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Oct 2015
The Ministry of Shipping is actively considering various measures to promote modal shift of cargo from roads to coastal waters not only to decongest roads but more importantly to harness the higher fuel efficiency of coastal movements vis-à-vis roads, as well as to reduce carbon footprint.
8One of the issues hindering the growth of coastal shipping has been the levy of customs and central excise duty on bunker fuels which raises cost of transportation.
8This issue was however resolved in the notification released in end of 2014 which exempted customs and excise duty leviable on bunker fuels, namely IFO 180 CST and IFO 380 CST used in Indian flag vessels for transportation of EXIM and empty containers between two ports in India.
8The exemption has been further extended by the department of revenue to Indian flag ships carrying a mix of EXIM, empty and domestic containers.
8This tax incentive for transportation along the coast will go a long way in enhancing Indian tonnage as well as in promoting development of transportation hubs in India.
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8One of the issues hindering the growth of coastal shipping has been the levy of customs and central excise duty on bunker fuels which raises cost of transportation.
8This issue was however resolved in the notification released in end of 2014 which exempted customs and excise duty leviable on bunker fuels, namely IFO 180 CST and IFO 380 CST used in Indian flag vessels for transportation of EXIM and empty containers between two ports in India.
8The exemption has been further extended by the department of revenue to Indian flag ships carrying a mix of EXIM, empty and domestic containers.
8This tax incentive for transportation along the coast will go a long way in enhancing Indian tonnage as well as in promoting development of transportation hubs in India.
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Cairn and its partner Oil and Natural Gas Corp (ONGC) have written to the government seeking relief on levy of cess citing the production sharing contract (PSC) for Rajasthan field which is silent on such a levy and does no specify any rate.
8Cairn had also initiated an arbitration against the levy but had to drop it as part of the conditions laid down by the government for approving takeover by Vedanta Group.
8The company has pointed out that a cess is applicable only on pre-NELP blocks. And even there the rate is fixed at Rs 900 per tonne on 26 blocks awarded prior to 1999. Only in case of Rajasthan is the cess levied at Rs 4,500 per tonne.
8While the cess had in the past been linked to prevailing crude oil prices when it has hiked, the same principle should be applied when rates have fallen to make a balance.
8On a rough estimation Cairn has completed 300 million barrels production in six years and has contributed over Rs 60,000 crore to the exchequer.
8The current cess leived has become a burden for producers after international oil prices halves around at 50 per barrel.
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8Cairn had also initiated an arbitration against the levy but had to drop it as part of the conditions laid down by the government for approving takeover by Vedanta Group.
8The company has pointed out that a cess is applicable only on pre-NELP blocks. And even there the rate is fixed at Rs 900 per tonne on 26 blocks awarded prior to 1999. Only in case of Rajasthan is the cess levied at Rs 4,500 per tonne.
8While the cess had in the past been linked to prevailing crude oil prices when it has hiked, the same principle should be applied when rates have fallen to make a balance.
8On a rough estimation Cairn has completed 300 million barrels production in six years and has contributed over Rs 60,000 crore to the exchequer.
8The current cess leived has become a burden for producers after international oil prices halves around at 50 per barrel.
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There are mixed signals emanating out of the global crude market of late. And prices may swing either way depending upon which way the wind blows.
8The point to note is that global surplus crude oil production capacity averaged 1.2 million b/d in August and September, 0.9 million b/d lower than at the same time last year.
8Spare capacity is typically an indication of market conditions, and surplus capacity below 2.5 million b/d is an indicator of a tight market.
8And this should normally make prices go up
8But then there is the other side of the story too. Since producing countries are pumping larger volumes of crude and demand is not going up strongly enough because of a slowdown in global economy, crude inventory levels are high. The U.S. Energy Information Administration (EIA) estimates has estimated that global oil inventories grew by an average of 1.8 million barrels per day (b/d) in August and September 2015, sharply exceeding the 0.8-million b/d build during the same time last year and the average 0.3 million b/d build over the previous three years (2012-14)
8And this is making current low surplus capacity level less significant.
8Nonetheless, low surplus capacity heightens uncertainty about the market’s ability to counteract unforeseen supply outages, particularly in the current geopolitical climate with ongoing conflicts in or next to major oil producing countries in the Middle East and North Africa
Then again, industry watchers are speaking of a dramatic decline in US shale output at current prices, and this too is likely to act to pull crude prices up.
8So keep your fingers crossed on which way oil prices are going to behave a few months from now.
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8The point to note is that global surplus crude oil production capacity averaged 1.2 million b/d in August and September, 0.9 million b/d lower than at the same time last year.
8Spare capacity is typically an indication of market conditions, and surplus capacity below 2.5 million b/d is an indicator of a tight market.
8And this should normally make prices go up
8But then there is the other side of the story too. Since producing countries are pumping larger volumes of crude and demand is not going up strongly enough because of a slowdown in global economy, crude inventory levels are high. The U.S. Energy Information Administration (EIA) estimates has estimated that global oil inventories grew by an average of 1.8 million barrels per day (b/d) in August and September 2015, sharply exceeding the 0.8-million b/d build during the same time last year and the average 0.3 million b/d build over the previous three years (2012-14)
8And this is making current low surplus capacity level less significant.
8Nonetheless, low surplus capacity heightens uncertainty about the market’s ability to counteract unforeseen supply outages, particularly in the current geopolitical climate with ongoing conflicts in or next to major oil producing countries in the Middle East and North Africa
Then again, industry watchers are speaking of a dramatic decline in US shale output at current prices, and this too is likely to act to pull crude prices up.
8So keep your fingers crossed on which way oil prices are going to behave a few months from now.
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The state of the global E&P market can be witnessed from the lackluster performance of the latest Brazilian auction for E&P blocks. Most of blocks went unsold.
8Brazalian national oil company Petrobras sat out the oil licensing round and most multinationals stayed out too.
8The onland blocks were taken over by local startups and mid-sized companies which are likely to use political clout to wriggle out of work programme commitments should the going get difficult.
8The auction took place amid a slump in crude prices and a management crisis as Petrobras, the country’s dominant producer, as it grapples with cash constraints and allegations of under-the-table payments.
8The poor response is despite the fact that Brazil is one of the world's most hydrocarbon rich countries but will the situation be different in India should an auction happen today?
8The answer is both a "yes" and a "no".
8Private companies are likely to stay away as the new model will make it tougher for them to decide on a revenue sharing plan when prices are down and the geology is uncertain.
8Foreign companies are likely to stay out completely as they cut investment budgets in keeping with low prices and lower returns.
8There are unlikely to be any private sector bids for Indian offshore blocks at this point in time, particularly when operators are unable to tap even discovered reserves given the lopsided gas pricing policy.
8But the public sector may be called upon by the government to bid for some uneconomical blocks so as to ensure that the auction is a success.
8However even at current low prices, there is likely to be significant competition for the small and marginal fields that are to be auctioned out. Private players are likely to make a beeline as the reserves in these fields have been mostly discovered, and the cost of recovery should be lower than current global prices. More E&P work will in probably raise the reserve estimates and bring in more money to the operator.
8But whether these fields will leave enough money in the hands of the operators under a new pricing paradigm after sharing revenue with the government remains a moot point.
ONGC and OIL are also likely to participate enthusiastically in the bidding round as the cost economics have turned positive. This is because market price is to be given for the gas that will be produced, and this may crowd out private players.
8There are the examples of investors in the the Ravva and Panna-Mukta-Tapti fields that private players will try and emulate. The owners of these fields have gone on to become unicorns, pocketing billions of dollars from the oil and gas business by first learning the business and then investing well. Details
8Brazalian national oil company Petrobras sat out the oil licensing round and most multinationals stayed out too.
8The onland blocks were taken over by local startups and mid-sized companies which are likely to use political clout to wriggle out of work programme commitments should the going get difficult.
8The auction took place amid a slump in crude prices and a management crisis as Petrobras, the country’s dominant producer, as it grapples with cash constraints and allegations of under-the-table payments.
8The poor response is despite the fact that Brazil is one of the world's most hydrocarbon rich countries but will the situation be different in India should an auction happen today?
8The answer is both a "yes" and a "no".
8Private companies are likely to stay away as the new model will make it tougher for them to decide on a revenue sharing plan when prices are down and the geology is uncertain.
8Foreign companies are likely to stay out completely as they cut investment budgets in keeping with low prices and lower returns.
8There are unlikely to be any private sector bids for Indian offshore blocks at this point in time, particularly when operators are unable to tap even discovered reserves given the lopsided gas pricing policy.
8But the public sector may be called upon by the government to bid for some uneconomical blocks so as to ensure that the auction is a success.
8However even at current low prices, there is likely to be significant competition for the small and marginal fields that are to be auctioned out. Private players are likely to make a beeline as the reserves in these fields have been mostly discovered, and the cost of recovery should be lower than current global prices. More E&P work will in probably raise the reserve estimates and bring in more money to the operator.
8But whether these fields will leave enough money in the hands of the operators under a new pricing paradigm after sharing revenue with the government remains a moot point.
ONGC and OIL are also likely to participate enthusiastically in the bidding round as the cost economics have turned positive. This is because market price is to be given for the gas that will be produced, and this may crowd out private players.
8There are the examples of investors in the the Ravva and Panna-Mukta-Tapti fields that private players will try and emulate. The owners of these fields have gone on to become unicorns, pocketing billions of dollars from the oil and gas business by first learning the business and then investing well. Details
With tension building up with the EU, Russia is increasingly turning east to find alternative markets.
8In this context, the $400 billion deal with China for a pipeline network that will ferry around 38 billion cublic metres of gas for 30 years from Siberian fields is a feather in Russia's cap.
8The largest pipeline project between the two countries is known as the East Route Gas Pipeline (ERGS). The ERGC in turn is one component of a comprehensive Russian Chinese energy deal..
8The project involves constructing a gas transportation system in each country to be connected at a border
8 The Russian end of the pipeline will take gas from the Irkutsk and Yakutia gas production centres in Siberia to to Russia’s Far East and also China.
As a joint venture of CNPC and Gazprom, approximately 4000 km is being built.
8The welding of the first roll of pipes in Russian part in the first segment has already started and is to become operational in late 2017.
8A 800 km Irkutsk Region-Yakutia pipeline will also be built to ferry more gas but the completion dates are yet to be announced. The Chayandinskoye and Kovyktin gas fields in eastern Siberia are going to be this pipeline’s main feeders.
8China too has launched the construction of its end of the pipeline on 30 June 2015. Welding on the first joint of the pipeline near the Chinese city of Heihe in the northern province of Heilongjiang bordering Russia has also been done.
8Built by CNPC, the Chinese line consists of northern, southern and central sections passing through six Chinese provinces (Heilongjiang, Jilin, Liaoning, Hebei, Shandong and Jiangsu), the Inner Mongolia Autonomous Region, Tianjin and Shanghai.
8The line’s specifics are not entire known, but Beijing will reportedly spend at least $20 billion on it.
8China will start receiving Russian gas in 2018 when the entire ERGS is scheduled to be fully operational.
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8In this context, the $400 billion deal with China for a pipeline network that will ferry around 38 billion cublic metres of gas for 30 years from Siberian fields is a feather in Russia's cap.
8The largest pipeline project between the two countries is known as the East Route Gas Pipeline (ERGS). The ERGC in turn is one component of a comprehensive Russian Chinese energy deal..
8The project involves constructing a gas transportation system in each country to be connected at a border
8 The Russian end of the pipeline will take gas from the Irkutsk and Yakutia gas production centres in Siberia to to Russia’s Far East and also China.
As a joint venture of CNPC and Gazprom, approximately 4000 km is being built.
8The welding of the first roll of pipes in Russian part in the first segment has already started and is to become operational in late 2017.
