B = 92 KM
-- Sector C = 77.5 KM
8The grand total for three sectors is 257 KM.
8The idea is to get line walkers in each sector cover a minimum length of 6 to 7 KM per day.
8Whoever gets the contract will get for two years, extendable by another one year at the discretion of the company.
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Transocean -- the supplier of deepwater rigs in India to companies such as ONGC and RIL -- is currently embroiled in a corruption scandal in Brazil.
8The top brass of Brazilian national oil company, Petrobras, has admitted that payments have been paid by Transocean to one of them for a drilling contract.
8The admission was made before Brazalian authorities which are investigating the corruption charge.
8Petrobras claims that the payments were made despite the fact that no favour was shown to Transocean as it was already qualified for the contract.
8Transocean claims that it has been following transparent procedures in all its contracts and it is willing to cooperate with authorities in their investigation.
8Multinational has not identified any wrongdoing by any employee or any of its agents in connection with the company's business.
Comment: It is necessary to take large corporates such as Transocean to task if they have violated corruption laws in Brazil. Authorities in India too must carefully scan all the transactions entered into by oil and gas companies with Transocean to see that they were done with transparency and fairness. The multinational has supplied rigs with rates running into thousands of crores of rupees in India. Details
8The top brass of Brazilian national oil company, Petrobras, has admitted that payments have been paid by Transocean to one of them for a drilling contract.
8The admission was made before Brazalian authorities which are investigating the corruption charge.
8Petrobras claims that the payments were made despite the fact that no favour was shown to Transocean as it was already qualified for the contract.
8Transocean claims that it has been following transparent procedures in all its contracts and it is willing to cooperate with authorities in their investigation.
8Multinational has not identified any wrongdoing by any employee or any of its agents in connection with the company's business.
Comment: It is necessary to take large corporates such as Transocean to task if they have violated corruption laws in Brazil. Authorities in India too must carefully scan all the transactions entered into by oil and gas companies with Transocean to see that they were done with transparency and fairness. The multinational has supplied rigs with rates running into thousands of crores of rupees in India. Details
Building LPG handling infrastructure is always going to be lucrative proposition in India.
8Given its vast population, the demand for LPG will continue to grow for a long time to come.
8The PPAC has estimated that demand will grow at a CAGR of 2.6% between 2016-17 and 2021-22.
8The domestic demand-supply gap is likely to widen over the years, from 6635 TMT in 2016-17 to 7503 TMT in 2020-21.
8In this context, import of LPG will continue well into the future.
8Keeping this in mind, and now that it has a first rate jetty in place at Paradip, IOC Is planning to make Paradip a marketing and import hub for LPG to cater to all of East India.
8The LPG produced from its Paradip refinery along with imports will be the LPG stock that will then be shipped out via the Paradip-Haldia-Durgapur-Barauni-Patna-Muzaffarpur pipeline to LPG bottling plants in West Bengal and Bihar.
8Lorries will also be used to ferry the LPG.
8The need for another hub was felt after the company's Haldia LPG facility could not take the load on account of severe draft as well as jetty availability problems.
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8Given its vast population, the demand for LPG will continue to grow for a long time to come.
8The PPAC has estimated that demand will grow at a CAGR of 2.6% between 2016-17 and 2021-22.
8The domestic demand-supply gap is likely to widen over the years, from 6635 TMT in 2016-17 to 7503 TMT in 2020-21.
8In this context, import of LPG will continue well into the future.
8Keeping this in mind, and now that it has a first rate jetty in place at Paradip, IOC Is planning to make Paradip a marketing and import hub for LPG to cater to all of East India.
8The LPG produced from its Paradip refinery along with imports will be the LPG stock that will then be shipped out via the Paradip-Haldia-Durgapur-Barauni-Patna-Muzaffarpur pipeline to LPG bottling plants in West Bengal and Bihar.
8Lorries will also be used to ferry the LPG.
8The need for another hub was felt after the company's Haldia LPG facility could not take the load on account of severe draft as well as jetty availability problems.
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What Paradip will allow is to import of LPG through VLGCs at the newly constructed South Jetty next to the Paradip refinery, opening up to the Bay of Bengal.
