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Oct 2015
The Chinese economy may be slowing down but three of China's energy companies -- made it to the top 10 of the top 250 global energy companies in 2015 as ranked by Platts. The year saw not one, but two Chinese energy giants, CNOOC and PetroChina Company , moved into the Top 5 for the first time since the rankings began in 2002. China Shenhua Energy was the other company that stood ninth in the ranking.
8The Platts Top 250 rankings reflect the financial performance of publicly traded energy companies with assets greater than U.S.$5 billion, and are based on a combination of asset value, revenue, profit and return on invested capital (ROIC) for the latest fiscal year (2014).
8Reliance Industries moved up the ladder standing a proud 14the in the global rankings followed by ONGC (17th) and Coal India (38th). The latter in fact has climbed up to 38th place this year from 47th place a year ago, due in large part to its impressive growth year-over-year, including a 14% jump in drilling over the past year
8Exxon Mobil Corporation has retained its stronghold on the No 1 spot for the 11th consecutive year.
8In contrast, the rankings of Britain's BP, France's TOTAL, and Russia's Gazprom have fallen dramatically. The Russian gas supplier, which placed 4th overall last year, dived 39 places to 43rd, buffeted by the ruble's collapse, its impact on long-term credit, and other factors. TOTAL, once a Top 10 fixture, tumbled to 26th place this year as its earnings and returns faltered. Last year's 2nd-ranked BP fell to 29th this year, due in large part to its weaker profits and poor 2% ROIC.
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8The Platts Top 250 rankings reflect the financial performance of publicly traded energy companies with assets greater than U.S.$5 billion, and are based on a combination of asset value, revenue, profit and return on invested capital (ROIC) for the latest fiscal year (2014).
8Reliance Industries moved up the ladder standing a proud 14the in the global rankings followed by ONGC (17th) and Coal India (38th). The latter in fact has climbed up to 38th place this year from 47th place a year ago, due in large part to its impressive growth year-over-year, including a 14% jump in drilling over the past year
8Exxon Mobil Corporation has retained its stronghold on the No 1 spot for the 11th consecutive year.
8In contrast, the rankings of Britain's BP, France's TOTAL, and Russia's Gazprom have fallen dramatically. The Russian gas supplier, which placed 4th overall last year, dived 39 places to 43rd, buffeted by the ruble's collapse, its impact on long-term credit, and other factors. TOTAL, once a Top 10 fixture, tumbled to 26th place this year as its earnings and returns faltered. Last year's 2nd-ranked BP fell to 29th this year, due in large part to its weaker profits and poor 2% ROIC.
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BP's dramatic fall from second place to 29th in Platts ranking may not have a straight link with negative returns that the multinational's $7.2 billion acquisition of a 30% stake in RIL's E&P business. There have been a series of bad investments made by BP and in July 2015, the multinational agreed to pay $18.7 billion in fines for the Gulf of Mexico oil spill, the largest corporate settlement in U.S. history.
8In India for example, the fall in the worth of BP's investment is arguably the biggest destruction of corporate value ever in the country's business history.
RIL's 70% stake in its E&P block has returned revenues of a mere Rs 1,166 crore in Q-2, 2015-17 from its domestic E&P operations and by extension, BP's revenues will be proportionately lower.
8Lower prices coupled with decline in output has brought the EBIT down to Rs 56 crore for RIL so BP's will be even lower
8Then there is arbitration of all kinds to deal with, from charges of gold plating to freedom to fix gas prices.
8All of that is time consuming, and erodes both confidence and funds.
8Besides the investment in equity, BP had been pumping in money along with RIL in shoring up production in its KG D-6 fields and in additional exploration work. That's over and above the 2 billion it had pumped in to acquire the 30% stake.
8BP may also have to shell out 30% of the Rs 9000 crore that ONGC claims is the amount of gas that the RIL-BP duo have spirited out from its block. An independent international consultant has established that gas has flowed away from ONGC's block into the adjacent D-6 block where it was mopped up by RIL's wells.
8The future too is uncertain. The current gas pricing policy does not make it worth while to produce from fresh reserves in the KG basin. BP had at one point said that it can pump out as much as 50 mmscmd of gas from the East 8Coast of India but those plans stay frozen for the time being..
8But of all that is now uncertain even if the government frees the price of gas though given that the evacuation and processing infrastructure has already been built in the KG basin, the cost of production will be lower than others. But whether the gas can compete with the landed price of LNG is something that is still to be worked out, particularly when BP had loudly declared last year that the cost of production will be a tad more than $10/mmbtu.
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8In India for example, the fall in the worth of BP's investment is arguably the biggest destruction of corporate value ever in the country's business history.
RIL's 70% stake in its E&P block has returned revenues of a mere Rs 1,166 crore in Q-2, 2015-17 from its domestic E&P operations and by extension, BP's revenues will be proportionately lower.
8Lower prices coupled with decline in output has brought the EBIT down to Rs 56 crore for RIL so BP's will be even lower
8Then there is arbitration of all kinds to deal with, from charges of gold plating to freedom to fix gas prices.
8All of that is time consuming, and erodes both confidence and funds.
8Besides the investment in equity, BP had been pumping in money along with RIL in shoring up production in its KG D-6 fields and in additional exploration work. That's over and above the 2 billion it had pumped in to acquire the 30% stake.
8BP may also have to shell out 30% of the Rs 9000 crore that ONGC claims is the amount of gas that the RIL-BP duo have spirited out from its block. An independent international consultant has established that gas has flowed away from ONGC's block into the adjacent D-6 block where it was mopped up by RIL's wells.
8The future too is uncertain. The current gas pricing policy does not make it worth while to produce from fresh reserves in the KG basin. BP had at one point said that it can pump out as much as 50 mmscmd of gas from the East 8Coast of India but those plans stay frozen for the time being..
8But of all that is now uncertain even if the government frees the price of gas though given that the evacuation and processing infrastructure has already been built in the KG basin, the cost of production will be lower than others. But whether the gas can compete with the landed price of LNG is something that is still to be worked out, particularly when BP had loudly declared last year that the cost of production will be a tad more than $10/mmbtu.
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It must indeed be a proud moment for Ms Nishi Vasudeva, chairman and managing director of HPCL to have been bestowed the "Asia CEO of the Year" by Platts.
8With this win, Vasudeva is automatically in the running with other finalists for the global "CEO of the Year" award, which will be announced December
8The Platts Top 250's independent judges panel, already impressed with Hindustan Petroleum's history of peer-beating marketing margins, credited Vasudeva's exemplary leadership with steering the company to its stated best financial performance since its 1974 formation.
8In the past year, the refining and marketing company showed a personal best in profits, well beyond its decades' highest profit from the prior year. According to the judges, these accomplishments were even more significant when juxtaposed with the volatile global economy, as well as India's high rates of inflation, weak currency, and the cyclone damage to the company's 8.3-million-tons-per year, 166,000 barrels-per day refinery at Vishakhapatnam. Details
8With this win, Vasudeva is automatically in the running with other finalists for the global "CEO of the Year" award, which will be announced December
8The Platts Top 250's independent judges panel, already impressed with Hindustan Petroleum's history of peer-beating marketing margins, credited Vasudeva's exemplary leadership with steering the company to its stated best financial performance since its 1974 formation.