8A 800 km Irkutsk Region-Yakutia pipeline will also be built to ferry more gas but the completion dates are yet to be announced. The Chayandinskoye and Kovyktin gas fields in eastern Siberia are going to be this pipeline’s main feeders.
8China too has launched the construction of its end of the pipeline on 30 June 2015. Welding on the first joint of the pipeline near the Chinese city of Heihe in the northern province of Heilongjiang bordering Russia has also been done.
8Built by CNPC, the Chinese line consists of northern, southern and central sections passing through six Chinese provinces (Heilongjiang, Jilin, Liaoning, Hebei, Shandong and Jiangsu), the Inner Mongolia Autonomous Region, Tianjin and Shanghai.
8The line’s specifics are not entire known, but Beijing will reportedly spend at least $20 billion on it.
8China will start receiving Russian gas in 2018 when the entire ERGS is scheduled to be fully operational.
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India, the world fourth largest oil consumer, has to forge a stronger energy relationship with Russia, the world’s single largest exporter of energy for more than a decade.
8Western sanctions have played an important role in recalibrating Russia's global energy outlook.
It is looking increasingly east as both sanctions and a dramatic fall in crude and gas prices have hit Russia economically
8It is now clear that Russia would end up in a recession during 2015. The economy will contract and the forecast is that the recession will continue until 2016
8While China has been able to cash in on Russia's vulnerability by striking a lucrative gas deal, India is still to make adequate efforts in this direction.
8This is despite the fact that India has strong ties with Russia.
8Both the Indian government and companies such as OVL will have to work hard to reap the energy dividend from Russia
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8Western sanctions have played an important role in recalibrating Russia's global energy outlook.
It is looking increasingly east as both sanctions and a dramatic fall in crude and gas prices have hit Russia economically
8It is now clear that Russia would end up in a recession during 2015. The economy will contract and the forecast is that the recession will continue until 2016
8While China has been able to cash in on Russia's vulnerability by striking a lucrative gas deal, India is still to make adequate efforts in this direction.
8This is despite the fact that India has strong ties with Russia.
8Both the Indian government and companies such as OVL will have to work hard to reap the energy dividend from Russia
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The entities who are likely to be most impacted by the recalibration of tariff for the Dabhol-Bangalore pipeline are anchor customers such as those in the fertilizer sector.
8The cut in tariff will benefit customers and even if they have their point of view on the usurious rates that were charged so far by pipeline operators, they have chosen not to join issue with the gas transporters in the ensuing debate over the determination of final tariff for the pipeline
8The reason for this is simple: customers do not want to take cudgels with monopoly suppliers such as GAIL for the gas major will then hit back at a later date.
8"There are many ways a supplier can harass you. They can cut off the gas without a reason, they can charge you higher on some pretext or other, or they can impose one sided take or pay positions; they can just about do anything," a GAIL customer in the fertilizer sector told this website.
8Such is the fear of retaliation from GAIL that no one is willing to speak on record on the high tariff rates that have been charged so far by the public sector gas major.
8Of course, for the fertilizer sector customer, the tariff cost is a pass through but the government is unwilling to allow a rate beyond a cut off point for claiming subsidy.
8This provides a compelling reason for end use customers in the fertilizer industry to join issue with GAIL but no one is willing to come forward and openly take a position against GAIL.
8Such is the fear that the gas transporter evokes amongst its customers.
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8The cut in tariff will benefit customers and even if they have their point of view on the usurious rates that were charged so far by pipeline operators, they have chosen not to join issue with the gas transporters in the ensuing debate over the determination of final tariff for the pipeline
8The reason for this is simple: customers do not want to take cudgels with monopoly suppliers such as GAIL for the gas major will then hit back at a later date.
8"There are many ways a supplier can harass you. They can cut off the gas without a reason, they can charge you higher on some pretext or other, or they can impose one sided take or pay positions; they can just about do anything," a GAIL customer in the fertilizer sector told this website.
8Such is the fear of retaliation from GAIL that no one is willing to speak on record on the high tariff rates that have been charged so far by the public sector gas major.
8Of course, for the fertilizer sector customer, the tariff cost is a pass through but the government is unwilling to allow a rate beyond a cut off point for claiming subsidy.
8This provides a compelling reason for end use customers in the fertilizer industry to join issue with GAIL but no one is willing to come forward and openly take a position against GAIL.
8Such is the fear that the gas transporter evokes amongst its customers.
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H-Energy Gateway Private Limited's (HEGPL) upcoming onshore LNG re-gasification terminal at Jaigarh, (Ratnagiri district) in Maharashtra, is expected to commence operations from 2019.
8According to sources, the company is determined to go ahead with the terminal despite the present turmoil roiling the gas market globally.
8The nameplate capacity of HEGPL's -- which is an affiliate of Hiranandani Group`s energy arm, H-Energy -- LNG terminal is 8.0 MMTPA. In other words, the LNG terminal will be capable of supplying 29.0 mmscmd of re-gasified LNG in the downstream markets on a daily basis.
8The LNG terminal will be connected to two major trunk pipelines: the Dahej-Uran-Dabhol-Panvel pipeline and the Dabhol-Bangalore pipeline. These pipelines will be used to transport natural gas from Jaigarh LNG terminal to the downstream markets connected to the gas grid.
8The LNG terminal will be a tolling terminal in the country offering 100% of re-gasification capacity to third party users (open access).
8In this model, the customers will reserve re-gasification capacity to unload, store and re-gasify the LNG procured from international suppliers. The terminal owner shall act as an infrastructure provider and would not have any interest in the commodity. The customers will have the flexibility to source LNG at competitive prices and terms from worldwide sources, and use the terminal infrastructure for re-gasification of LNG to meet their natural gas requirement.
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8According to sources, the company is determined to go ahead with the terminal despite the present turmoil roiling the gas market globally.
8The nameplate capacity of HEGPL's -- which is an affiliate of Hiranandani Group`s energy arm, H-Energy -- LNG terminal is 8.0 MMTPA. In other words, the LNG terminal will be capable of supplying 29.0 mmscmd of re-gasified LNG in the downstream markets on a daily basis.
8The LNG terminal will be connected to two major trunk pipelines: the Dahej-Uran-Dabhol-Panvel pipeline and the Dabhol-Bangalore pipeline. These pipelines will be used to transport natural gas from Jaigarh LNG terminal to the downstream markets connected to the gas grid.
8The LNG terminal will be a tolling terminal in the country offering 100% of re-gasification capacity to third party users (open access).
8In this model, the customers will reserve re-gasification capacity to unload, store and re-gasify the LNG procured from international suppliers. The terminal owner shall act as an infrastructure provider and would not have any interest in the commodity. The customers will have the flexibility to source LNG at competitive prices and terms from worldwide sources, and use the terminal infrastructure for re-gasification of LNG to meet their natural gas requirement.
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H-Energy Gateway Private Ltd (HEGPL) has opposed the authorization of a spur line to Mangalore from the Dhabol-Bangalore LNG pipeline.
8H-Energy seems to be hitting back at GAIL as its own plans to build the Jaigarh (Maharashtra) to Mangalore (Karnataka) pipeline to ferry gas from its 8 MMTPA LNG terminal at Jaigarh is being opposed tooth and nail by GAIL.
8The company in its comments has urged the PNGRB not to consider providing authorization to the spur line that GAIL is planning to build from the Dahbol Bangalore line to Mangalore on the ground that the central government authorization was granted only for the Dhabol-Bangalore line and not for the spur line.
8In that case the future capex investment in the spur line should not be considered in the detemination of the DBPL tariff rate.
8H-Energy's stand comes from the fact that it is also building a pipeline to Mangalore that will clash with GAIL's plans to connect Mangalore with the BDPL.
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8H-Energy seems to be hitting back at GAIL as its own plans to build the Jaigarh (Maharashtra) to Mangalore (Karnataka) pipeline to ferry gas from its 8 MMTPA LNG terminal at Jaigarh is being opposed tooth and nail by GAIL.
8The company in its comments has urged the PNGRB not to consider providing authorization to the spur line that GAIL is planning to build from the Dahbol Bangalore line to Mangalore on the ground that the central government authorization was granted only for the Dhabol-Bangalore line and not for the spur line.
8In that case the future capex investment in the spur line should not be considered in the detemination of the DBPL tariff rate.
8H-Energy's stand comes from the fact that it is also building a pipeline to Mangalore that will clash with GAIL's plans to connect Mangalore with the BDPL.
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RGTIL is also of the view that for determination of the final tariff rates for the Dabhol-Bangalore pipeline (DBPL), computations should be done on the basis of DCF methodology considering all future expected cash flows, including expenditure incurred on replacement, overhaul, up-keep, upgradtion and addition of network or equipment.
8The company wants the inflation rate to be on actual rather than notional basis.
RGTIL has also claimed that un-accounted gas based on reasonable assessment should be allowed. The quantity can be benchmarked based on some normative value, perhaps as a percentage of gas transported by a pipeline based on pipeline industry data.
8On the volume divisor, the company finds it prudent to give its comments, once more clarity emerges on the proposed amendment in tariff regulations on the volume divisor by PNGRB.
RGTIL wants the number of working days to be calculated by taking a 30-day shutdown period for the shipper and the transporter.
8On return on capital employed, the company has taken the position that for gross up to pretax level, the rate applicable for any corporate assesse is to be considered as per tariff regulations for the economic life of the project which includes the construction period as well.
8RGTIL is not opposed to retrospective revision of tariff but wants the ground rules to be clear.
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8The company wants the inflation rate to be on actual rather than notional basis.
RGTIL has also claimed that un-accounted gas based on reasonable assessment should be allowed. The quantity can be benchmarked based on some normative value, perhaps as a percentage of gas transported by a pipeline based on pipeline industry data.
8On the volume divisor, the company finds it prudent to give its comments, once more clarity emerges on the proposed amendment in tariff regulations on the volume divisor by PNGRB.
RGTIL wants the number of working days to be calculated by taking a 30-day shutdown period for the shipper and the transporter.
8On return on capital employed, the company has taken the position that for gross up to pretax level, the rate applicable for any corporate assesse is to be considered as per tariff regulations for the economic life of the project which includes the construction period as well.
8RGTIL is not opposed to retrospective revision of tariff but wants the ground rules to be clear.
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Gas transmission companies are usually at loggerheads over many issues governing the sector but they now seem united in opposing the drastic cut in tariff rates that the PNGRB is planning to impose on the GAIL operated Dabhol-Bangalore pipeline that ferries RLNG from GAIL's Dabhol LNG terminal.
8This will be the first time that the regulator will be fixing the final tariff of a common carrier gas pipeline and transmission companies are worried that if the wrong precedence is set, it will adversely impact their future business prospects.
8Gujarat State Petronet Ltd has claimed that the capex of spur lines in the same tariff zone should be taken into account at the time of tarif determination. If the capex does not take place, the PNGRB can always factor that at the time of review.
8GSPL is opposed to clubbing maintenance expenditure as opex. Capex, whether maintenance or otherwise, should be part of fixed assets and not opex, the argument goes.
8The company has also argued against the PNGRB's attempt to allow System Use Gas to the extend of gas consumed in the running of compressors and not for maintenance gas consumption and unaccounted gas.
8GSPL also wants the inflation rate to be actual rather than a notional rate. The company is also opposed to disallowance of currency devaluation for computing future SUG cost.
8The company is further of the view that any adjustment of tariff rates or dues with customers for past period should be captured in prospective cash flows in DCF calculations for determination of final tariff, in order to avoid retrospective adjustments and their associated administrative and financial hardships.
GSPL has made the following additional points:
8Actual gas volume transported by an entity to be considered in the divisor while determining tariff instead of the present method of considering volume derived based on pipeline capacity assessed by the PNGRB.
PNGRB should take into account only the volume of gas forcast made by the entity and not dwell on any other criteria.