8The jetty has space to set up butane and propane unloading facilities. Two underground pipelines will transfer the cargoes to the storage facility, in terms of above ground mounded storage vessels.
8The propane and butane will bne mixed and marketed as LPG.
8A marketing terminal is already in place to store and distribute LPG made in the Paradip refinery but the facilities will now be expanded to take care of imported LPG.
8Mounded bullets for bulk butane &and propane storage (20 x 2,000 MT) will be set up for storage purposes. The estimated cost of the project is Rs. 690 crore.
8The existing storage capacity at Paradip is made of 3 x 600 MT of LPG and this is to be expanded by 20 x 2,000 MT storage to take in imported LPG.
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8The jetty has space to set up butane and propane unloading facilities. Two underground pipelines will transfer the cargoes to the storage facility, in terms of above ground mounded storage vessels.
8The propane and butane will bne mixed and marketed as LPG.
8A marketing terminal is already in place to store and distribute LPG made in the Paradip refinery but the facilities will now be expanded to take care of imported LPG.
8Mounded bullets for bulk butane &and propane storage (20 x 2,000 MT) will be set up for storage purposes. The estimated cost of the project is Rs. 690 crore.
8The existing storage capacity at Paradip is made of 3 x 600 MT of LPG and this is to be expanded by 20 x 2,000 MT storage to take in imported LPG.
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The Rs 690 crore investment will go into putting together the LPG unloading facilities, where the material will flow out at the rate of 1,000 MT per hour.
8The refrigerated LPG will be heated to about 15 degree centigrade by using sea water shell and tube heat exchanges and then transferring it to the storage facility through through two. 16” transfer lines.
8Booster Pumps will be used for transfer of butane and propane through pipelines. Motor operated valves will be in position to control the flow.
8The LPG unloaded from ship will be stored in 10 bullets each for propane and butane. and the moulded vessels will be fabricated and installed as per OISD-150 standards.
8The mechanical design of the storage vessels will be based on following considerations:
--Design Code - ASME SEC. VIII or PD - 5500 or equivalent duly approved by PESO. Amsingle code shall be adopted for design, fabrication, and inspection and testing.
8Specific consideration shall be given to
-- Internal vapour and hydraulic pressure
-- External loadings on the vessel
-- Internal vacuum
-- Material
-- The material of construction for bullets shall be IS:2041 Grade R-355
conforming to design code.
Cathodic protection shall be provided to protect the external surface of the bullet from
corrosion.
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8The refrigerated LPG will be heated to about 15 degree centigrade by using sea water shell and tube heat exchanges and then transferring it to the storage facility through through two. 16” transfer lines.
8Booster Pumps will be used for transfer of butane and propane through pipelines. Motor operated valves will be in position to control the flow.
8The LPG unloaded from ship will be stored in 10 bullets each for propane and butane. and the moulded vessels will be fabricated and installed as per OISD-150 standards.
8The mechanical design of the storage vessels will be based on following considerations:
--Design Code - ASME SEC. VIII or PD - 5500 or equivalent duly approved by PESO. Amsingle code shall be adopted for design, fabrication, and inspection and testing.
8Specific consideration shall be given to
-- Internal vapour and hydraulic pressure
-- External loadings on the vessel
-- Internal vacuum
-- Material
-- The material of construction for bullets shall be IS:2041 Grade R-355
conforming to design code.
Cathodic protection shall be provided to protect the external surface of the bullet from
corrosion.
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For reference purposes, the website also carries here additional details of the faciltiies that are going to set up. And these include information on:
8Ship unloading facility, parcel size, berthing time and unloading rate
8Sea water intake pumps capacity and discharge pressure
8Thermal capacity of sea water heat exchangers
8Pipeline transfer parameters
8Receipt and storage facility parameters
8LPG dispatch facility details
8Flow rates of Propane and Butane transfer pumps
8Design basis for raw materials
8Water requirement and waste water generation
8Electricity (in terms of DG sets) and fuel requirements
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8Ship unloading facility, parcel size, berthing time and unloading rate
8Sea water intake pumps capacity and discharge pressure
8Thermal capacity of sea water heat exchangers
8Pipeline transfer parameters
8Receipt and storage facility parameters
8LPG dispatch facility details
8Flow rates of Propane and Butane transfer pumps
8Design basis for raw materials
8Water requirement and waste water generation
8Electricity (in terms of DG sets) and fuel requirements
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No other company exhibits the potential of the LPG storage and logistics business better than the privately owned Aegis Logistics.