8In the past year, the refining and marketing company showed a personal best in profits, well beyond its decades' highest profit from the prior year. According to the judges, these accomplishments were even more significant when juxtaposed with the volatile global economy, as well as India's high rates of inflation, weak currency, and the cyclone damage to the company's 8.3-million-tons-per year, 166,000 barrels-per day refinery at Vishakhapatnam. Details
RGTIL has placed exactly the same set of objections on the tariff fixation mechanism initiated by the PNGRB for GAIL's Cauvery Basin network as it did for the public sector gas major's Dabhol-Bangalore pipeline
8The private gas transporter claims that computation of tariff should be done on the basis of the DCF methodology considering all future expected cash flows, including expenditure incurred on replacement, overhaul, up-keep, upgradtion and addition of network or equipment and not in the manner in which PNGRB wants to do it.
8Then again, RGTIL wants the inflation rate to be on actual rather than notional basis.
8RGTIL 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.
8RGTIL 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 private gas transporter claims that computation of tariff should be done on the basis of the DCF methodology considering all future expected cash flows, including expenditure incurred on replacement, overhaul, up-keep, upgradtion and addition of network or equipment and not in the manner in which PNGRB wants to do it.
8Then again, RGTIL wants the inflation rate to be on actual rather than notional basis.
8RGTIL 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.
8RGTIL 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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Worries are beginning to surface about the slowdown in China. Is it going to be the new normal or is it just blip and GDP growth will accelerate again?
8The recent China market downturn has interrupted a decade-long double-digit growth trajectory.
8A recent paper looks at how gas demand is going to change with falling GDP growth in China.
8The need for clean energy and compulsions to limit environmental damage implies a fuel-mix choice that will have to underpin a robust growth in gas consumption.
8The gap between what is required by the fuel-mix transition and a status quo scenario can be closed, if right policy responses are taken to build a more flexible pricing mechanism, implement energy market reforms and enforce stricter environmental regulations.
8The focus should be on unleashing the demand potential from urbanization and income growth
8The attention of all major gas producers is on China because its rapid economic growth in recent years had lead to a surge in global gas supply and demand
8A slow down will hit gas producers and gas prices.
8If Chinese demand cools off, suppliers will find it difficult to break out of the low equilibrium trap in which gas prices are currently caught. Details
8The recent China market downturn has interrupted a decade-long double-digit growth trajectory.
8A recent paper looks at how gas demand is going to change with falling GDP growth in China.
8The need for clean energy and compulsions to limit environmental damage implies a fuel-mix choice that will have to underpin a robust growth in gas consumption.
8The gap between what is required by the fuel-mix transition and a status quo scenario can be closed, if right policy responses are taken to build a more flexible pricing mechanism, implement energy market reforms and enforce stricter environmental regulations.
8The focus should be on unleashing the demand potential from urbanization and income growth
8The attention of all major gas producers is on China because its rapid economic growth in recent years had lead to a surge in global gas supply and demand
8A slow down will hit gas producers and gas prices.
8If Chinese demand cools off, suppliers will find it difficult to break out of the low equilibrium trap in which gas prices are currently caught. Details
Blowouts are always frightening for their capacity to take lives and inflict damage on the environment.
8Oil India Ltd's DND#9 well in its Dandewala oil field on the India-Pakistan border was its most prolific well, producing gas at the rate of 77650 SCMD, but situation went out of control on October 12 when gas started seeping out from surfaces adjacent to the well.
8A full-blown blowout was in the making.
8After a request for help from OIL, an ONGC team was rushed to the site.
8But the well killing job was not an easy one, and ONGC had to supplement its initial effort with fire teams and experts from Ahmedabad and Mehsana along with heavy equipment to quell the blowout over a three day period.
8The website carries here a detailed account of the operation, highlighting both the skill and the dedicated work put in by the ONGC team.
8The episode also highlights the sorry state of preparedness of OIL in dealing with the blowout.
8Given that OIL operates hundreds of wells, it is necessary for the company to develop the in-house skills necessary to tackle such emergencies.
8From the account of the accident, it seems ONGC did all the work, and OIL had not role to play in controlling the blowout.
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8Oil India Ltd's DND#9 well in its Dandewala oil field on the India-Pakistan border was its most prolific well, producing gas at the rate of 77650 SCMD, but situation went out of control on October 12 when gas started seeping out from surfaces adjacent to the well.
8A full-blown blowout was in the making.
8After a request for help from OIL, an ONGC team was rushed to the site.
8But the well killing job was not an easy one, and ONGC had to supplement its initial effort with fire teams and experts from Ahmedabad and Mehsana along with heavy equipment to quell the blowout over a three day period.
8The website carries here a detailed account of the operation, highlighting both the skill and the dedicated work put in by the ONGC team.
8The episode also highlights the sorry state of preparedness of OIL in dealing with the blowout.
8Given that OIL operates hundreds of wells, it is necessary for the company to develop the in-house skills necessary to tackle such emergencies.
8From the account of the accident, it seems ONGC did all the work, and OIL had not role to play in controlling the blowout.
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Financial stress building up in some shipbuilding yards has eased somewhat with crude tanker orders resuming in healthy volumes after remaining subdued for sometime More and more names of A-list tanker owners are now placing orders sensing a revival in the market.
8South Korea’s, Hyundai Mipo, a ship builder, has returned to profits in the third quarter on robust orders after a period of poor performance that lasted for more than a year
8Should the strong momentum in the tanker market persists, the order book position of shipyards may soon enough become full thereby forcing a halt in ordering, albeit for a different reason altogether.
8Among the latest orders were those from Elandra which placed an order for three Suezmaxes (158,000dwt) at Sungdong, in S.Korea for a price of $ 66.0m each and delivery set in 2017.
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8South Korea’s, Hyundai Mipo, a ship builder, has returned to profits in the third quarter on robust orders after a period of poor performance that lasted for more than a year
8Should the strong momentum in the tanker market persists, the order book position of shipyards may soon enough become full thereby forcing a halt in ordering, albeit for a different reason altogether.
8Among the latest orders were those from Elandra which placed an order for three Suezmaxes (158,000dwt) at Sungdong, in S.Korea for a price of $ 66.0m each and delivery set in 2017.
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A background paper claims that the two US based Koch brothers -- who together are the world's most wealthiest people -- are responsible for paralyzing the United States climate policy that underpins the
international impasse at the United Nations Framework Convention on Climate Change (UNFCCC).
8The brothers intend to spent a massive $900 million in the 2016 US elections so as to be able to influence energy policies of the US government.
8The brothers who are heavily invested in the oil and gas industry have been accused of funding research that says that it will not be possible to achieve the two degree increase in global warming by the end of the century. Instead governments must look at a more realistic 4 degree centigrade figure.
8A higher temperature margin allows the global hydrocarbon industry to proliferate as there will be a larger appetite for oil and gas under such a scenario.