8The regulator should finalize tariff on truing up basis as is the case with electricity distribution tariff
8Actual loss of unaccounted gas incurred in the transportation of gas should be allowed to be recovered from transportation tariff.
Also carried here are GSPL's comments on the PNGRB (Determination of Natural Gas Pipeline Tariff) Amendment Regulation 2015.
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8This will be the first time that the regulator will be fixing the final tariff of a common carrier gas pipeline and transmission companies are worried that if the wrong precedence is set, it will adversely impact their future business prospects.
8Gujarat State Petronet Ltd has claimed that the capex of spur lines in the same tariff zone should be taken into account at the time of tarif determination. If the capex does not take place, the PNGRB can always factor that at the time of review.
8GSPL is opposed to clubbing maintenance expenditure as opex. Capex, whether maintenance or otherwise, should be part of fixed assets and not opex, the argument goes.
8The company has also argued against the PNGRB's attempt to allow System Use Gas to the extend of gas consumed in the running of compressors and not for maintenance gas consumption and unaccounted gas.
8GSPL also wants the inflation rate to be actual rather than a notional rate. The company is also opposed to disallowance of currency devaluation for computing future SUG cost.
8The company is further of the view that any adjustment of tariff rates or dues with customers for past period should be captured in prospective cash flows in DCF calculations for determination of final tariff, in order to avoid retrospective adjustments and their associated administrative and financial hardships.
GSPL has made the following additional points:
8Actual gas volume transported by an entity to be considered in the divisor while determining tariff instead of the present method of considering volume derived based on pipeline capacity assessed by the PNGRB.
PNGRB should take into account only the volume of gas forcast made by the entity and not dwell on any other criteria.
8The regulator should finalize tariff on truing up basis as is the case with electricity distribution tariff
8Actual loss of unaccounted gas incurred in the transportation of gas should be allowed to be recovered from transportation tariff.
Also carried here are GSPL's comments on the PNGRB (Determination of Natural Gas Pipeline Tariff) Amendment Regulation 2015.
Click on the Reports for more. Details
The Department of Fertilizers is now mounting pressure on GAIL and the petroleum ministry to find a solution to the impasse over supply of gas to the three fertilizer units.
8The DOF has to provide an Action Taken Report on a Parliamentary Standing Committee report for immediate connection of the three fertilizer units to gas lines.
8It has sought a reply from the ministry and the gas major on the next course of action as the Action Taken Report has to filed in a time bound manner on an urgent basis.
8The debate seems to be over what will happen to the Kochi evacuation network if main anchor customers are supported not through the Kochi-Mangalore pipeline but through the spur line coming out of the Dabhol-Bangalore LNG line.
8The fate of the Kochi terminal will then hang in balance as it will not be possible to evacuate any significant quantity of gas from its terminal without an evacuation system in place.
8Attempts are now being made to build the Kerala segment with the help of state authorities despite firm opposition from farmers and villagers.
8Any which way, the petroleum ministry will have to take a decision and the PNGRB has to be roped in to get the spur lines going so that gas can be supplied to the stranded fertilizer units.
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8The DOF has to provide an Action Taken Report on a Parliamentary Standing Committee report for immediate connection of the three fertilizer units to gas lines.
8It has sought a reply from the ministry and the gas major on the next course of action as the Action Taken Report has to filed in a time bound manner on an urgent basis.
8The debate seems to be over what will happen to the Kochi evacuation network if main anchor customers are supported not through the Kochi-Mangalore pipeline but through the spur line coming out of the Dabhol-Bangalore LNG line.
8The fate of the Kochi terminal will then hang in balance as it will not be possible to evacuate any significant quantity of gas from its terminal without an evacuation system in place.
8Attempts are now being made to build the Kerala segment with the help of state authorities despite firm opposition from farmers and villagers.
8Any which way, the petroleum ministry will have to take a decision and the PNGRB has to be roped in to get the spur lines going so that gas can be supplied to the stranded fertilizer units.
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A solution has not been found yet to the gross under utilization of the Kochi LNG terminal on account of the inability to lay an evacuation network in Kerala on account of intense Permission to build the spurline to Mangalore has not come in yet as the option of getting the Kochi Mangalore line going is still being explored.
8There is confusion too over pipeline tariffs as the PNGRB has found most of the tariff rates to be gold plated and the regulator is now going about cutting tariffs in some cases by more than half. and there is confusion over pipeline tariffs now that the PNGRB
8In the meanwhile, the three fertilizer plants are starved off gas.
8MCFL's Mangalore plant will have to wait for the spur line to be built to Mangalore or for the line from Kochi to be constructed and the time to be taken for that is anybody's guess.
8In case of Madras Fertilizers Ltd, the plan is to build a 250 km spur line from the Dabhol-Bangalore pipeline that extends up to Chennai..
8This arrangement is meant to be a temporary one until IOC's terminal in Ennore comes up. MFL is meant to sign gas supply deals with both GAIL and IOC, and whoever can supply gas at a cheaper rate will be selected.
8And what happens to the 250 spur line that is built once MFL begins to offtake gas from Ennore? The pipeline can then be used to supply gas to Chennai and also feed the Dabhol-Bangalore line from the Ennore terminal.
8As far as SPIC is concerned, the company is banking on the laying of the Ennore-Tuticorin pipeline. The idea is to build the 110 km Tuticorin to Ramnad (where ONGC produces gas) first.
8SPIC is also looking at a dedicated pipeline to Ramnad too, as permission is not required from the PNGRB to build one.
8ONGC is wiling to confirm gas availability of 0.9 mmscmd from Ramnad and beyond that volume gas can come from further exploration and production work at Ramnad or LNG can come in from the pipeline that will connect to Ennore.
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8There is confusion too over pipeline tariffs as the PNGRB has found most of the tariff rates to be gold plated and the regulator is now going about cutting tariffs in some cases by more than half. and there is confusion over pipeline tariffs now that the PNGRB
8In the meanwhile, the three fertilizer plants are starved off gas.
8MCFL's Mangalore plant will have to wait for the spur line to be built to Mangalore or for the line from Kochi to be constructed and the time to be taken for that is anybody's guess.
8In case of Madras Fertilizers Ltd, the plan is to build a 250 km spur line from the Dabhol-Bangalore pipeline that extends up to Chennai..
8This arrangement is meant to be a temporary one until IOC's terminal in Ennore comes up. MFL is meant to sign gas supply deals with both GAIL and IOC, and whoever can supply gas at a cheaper rate will be selected.
8And what happens to the 250 spur line that is built once MFL begins to offtake gas from Ennore? The pipeline can then be used to supply gas to Chennai and also feed the Dabhol-Bangalore line from the Ennore terminal.
8As far as SPIC is concerned, the company is banking on the laying of the Ennore-Tuticorin pipeline. The idea is to build the 110 km Tuticorin to Ramnad (where ONGC produces gas) first.
8SPIC is also looking at a dedicated pipeline to Ramnad too, as permission is not required from the PNGRB to build one.
8ONGC is wiling to confirm gas availability of 0.9 mmscmd from Ramnad and beyond that volume gas can come from further exploration and production work at Ramnad or LNG can come in from the pipeline that will connect to Ennore.
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One option that is still under consideration is to take gas to Mangalore through a 286 km, 24-inch spur line that goes from Bidadi on the Dabhol-Bangalore pipeline along the ROU of HPCL's LPG pipeline all the way to Mangalore.
8Two other options were also investigated -- a 330 km line from Goa along the NH 17 highway or the coast or a 312 km spur line from Hivvinahadagalli -- but eventually the spur line from Bidadi on the Dabhol-Bangalore pipeline was found to be the most viable option.
8The point to note is that the capacity utilization of the Dabhol-Mangalore pipeline (DBPL) is currently only at 10% and it may take up to seven years to reach the 60% utilization rate against the design capacity of 16 mscmd.
8What is more, the envisaged power project at Bidadi is under litigation and may not eventually come through and that case the gas pressure at Bidadi should be sufficient to supply around 3 to 5 mmscmd of gas to Mangalore through a 24-inch spur line without installing an auxiliary compressor till the pipeline reaches the 75% utilization rate.
8The spur line to Mangalore is to go along the ROU of the proposed Mangalore-Hasan-Solur LPG pipeline that has been authorized by PNGRB for HPCL to build.
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8Two other options were also investigated -- a 330 km line from Goa along the NH 17 highway or the coast or a 312 km spur line from Hivvinahadagalli -- but eventually the spur line from Bidadi on the Dabhol-Bangalore pipeline was found to be the most viable option.
8The point to note is that the capacity utilization of the Dabhol-Mangalore pipeline (DBPL) is currently only at 10% and it may take up to seven years to reach the 60% utilization rate against the design capacity of 16 mscmd.
8What is more, the envisaged power project at Bidadi is under litigation and may not eventually come through and that case the gas pressure at Bidadi should be sufficient to supply around 3 to 5 mmscmd of gas to Mangalore through a 24-inch spur line without installing an auxiliary compressor till the pipeline reaches the 75% utilization rate.
8The spur line to Mangalore is to go along the ROU of the proposed Mangalore-Hasan-Solur LPG pipeline that has been authorized by PNGRB for HPCL to build.
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A solution has not been found yet to the gross under utilization of the Kochi LNG terminal on account of the inability to lay an evacuation network in Kerala on account of intense opposition from farmers.
8One set of anchor customers which is getting restless are the three fertilizer units -- Madras Fertilizer Ltd's Manali unit, MCFL's Mangalore plant and SPIC's Tuticorin complex -- all of which have made investments to convert their feedstock from naphtha to gas but are now waiting for the pipelines to come up.
8These units were meant to get gas from the Kochi terminal through a network of pipelines -- including a Kochi-Mangalore line -- that were meant to be built by GAIL.
8But opposition from local farmers in Kerala has sabotaged plans for gas supply so far. The Kochi-Mangalore line traverses 350 km through the state of Kerala and this segment is now turning out to be difficult to build.
8Both GAIL and the petroleum ministry have at one point in time looking at abandoning the gas evacuation network from Kochi for the time being, instead looking at using spur lines from the Dabhol-Bangalore RLNG pipeline to supply gas to stranded customers.
8But the latest reports are that goaded by the central government and with support from state authorities, GAIL has begun work again on the pipeline in Kerala but it remains a moot point whether work will continue apace or come to a halt soon given the opposition mounted by the farmers.
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8One set of anchor customers which is getting restless are the three fertilizer units -- Madras Fertilizer Ltd's Manali unit, MCFL's Mangalore plant and SPIC's Tuticorin complex -- all of which have made investments to convert their feedstock from naphtha to gas but are now waiting for the pipelines to come up.
8These units were meant to get gas from the Kochi terminal through a network of pipelines -- including a Kochi-Mangalore line -- that were meant to be built by GAIL.
8But opposition from local farmers in Kerala has sabotaged plans for gas supply so far. The Kochi-Mangalore line traverses 350 km through the state of Kerala and this segment is now turning out to be difficult to build.
8Both GAIL and the petroleum ministry have at one point in time looking at abandoning the gas evacuation network from Kochi for the time being, instead looking at using spur lines from the Dabhol-Bangalore RLNG pipeline to supply gas to stranded customers.
8But the latest reports are that goaded by the central government and with support from state authorities, GAIL has begun work again on the pipeline in Kerala but it remains a moot point whether work will continue apace or come to a halt soon given the opposition mounted by the farmers.
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Gujarat State Petroleum Corporation (GSPC), the operator of the CB-ON/2 block has chalked out a plan to drill 11 wells in the Sanand Miroli block located in Cambay Basin in Gujarat.
8The block was awarded to the consortium of GSPC, ONGC and Geo Global Barbados Inc.
8The project includes the following:
-- Drilling of Eleven wells
-- Setting up of an early production system (EPS) at the well site:
-- Connection of wells through underground 4-inch or 6-inch pipelines to the EPS.