8The company has made inroads into a business controlled by the public sector and despite many a problem, it has been able come out a winner.
8The company is deeply involved in the sourcing, storage and distribution of LPG as well as other oil and chemical products.
8The terminalling, retailing and distribution industry in India has many participants, but only a select few possess the necessary technical and safety credentials as well as the infrastructure to benefit from the long term prospects resulting from increasing Indian imports oil products, particularly LPG.
8The performance of Aegis' LPG retail and distribution business stabilized with the gradual rationalization of LPG subsidies, resulting in a decrease in the diversion of subsidized LPG to the transport and commercial sector. This has helped the company to make firm inroads into the commercial LPG market.
8The company's turnover in Q-1 2016 was Rs 706.45 crore as against Rs 949.42 crore in Q-1, 2015. But the lower turnover was on account of lower prices but the company's margins have gone up sizably during this period.
8In fact the profit before interest & tax for the LPG segment stood at Rs 24.07 crore versus Rs 15.82 crore in Q1FY15 which is a substantial growth of 52.1%.
8Click on Details to find out more about how the company woven a success story around a segment that is tightly controlled by the public sector downstream companies as also its future expansion plans.
8Clearly, the company did quite well as is evident from the fact that it was able to sell a 40% stake to Itochu Corporation last year.
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8The company has made inroads into a business controlled by the public sector and despite many a problem, it has been able come out a winner.
8The company is deeply involved in the sourcing, storage and distribution of LPG as well as other oil and chemical products.
8The terminalling, retailing and distribution industry in India has many participants, but only a select few possess the necessary technical and safety credentials as well as the infrastructure to benefit from the long term prospects resulting from increasing Indian imports oil products, particularly LPG.
8The performance of Aegis' LPG retail and distribution business stabilized with the gradual rationalization of LPG subsidies, resulting in a decrease in the diversion of subsidized LPG to the transport and commercial sector. This has helped the company to make firm inroads into the commercial LPG market.
8The company's turnover in Q-1 2016 was Rs 706.45 crore as against Rs 949.42 crore in Q-1, 2015. But the lower turnover was on account of lower prices but the company's margins have gone up sizably during this period.
8In fact the profit before interest & tax for the LPG segment stood at Rs 24.07 crore versus Rs 15.82 crore in Q1FY15 which is a substantial growth of 52.1%.
8Click on Details to find out more about how the company woven a success story around a segment that is tightly controlled by the public sector downstream companies as also its future expansion plans.
8Clearly, the company did quite well as is evident from the fact that it was able to sell a 40% stake to Itochu Corporation last year.
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IOCL has proposed to reduce the capacity of its oil tankage facility located at the Jawaharlal Nehru Port Trust, Navi Mumbai.
8The reduction in kerosene requirement, as LPG replaces SKO rapidly through rural India, has led IOCL to reduce its tankage to 5000KL from 10000 KL.
8The delay in completion of the new international airport project in Navi Mumbai has also pressurized IOC to reduce ATF tankage to 25000KL.
8Also, as per the government guidelines, its is mandated that ethanol should be mixed with motor spirit (MS). Hence 210 KL of tankage will also be build for storing ethanol.
8List of existing and proposed capacities is as follows:
-- Motor Spirit( Capacity changed (from 10000KL to 8070KL)
-- Superior Kerosene Oil (from 10000KL to 5000KL)
-- High Speed Diesel (New tankage with proposed capacity of 10020KL)
-- Aviation Turbine Fuel (from 30000KL to 25000KL)
-- Ethanol (new installation of 210KL)
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8The reduction in kerosene requirement, as LPG replaces SKO rapidly through rural India, has led IOCL to reduce its tankage to 5000KL from 10000 KL.
8The delay in completion of the new international airport project in Navi Mumbai has also pressurized IOC to reduce ATF tankage to 25000KL.