Click on Reports for a copy of this fascinating paper. Details
international impasse at the United Nations Framework Convention on Climate Change (UNFCCC).
8The brothers intend to spent a massive $900 million in the 2016 US elections so as to be able to influence energy policies of the US government.
8The brothers who are heavily invested in the oil and gas industry have been accused of funding research that says that it will not be possible to achieve the two degree increase in global warming by the end of the century. Instead governments must look at a more realistic 4 degree centigrade figure.
8A higher temperature margin allows the global hydrocarbon industry to proliferate as there will be a larger appetite for oil and gas under such a scenario.
Click on Reports for a copy of this fascinating paper. Details
The biggest challenge to the demand for MS and HSD could come from the electric vehicle (EV).
8The technology has been around for quite some time, but it is only now that there is talk that such a car can be cost competitive to a conventional diesel or petrol driven passenger car.
8The forecast is that EVs could be cost competitive by 2030.31 but the point to note is that it can happen earlier than what has been predicted.
8The cost of Tesla’s recent Model-S was at least five years ahead of this industry's own projection.
8As such, assuming learning rates are maintained, EVs could be cost competitive with internal combustion engine (ICE) cars by 2025.
8By 2025, the IEA estimates 80 million EVs on the road. After cost-parity is reached, this number will surely increase further.
8One could expect that once cost parity is reached, demand for EVs will increase exponentially
8BMW, for example, have already said they expect all their models to be electric by 2025.
8Interestingly however big oil companies such as Exxon Mobil and Shell have not taken these projections into consideration. Instead, they continue to be bearish on the cost competitiveness of EVs but sticking on to their projections will be increasingly at their own peril.
8The winds of change will sweep India as well. And the huge liquid fuel edifice -- in terms of retail outlets and distribution networks -- built laboriously by the oil companies may become outdated in 10 years time if EV technology continues to move as rapidly as it is doing now.
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8The technology has been around for quite some time, but it is only now that there is talk that such a car can be cost competitive to a conventional diesel or petrol driven passenger car.
8The forecast is that EVs could be cost competitive by 2030.31 but the point to note is that it can happen earlier than what has been predicted.
8The cost of Tesla’s recent Model-S was at least five years ahead of this industry's own projection.
8As such, assuming learning rates are maintained, EVs could be cost competitive with internal combustion engine (ICE) cars by 2025.
8By 2025, the IEA estimates 80 million EVs on the road. After cost-parity is reached, this number will surely increase further.
8One could expect that once cost parity is reached, demand for EVs will increase exponentially
8BMW, for example, have already said they expect all their models to be electric by 2025.
8Interestingly however big oil companies such as Exxon Mobil and Shell have not taken these projections into consideration. Instead, they continue to be bearish on the cost competitiveness of EVs but sticking on to their projections will be increasingly at their own peril.
8The winds of change will sweep India as well. And the huge liquid fuel edifice -- in terms of retail outlets and distribution networks -- built laboriously by the oil companies may become outdated in 10 years time if EV technology continues to move as rapidly as it is doing now.
Click on Reports for more Details
ONGC and RIL have put their plans to exploit their deepwater oil and gas assets on hold pending a review of the pricing policy by the government.
8But assuming that the Modi government decides to allow free pricing of gas, will these assets still be viable to tap?
8Both these companies will have to carefully assess the NPV of their reserves over a 10 to 20 year period.
8The crucial parameter that will allow the projection of positive NPV will be a reasonable price for landed LNG.
8In case the foreseeable worldwide demand for gas does not come about, the landed cost of LNG can get lower than what it is now if the US shale gas industry becomes more efficient.
8Countries like Qatar, which will be badly impacted if crude prices continue to stay low, may start selling gas at panic prices to be able to retain market share just like Saudi Arabia's refusal to cut down crude supply has halved the price of oil.
8In that kind of a scenario, there is a serious possibility that the KG Basin gas reserves may in fact go untapped.
8There is already talk that the a large part of deepwater hydrocarbon assets will have to stay unexploited should global warming be limited to a two degree change by the end of the century.
8If the governments agree on emission targets and if disruptive technologies continue to eat away at the demand for gas, it may well be likely that the KG Basin reserves can be among those marked to stay underground forever.
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8But assuming that the Modi government decides to allow free pricing of gas, will these assets still be viable to tap?
8Both these companies will have to carefully assess the NPV of their reserves over a 10 to 20 year period.
8The crucial parameter that will allow the projection of positive NPV will be a reasonable price for landed LNG.
8In case the foreseeable worldwide demand for gas does not come about, the landed cost of LNG can get lower than what it is now if the US shale gas industry becomes more efficient.
8Countries like Qatar, which will be badly impacted if crude prices continue to stay low, may start selling gas at panic prices to be able to retain market share just like Saudi Arabia's refusal to cut down crude supply has halved the price of oil.
8In that kind of a scenario, there is a serious possibility that the KG Basin gas reserves may in fact go untapped.
8There is already talk that the a large part of deepwater hydrocarbon assets will have to stay unexploited should global warming be limited to a two degree change by the end of the century.
8If the governments agree on emission targets and if disruptive technologies continue to eat away at the demand for gas, it may well be likely that the KG Basin reserves can be among those marked to stay underground forever.
Click on Reports for more. Details
Cash circulation has come down because the Modi government has come down harshly on its generation.
8Unaccounted cash is no longer king. It is certainly not about to disappear, but its growth has been checked and new business uncertainties are being created as a result.
8The problem with considering black money as pure evil is that it discounts the reality that it is also an engine of demand and growth. Black money is high-powered money, as it evades taxes and leaves more money in the hands of cronies and ordinary citizens.
8Whatever the moral objections, the fact is that it also drives growth in the form of consumption, even conspicuous consumption. So any fundamental attack on the sources of black money will have a medium-term impact on consumption and investment.
8Click on Details to find out how cash circulation is being curtailed by the government and how in the face of shrinking private sector investment, the government investment is the only way to generate new income in the country today. Details
8Unaccounted cash is no longer king. It is certainly not about to disappear, but its growth has been checked and new business uncertainties are being created as a result.
8The problem with considering black money as pure evil is that it discounts the reality that it is also an engine of demand and growth. Black money is high-powered money, as it evades taxes and leaves more money in the hands of cronies and ordinary citizens.
8Whatever the moral objections, the fact is that it also drives growth in the form of consumption, even conspicuous consumption. So any fundamental attack on the sources of black money will have a medium-term impact on consumption and investment.
8Click on Details to find out how cash circulation is being curtailed by the government and how in the face of shrinking private sector investment, the government investment is the only way to generate new income in the country today. Details
For reference purposes, the website carried here a comprehensive map of India showing its latest gas pipeline infrastructure.
8As of now, the existing pipeline network is spread over 6200 km capable of transporting 430 mmsmcd of gas.
8There is an additional 15,000 km of pipelines planned.
8Another 8000 km is currently in construction, capable of ferrying 400 mmscmd.
8The map provides a clear depiction of LNG terminals around the country and the attendant networks that cater to demand for gas from across the country.