8The expected project cost will be around 200 crore.
8Out of the 11 wells proposed, eight wells are located in the Ahmedabad district whereas the rest are located in the Mehsana district of Gujarat.
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Details
8The block was awarded to the consortium of GSPC, ONGC and Geo Global Barbados Inc.
8The project includes the following:
-- Drilling of Eleven wells
-- Setting up of an early production system (EPS) at the well site:
-- Connection of wells through underground 4-inch or 6-inch pipelines to the EPS.
8The expected project cost will be around 200 crore.
8Out of the 11 wells proposed, eight wells are located in the Ahmedabad district whereas the rest are located in the Mehsana district of Gujarat.
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Details
Water based mud will be used during the drilling operation and drill cuttings generated along with waste mud, will be washed, and separated for reuse after improving their properties.
8Moreover, maximum amount of produced associated and non associated gas will be sold to local buyers and rest will be used internally in the indirect bath heater to heat the oil and for maintaining the mobility of crude oil for transportation.
8It is expected that waste oil, approx l000 liters per well, will be generated which will be handed over to authorized recyclers.
8For drilling rig operation and lighting purposes, power requirement of 662.5 KVA will be required for each well, which will be met through two DG sets.
8Electricity supply will be sourced from the GEB.
8At each EPS, 8-10 Liters/hr of diesel will be consumed in D.G set (82.5KVA) in case of power failure.
8Water requirement of 40 KLD per well site will be made available through nearest surface water source or through road tankers.
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8Moreover, maximum amount of produced associated and non associated gas will be sold to local buyers and rest will be used internally in the indirect bath heater to heat the oil and for maintaining the mobility of crude oil for transportation.
8It is expected that waste oil, approx l000 liters per well, will be generated which will be handed over to authorized recyclers.
8For drilling rig operation and lighting purposes, power requirement of 662.5 KVA will be required for each well, which will be met through two DG sets.
8Electricity supply will be sourced from the GEB.
8At each EPS, 8-10 Liters/hr of diesel will be consumed in D.G set (82.5KVA) in case of power failure.
8Water requirement of 40 KLD per well site will be made available through nearest surface water source or through road tankers.
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An EPS will be constructed to facilitate handling of produced fluid from the oil wells.
8The station would be constructed in such a manner that it can handle and process the produced fluid from oil wells.
8Produced hydrocarbon from all the wells will be fed to the EPS oil header through 4 inch underground pipelines.
8The flow from the headers will then be directed to the separator for separation of liquid and associated gas.
8And then the separated crude oil will be loaded in tankers via the tanker loading point and transported up to nearby ONGC Facility.
8The station will mainly consist of four crude storage tanks and two 2-Phase separators.
8Among other equipment in the station will be indirect bath heater, heater-treater, pumps for chemical dozing, flow line system and a loading platform.
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8The station would be constructed in such a manner that it can handle and process the produced fluid from oil wells.
8Produced hydrocarbon from all the wells will be fed to the EPS oil header through 4 inch underground pipelines.
8The flow from the headers will then be directed to the separator for separation of liquid and associated gas.
8And then the separated crude oil will be loaded in tankers via the tanker loading point and transported up to nearby ONGC Facility.
8The station will mainly consist of four crude storage tanks and two 2-Phase separators.
8Among other equipment in the station will be indirect bath heater, heater-treater, pumps for chemical dozing, flow line system and a loading platform.
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ONGC which plans to drill 22 wells in Ramanthapuram district of Tamil Nadu will now no longer have to worry about the CRZ clearances.
8During the initial proposed locations, some of the wells were falling under ESZ and CRZ zones.
8However, after the revised geophysical and geological studies, relocations were made and no location was found to be falling within the CRZ and hence the company's CRZ application was withdrawn.
8However ONGC still awaits clearance from the wild life department.
8But as ONGC was asked to submit the EIA report within a period of two year starting from 2013 which is due to expire on 05.11.15 but due to delays, ONGC will now have to take up the case with the EAC Meeting of October 2015 for extension of the TOR for one more year.
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8During the initial proposed locations, some of the wells were falling under ESZ and CRZ zones.
8However, after the revised geophysical and geological studies, relocations were made and no location was found to be falling within the CRZ and hence the company's CRZ application was withdrawn.
8However ONGC still awaits clearance from the wild life department.
8But as ONGC was asked to submit the EIA report within a period of two year starting from 2013 which is due to expire on 05.11.15 but due to delays, ONGC will now have to take up the case with the EAC Meeting of October 2015 for extension of the TOR for one more year.
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Everyone in the oil and gas business has his eye on crude oil prices. The website carries here a detailed paper that outlines the main factors that drive crude prices.
8A list of all the 7 factors that influence oil markets are as follows:
-- Crude oil prices react to a variety of geopolitical and economic events
-- World oil prices move together due to arbitrage
-- Economic growth has a strong impact on oil consumption
-- Changes in expectations of economic growth can affect oil prices
-- In OECD countries, price increases have coincided with lower consumption
-- Rising oil prices held down global oil consumption growth from 2005-2008, despite high economic growth
-- Changes in non-OPEC production can affect oil prices
-- Non-OPEC supply expectations indicate changes in market sentiment concerning oil supply
-- Changes in Saudi Arabia crude oil production can affect oil prices
-- Unplanned supply disruptions tighten world oil markets and push prices higher
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8A list of all the 7 factors that influence oil markets are as follows:
-- Crude oil prices react to a variety of geopolitical and economic events
-- World oil prices move together due to arbitrage
-- Economic growth has a strong impact on oil consumption
-- Changes in expectations of economic growth can affect oil prices
-- In OECD countries, price increases have coincided with lower consumption
-- Rising oil prices held down global oil consumption growth from 2005-2008, despite high economic growth
-- Changes in non-OPEC production can affect oil prices
-- Non-OPEC supply expectations indicate changes in market sentiment concerning oil supply
-- Changes in Saudi Arabia crude oil production can affect oil prices
-- Unplanned supply disruptions tighten world oil markets and push prices higher
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Nepal has become a perfect example of how and what impact energy security can mean to a country.
8The Himalayan nation relies on India for more than 60 percent of its imports, including almost all of its oil.
8This disruption of fuel supplies in Nepal following agitations subsequent to the adoption of a new constitution has been an additional burden for an economy that has been devastated by an earthquake earlier on.
8Right now the country is in a desperate state, chronic blackouts force businesses and homes to rely on diesel-powered generators for electricity.
8Nepal has a petroleum stocks for about 17 days, compared with 270 days in Israel, 240 days in South Korea and 137 days in the U.S., according to the Kathmandu Post.
8The current crisis in Nepal, will once again ignite the debate what energy security means for a country and how best to go about achieving it
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8The Himalayan nation relies on India for more than 60 percent of its imports, including almost all of its oil.
8This disruption of fuel supplies in Nepal following agitations subsequent to the adoption of a new constitution has been an additional burden for an economy that has been devastated by an earthquake earlier on.
8Right now the country is in a desperate state, chronic blackouts force businesses and homes to rely on diesel-powered generators for electricity.
8Nepal has a petroleum stocks for about 17 days, compared with 270 days in Israel, 240 days in South Korea and 137 days in the U.S., according to the Kathmandu Post.
8The current crisis in Nepal, will once again ignite the debate what energy security means for a country and how best to go about achieving it
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Essar's plan to start off its commercial production from Raniganj field by May 2016 is likely to get delayed.
8The company is aiming to produce 1.2 million scmd of gas in the first few months which is eventually estimated to reach 2.5-3 million scmd.
8Meanwhile, Essar's refineries are also currently undertaking turnaround shutdown, which is expected to get over by middle of October.
8During this time, Essar will complete the conversion of its existing Vacuum Gas Oil Hydrotreater unit to Mild Hydrocracker unit which will enable it to convert lower margin Vacuum Gas Oil to high value distillates like diesel and kerosene.
8Moreover, Essar is looking at expanding its retail network to 5,000 operational outlets over the next two years.
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8The company is aiming to produce 1.2 million scmd of gas in the first few months which is eventually estimated to reach 2.5-3 million scmd.
8Meanwhile, Essar's refineries are also currently undertaking turnaround shutdown, which is expected to get over by middle of October.
8During this time, Essar will complete the conversion of its existing Vacuum Gas Oil Hydrotreater unit to Mild Hydrocracker unit which will enable it to convert lower margin Vacuum Gas Oil to high value distillates like diesel and kerosene.
8Moreover, Essar is looking at expanding its retail network to 5,000 operational outlets over the next two years.
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With a huge volume of seismic data collection taking place in India, there are entrepreneurs who are thinking of setting up data processing centers locally. Most of them believe what they need is a roomful of computers and a foreign tie-up to earn the right to process the data.
8But technology is moving rapidly on this front and ramshackle data centres are soon going to be extinct.
8The deployment of latest technology has seen a vast rise in the quantum of data collected.
8A common feature in all the acquisition improvements is they generate far more data, requiring higher-powered computers and more efficient algorithms to turn all that data into useful information.
8For example, the first wide-azimuth survey gathered more than eight times the data of the conventional designs
8The processing power needed to handle the data gathered by Schlumberger’s new generation of multisensor streamers is so great that one feature that stands out in the vessels used for those surveys is the unusually powerful data-processing system on board.
8The data recorded is just mind boggling. There are more than 500,000 sensors in the array recording every 2 milliseconds. That is 500 samples a second per sensor.
8But rogress in data acquisition only happens when what has been gathered can be processed using readily available equipment.
8At the heart of BP’s push to be a technological leader in seismic is the fact that its Center for High-Performance Computing in Houston is one of the world’s largest, high-performance computing centers for research. Since it opened in 2014, the company increased the center’s processing speed by more than 70% to 3.8 petaflops, each of which is 1,015 calculations per second.
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8But technology is moving rapidly on this front and ramshackle data centres are soon going to be extinct.
8The deployment of latest technology has seen a vast rise in the quantum of data collected.
8A common feature in all the acquisition improvements is they generate far more data, requiring higher-powered computers and more efficient algorithms to turn all that data into useful information.
8For example, the first wide-azimuth survey gathered more than eight times the data of the conventional designs
8The processing power needed to handle the data gathered by Schlumberger’s new generation of multisensor streamers is so great that one feature that stands out in the vessels used for those surveys is the unusually powerful data-processing system on board.
8The data recorded is just mind boggling. There are more than 500,000 sensors in the array recording every 2 milliseconds. That is 500 samples a second per sensor.
8But rogress in data acquisition only happens when what has been gathered can be processed using readily available equipment.
8At the heart of BP’s push to be a technological leader in seismic is the fact that its Center for High-Performance Computing in Houston is one of the world’s largest, high-performance computing centers for research. Since it opened in 2014, the company increased the center’s processing speed by more than 70% to 3.8 petaflops, each of which is 1,015 calculations per second.
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Three offshore data acquisition trends were are now gaining ground and these are:
8Wide-azimuth surveys, which opened up exploration and development beneath thick salt layers by examining reservoirs from a variety of directions and angles, are evolving to address different challenges.
8Simultaneous sound sources are used to gather more data faster by continuously recording sounds generated by multiple sound sources that are steadily working without any effort to avoid overlapping shots. The sounds are then separated as if each came in separately.
8Multisensor streamers are used to detect the direction of incoming seismic signals. By better sorting signals it is possible to gather more of the data needed to create clearer images, and could offer new opportunities, such as filling in the gaps in between widely spaced streamers.
8Among the three, the game changer could well be wide azimuth technology. The change from narrow to rich azimuth exceeded all the advances experienced in 10 years of algorithm development,
8It was first used a decade ago by BP, which needed a way to image reservoirs obscured by thick salt layers, and was quickly embraced by other companies as a way to reduce the risk of subsalt exploration and production.