8Also, as per the government guidelines, its is mandated that ethanol should be mixed with motor spirit (MS). Hence 210 KL of tankage will also be build for storing ethanol.
8List of existing and proposed capacities is as follows:
-- Motor Spirit( Capacity changed (from 10000KL to 8070KL)
-- Superior Kerosene Oil (from 10000KL to 5000KL)
-- High Speed Diesel (New tankage with proposed capacity of 10020KL)
-- Aviation Turbine Fuel (from 30000KL to 25000KL)
-- Ethanol (new installation of 210KL)
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In today's volatile environment, the oil and gas analyst has a tough job in hand trying to keep on top of developments.
8For those who are harried and pressed for time, the parameters to watch are:
For crude oil movements (the outlook currently is negative)
8Data to Watch: US FOMC Member Dudley Speaks, US Personal Spending m/m, US Pending Home Sales m/m, US Goods Trade Balance, US CB Consumer Confidence, US ADP Non-Farm Employment Change, US Chicago PMI, US Crude Oil Inventories, US Fed Chair Yellen Speaks, CHINA Caixin Final Manufacturing PMI, US Unemployment Claims, US ISM Manufacturing PMI, US Average Hourly Earnings m/m, US Non-Farm Employment Change, US Unemployment Rate, US Factory Orders m/m.
For gas
8Fundamental News: Natural-gas prices fell after the EIA reported larger-than-expected climb in U.S. supplies.
8The primary data to watch is the US natural gas storage data
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8For those who are harried and pressed for time, the parameters to watch are:
For crude oil movements (the outlook currently is negative)
8Data to Watch: US FOMC Member Dudley Speaks, US Personal Spending m/m, US Pending Home Sales m/m, US Goods Trade Balance, US CB Consumer Confidence, US ADP Non-Farm Employment Change, US Chicago PMI, US Crude Oil Inventories, US Fed Chair Yellen Speaks, CHINA Caixin Final Manufacturing PMI, US Unemployment Claims, US ISM Manufacturing PMI, US Average Hourly Earnings m/m, US Non-Farm Employment Change, US Unemployment Rate, US Factory Orders m/m.
For gas
8Fundamental News: Natural-gas prices fell after the EIA reported larger-than-expected climb in U.S. supplies.
8The primary data to watch is the US natural gas storage data
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The website carries here an interesting paper on the diversity of supply sources in advanced countries for petroleum products and crude oil. The comparisons have interesting lessons for India too.
8The study shows that a significantly higher proportion of petroleum products is made indigenously by importing crude oil.
8The overall picture of diversity of supply for oil and oil products reflects a higher security of supply for oil products than for crude oil, primarily driven by higher levels of indigenous production for products than for crude itself.
8With an average self-sufficiency score of 0.41, these advanced countries are highly dependent on imports of crude oil to meet refinery demand, compared to average scores of
1.43, 0.88 and 0.93 for motor gasoline, jet fuel and diesel respectively.
8India oil and gas sector is also styled along the same lines. We are self sufficient, more or less, in refined products but overtly dependent on crude oil imports.
8Our crude oil dependency ratios are however significantly higher than most other countries.
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8The study shows that a significantly higher proportion of petroleum products is made indigenously by importing crude oil.
8The overall picture of diversity of supply for oil and oil products reflects a higher security of supply for oil products than for crude oil, primarily driven by higher levels of indigenous production for products than for crude itself.
8With an average self-sufficiency score of 0.41, these advanced countries are highly dependent on imports of crude oil to meet refinery demand, compared to average scores of
1.43, 0.88 and 0.93 for motor gasoline, jet fuel and diesel respectively.
8India oil and gas sector is also styled along the same lines. We are self sufficient, more or less, in refined products but overtly dependent on crude oil imports.
8Our crude oil dependency ratios are however significantly higher than most other countries.
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The next 20 years will witness radical shifts in the supply, demand and trade balances for NGLs — ethane, propane, butane, and pentanes plus. These shifts will have a profound impact, reaching beyond LPG and ethane markets and trade. They will affect upstream oil and gas economics, as well as downstream pricing for naphtha and other oil products, in turn impacting petrochemical feed choices and investments, refining margins and runs, and even crude oil production.