8All existing and proposed pipelines are displayed in the map. Details
8As of now, the existing pipeline network is spread over 6200 km capable of transporting 430 mmsmcd of gas.
8There is an additional 15,000 km of pipelines planned.
8Another 8000 km is currently in construction, capable of ferrying 400 mmscmd.
8The map provides a clear depiction of LNG terminals around the country and the attendant networks that cater to demand for gas from across the country.
8All existing and proposed pipelines are displayed in the map. Details
Petronet LNG Ltd has said that it will commission its 5 MMTPA onshore LNG plant at Gangavaram, Andhra Pradesh in 2017.
8DFR, FEED and various other pre-project activities have been completed
8All approvals have been received
8Estimated project cost is $ 750 Million.
8The LNG terminal is to be developed as SPV with Gangavaram Ports Ltd as partner
8Facilities to include 2 Storage tanks, marine & regasification facilities
8Understanding reached for connectivity with East West & Mallavaram-Bhilwara pipelines. The company is in discussions with Kakinada-Srikakulam pipeline for a tie-up as well
8The company is now working actively on customer tie-ups.
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8DFR, FEED and various other pre-project activities have been completed
8All approvals have been received
8Estimated project cost is $ 750 Million.
8The LNG terminal is to be developed as SPV with Gangavaram Ports Ltd as partner
8Facilities to include 2 Storage tanks, marine & regasification facilities
8Understanding reached for connectivity with East West & Mallavaram-Bhilwara pipelines. The company is in discussions with Kakinada-Srikakulam pipeline for a tie-up as well
8The company is now working actively on customer tie-ups.
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For reference purposes, the website carries here the entire matrix involved in the calculation of emissions in the gas production chain.
8Emission levels are estimated right from well installation and drilling to venting and flaring of gas in the extraction process to well completions, workovers, liquid unloading and fugitive emissions.
8GHG emissions from gas processing is also adequately documented
8Emissions from pneumatic devices are captured as also emissions coming out of a natural gas processing and liquefaction facility.
8Gas emissions from gas transportation is also calculated and the entire process is documented in the report
8GHG emissions from shipping of LNG is also taken into account as also from the regasification process.
8Then the emissions coming out of a gas based combined cycle power plant is also picked up.
8The process is repeated for a coal based power plant.
8It is time that similar exercises are done for the Indian gas sector too.
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8Emission levels are estimated right from well installation and drilling to venting and flaring of gas in the extraction process to well completions, workovers, liquid unloading and fugitive emissions.
8GHG emissions from gas processing is also adequately documented
8Emissions from pneumatic devices are captured as also emissions coming out of a natural gas processing and liquefaction facility.
8Gas emissions from gas transportation is also calculated and the entire process is documented in the report
8GHG emissions from shipping of LNG is also taken into account as also from the regasification process.
8Then the emissions coming out of a gas based combined cycle power plant is also picked up.
8The process is repeated for a coal based power plant.
8It is time that similar exercises are done for the Indian gas sector too.
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Gas is suppose to be the "transition fuel" that is meant to ensure a smooth movement to a low emission world.
8The main focus of gas suppliers today is the power sector where the maximum demand for new gas is expected to be created.
8Detailed analysis has now been done on how much more polluting a coal fired power plant is compared to a gas fired one.
8Existing coal based power producing technology for the five LNG export markets analyzed in a study was found to produce approximately 117 percent to 194 percent more emissions on a life cycle basis than gas
8The analysis indicated that in the five LNG export markets used in this study, an efficient new-build coal-fired power plant would on average emit 106 percent more emissions from a life cycle perspective than the average low case for LNG (an average of 1.041 tonnes CO2-e/MWH for the new-build power plant case versus 0.506 tonnes CO2-e/MWH for LNG case).
8Combustion emissions were greater for all coal cases than for LNG. Emissions from raw material acquisition were also generally higher for coal than for LNG. However, gas processing emissions were greater for LNG due to incremental processing requirements such as liquefaction, regasification, and pipeline transport.
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8The main focus of gas suppliers today is the power sector where the maximum demand for new gas is expected to be created.
8Detailed analysis has now been done on how much more polluting a coal fired power plant is compared to a gas fired one.
8Existing coal based power producing technology for the five LNG export markets analyzed in a study was found to produce approximately 117 percent to 194 percent more emissions on a life cycle basis than gas
8The analysis indicated that in the five LNG export markets used in this study, an efficient new-build coal-fired power plant would on average emit 106 percent more emissions from a life cycle perspective than the average low case for LNG (an average of 1.041 tonnes CO2-e/MWH for the new-build power plant case versus 0.506 tonnes CO2-e/MWH for LNG case).
8Combustion emissions were greater for all coal cases than for LNG. Emissions from raw material acquisition were also generally higher for coal than for LNG. However, gas processing emissions were greater for LNG due to incremental processing requirements such as liquefaction, regasification, and pipeline transport.
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What happens to the price of gas in the next 10 years?
8This is a question that is going to be increasingly difficult to answer.
8If the rise of renewables is going to upset the worldwide demand for gas from the power sector, gas prices may remain low for a very long time indeed
8With the American shale gas supply being price sensitive, the cost of gas will remain above the breakeven cost of US shale gas for a long time to come.
8The disruptive power of electric vehicles on crude oil demand also should not be overlooked. No one can really predict how rapidly EVs will substitute conventional cars.
8The change will happen quickly and transformatively, so much so that conventional cars may become obsolete in a short lifespan.
8If electric vehicles ever reach 3% of global fleet additions; the next stop after 3% is 97%.
8BMW's prediction that it will not make conventional cars by 2015 has frightening implications for the oil and gas industry.
8The ripples will be felt in India sooner than later.
Comment: Do Indian companies have the scenario building capacity that large companies such as Exxon Mobil and BP have built? Given the disruptive changes, what are the internal processes in place in the Indian OMCs and NOCs to take on the challenge that the future seems to throw up. To keep a handle on the frightening pace of change is not going to be easy and the oil companies need to shore up their defenses to prepare for an completely unpredictable future.
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8This is a question that is going to be increasingly difficult to answer.
8If the rise of renewables is going to upset the worldwide demand for gas from the power sector, gas prices may remain low for a very long time indeed
8With the American shale gas supply being price sensitive, the cost of gas will remain above the breakeven cost of US shale gas for a long time to come.
8The disruptive power of electric vehicles on crude oil demand also should not be overlooked. No one can really predict how rapidly EVs will substitute conventional cars.
8The change will happen quickly and transformatively, so much so that conventional cars may become obsolete in a short lifespan.
8If electric vehicles ever reach 3% of global fleet additions; the next stop after 3% is 97%.
8BMW's prediction that it will not make conventional cars by 2015 has frightening implications for the oil and gas industry.
8The ripples will be felt in India sooner than later.
Comment: Do Indian companies have the scenario building capacity that large companies such as Exxon Mobil and BP have built? Given the disruptive changes, what are the internal processes in place in the Indian OMCs and NOCs to take on the challenge that the future seems to throw up. To keep a handle on the frightening pace of change is not going to be easy and the oil companies need to shore up their defenses to prepare for an completely unpredictable future.