8There are other techniques that could make the list. Longer lasting battery-powered receiver nodes with multiple types of sensors inside are being used more frequently to create ocean-bottom arrays for detailed imaging that can track changes over time.
8Multiple industry partnerships are working on new offshore sound sources in hopes of creating a device whose output can be controlled to emit more of the scarce frequencies, and reduce the environmental problems related to seismic work.
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8Wide-azimuth surveys, which opened up exploration and development beneath thick salt layers by examining reservoirs from a variety of directions and angles, are evolving to address different challenges.
8Simultaneous sound sources are used to gather more data faster by continuously recording sounds generated by multiple sound sources that are steadily working without any effort to avoid overlapping shots. The sounds are then separated as if each came in separately.
8Multisensor streamers are used to detect the direction of incoming seismic signals. By better sorting signals it is possible to gather more of the data needed to create clearer images, and could offer new opportunities, such as filling in the gaps in between widely spaced streamers.
8Among the three, the game changer could well be wide azimuth technology. The change from narrow to rich azimuth exceeded all the advances experienced in 10 years of algorithm development,
8It was first used a decade ago by BP, which needed a way to image reservoirs obscured by thick salt layers, and was quickly embraced by other companies as a way to reduce the risk of subsalt exploration and production.
8There are other techniques that could make the list. Longer lasting battery-powered receiver nodes with multiple types of sensors inside are being used more frequently to create ocean-bottom arrays for detailed imaging that can track changes over time.
8Multiple industry partnerships are working on new offshore sound sources in hopes of creating a device whose output can be controlled to emit more of the scarce frequencies, and reduce the environmental problems related to seismic work.
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Cuts in exploration budgets have forced data acquisition and seismic service providers to offer services at discounts from 30% to 50%.
8But even these bargain rates are drawing little interest because E&P companies are strapped of exploration budgets.
8New avenues are now being investigated where advanced data acquisition technology can be deployed.
8New data acquisition methods are coming into use because they promise better imaging and, in some cases, significantly reduce the cost to do the work.
8And as the average offshore discovery gets smaller better quality imaging has become paramount.
8The seismic industry will find opportunities in maturing fields where new imaging technology can be deployed, for in some of the mature fields the reservoirs are quite complex and thin compared to what is typically seen.
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8But even these bargain rates are drawing little interest because E&P companies are strapped of exploration budgets.
8New avenues are now being investigated where advanced data acquisition technology can be deployed.
8New data acquisition methods are coming into use because they promise better imaging and, in some cases, significantly reduce the cost to do the work.
8And as the average offshore discovery gets smaller better quality imaging has become paramount.
8The seismic industry will find opportunities in maturing fields where new imaging technology can be deployed, for in some of the mature fields the reservoirs are quite complex and thin compared to what is typically seen.
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BPCL has put together a ambitious plan to supply massive quantities of high pour point and high viscosity intermediates such as Low and High Sulphur Vaccum Residues (HSVR), Low Sulphur Heavy Stock (LSHS) and Vaccum Gas Oil (VGO) from its Mumbai refinery to the newly revamped and expanded Kochi refinery.
8The Mumbai refinery will transfer as much as 400 TMT of HSVR per annum to Kochi
8HSVR in fact is a blend of vacuum residues with 10 % to 15 % heavy kerosene which will be stored separately for transfer to Kochi
8The HSVR will be processed in the DCU in Kochi for more value added products.
8Then again, the total plant fuel requirement in Kochi subsequent to its expansion and revamp is estimated at 422 TMT of which around 120 TMT will be internally generated, leaving a gap of 322 TMT of low sulphur plant fuel to be imported by the refinery. This gap can be plugged by Mumbai refinery by supplying 170 to 200 TMT of LSHS to the Kochi refinery, with only the balance 122 TMT of low sulphur fuel oil left to be imported by Kochi.
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8The Mumbai refinery will transfer as much as 400 TMT of HSVR per annum to Kochi
8HSVR in fact is a blend of vacuum residues with 10 % to 15 % heavy kerosene which will be stored separately for transfer to Kochi
8The HSVR will be processed in the DCU in Kochi for more value added products.
8Then again, the total plant fuel requirement in Kochi subsequent to its expansion and revamp is estimated at 422 TMT of which around 120 TMT will be internally generated, leaving a gap of 322 TMT of low sulphur plant fuel to be imported by the refinery. This gap can be plugged by Mumbai refinery by supplying 170 to 200 TMT of LSHS to the Kochi refinery, with only the balance 122 TMT of low sulphur fuel oil left to be imported by Kochi.
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BPCL has already put together an investment plan for a heat traced pipeline from Mumbai refinery to the jetty and it has now drawn up a similar line -- at a cost of Rs 377 crore -- from the jetty to Kochi refinery.
8The idea is to lay a heat traced pipeline by replacing the redundant 30” crude oil pipeline handle high pour point products at the Kochi refinery.
The pipeline will have the following characteristics:
8Skin Effect Current Tracing (SECT) System: Heat is generated on the inner surface of a ferromagnetic heat tube that is thermally coupled (welded) to the pipe to be heat traced. A non-magnetic conductor material is placed inside the heat tube and connected to the tube at the far end.
8Optical Fibre based Temperature monitoring system: Industrialization of fibre-optic sensing technology has been technically difficult and expensive.Fiber-optic temperature monitoring has particular advantages over thermistor and thermocouple-based systems, as fibre-optic systems are very robust and unaffected by electrical noise.
Following are the details of pipeline design:
8Base Material : Carbon Steel
8Material Grade : API 5L Gr.X 52 or equivalent
8Length of pipeline:14,000 m Details
8The idea is to lay a heat traced pipeline by replacing the redundant 30” crude oil pipeline handle high pour point products at the Kochi refinery.
The pipeline will have the following characteristics:
8Skin Effect Current Tracing (SECT) System: Heat is generated on the inner surface of a ferromagnetic heat tube that is thermally coupled (welded) to the pipe to be heat traced. A non-magnetic conductor material is placed inside the heat tube and connected to the tube at the far end.
8Optical Fibre based Temperature monitoring system: Industrialization of fibre-optic sensing technology has been technically difficult and expensive.Fiber-optic temperature monitoring has particular advantages over thermistor and thermocouple-based systems, as fibre-optic systems are very robust and unaffected by electrical noise.
Following are the details of pipeline design:
8Base Material : Carbon Steel
8Material Grade : API 5L Gr.X 52 or equivalent
8Length of pipeline:14,000 m Details
The website site carries here comprehensive details on the Rs 377.06 crore heat traced pipeline project that BPCL is undertaking in Kochi.
The following are the details:
8Baseline environmental status
8Anticipated environmental impact and its mitigation measures.
8Environmental monitoring program
8Hazard identification and risk assessment
8Project benefits
Click on Report for more details</font Details
The following are the details:
8Baseline environmental status
8Anticipated environmental impact and its mitigation measures.
8Environmental monitoring program
8Hazard identification and risk assessment
8Project benefits
Click on Report for more details</font Details
Following are the existing plant facilities at Kochi Refinery that will be utilized to process high viscosity products that will come from BPCL's Mumbai refinery:
8Crude Distillation Unit – I & II (CDU)
8Fluid Catalytic Cracking Unit (FCC)
8Vis breaker Unit (VBU)
8Bitumen Blowing Unit (BBU)
8Kerosene Hydro De- Sulphurization Unit (KHDS)
8Aromatic Recovery Unit (ARU)
8Diesel Hydro Desulphurisation Unit (DHDS)
8Hydrogen Generation Unit (HGU)
8Sulphur Recovery unit (SRU)
8VGO Hydro De-sulpharisation Unit (VGO-HDS)
8Continuous Catalytic Reformer Unit (CCR)
8Associated Utilities and power generation facilities
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8Crude Distillation Unit – I & II (CDU)
8Fluid Catalytic Cracking Unit (FCC)
8Vis breaker Unit (VBU)
8Bitumen Blowing Unit (BBU)
8Kerosene Hydro De- Sulphurization Unit (KHDS)
8Aromatic Recovery Unit (ARU)
8Diesel Hydro Desulphurisation Unit (DHDS)
8Hydrogen Generation Unit (HGU)
8Sulphur Recovery unit (SRU)
8VGO Hydro De-sulpharisation Unit (VGO-HDS)
8Continuous Catalytic Reformer Unit (CCR)
8Associated Utilities and power generation facilities
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So how will the supply integration happen?
8This will be done by constructing a heat traced pipeline in Mumbai and Kochi to transfer these high pour point, high viscosity products.
8The pipeline from the BPCL's Mumbai refinery will take it to the local port and then ferried by coastal shipping to Kochi where a similar pipeline will take it into the refinery.
8During turnarounds, in case of a shortfall, products will move from Kochi to Mumbai if there is a requirement.
8The existing pipelines to the ports from the two refineries transfer only low poor intermediates
8Only a heat traced pipeline can transfer high viscosity products.
8Around 400 TMT of HSVR (roughly about 34 TMT a month), 170 to 220 TMT of LSHS (14 to 18 TMT per month) will be loaded from the Mumbai refinery for arrival at Kochi through the new electrically traced pipeline at the Old Prpau jetty.
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8This will be done by constructing a heat traced pipeline in Mumbai and Kochi to transfer these high pour point, high viscosity products.
8The pipeline from the BPCL's Mumbai refinery will take it to the local port and then ferried by coastal shipping to Kochi where a similar pipeline will take it into the refinery.
8During turnarounds, in case of a shortfall, products will move from Kochi to Mumbai if there is a requirement.
8The existing pipelines to the ports from the two refineries transfer only low poor intermediates
8Only a heat traced pipeline can transfer high viscosity products.
8Around 400 TMT of HSVR (roughly about 34 TMT a month), 170 to 220 TMT of LSHS (14 to 18 TMT per month) will be loaded from the Mumbai refinery for arrival at Kochi through the new electrically traced pipeline at the Old Prpau jetty.
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BPCL's attempt to join the supply chain for high viscosity products between Mumbai and Kochi refineries will have other advantages as well.
8During normal operation, the VGO in a refinery is usally processed in its FCCU or in the VGO hydro-treating units.
8But a problem can arise during turnarounds when there is a possibility that due tankage constraints either at BPCL's Kochi or Mumbai refineries, they may be required to reduce their crude throughput.
8This can happen because of VGO containment issues.
8Now that the supply chain is going to be integrated, the VGO can be transferred between the refineries on a case to case basis thereby avoiding loss of crude processing capacities in both refineries.
8Then again, bbitumen from the Mumbai refinery is being evacuated through Tank lorries but with production likely to increase in the future with increased processing of heavy crudes the feasibility of loading bitumen into Tankers through the same pipeline is also planned.
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8During normal operation, the VGO in a refinery is usally processed in its FCCU or in the VGO hydro-treating units.
8But a problem can arise during turnarounds when there is a possibility that due tankage constraints either at BPCL's Kochi or Mumbai refineries, they may be required to reduce their crude throughput.
8This can happen because of VGO containment issues.
8Now that the supply chain is going to be integrated, the VGO can be transferred between the refineries on a case to case basis thereby avoiding loss of crude processing capacities in both refineries.
8Then again, bbitumen from the Mumbai refinery is being evacuated through Tank lorries but with production likely to increase in the future with increased processing of heavy crudes the feasibility of loading bitumen into Tankers through the same pipeline is also planned.
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That cost of generation of renewable energy is likely to fall further is evident from the long term contract prices on offer today.
8Massive advances in technology has made this possible
8According to the EIA, new onshore wind can be contracted today in a number of countries at Rs 3.60 to Rs 4.80/Kwh (assuming a dollar rate of Rs 60), with the best cases around Rs 3/Kwh USD 50/MWh (e.g. Brazil, Egypt, South Africa, some US states).