8On the supply side, the pace of change has accelerated, and the wave of NGL production growth in North America continues, even with the recent shock of lower prices in 2014-15. This trend is incentivizing investment in
fractionation, local petrochemical facilities, and export infrastructure. The battle to capture global markets will generate both winners and losers everywhere — exporters in North America and the Middle East, as well as importers in Europe, Asia and Latin America.
8On the demand side of the equation, the story is also rapidly changing as growing supply is pricing itself to create sufficient demand. Will the mix of feeds into petrochemicals be the most affected given its price sensitivity? What other markets will be impacted? How much and where?
8Trade will change dramatically as rapid increases in North American exports force their way into the market. Although initially focused on Europe and Latin America, destinations will shift more towards Asia with the widening of the Panama Canal in 2016.
8Together, these fundamental forces will impact price spreads for other products as the surge in NGLs ultimately displaces naphtha from petrochemicals and drives refiners to shift yields more towards middle distillates.
8Investment choices in upstream, midstream, tanker fleets, petrochemicals and refining will all be affected.
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8On the supply side, the pace of change has accelerated, and the wave of NGL production growth in North America continues, even with the recent shock of lower prices in 2014-15. This trend is incentivizing investment in
fractionation, local petrochemical facilities, and export infrastructure. The battle to capture global markets will generate both winners and losers everywhere — exporters in North America and the Middle East, as well as importers in Europe, Asia and Latin America.
8On the demand side of the equation, the story is also rapidly changing as growing supply is pricing itself to create sufficient demand. Will the mix of feeds into petrochemicals be the most affected given its price sensitivity? What other markets will be impacted? How much and where?
8Trade will change dramatically as rapid increases in North American exports force their way into the market. Although initially focused on Europe and Latin America, destinations will shift more towards Asia with the widening of the Panama Canal in 2016.
8Together, these fundamental forces will impact price spreads for other products as the surge in NGLs ultimately displaces naphtha from petrochemicals and drives refiners to shift yields more towards middle distillates.
8Investment choices in upstream, midstream, tanker fleets, petrochemicals and refining will all be affected.
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The Dredging Corporation of India (DCI) plans to augment its capacity by purchasing two more higher capacity dredgers while at the same time take up the refurbishment of the existing albeit aging fleet
8The augmentation will bring in additional business because dredging work is much in demand in India.
8The fact that India is a good market is evident from the fact that the company registered a 66% increase in its profit before tax in FY15.
8The EPS also went up to Rs 22.29 from Rs 13.41 during the period.
8For reference purposes, the website also carries here details of the its dredging fleet.
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8The augmentation will bring in additional business because dredging work is much in demand in India.
8The fact that India is a good market is evident from the fact that the company registered a 66% increase in its profit before tax in FY15.
8The EPS also went up to Rs 22.29 from Rs 13.41 during the period.
8For reference purposes, the website also carries here details of the its dredging fleet.
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BPCL is planning to install centrifugal pumps and associated pipelines in the Jalandhar TOP.
The job consist of following works:
8Centrifugal pump installation- two 250KLand 150 KL/HR250KL/HR centrifugal pump with electric motor and accessories.
8Pipeline laying-AG 75 mm
8Pipeline laying-AG 100 mm
8Pipeline API 5L GRA/B-150 mm
8Laying above ground pipelines by welding joint, flanges, fabricating bends and fittings as required
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The job consist of following works:
8Centrifugal pump installation- two 250KLand 150 KL/HR250KL/HR centrifugal pump with electric motor and accessories.
8Pipeline laying-AG 75 mm
8Pipeline laying-AG 100 mm
8Pipeline API 5L GRA/B-150 mm
8Laying above ground pipelines by welding joint, flanges, fabricating bends and fittings as required
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There has been a dramatic fall in E&P expenditure since crude prices have fallen.
8So far, the data shows that over $200 billion in global new project spending has been delayed, postponed or cancelled.
8Canada’s oil sands is taking largest hit with a 40% decline in capital spending in its oil & gas industry in 2015
8Shale producers reported losses of about $15 billion in Q2 2015 compared to profits of nearly $5 billion in Q2 2014
8US energy companies default on loan rate has accelerate to 4.8%--highest level since 1999 and up from 3.3% in August
8EIA has been consistently bringing down US crude production forecast every month.