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It is anybody's guess how oil and gas prices are going to behave going ahead.
8The volatility in prices is driven by short term demand-supply forces but the long term outlook does not look very optimistic given the rapid rise of renewable technology.
8Then again some of the demand projections for oil and gas assume a certain rate of population growth, GDP growth and energy intensity deceleration.
8All these projections are turning out to be highly optimistic.
8Slower population growth will mean that the headcount will be around 8.3 billion instead of 9 billion people and this itself can cool down demand for fossil fuels by 17%.
8Similarly the cooling down of China can bring down the base GDP growth forecast rate significantly, again lowering demand for oil and gas.
8This also holds true for projections made on the rate of decline of energy intensity as well as carbon intensity of energy.
8Given that any tilting of demand and supply of oil and gas can have a more than proportional impact on prices, the unhinging of the BAU model -- that is cultivated by the likes of Exxon Mobil, Shell and BP -- can create dramatic disturbances in the oil and gas market
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8The volatility in prices is driven by short term demand-supply forces but the long term outlook does not look very optimistic given the rapid rise of renewable technology.
8Then again some of the demand projections for oil and gas assume a certain rate of population growth, GDP growth and energy intensity deceleration.
8All these projections are turning out to be highly optimistic.
8Slower population growth will mean that the headcount will be around 8.3 billion instead of 9 billion people and this itself can cool down demand for fossil fuels by 17%.
8Similarly the cooling down of China can bring down the base GDP growth forecast rate significantly, again lowering demand for oil and gas.
8This also holds true for projections made on the rate of decline of energy intensity as well as carbon intensity of energy.
8Given that any tilting of demand and supply of oil and gas can have a more than proportional impact on prices, the unhinging of the BAU model -- that is cultivated by the likes of Exxon Mobil, Shell and BP -- can create dramatic disturbances in the oil and gas market
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Experts are now increasingly talking of disruptive technologies that can dramatically upset projections of continuingly increasing demand for fossil fuels well into the future.
8Research papers are now predicting that it will not be business as usual (BAU) for the oil and gas industry. The BAU case sees fossil fuels making up three quarters of the total energy demand by 2040.
8One game changer is the sliding cost of energy storage in batteries that will have the advantage of removing the barrier of intermittency in renewable energy supply, leading to much higher penetration of renewal energy in an economy.
8Forecasts of ‘battery parity’ – the point where renewable energy, typically solar, and battery costs match grid supply costs – show renewables and energy storage could be cost competitive in the near-term.
8Deutsche Bank sees battery parity being reached in Germany in 2016, while another consultancy sees solar PV plus storage outcompeting retail power prices in Australia, Japan, Spain and Brazil by 2018.
8This will also mean that major consumers of grid power can eventually go off-grid completely.
8The eventual shift to renewable energy will have severe implications not just for coal-based but also for the gas-based power. In other words, the projected increase in gas based peaking power requirement may not happen, thereby limiting the demand for gas in the future. Details
8Research papers are now predicting that it will not be business as usual (BAU) for the oil and gas industry. The BAU case sees fossil fuels making up three quarters of the total energy demand by 2040.
8One game changer is the sliding cost of energy storage in batteries that will have the advantage of removing the barrier of intermittency in renewable energy supply, leading to much higher penetration of renewal energy in an economy.
8Forecasts of ‘battery parity’ – the point where renewable energy, typically solar, and battery costs match grid supply costs – show renewables and energy storage could be cost competitive in the near-term.
8Deutsche Bank sees battery parity being reached in Germany in 2016, while another consultancy sees solar PV plus storage outcompeting retail power prices in Australia, Japan, Spain and Brazil by 2018.
8This will also mean that major consumers of grid power can eventually go off-grid completely.
8The eventual shift to renewable energy will have severe implications not just for coal-based but also for the gas-based power. In other words, the projected increase in gas based peaking power requirement may not happen, thereby limiting the demand for gas in the future. Details
The world’s leading technological innovators see the transformation that is occurring and understand that big money can be made by early-movers.
8That is why Google has committed $1.8 billion to renewable energy projects and why Apple has invested $3 billion in solar facilities.
8Technologies typically penetrate markets in an S-curve.
8Given the rate of cost reduction, the world could be at the cusp of a rapid uptake of renewable energy technologies with the coevolution of energy storage.
8This will be combined with further cuts in renewal energy cost. Cost reductions in solar PV and wind are continuing strongly.
8With every doubling of cumulative production, wind turbine costs have fallen 14% since 1984; for crystalline silicon PV modules this rate is 25%.
8This has meant the price of electricity generated from solar PV has fallen from US$76.67/watt in 1977 to just US$0.50/watt in 2015.
8There is variation between scenarios in the assumed percentage of time solar and wind technologies will be operating at full capacity, i.e. the load factor. This assumption affects perceived costs. For example, some scenarios assume only a 10% load factor for solar PV generation. If scenarios double the assumed load factor this will half the levelised cost of energy (LCOE) and increase assumed electricity generation.
8Similarly, if a lower load factor is assumed for coal and gas generation, perhaps if they no longer form baseload, the economic viability of these power sources will suffer.
8The changes are too rapid and overwhelming for anyone to figure out what the future has in store.
8But clearly base case scenarios of demand and supply projected by Big Oil are unlikely to hold true any more. Details
8That is why Google has committed $1.8 billion to renewable energy projects and why Apple has invested $3 billion in solar facilities.
8Technologies typically penetrate markets in an S-curve.
8Given the rate of cost reduction, the world could be at the cusp of a rapid uptake of renewable energy technologies with the coevolution of energy storage.
8This will be combined with further cuts in renewal energy cost. Cost reductions in solar PV and wind are continuing strongly.
8With every doubling of cumulative production, wind turbine costs have fallen 14% since 1984; for crystalline silicon PV modules this rate is 25%.
8This has meant the price of electricity generated from solar PV has fallen from US$76.67/watt in 1977 to just US$0.50/watt in 2015.
8There is variation between scenarios in the assumed percentage of time solar and wind technologies will be operating at full capacity, i.e. the load factor. This assumption affects perceived costs. For example, some scenarios assume only a 10% load factor for solar PV generation. If scenarios double the assumed load factor this will half the levelised cost of energy (LCOE) and increase assumed electricity generation.
8Similarly, if a lower load factor is assumed for coal and gas generation, perhaps if they no longer form baseload, the economic viability of these power sources will suffer.
8The changes are too rapid and overwhelming for anyone to figure out what the future has in store.
8But clearly base case scenarios of demand and supply projected by Big Oil are unlikely to hold true any more. Details
Experts are now also challenging the demand for gas as a "transition fuel" as the world moves from dirty coal to renewable energy.
8There is no doubt that the gas market is hard to predict. Few commentators saw the US shale gas boom coming.
8Meanwhile, the much-heralded European coal to gas switch has failed to materialize and gas demand in carbon constrained scenarios could be lower than what many expected.
8Gas demand is going to grow much slower than the projected 45% between 2015-2025 estimated by the IEA.