8Meanwhile, new utility-scale solar PV projects can be contracted at Rs 5 to Rs 6/Kwh with the best cases at USD Rs 3.60 to Rs 4.00/Kwh (e.g. United Arab Emirates, Jordan, South Africa, some US states).
8These rates are likely to fall going ahead.
8As technology costs have declined, financing conditions, which vary across countries and over time, play a more important role.
8And the lowest prices have emerged in countries with a combination of price competition for long-term contracts, good resources and financial de-risking measures and/or concessional financing.
8These conditions are not present in all markets, but they do indicate potential ahead for some countries to leapfrog to development based on more affordable clean power.
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8Massive advances in technology has made this possible
8According to the EIA, new onshore wind can be contracted today in a number of countries at Rs 3.60 to Rs 4.80/Kwh (assuming a dollar rate of Rs 60), with the best cases around Rs 3/Kwh USD 50/MWh (e.g. Brazil, Egypt, South Africa, some US states).
8Meanwhile, new utility-scale solar PV projects can be contracted at Rs 5 to Rs 6/Kwh with the best cases at USD Rs 3.60 to Rs 4.00/Kwh (e.g. United Arab Emirates, Jordan, South Africa, some US states).
8These rates are likely to fall going ahead.
8As technology costs have declined, financing conditions, which vary across countries and over time, play a more important role.
8And the lowest prices have emerged in countries with a combination of price competition for long-term contracts, good resources and financial de-risking measures and/or concessional financing.
8These conditions are not present in all markets, but they do indicate potential ahead for some countries to leapfrog to development based on more affordable clean power.
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It is time for all Indian companies to enter the renewable power sector in some form or other because the cost economics are looking more and more attractive.
8Renewable generation costs are forecast to continue decreasing.
8From 2010-15, indicative generation costs for new plants fell by an estimated 30% on average while that for new utility-scale solar PV declined by two-thirds.
8Over 2015-20, the IEA forecasts are that new onshore wind costs will decline by a further 10%.
8New utility-scale solar PV cost will decline by 25%.
8mportantly, high levels of incentives are no longer necessary for solar PV and onshore wind, but their economic attractiveness still strongly depends on the regulatory framework and market design.
8Meanwhile, some technologies (offshore wind, solar thermal electricity and some bioenergy) require continued policy support to bring them down the learning curve.
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8Renewable generation costs are forecast to continue decreasing.
8From 2010-15, indicative generation costs for new plants fell by an estimated 30% on average while that for new utility-scale solar PV declined by two-thirds.
8Over 2015-20, the IEA forecasts are that new onshore wind costs will decline by a further 10%.
8New utility-scale solar PV cost will decline by 25%.
8mportantly, high levels of incentives are no longer necessary for solar PV and onshore wind, but their economic attractiveness still strongly depends on the regulatory framework and market design.
8Meanwhile, some technologies (offshore wind, solar thermal electricity and some bioenergy) require continued policy support to bring them down the learning curve.
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Oil companies have a proud history of digging holes in inaccessible places and producing gushers of money. But in the Chukchi Sea, in the Alaskan Arctic, Shell has poured $7 billion into a single 6,800-foot exploratory well, making it possibly the most expensive hole yet drilled, only to admit this week that it had not found enough oil and gas to make further exploration worthwhile, reports the Economist magazine
8That was a big climbdown for a company that had spent seven years since acquiring the Chukchi licenses in 2008 in a highly public, drawn-out battle to drill in the Arctic. The decision boiled down to costs, financial and reputational. Most big oil firms face similar pressures.
8Some will take a lesson from Shell and put their Arctic plans on hold, though Eni, a big Italian oil firm, is vowing to press ahead with its efforts to drill in the Norwegian Arctic.
8As the oil price has fallen by more than half over the past year, the economics of drilling in deep and treacherous waters have worsened considerably.
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8That was a big climbdown for a company that had spent seven years since acquiring the Chukchi licenses in 2008 in a highly public, drawn-out battle to drill in the Arctic. The decision boiled down to costs, financial and reputational. Most big oil firms face similar pressures.
8Some will take a lesson from Shell and put their Arctic plans on hold, though Eni, a big Italian oil firm, is vowing to press ahead with its efforts to drill in the Norwegian Arctic.
8As the oil price has fallen by more than half over the past year, the economics of drilling in deep and treacherous waters have worsened considerably.
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Cauvery basin natural gas pipeline network consist of four sub networks namely, Narimam-Kuthalam, Ramanad, Bhuvanagiri and Kovilkalappal segments, but the tariff determination exercise was later confined to two segments -- the Narimam-Kuthalam and Ramanad sections -- while the other two sub-networks were declared as dedicated corridors.
8So the networks in question are the Narimanam and Kuthalam sub-network (NKM) with a length 230.67 km and a capacity of 2.0 MMSCMD and the Ramnad sub-network (RMD) with a length of 9.62 km with a capacity of 2.33 MMSCMD.
8The provisional transportation tariff for the pipelines as proposed by GAIL and PNGRB are widely divergent, forcing GAIL to go to APTEL against the regulator.
8APTEL directed PNGRB to complete the process of determination of final tariff by 31.03.2016 and pass a speaking and reasoned order.
8Whereas GAIL was directed by APTEL to make submissions including challenges against the findings in the provisional tariff orders before the PNGRB.
8On scrutiny it was observed by the PNGRB that GAIL's additional CA certificates -- submitted later to validate its cost data -- do not reconcile with the CA certificates already submitted.
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8So the networks in question are the Narimanam and Kuthalam sub-network (NKM) with a length 230.67 km and a capacity of 2.0 MMSCMD and the Ramnad sub-network (RMD) with a length of 9.62 km with a capacity of 2.33 MMSCMD.
8The provisional transportation tariff for the pipelines as proposed by GAIL and PNGRB are widely divergent, forcing GAIL to go to APTEL against the regulator.
8APTEL directed PNGRB to complete the process of determination of final tariff by 31.03.2016 and pass a speaking and reasoned order.
8Whereas GAIL was directed by APTEL to make submissions including challenges against the findings in the provisional tariff orders before the PNGRB.
8On scrutiny it was observed by the PNGRB that GAIL's additional CA certificates -- submitted later to validate its cost data -- do not reconcile with the CA certificates already submitted.
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GAIL is fighting hard against the PNGRB's attempt to drastically cut the tariff rates for the Cauvery basin pipeline network.
The Appellate Authority turned down GAIL's plea to cancel the PNGRB tariff exercise. Instead the gas major has been told to go back to the PNGRB and submit its views.
8The gas major however has not yet submitted all the data that has been demanded by the regulator even though the last date for submission of information is already over.
8Some of the cost data submitted by GAIL has been found to be contradictory but the company is yet to fully clarify the contradictions.
8Given that a lot is at stake, GAIL is fighting tooth and nail against the PNGRB's tariff exercise
8The company is now making the claim that the regulator has the right to fix tariffs only on a prospective basis and not retrospectively.
8To buttress its case, it has cited an order by the Appellate Tribunal wherein it said that PNGRB's jurisdiction begins from the grant of authorization and not before that.
8GAIL is using the order to claim that PNGRB's retrospective orders are against the law.
8In other words, even if the tariff rates were far higher than what was justified, the regulator had no jurisdiction to arbitrate on them before the date of authorization, the gas major has argued.
8And what about the buyers of gas before the date of authorization? They will not, by this logic, be entitled to any revision of tariff paid in the past.
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The Appellate Authority turned down GAIL's plea to cancel the PNGRB tariff exercise. Instead the gas major has been told to go back to the PNGRB and submit its views.
8The gas major however has not yet submitted all the data that has been demanded by the regulator even though the last date for submission of information is already over.
8Some of the cost data submitted by GAIL has been found to be contradictory but the company is yet to fully clarify the contradictions.
8Given that a lot is at stake, GAIL is fighting tooth and nail against the PNGRB's tariff exercise
8The company is now making the claim that the regulator has the right to fix tariffs only on a prospective basis and not retrospectively.
8To buttress its case, it has cited an order by the Appellate Tribunal wherein it said that PNGRB's jurisdiction begins from the grant of authorization and not before that.
8GAIL is using the order to claim that PNGRB's retrospective orders are against the law.
8In other words, even if the tariff rates were far higher than what was justified, the regulator had no jurisdiction to arbitrate on them before the date of authorization, the gas major has argued.
8And what about the buyers of gas before the date of authorization? They will not, by this logic, be entitled to any revision of tariff paid in the past.
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GAIL has claimed a total capex of Rs. 233.54 crore for its its Narimanam and Kuthalam (NKM) sub-network from 2008-09 till the end of its economic life in 2024-25, whereas capex for Ramnad sub-sector (RMD)network was also claimed to be Rs. 29.31 crore of the years starting from 2008-09 to 2026-27.
The PNGRB however finds that the figures do not match up to what the verified data shows
8The operating expenses submitted by GAIL for the NKM sub-network is Rs. 299.23 crores from 2008-09 to 2024-25, and for the RMD sub-network, it is Rs. 324.98 crores,from 2008-09 to 2026-27..
8However, the total opex figures for Cauvery Basin Network from 2008-09 to 2013-14, as certified by the CA do not match with the figures given out by GAIL
8In addition to opex, GAIL has also considered 0.3% of the throughput as unaccounted gas loss, as a cost to be recovered through the transportation tariff, amounting to Rs. 41.37 crore from 2008-09 to 2024-25 for NKM network and Rs. 59.62 crore from 2008-09 to 2024-25 for the RMD network.
8PNGRB is not happy about factoring in the unaccounted gas loss into the tariff structure.
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The PNGRB however finds that the figures do not match up to what the verified data shows
8The operating expenses submitted by GAIL for the NKM sub-network is Rs. 299.23 crores from 2008-09 to 2024-25, and for the RMD sub-network, it is Rs. 324.98 crores,from 2008-09 to 2026-27..
8However, the total opex figures for Cauvery Basin Network from 2008-09 to 2013-14, as certified by the CA do not match with the figures given out by GAIL
8In addition to opex, GAIL has also considered 0.3% of the throughput as unaccounted gas loss, as a cost to be recovered through the transportation tariff, amounting to Rs. 41.37 crore from 2008-09 to 2024-25 for NKM network and Rs. 59.62 crore from 2008-09 to 2024-25 for the RMD network.
8PNGRB is not happy about factoring in the unaccounted gas loss into the tariff structure.
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A striking contrast can be seen while comparing provisional tariffs calculated by GAIL for the Cauvery Basin pipeline network as against what PNGRB is willing to secede
8Tariff proposed by GAIL is twice as high compared what the PNGRB wishes to grant
8Provisional tariff proposed by GAIL for its Narimanam and Kuthalam sub-network was Rs. 16.80 per MMBTU, whereas PNGRB figure pegs it at Rs. 7.47 per MMBTU .
8GAI.Lclaimed a tariff rate for its Ramnad sub-sector whereas PNGRB will to accede only Rs. 3.07 per MMBTU.
8The final tariff filling done by GAIL shows that the tariffs for Narimanam and Kuthalam sub-network from the year 2008-2009 up to 2014-15 is Rs.7.47 per MMBTU, whereas for the years from 2015-16 to 2024-25 tariff is charged at Rs. 43.58 per MMBTU.
8Tariff rates for Ramnad sub-sector from the year 2008-09-upto 2014-15 is charged at Rs 3.07 per MMBTU, and for the years from 2015-16 to 2026-17 tariff is set at Rs.17.81 per MMBTU.
PNGRB on the other hand is willing to provide only half the amount.
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8Tariff proposed by GAIL is twice as high compared what the PNGRB wishes to grant
8Provisional tariff proposed by GAIL for its Narimanam and Kuthalam sub-network was Rs. 16.80 per MMBTU, whereas PNGRB figure pegs it at Rs. 7.47 per MMBTU .