8Clearly, low prices are hurting non-OPEC production and investment that may eventually lead to the rebalancing of the market in 2016 and that is the reason why OPEC producers like Saudi Arabia are pumping in production into the market even if low prices are hurting their economies.
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8So far, the data shows that over $200 billion in global new project spending has been delayed, postponed or cancelled.
8Canada’s oil sands is taking largest hit with a 40% decline in capital spending in its oil & gas industry in 2015
8Shale producers reported losses of about $15 billion in Q2 2015 compared to profits of nearly $5 billion in Q2 2014
8US energy companies default on loan rate has accelerate to 4.8%--highest level since 1999 and up from 3.3% in August
8EIA has been consistently bringing down US crude production forecast every month.
8Clearly, low prices are hurting non-OPEC production and investment that may eventually lead to the rebalancing of the market in 2016 and that is the reason why OPEC producers like Saudi Arabia are pumping in production into the market even if low prices are hurting their economies.
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OPEC vision that low prices will snuff out non-OPEC output in 2016 may not happen.
8Even if the US shale industry is feeling the pinch of low prices, US supply will remain "sticky".
8This means that declines while decline in US production will be significant, it will not enough to balance the market in 2016
8US is no longer a marginal swing producer, for low prices have spurred advances in technology, allowing producers to stay resilient
8This being done by re-fracking wells, increasing well productivity and using advanced software.
8Other significant methods used for keeping production alive in the US is by using methods such as "highgrading", "fracklogging" and by forcing service companies to cut costs.
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8Even if the US shale industry is feeling the pinch of low prices, US supply will remain "sticky".
8This means that declines while decline in US production will be significant, it will not enough to balance the market in 2016
8US is no longer a marginal swing producer, for low prices have spurred advances in technology, allowing producers to stay resilient
8This being done by re-fracking wells, increasing well productivity and using advanced software.
8Other significant methods used for keeping production alive in the US is by using methods such as "highgrading", "fracklogging" and by forcing service companies to cut costs.
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The new theory that is being advanced by this presentation is that it will have to be a demand lead recovery rather than a supply collapse that will lead to a revival of prices.
8Non-OPEC non-shale decline may not underpin market rebalancing
8Demand may go up responding to low domestic gasoline prices.
8In the US for example, gasoline consumption averaged 9.5 million bpd in August, the highest seasonal level since 2007 despite a long-term structural decline trend from efficiency measures.
8Unlike in the US however, slowing economic growth and resulting slowing appetite for commodities to continue in China.
8Overall, a mix of factors will be at work: there will be a fall in both US and non-OPEC production. There will also be project cancellations. OPEC supply growth will also end, as new capacity will not be added while output from older fields will contiue to decline.
8Saudi Arabia's output decline may pump in by end of 2015 while that of Iran may end in 2016.
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8Non-OPEC non-shale decline may not underpin market rebalancing
8Demand may go up responding to low domestic gasoline prices.
8In the US for example, gasoline consumption averaged 9.5 million bpd in August, the highest seasonal level since 2007 despite a long-term structural decline trend from efficiency measures.
8Unlike in the US however, slowing economic growth and resulting slowing appetite for commodities to continue in China.
8Overall, a mix of factors will be at work: there will be a fall in both US and non-OPEC production. There will also be project cancellations. OPEC supply growth will also end, as new capacity will not be added while output from older fields will contiue to decline.
8Saudi Arabia's output decline may pump in by end of 2015 while that of Iran may end in 2016.
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The projections now are that the average price of crude will hover around $50/bbl lin 2016.
8This is because non-OPEC supply is dropping but OPEC supply continue to grow as every OPEC supplier is keen to keep its market share intact.
8Also to be noted that while non-OPEC supply falls, the fall is not going to be very large. EIA projections show that US supply was at 9.61 million barrels in April, 2015, and this goes down to 8.63 million barrrels in August 2016 but recovers to 9.09 million barrels in December 2016
8Then again, the geopolitical context remains bearish globally.
8So the rebalancing is not going to happen in 2016.
8At best the rebalancing is going to take place in the third quarter of 2017 at the earliest.