8If global temperatures are to be limited to 2 degrees centigrade, room for gas demand growth will be far less than business as usual.
8The power sector remains the biggest single sector for future gas demand.
8But a changing power landscape threatens to dislodge gas as a ‘base-load’ fuel leaving it as a back-up option.
8As renewable technologies with lower marginal costs gain market share, capacity factors for fossil fuelled power generation will stand lowered, making new plants less viable. Details
8There is no doubt that the gas market is hard to predict. Few commentators saw the US shale gas boom coming.
8Meanwhile, the much-heralded European coal to gas switch has failed to materialize and gas demand in carbon constrained scenarios could be lower than what many expected.
8Gas demand is going to grow much slower than the projected 45% between 2015-2025 estimated by the IEA.
8If global temperatures are to be limited to 2 degrees centigrade, room for gas demand growth will be far less than business as usual.
8The power sector remains the biggest single sector for future gas demand.
8But a changing power landscape threatens to dislodge gas as a ‘base-load’ fuel leaving it as a back-up option.
8As renewable technologies with lower marginal costs gain market share, capacity factors for fossil fuelled power generation will stand lowered, making new plants less viable. Details
8Today, BP's $7.2 billion acquisition of a 30% stake in RIL is not worth only a small fraction of that value.
8RIL's 70% stake has returned revenues of a mere Rs 1,166 crore in Q-2, 2015-17 from its domestic E&P operations and by extension, BP's revenues will be proportionately lower.
8Lower prices coupled with decline in output has brought the EBIT down to Rs 56 crore for RIL so BP's will be even lower
8Then there is arbitration of all kinds to deal with, from charges of gold plating to freedom to fix gas prices.
8All of that is time consuming, and erodes both confidence and funds.
8Besides the investment in equity, BP had been pumping in money along with RIL in shoring up production in its KG D-6 fields and in additional exploration work. That's over and above the $7.2 billion it had pumped in to acquire the 30% stake.
8BP may also have to shell out 30% of the Rs 9000 crore that ONGC claims is the amount of gas that the RIL-BP duo have spirited out from its block. An independent international consultant has established that gas has flowed away from ONGC's block into the adjacent D-6 block where it was mopped up by RIL's wells.
8The future too is uncertain. The current gas pricing policy does not make it worth while to produce from fresh reserves in the KG basin. BP had at one point said that it can pump out as much as 50 mmscmd of gas from the East Coast of India but those plans stay frozen for the time being..
8But of all that is now uncertain even if the government frees the price of gas though given that the evacuation and processing infrastructure has already been built in the KG basin, the cost of production will be lower than others. But whether the gas can compete with the landed price of LNG is something that is still to be worked out, particularly when BP had loundly declared last year that the cost of production will be a tad more than $10/mmbtu.
8BP however is so large that it can absorb the loss. For the multinational, it is one bet that has gone wrong against others that perhaps have gone right.
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8RIL's 70% stake has returned revenues of a mere Rs 1,166 crore in Q-2, 2015-17 from its domestic E&P operations and by extension, BP's revenues will be proportionately lower.
8Lower prices coupled with decline in output has brought the EBIT down to Rs 56 crore for RIL so BP's will be even lower
8Then there is arbitration of all kinds to deal with, from charges of gold plating to freedom to fix gas prices.
8All of that is time consuming, and erodes both confidence and funds.
8Besides the investment in equity, BP had been pumping in money along with RIL in shoring up production in its KG D-6 fields and in additional exploration work. That's over and above the $7.2 billion it had pumped in to acquire the 30% stake.
8BP may also have to shell out 30% of the Rs 9000 crore that ONGC claims is the amount of gas that the RIL-BP duo have spirited out from its block. An independent international consultant has established that gas has flowed away from ONGC's block into the adjacent D-6 block where it was mopped up by RIL's wells.
8The future too is uncertain. The current gas pricing policy does not make it worth while to produce from fresh reserves in the KG basin. BP had at one point said that it can pump out as much as 50 mmscmd of gas from the East Coast of India but those plans stay frozen for the time being..
8But of all that is now uncertain even if the government frees the price of gas though given that the evacuation and processing infrastructure has already been built in the KG basin, the cost of production will be lower than others. But whether the gas can compete with the landed price of LNG is something that is still to be worked out, particularly when BP had loundly declared last year that the cost of production will be a tad more than $10/mmbtu.
8BP however is so large that it can absorb the loss. For the multinational, it is one bet that has gone wrong against others that perhaps have gone right.
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The PNGRB has sought public comments on an amendment to the Access Code for City Gas Distribution (CGD) projects.
8The original provision (Section 2(I)(zf) says that "unless the context otherwise requires, "network tariff" means the unit rate of tariff (excluding statutory taxes and levies) in rupees per million British Thermal Units (Rs/MMBTU) for all the categories of customers of natural gas in a CGD network as determined and approved y the Board".
8The amendment that is being sought to be made reads as follows: "Unless the context otherwise requires, "network tariff" means the unit rate of tariff (excluding statutory taxes and levies) in rupees per million British Thermal Units (Rs/MMBTU) of natural gas in a CGD network to be paid by an entity to the entity authorized to operate the CGD network, as determined and approved by the Board".
8In other words all categories of customers has been removed and instead payment by an entity to the authorized entity has been incorporated. Details
8The original provision (Section 2(I)(zf) says that "unless the context otherwise requires, "network tariff" means the unit rate of tariff (excluding statutory taxes and levies) in rupees per million British Thermal Units (Rs/MMBTU) for all the categories of customers of natural gas in a CGD network as determined and approved y the Board".
8The amendment that is being sought to be made reads as follows: "Unless the context otherwise requires, "network tariff" means the unit rate of tariff (excluding statutory taxes and levies) in rupees per million British Thermal Units (Rs/MMBTU) of natural gas in a CGD network to be paid by an entity to the entity authorized to operate the CGD network, as determined and approved by the Board".
8In other words all categories of customers has been removed and instead payment by an entity to the authorized entity has been incorporated. Details
The PNGRB has sought public comments on an amendment to the Access Code for City Gas Distribution (CGD) projects.
8The original provision (Section 2(I)(zf) says that "unless the context otherwise requires, "network tariff" means the unit rate of tariff (excluding statutory taxes and levies) in rupees per million British Thermal Units (Rs/MMBTU) for all the categories of customers of natural gas in a CGD network as determined and approved y the Board".
8The amendment that is being sought to be made reads as follows: "Unless the context otherwise requires, "network tariff" means the unit rate of tariff (excluding statutory taxes and levies) in rupees per million British Thermal Units (Rs/MMBTU) of natural gas in a CGD network to be paid by an entity to the entity authorized to operate the CGD network, as determined and approved by the Board".
8In other words all categories of customers has been removed and instead payment by an entity to the authorized entity has been incorporated. Details
8The original provision (Section 2(I)(zf) says that "unless the context otherwise requires, "network tariff" means the unit rate of tariff (excluding statutory taxes and levies) in rupees per million British Thermal Units (Rs/MMBTU) for all the categories of customers of natural gas in a CGD network as determined and approved y the Board".