8GAI.Lclaimed a tariff rate for its Ramnad sub-sector whereas PNGRB will to accede only Rs. 3.07 per MMBTU.
8The final tariff filling done by GAIL shows that the tariffs for Narimanam and Kuthalam sub-network from the year 2008-2009 up to 2014-15 is Rs.7.47 per MMBTU, whereas for the years from 2015-16 to 2024-25 tariff is charged at Rs. 43.58 per MMBTU.
8Tariff rates for Ramnad sub-sector from the year 2008-09-upto 2014-15 is charged at Rs 3.07 per MMBTU, and for the years from 2015-16 to 2026-17 tariff is set at Rs.17.81 per MMBTU.
PNGRB on the other hand is willing to provide only half the amount.
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The proposed pipeline network traversing the Taj Trapezium Zone (TTZ) will be laid in two parts:
-- Part-I invovles a line from SV Chatta to Kosikalan – 8 inch x 20 km approx
-- Part II covers a netwrok from SV-Sihana to Vrindavan-Goverdhan --6 inch x 17 km and 4 inch x 25 km approx
8Time of completion for both parts will be 13 months from date of issue of work.
8Eight months will be given for mechanical completion including mobilization period and completion of TCP works.
8One month for commissioning and gas-in and TCP commissioning. PCP commissioning will have to be completed within 4 month from date of commissioning of TCP for pipeline.
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-- Part-I invovles a line from SV Chatta to Kosikalan – 8 inch x 20 km approx
-- Part II covers a netwrok from SV-Sihana to Vrindavan-Goverdhan --6 inch x 17 km and 4 inch x 25 km approx
8Time of completion for both parts will be 13 months from date of issue of work.
8Eight months will be given for mechanical completion including mobilization period and completion of TCP works.
8One month for commissioning and gas-in and TCP commissioning. PCP commissioning will have to be completed within 4 month from date of commissioning of TCP for pipeline.
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GAIL Gas Limited is planning to implement City Gas Distribution (CGD) networks Taj Trapezium zone (TTZ) to supply natural gas to various domestic, commercial, industrial and automobile consumers.
8During the first phase GAIL intends to lay an underground steel pipeline network of various sizes along with associated facilities from GAIL's existing sectionalizing valve (13-14) and IP Station off the Vijaipur Dadri Pipeline.
8This will make natural gas available in the areas surrounding Taj Trapezium Zone (TTZ).
8The TTZ area includes Firozabad, Bharatpur, Vrindavan, Goverdhan, Kosikalan, Hathras and Fatehpur Sikri among others.
8The project involves laying, testing and commissioning of the network.
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8During the first phase GAIL intends to lay an underground steel pipeline network of various sizes along with associated facilities from GAIL's existing sectionalizing valve (13-14) and IP Station off the Vijaipur Dadri Pipeline.
8This will make natural gas available in the areas surrounding Taj Trapezium Zone (TTZ).
8The TTZ area includes Firozabad, Bharatpur, Vrindavan, Goverdhan, Kosikalan, Hathras and Fatehpur Sikri among others.
8The project involves laying, testing and commissioning of the network.
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The government-mandated domestic natural gas price in India is likely to remain muted over the next 12-18 months.
8The price of gas is determined by the cost of gas at the major gas producing hubs around the world
8It is projected that Henry Hub natural gas prices for 2016 -- that sets the global trend in gas prices -- will be around $3.00 - $3.25 per mmbtu in 2017.
8This means that prices will remain subdued not just around the world but also in India.
8Clearly, these gas prices are unlike to spur investments in producing discovered gas lying in reservoirs in India offshore blocks.
8The breakeven price for gas production in RIL's D-6 block is estimated at around $6.5 to $7/mmbtu, much higher than the prevailing price of gas.
8India will will continue to depend on imports to cater to incremental demand. Low international gas prices stimulate demand for natural gas and low domestic prices discourage further investments by upstream players to explore and develop new gas reserves.
8India's natural gas imports accounted for 36% of the total natural gas consumption in India for fiscal 2015 and 39% for the five months between 1 April and 30 August 2015.
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8The price of gas is determined by the cost of gas at the major gas producing hubs around the world
8It is projected that Henry Hub natural gas prices for 2016 -- that sets the global trend in gas prices -- will be around $3.00 - $3.25 per mmbtu in 2017.
8This means that prices will remain subdued not just around the world but also in India.
8Clearly, these gas prices are unlike to spur investments in producing discovered gas lying in reservoirs in India offshore blocks.
8The breakeven price for gas production in RIL's D-6 block is estimated at around $6.5 to $7/mmbtu, much higher than the prevailing price of gas.
8India will will continue to depend on imports to cater to incremental demand. Low international gas prices stimulate demand for natural gas and low domestic prices discourage further investments by upstream players to explore and develop new gas reserves.
8India's natural gas imports accounted for 36% of the total natural gas consumption in India for fiscal 2015 and 39% for the five months between 1 April and 30 August 2015.
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It is now a well established fact that methane emissions from the natural gas supply chain can be a major source of green house emission.
8The recent study has established that the range of estimated greenhouse gas emissions across the supply chain is vast: between 2 and 42 g CO2 eq./ MJ HHV (Higher Heating
Value) assuming a global warming potential of 34 for methane.
8If the gas were to be used for electricity generation, these supply chain emissions would be equivalent to 14–302 g CO2
8High levels of emissions are taking place from specific supply chain stages or facilities, in particular from well completions (for unconventional gas) and liquids unloading processes.
Super emitters have been found at various facilities across the whole supply chain including well completions, liquids unloading, leaking pipework, pneumatic devices and compressors.
8These large emissions are likely to occur due to the use of ineffective process equipment and poor operational and maintenance strategies. Again, it should be noted that if best available techniques and more stringent maintenance and operation procedures were applied, these high emissions would largely be eliminated.
Comment: Now that India is talking of controlling emissions, it is necessary for the government to conduct a sample study of the kind of emissions that the Indian gas supply system is emitting. Given that no such study has been done, there are likely to be many surprises. The next step of controlling such emissions can then be taken up.
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8The recent study has established that the range of estimated greenhouse gas emissions across the supply chain is vast: between 2 and 42 g CO2 eq./ MJ HHV (Higher Heating
Value) assuming a global warming potential of 34 for methane.
8If the gas were to be used for electricity generation, these supply chain emissions would be equivalent to 14–302 g CO2
8High levels of emissions are taking place from specific supply chain stages or facilities, in particular from well completions (for unconventional gas) and liquids unloading processes.
Super emitters have been found at various facilities across the whole supply chain including well completions, liquids unloading, leaking pipework, pneumatic devices and compressors.
8These large emissions are likely to occur due to the use of ineffective process equipment and poor operational and maintenance strategies. Again, it should be noted that if best available techniques and more stringent maintenance and operation procedures were applied, these high emissions would largely be eliminated.
Comment: Now that India is talking of controlling emissions, it is necessary for the government to conduct a sample study of the kind of emissions that the Indian gas supply system is emitting. Given that no such study has been done, there are likely to be many surprises. The next step of controlling such emissions can then be taken up.
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Market conditions this year, together with pricing patterns have have had a varying impact on ship types and classes.
8The new-build market has been most stressful this year.
8Ordering for Dry Bulk carriers has been severely impacted by poor freight rates and the very attractive prices at which the second hand tonnage is offered right now.
8Occasional spikes in freight rates are also not expected to positively affect newbuilding activity in the sector as long as market sentiment remains poor.
8On the other hand, the wet carrier segment is definitely witnessing a better run.
8Healthy rates due to a more balanced supply of tonnage and good market sentiment backed by strong market fundamentals and a sense of optimism for the future have kept newbuilding activity in the sector live and kicking.
8What is of significant importance is that contracting activity is observed for all vessel sizes from specialized small vessels to VLCCs.
8At the same time the trend of converting originally dry bulk orders to tankers has gathered a lot of momentum during the first half of the year, resulting in a further squeeze of the dry bulk order book and deliveries.
8Meanwhile, in the demolition market this past week, following a small period of healthier activity volumes, things have quietened down, with the market still remaining in search of a clear sense of direction. With holidays kick starting and cheap Chinese scrap steel imports still flooding the region, recycling yards across India, Pakistan and Bangladesh seemed unsuccessful in finding any reasons for getting their hands into more tonnage, especially as long as local steel prices remain at the helm of imported quantities.
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8The new-build market has been most stressful this year.
8Ordering for Dry Bulk carriers has been severely impacted by poor freight rates and the very attractive prices at which the second hand tonnage is offered right now.
8Occasional spikes in freight rates are also not expected to positively affect newbuilding activity in the sector as long as market sentiment remains poor.
8On the other hand, the wet carrier segment is definitely witnessing a better run.
8Healthy rates due to a more balanced supply of tonnage and good market sentiment backed by strong market fundamentals and a sense of optimism for the future have kept newbuilding activity in the sector live and kicking.
8What is of significant importance is that contracting activity is observed for all vessel sizes from specialized small vessels to VLCCs.
8At the same time the trend of converting originally dry bulk orders to tankers has gathered a lot of momentum during the first half of the year, resulting in a further squeeze of the dry bulk order book and deliveries.
8Meanwhile, in the demolition market this past week, following a small period of healthier activity volumes, things have quietened down, with the market still remaining in search of a clear sense of direction. With holidays kick starting and cheap Chinese scrap steel imports still flooding the region, recycling yards across India, Pakistan and Bangladesh seemed unsuccessful in finding any reasons for getting their hands into more tonnage, especially as long as local steel prices remain at the helm of imported quantities.
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A recent survey has shown that some 50 percent of crews working on offshore support vessels are willing to compromise safety rather than say “no” to clients while nearly 80 percent believe commercial pressures could influence the safety of their working practices.
8The findings come from a newly published report
8The case study analysis established that many factors contributing to the accidents find root in a company's safety management.
8In particular, incomplete or non-existent hazard identification procedures, lack of safety procedures or failure to ensure they are implemented, lack of communication about safety hazards and insufficiently trained crews were mentioned as factors contributing to the accidents.
8After establishing the link between poor safety culture and accident causation, the research study focused on identifying to what extent a well-embedded organizational safety culture can contribute to safety leadership within the workboat industry.
8Again, three case studies were conducted, this time of companies with above-average safety records, and the framework developed based on the literature review was used to assess each company’s safety culture.
8All three companies communicate safety as their top operating priority and, despite not being legally obliged, two out of the three companies had established a certified safety management system.
8Communication of safety procedures and other safety-related information was found to be an important aspect and innovative ways were developed to achieve effective communication. All three companies established reporting mechanisms to encourage employee feedback and urged their crews to stop an operation they deem unsafe. Based on the research study findings, recommendations were made for companies in the workboat and OSV sectors wishing to improve their safety processes.
8It is time that Indian companies pick up such studies and look at their recommendations for implementation in their own ships.
8Operators such as ONGC can also pick cues from such studies.
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8The findings come from a newly published report
8The case study analysis established that many factors contributing to the accidents find root in a company's safety management.
8In particular, incomplete or non-existent hazard identification procedures, lack of safety procedures or failure to ensure they are implemented, lack of communication about safety hazards and insufficiently trained crews were mentioned as factors contributing to the accidents.
8After establishing the link between poor safety culture and accident causation, the research study focused on identifying to what extent a well-embedded organizational safety culture can contribute to safety leadership within the workboat industry.
8Again, three case studies were conducted, this time of companies with above-average safety records, and the framework developed based on the literature review was used to assess each company’s safety culture.
8All three companies communicate safety as their top operating priority and, despite not being legally obliged, two out of the three companies had established a certified safety management system.