8And that for those who look at the oil markets is still a long time away.
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8This is because non-OPEC supply is dropping but OPEC supply continue to grow as every OPEC supplier is keen to keep its market share intact.
8Also to be noted that while non-OPEC supply falls, the fall is not going to be very large. EIA projections show that US supply was at 9.61 million barrels in April, 2015, and this goes down to 8.63 million barrrels in August 2016 but recovers to 9.09 million barrels in December 2016
8Then again, the geopolitical context remains bearish globally.
8So the rebalancing is not going to happen in 2016.
8At best the rebalancing is going to take place in the third quarter of 2017 at the earliest.
8And that for those who look at the oil markets is still a long time away.
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Royal Dutch Shell, which set up a 5 million tone LNG terminal at Hazira in Gujarat nearly a decade back, is all set to grab a bigger share of the growing demand for imported gas in India.
8Andhra Pradesh Gas Distribution Corporation (APGDC), GDF Suez, Shell and GAIL have signed a memorandum of understanding (MoU) to set up a floating LNG terminal with an initial capacity of 5 mt, which could be doubled at a later stage.
8The prposed project is planed to set up Kakinada at Andhra Pradesh.
5 MT LNG terminals is expected to cost around $1 billion.
8A floating LNG terminal will reduce the cost of the project as there is no need for long pipelines to onshore terminal, compression platforms to push gas to the shore, near shore works such as dredging and jetty construction, and onshore development such as building roads, lay-down areas and accommodation facilities.
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8Andhra Pradesh Gas Distribution Corporation (APGDC), GDF Suez, Shell and GAIL have signed a memorandum of understanding (MoU) to set up a floating LNG terminal with an initial capacity of 5 mt, which could be doubled at a later stage.
8The prposed project is planed to set up Kakinada at Andhra Pradesh.
5 MT LNG terminals is expected to cost around $1 billion.
8A floating LNG terminal will reduce the cost of the project as there is no need for long pipelines to onshore terminal, compression platforms to push gas to the shore, near shore works such as dredging and jetty construction, and onshore development such as building roads, lay-down areas and accommodation facilities.
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Now that the government is determined, it looks like at least five to six urea units may come up within the next four to five years.
8This totals up to an investment of anywhere between Rs 30,000 to Rs 36,000 crore.
8All of the units are going to be state pushed but a few of them will depend on private capital to be set up.
8Two units are already state sponsored, the unit in Ramagundam and the other in Talcher in which public sector enterprises are actively involved.
8The ones in Gorakhpur, Sindri, Barauni and Namrup are meant to be set up with private capital.
8But the moot point remains will private capital be interested to come in when the return on investment will be determined entirely through government fiat.
8There are uncertainties on two fronts that may keep private capital out. One is the uncertain price of RLNG on which the these units are likely to be eventually based though the government claims that ONGC's new discoveries will feed these units. Given the low international and domestic price of gas, it remains a moot point how much of ONGC's new deepwater gas will ever reach the point of production.
8The biggest uncertainty however will be on the urea subsidy regime. It is unlikely that the price of urea will ever be equal to the cost of production in the foreseeable future. In that case, the return on investment will depend entirely on the subsidy regime that will be in vogue when the units are in production.
8The government has been notorious in the past in delaying the dispensation of subsidy and denting legitimate cost claims of the the industry.
8Will a private entrepreneur risk his capital in such high value investments when the future is not known?
8Any time will provide an appropriate answer. Details
8This totals up to an investment of anywhere between Rs 30,000 to Rs 36,000 crore.
8All of the units are going to be state pushed but a few of them will depend on private capital to be set up.
8Two units are already state sponsored, the unit in Ramagundam and the other in Talcher in which public sector enterprises are actively involved.
8The ones in Gorakhpur, Sindri, Barauni and Namrup are meant to be set up with private capital.
8But the moot point remains will private capital be interested to come in when the return on investment will be determined entirely through government fiat.
8There are uncertainties on two fronts that may keep private capital out. One is the uncertain price of RLNG on which the these units are likely to be eventually based though the government claims that ONGC's new discoveries will feed these units. Given the low international and domestic price of gas, it remains a moot point how much of ONGC's new deepwater gas will ever reach the point of production.