8The amendment that is being sought to be made reads as follows: "Unless the context otherwise requires, "network tariff" means the unit rate of tariff (excluding statutory taxes and levies) in rupees per million British Thermal Units (Rs/MMBTU) of natural gas in a CGD network to be paid by an entity to the entity authorized to operate the CGD network, as determined and approved by the Board".
8In other words all categories of customers has been removed and instead payment by an entity to the authorized entity has been incorporated. Details
Oct 26 : IOCL to deploy spy agency to check pilferage, prevent adverse reactions in media and public
IOCL has decided to deploy an intelligence gathering agency to work across its 2323.6 Km of cross country underground pipelines in Northern India.
8The networks passes through the states of Rajasthan, Uttar Pradesh, Delhi, Uttrakhand, Haryana and Punjab. The crude pipelines supply crude oil to Panipat Refinery & Mathura Refinery and product pipelines including LPG pipeline feed finished products from refinery to northern parts of India.
8In addition, the agency will also oversee the gas pipeline network of the company, from Dadri to Panipat
8The need to hire such an agency was felt after pilferage incidents were observed over these pipelines
8The agency will gather information on the suspected movements of pilferers near pipeline Right of Way (ROW) to prevent pilferages.
8What is more the agency will also have the dual role of safeguarding the the interest of Indian Oil from attracting adverse reaction of citizen, media, DGR and Administration.
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8The networks passes through the states of Rajasthan, Uttar Pradesh, Delhi, Uttrakhand, Haryana and Punjab. The crude pipelines supply crude oil to Panipat Refinery & Mathura Refinery and product pipelines including LPG pipeline feed finished products from refinery to northern parts of India.
8In addition, the agency will also oversee the gas pipeline network of the company, from Dadri to Panipat
8The need to hire such an agency was felt after pilferage incidents were observed over these pipelines
8The agency will gather information on the suspected movements of pilferers near pipeline Right of Way (ROW) to prevent pilferages.
8What is more the agency will also have the dual role of safeguarding the the interest of Indian Oil from attracting adverse reaction of citizen, media, DGR and Administration.
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Africa poses both a challenge and an opportunity for Indian companies.
8The oil and gas sector in the continent has seen rough weather in recent time.
8And yet there is money to be made in this segment in Africa.
8Authors AS Ujawal and Rahul Dhir look at the continent from the view of opportunities available for Indian E&P players as well as the challenges involved in the sourcing of oil and gas from there.
Click on our Reports section to find out more about what these authors have to say. Details
8The oil and gas sector in the continent has seen rough weather in recent time.
8And yet there is money to be made in this segment in Africa.
8Authors AS Ujawal and Rahul Dhir look at the continent from the view of opportunities available for Indian E&P players as well as the challenges involved in the sourcing of oil and gas from there.
Click on our Reports section to find out more about what these authors have to say. Details
Essar Projects Limited (EPL) is a global EPC company, which is headquartered in Dubai, and offers a unique collaborative end-to-end project delivery model that is backward integrated into the supply chain.
8EPL's four decades of experience executing mega projects in Hydrocarbons (Refinery, Petrochemical & Fertiliser Plants); Tankages and Terminals; Pipelines (Oil & Gas, Water, Slurry and Subsea); Offshore (Platforms, SPM & PLEM); Infrastructure (Ports, Jetties, Airports, Railway, Buildings & Townships); Minerals & Metals (Steel Plants, Sinter Feed, Beneficiation & Pelletisation Plants, Material Handling Systems); and Power Plants (Coal, Gas, Multi-fuel and Hydel).
8Active participation in initial operations and maintenance through the stabilisation phase of projects executed for its Group companies has sharpened EPL's skills, adding the O&M experience in EPC execution of turnkey projects. Unlike other contractors, EPL is therefore able to extend EPC from concept to commissioning and beyond. Details
8EPL's four decades of experience executing mega projects in Hydrocarbons (Refinery, Petrochemical & Fertiliser Plants); Tankages and Terminals; Pipelines (Oil & Gas, Water, Slurry and Subsea); Offshore (Platforms, SPM & PLEM); Infrastructure (Ports, Jetties, Airports, Railway, Buildings & Townships); Minerals & Metals (Steel Plants, Sinter Feed, Beneficiation & Pelletisation Plants, Material Handling Systems); and Power Plants (Coal, Gas, Multi-fuel and Hydel).
8Active participation in initial operations and maintenance through the stabilisation phase of projects executed for its Group companies has sharpened EPL's skills, adding the O&M experience in EPC execution of turnkey projects. Unlike other contractors, EPL is therefore able to extend EPC from concept to commissioning and beyond. Details
Essar Projects Ltd's joint venture with Italy's Saipem has won a USD 1.57 billion order from Kuwait National Petroleum Company (KNPC) for setting up what is dubbed as "Package 4" of the Al-Zour Refinery Project (ZOR) in Kuwait
8This is Essar's biggest third-party order won in the region.
8The New Refinery Project at Al Zour is Kuwait's biggest development project with crude processing capacity of 615,000 barrels per day (bpd).
8KNPC has awarded four Contracts for the refinery's construction, worth over USD13.2 billion to successful International bidders.
8With this order, Essar Project's order book has swelled to USD 2.8 billion, with projects being executed in nine countries. The company has a track record of setting up large and complex projects in Oil & Gas (E&P as well as refineries), Power, Ports and Steel. It is currently focusing on third-party orders, particularly in the Middle East, where the company sees significant opportunities.
8The scope for the KNPC contract includes Engineering, Procurement, Construction, Pre-commissioning and assistance during commissioning, startup and performance testing of Tank Farms for the of the Al-Zour Refinery Project (ZOR). Essar's portion comprises build-out of tankages, roads and bridges, as well as civil work, on an EPC basis. The project is expected to be completed by 2019. Details
8This is Essar's biggest third-party order won in the region.
8The New Refinery Project at Al Zour is Kuwait's biggest development project with crude processing capacity of 615,000 barrels per day (bpd).
8KNPC has awarded four Contracts for the refinery's construction, worth over USD13.2 billion to successful International bidders.
8With this order, Essar Project's order book has swelled to USD 2.8 billion, with projects being executed in nine countries. The company has a track record of setting up large and complex projects in Oil & Gas (E&P as well as refineries), Power, Ports and Steel. It is currently focusing on third-party orders, particularly in the Middle East, where the company sees significant opportunities.
8The scope for the KNPC contract includes Engineering, Procurement, Construction, Pre-commissioning and assistance during commissioning, startup and performance testing of Tank Farms for the of the Al-Zour Refinery Project (ZOR). Essar's portion comprises build-out of tankages, roads and bridges, as well as civil work, on an EPC basis. The project is expected to be completed by 2019. Details
Subsequent to the Supreme Court order, the PNGRB plans to drip Schedule D Clause 15 of the PNGRB regulations particularly the provision that allowed the regulator to determine network tariff and compression charges for city gas entities.
8The earlier compliance with the Petroleum and Natural Gas Regulatory Board (Determination of Network Tariff for City or Local Natural Gas Distribution Networks and Compression Charge for CNG) Regulations, 2008, has been deleted in its entirety under the amendments.