8Communication of safety procedures and other safety-related information was found to be an important aspect and innovative ways were developed to achieve effective communication. All three companies established reporting mechanisms to encourage employee feedback and urged their crews to stop an operation they deem unsafe. Based on the research study findings, recommendations were made for companies in the workboat and OSV sectors wishing to improve their safety processes.
8It is time that Indian companies pick up such studies and look at their recommendations for implementation in their own ships.
8Operators such as ONGC can also pick cues from such studies.
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LNG-fuelled container ships could offer operators considerable cost savings when the price of traditional fuel rises again
8The technology is ready; emissions are down; and it eventually means reduced costs in ports; and there are no residual costs such as waste disposal of water used in scrubber systems
8The capital cost of the LNG vessels is about 25% higher than for a traditional vessel, so as a shipowner will need a long-term charter to get over the higher cost.
8Long-term charters made the financing possible
8One potential obstacle to be overcome before the first ship is deployed is the current lack of LNG bunkering facilities
8Meanwhile, Singapore has launched a S$12 million ($8.44 million) fund for companies to build vessels fuelled by liquefied natural gas, as the city-state tries to encourage use of LNG while also trying to maintain its role as the world’s top bunkering hub. Companies would be able to tap the fund for up to S$2 million per vessel, the port said in a statement recently
8Companies have to be incorporated in Singapore and the vessels must be flagged under the Singapore Registry or licensed for activity in Port of Singapore for at least five years. The port sought proposals on LNG bunker supplies in late July to complement the country’s profile of itself as an LNG hub, and as a step towards meeting its own deadline of supplying the super-chilled fuel to ships by 2020.
8In 2014, Singapore’s bunker industry recorded more than 42 million tonnes in bunker sales volumes, the port said.The bunker sales comprise different grades of fuel oil, which are considered more highly polluting than natural gas. ($1 = 1.4224 Singapore dollars).
8Is it possible for India to follow suit? Only time will tell
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8The technology is ready; emissions are down; and it eventually means reduced costs in ports; and there are no residual costs such as waste disposal of water used in scrubber systems
8The capital cost of the LNG vessels is about 25% higher than for a traditional vessel, so as a shipowner will need a long-term charter to get over the higher cost.
8Long-term charters made the financing possible
8One potential obstacle to be overcome before the first ship is deployed is the current lack of LNG bunkering facilities
8Meanwhile, Singapore has launched a S$12 million ($8.44 million) fund for companies to build vessels fuelled by liquefied natural gas, as the city-state tries to encourage use of LNG while also trying to maintain its role as the world’s top bunkering hub. Companies would be able to tap the fund for up to S$2 million per vessel, the port said in a statement recently
8Companies have to be incorporated in Singapore and the vessels must be flagged under the Singapore Registry or licensed for activity in Port of Singapore for at least five years. The port sought proposals on LNG bunker supplies in late July to complement the country’s profile of itself as an LNG hub, and as a step towards meeting its own deadline of supplying the super-chilled fuel to ships by 2020.
8In 2014, Singapore’s bunker industry recorded more than 42 million tonnes in bunker sales volumes, the port said.The bunker sales comprise different grades of fuel oil, which are considered more highly polluting than natural gas. ($1 = 1.4224 Singapore dollars).
8Is it possible for India to follow suit? Only time will tell
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L&T announced its business updates for shipping section.
8Larsen & Toubro has informed that L&T Shipbuilding Limited has entered into a non-binding Memorandum of Understanding with Adani Ports (Adani) for evaluating the operations of the port at Kattupalli, Tamil Nadu, with effect from October 01, 2015 for a period of one month.
8The MOU states that all non-operating revenues and expenses will be cost to L&T Shipbuilding Limited’s account.
8Adani shall be responsible for EBIDTA gains and losses arising from the Port operation for this period.
8The MOU also states that the shipyard will continue to be managed and operated by L&T Shipbuilding Limited.
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8Larsen & Toubro has informed that L&T Shipbuilding Limited has entered into a non-binding Memorandum of Understanding with Adani Ports (Adani) for evaluating the operations of the port at Kattupalli, Tamil Nadu, with effect from October 01, 2015 for a period of one month.
8The MOU states that all non-operating revenues and expenses will be cost to L&T Shipbuilding Limited’s account.
8Adani shall be responsible for EBIDTA gains and losses arising from the Port operation for this period.
8The MOU also states that the shipyard will continue to be managed and operated by L&T Shipbuilding Limited.
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For reference purposes, the website carries here a background paper on the EU-India Trade and Investment Partnership Summit 2015 that was held on September 30, 2015 in Brussels.
8The paper is one of the finest expositions in recent times of the challenges and opportunities available in India and is a must read for any ardent business analyst or entrepreneurs.
8The paper provides ideas about what the future holds in store for India and the likely areas -- particularly those in which India holds a comparative advantage -- where the country can push ahead.
8For those looking at business opportunities, the paper provides critical inputs on what the EU can offer and India can use in the light of the Made in India pragramme.
8It highlights the many challenges ahead and makes a candid comparison with China and India's ranking as a palce to do business in/
8A reading of the paper is a must for those with a larger vision of how India will forge ahead in the future and the areas where opportunity lurks.
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8The paper is one of the finest expositions in recent times of the challenges and opportunities available in India and is a must read for any ardent business analyst or entrepreneurs.
8The paper provides ideas about what the future holds in store for India and the likely areas -- particularly those in which India holds a comparative advantage -- where the country can push ahead.
8For those looking at business opportunities, the paper provides critical inputs on what the EU can offer and India can use in the light of the Made in India pragramme.
8It highlights the many challenges ahead and makes a candid comparison with China and India's ranking as a palce to do business in/
8A reading of the paper is a must for those with a larger vision of how India will forge ahead in the future and the areas where opportunity lurks.
Click on Reports for more Details
Everyone is now playing it safe with their pipelines after 22 people died a blast in GAIL network in the KG Basin.
8Even safer product pipelines are not up for scrutiny and testing.
8BPCL for example is planning the pressure testing of its product and PLT lines in West Bengal
8The testing will be carried out on the HSD pipeline from PLT Exchange Pit to HSD A/G Tanks inlet valves TK15, TK16, TK17 with product as per standard procedure at 10.5 Kg/ sq.cm.
The testing procedure will consist of following process:
8HSD and SKO pipelines can be tested with water or product. MS pipelines must be tested with water only. Pipeline quantity has to be sucked in BPCL tanks and it should be filled with water.
Pressure testing shall be carried out on segment wise pipelines.
8During 1st 15 minutes, 25% of max. test pressure 10.5 Kgf /cm2 i.e., 2.6 Kgf/cm2 pressure shall be applied to the pipeline testing. After 30 minutes from starting, pressure will be raised to 50% of max. test pressure during 3rd 15 minutes, i.e, up to 5.25 Kgf/ cm2 and it will be monitored during 4th 15 minutes.
8If everything is found normal, after 1 hour from starting, the pressure should be raised to 75% of max. test pressure during 5th 15 minutes, i.e, up to 7.69 Kgf/ cm2 and it will be monitored during 6th 15 minutes.
8In case no leakage is developed, after 1.5 hours from starting, the pressure will be raised to 100% of max. test pressure during 7th 15 minutes, i.e, up to 10.5 Kgf/ cm2. The pressure and temperature should be monitored for 2 hours from the time full pressure is applied.
8If any leakage is suspected and pressure falls ordoes not sustain, no further pressure shall be applied on the pipeline. Already developed pressure shall be released from test end and and the Maintenance Engineer shall be informed.
8In case of successful testing, pressure has to be released gradually over a period of 30 minutes. Details
8Even safer product pipelines are not up for scrutiny and testing.
8BPCL for example is planning the pressure testing of its product and PLT lines in West Bengal
8The testing will be carried out on the HSD pipeline from PLT Exchange Pit to HSD A/G Tanks inlet valves TK15, TK16, TK17 with product as per standard procedure at 10.5 Kg/ sq.cm.
The testing procedure will consist of following process:
8HSD and SKO pipelines can be tested with water or product. MS pipelines must be tested with water only. Pipeline quantity has to be sucked in BPCL tanks and it should be filled with water.
Pressure testing shall be carried out on segment wise pipelines.
8During 1st 15 minutes, 25% of max. test pressure 10.5 Kgf /cm2 i.e., 2.6 Kgf/cm2 pressure shall be applied to the pipeline testing. After 30 minutes from starting, pressure will be raised to 50% of max. test pressure during 3rd 15 minutes, i.e, up to 5.25 Kgf/ cm2 and it will be monitored during 4th 15 minutes.
8If everything is found normal, after 1 hour from starting, the pressure should be raised to 75% of max. test pressure during 5th 15 minutes, i.e, up to 7.69 Kgf/ cm2 and it will be monitored during 6th 15 minutes.
8In case no leakage is developed, after 1.5 hours from starting, the pressure will be raised to 100% of max. test pressure during 7th 15 minutes, i.e, up to 10.5 Kgf/ cm2. The pressure and temperature should be monitored for 2 hours from the time full pressure is applied.
8If any leakage is suspected and pressure falls ordoes not sustain, no further pressure shall be applied on the pipeline. Already developed pressure shall be released from test end and and the Maintenance Engineer shall be informed.
8In case of successful testing, pressure has to be released gradually over a period of 30 minutes. Details
The PNGRB notice seeking inputs for levy of "other charges" has attracted a lot of attention from stakeholders.
8All regulated entities are mandated to pay "other charges" as per section 11 (e) of PNGRB Act.
8PNGRB had invited comments on how to lend greater clarity to the levy and uniformity in collection.
8There have also been arrears in the collection of such charges.
8Among the entities which want to be heard on the subject are:
8Comments have been received from Mahanagar Gas Limited, Reliance Gas Transportation Limited, GAIL (India) Limited, Gujarat Gas Limited and Indraprastha Gas Limited
8The regulator has now called for an open house to discuss the issues at hand and hammer out a consensus.
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8All regulated entities are mandated to pay "other charges" as per section 11 (e) of PNGRB Act.
8PNGRB had invited comments on how to lend greater clarity to the levy and uniformity in collection.
8There have also been arrears in the collection of such charges.
8Among the entities which want to be heard on the subject are:
8Comments have been received from Mahanagar Gas Limited, Reliance Gas Transportation Limited, GAIL (India) Limited, Gujarat Gas Limited and Indraprastha Gas Limited
8The regulator has now called for an open house to discuss the issues at hand and hammer out a consensus.
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GAIL, through its JV, Indraprastha Gas Ltd (IGL), has challenged the authority of the PNGRB to levy "other charges" on authorized entities.
8IGL claims that the PNGRB Act does not prescribe the levy of charges for "services" and the attempt to generate funds through "other charges" is illegal.
8The level of "other charges" on the basis of the turnover of an entity is nothing but a "turnover tax" that the regulator has not jurisdiction to levy, IGL has argued.
8Apparently, Article 256 of the Constitution of India does not allow the levy of tax except by an Authority of Law and the PNGRB has not been authorized to do so by Parliament.
8Other entities however are not questioning the authority of the Board to levy the charge.
8Some are asking for exemption for smaller companies for it to be levied prospectively or from a date later than Septeber.
8GAIL however is vehemently opposed to the levy. Details
8IGL claims that the PNGRB Act does not prescribe the levy of charges for "services" and the attempt to generate funds through "other charges" is illegal.
8The level of "other charges" on the basis of the turnover of an entity is nothing but a "turnover tax" that the regulator has not jurisdiction to levy, IGL has argued.
8Apparently, Article 256 of the Constitution of India does not allow the levy of tax except by an Authority of Law and the PNGRB has not been authorized to do so by Parliament.
8Other entities however are not questioning the authority of the Board to levy the charge.
8Some are asking for exemption for smaller companies for it to be levied prospectively or from a date later than Septeber.
8GAIL however is vehemently opposed to the levy. Details