8The biggest uncertainty however will be on the urea subsidy regime. It is unlikely that the price of urea will ever be equal to the cost of production in the foreseeable future. In that case, the return on investment will depend entirely on the subsidy regime that will be in vogue when the units are in production.
8The government has been notorious in the past in delaying the dispensation of subsidy and denting legitimate cost claims of the the industry.
8Will a private entrepreneur risk his capital in such high value investments when the future is not known?
8Any time will provide an appropriate answer. Details
The Modi government seems very keen to set up new urea units under the pooled pricing regime and this best indicated by the decision last week to set up a committee headed by none other than NITI Aayog Vice Chairman Arvind Panagariya, to oversee the revival of three urea plants as well as the progress of Jagdishpur-Haldia gas pipeline, entailing investments of Rs 23,000 crore.
8The committee will oversee the revival of closed state-run urea plants in Gorakhpur (UP), Sindri ( Jharkhand) and Barauni ( Bihar).
8It will also review the progress on construction of Jagdishpur-Haldia gas pipeline.
8"The committee will work on to establish the single window mechanism to provide required approvals for revival of three urea plants, and the gas pipeline," the official said.
8Gas to all these urea plants would be provided at the pooling price from the Jagdishpur-Haldia pipeline which requires an investment of Rs 5,000 crore.
8Each urea plant will require an investment of Rs 6,000 crore. Details
8The committee will oversee the revival of closed state-run urea plants in Gorakhpur (UP), Sindri ( Jharkhand) and Barauni ( Bihar).
8It will also review the progress on construction of Jagdishpur-Haldia gas pipeline.
8"The committee will work on to establish the single window mechanism to provide required approvals for revival of three urea plants, and the gas pipeline," the official said.
8Gas to all these urea plants would be provided at the pooling price from the Jagdishpur-Haldia pipeline which requires an investment of Rs 5,000 crore.
8Each urea plant will require an investment of Rs 6,000 crore. Details
INPEX Corporation announced Thursday that the INPEX-operated Ichthys LNG project, located off Australia, launched its central processing facility (CPF) on September 19, 2015 from the offshore floating dock at the Samsung Heavy Industries’ shipyard in Geoje, South Korea, where it is being constructed.
8According to INPEX, the CPF is the world’s largest semi-submersible.
8INPEX Director Australia Seiya Ito said the successful launch was one of the project’s most significant achievements.
8“To see this enormous facility in the water is a testament to those who have worked for years to make it a reality,” Ito said.
8“This milestone is a clear demonstration that the Ichthys LNG Project is making good progress and that we are working in an excellent spirit of cooperation with our Korean contractors.”
8Managing Director Ichthys LNG Project, Louis Bon, said: “The operation was completed within two days in the safest conditions.
8“The CPF is now berthed quayside at the shipyard where work is continuing to lift and install the living quarters and integrate and commission all equipment in preparation for the CPF’s sail away. All teams are working together in a very efficient manner to achieve our next targets.”
8Once completed, the CPF, which the project began constructing in January 2013, will be towed 5600 kilometers to the Ichthys Field in the Browse Basin, offshore Western Australia, where it will be permanently moored for the life of the project—more than 40 years. Details
8According to INPEX, the CPF is the world’s largest semi-submersible.
8INPEX Director Australia Seiya Ito said the successful launch was one of the project’s most significant achievements.
8“To see this enormous facility in the water is a testament to those who have worked for years to make it a reality,” Ito said.
8“This milestone is a clear demonstration that the Ichthys LNG Project is making good progress and that we are working in an excellent spirit of cooperation with our Korean contractors.”
8Managing Director Ichthys LNG Project, Louis Bon, said: “The operation was completed within two days in the safest conditions.
8“The CPF is now berthed quayside at the shipyard where work is continuing to lift and install the living quarters and integrate and commission all equipment in preparation for the CPF’s sail away. All teams are working together in a very efficient manner to achieve our next targets.”
8Once completed, the CPF, which the project began constructing in January 2013, will be towed 5600 kilometers to the Ichthys Field in the Browse Basin, offshore Western Australia, where it will be permanently moored for the life of the project—more than 40 years. Details