8Some other changes have also been made in the regulations.
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8The earlier compliance with the Petroleum and Natural Gas Regulatory Board (Determination of Network Tariff for City or Local Natural Gas Distribution Networks and Compression Charge for CNG) Regulations, 2008, has been deleted in its entirety under the amendments.
8Some other changes have also been made in the regulations.
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Vigilance will get a strong dose of science now, it looks like.
8A presentation made to BPCL on "Preventive vigilance through preventive forensics" by Keshav Kumar, Joint Director in the CBI, speaks of the new a new psychoanalytic approach to solving, as well as, preventing vigilance related crimes.
8Mr. Kumar is of the opinion that many of the Fusion Forensics tools available today would facilitate in equipping officers in public sector companies both in generating awareness and preventing unethical practices.
8He also invited attention to the Gujarat Forensic Sciences University which is the first of its kind in the world that is solely dedicated to Forensic Research and has ample learning opportunities to provide, particularly from the view of an origanization.
8BPCL is now planning to follow up on Kumar advise and investigate the feasibility of using forensic tools with the vigilance department acting as a conduit.
8Will other public sector companies follow suit?
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8A presentation made to BPCL on "Preventive vigilance through preventive forensics" by Keshav Kumar, Joint Director in the CBI, speaks of the new a new psychoanalytic approach to solving, as well as, preventing vigilance related crimes.
8Mr. Kumar is of the opinion that many of the Fusion Forensics tools available today would facilitate in equipping officers in public sector companies both in generating awareness and preventing unethical practices.
8He also invited attention to the Gujarat Forensic Sciences University which is the first of its kind in the world that is solely dedicated to Forensic Research and has ample learning opportunities to provide, particularly from the view of an origanization.
8BPCL is now planning to follow up on Kumar advise and investigate the feasibility of using forensic tools with the vigilance department acting as a conduit.
8Will other public sector companies follow suit?
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Even though the tariff war between GAIL and the PNGRB is between operators of gas pipelines and the regulator, one set of stakeholders who are to be benefited most would be the consumers of gas who will be spared the trouble of paying usurious tariff rates.
8Nevertheless this set of stakeholders are keeping quiet in this fierce battle between the two sides.
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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8Nevertheless this set of stakeholders are keeping quiet in this fierce battle between the two sides.
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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GAIL seems to be on weak ground when trying to counter H-Energy's opposition to the request for authorization by the public sector gas major for building a spur line to Mangalore from the Dabhol-Bangalore LNG pipeline.
8H-Energy in its comments had urged the PNGRB not to consider providing authorization to the spur line that GAIL is planning to build on the ground that the central government authorization was granted only for the Dhabol-Bangalore line and not for the spur line.
8GAIL in its counter reply is claiming that it is already authorized to lay the Kochi-Koottanad--Bangalore-Mangalore pipeline but that hasn't got built because of non-availability of Right of Use(ROU) in Kerala.
8In this context, the gas major has argued, that the spur line to Mangalore can be interpreted as another way of reaching gas to the city.
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 from the Dabhol-Bangalore line.
8It remains a moot point whether a spur line can be sanctioned on the ground that another pipeline had not come through on account of trouble in acquiring ROU.
8There is also the larger question of whether a spur line can be deemed to be automatically authorized if the main line had the sanction of the government as is the case with the Dabhol-Bangalore pipeline.
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8H-Energy in its comments had urged the PNGRB not to consider providing authorization to the spur line that GAIL is planning to build on the ground that the central government authorization was granted only for the Dhabol-Bangalore line and not for the spur line.
8GAIL in its counter reply is claiming that it is already authorized to lay the Kochi-Koottanad--Bangalore-Mangalore pipeline but that hasn't got built because of non-availability of Right of Use(ROU) in Kerala.
8In this context, the gas major has argued, that the spur line to Mangalore can be interpreted as another way of reaching gas to the city.
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 from the Dabhol-Bangalore line.
8It remains a moot point whether a spur line can be sanctioned on the ground that another pipeline had not come through on account of trouble in acquiring ROU.
8There is also the larger question of whether a spur line can be deemed to be automatically authorized if the main line had the sanction of the government as is the case with the Dabhol-Bangalore pipeline.
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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.
8RGTIL 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.
8 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.
8RGTIL 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.
8 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.
8 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.
8 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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The battles lines have been drawn over fixation of final tariff rates for gas pipelines that are under the control of the PNGRB.
GAIL has said that its position on the cost calculations that should go into the determination of final tariff rates has found support among all pipeline operators in the country.
The gas major has said that two of the largest gas pipeline operators -- GSPC and RGTIL -- support GAIL views on the final tariff determination process.
GAIL claims that there is agreement among the trio overon the following parameters that go into tariff fixation:
8Future capex
8Inflation rate
8Unaccounted gas
8Volume divisor
8Number of working days
8Retrospective implementation of tariff
8Interest during construction
Comment: The pipeline operators seems to have formed a cartel to take on the PNGRB over tariff fixation. All three have a lot of lose as the regulator seems determined to cut tariffs on the ground that costs have been gold plated in some form or other. It is quite evident from the regulator's comments that it is arrayed against the operators. But the PNGRB will do well to take into account some of the points raised by the operators. Eventually, the Board must ensure that the return on investment is good enough or it is quite possible that investment interest in such pipelines may diminish going ahead.
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GAIL has said that its position on the cost calculations that should go into the determination of final tariff rates has found support among all pipeline operators in the country.
The gas major has said that two of the largest gas pipeline operators -- GSPC and RGTIL -- support GAIL views on the final tariff determination process.
GAIL claims that there is agreement among the trio overon the following parameters that go into tariff fixation:
8Future capex
8Inflation rate
8Unaccounted gas
8Volume divisor
8Number of working days
8Retrospective implementation of tariff
8Interest during construction
Comment: The pipeline operators seems to have formed a cartel to take on the PNGRB over tariff fixation. All three have a lot of lose as the regulator seems determined to cut tariffs on the ground that costs have been gold plated in some form or other. It is quite evident from the regulator's comments that it is arrayed against the operators. But the PNGRB will do well to take into account some of the points raised by the operators. Eventually, the Board must ensure that the return on investment is good enough or it is quite possible that investment interest in such pipelines may diminish going ahead.
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The PNGRB has come out with EOI for a natural gas pipeline that will run from Contai (Purba Medinipur district, West Bengal) - Dattapulia (Nadia district, West Bengal) – Jajpur (Jajpur district, Odisha) - Dhamra (Bhadrak district, Odisha) – Cuttack (Cuttack district, Odisha) - Paradip (Jagatsinghpur district, Odisha).
8The sale of bid documents for the pipeline will begin on October 28 and go on till February 17, 2016.
8The bid closing date will be February 24, 2016.
8The bid document will be available for viewing from February 28, 2016.
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8The sale of bid documents for the pipeline will begin on October 28 and go on till February 17, 2016.
8The bid closing date will be February 24, 2016.
8The bid document will be available for viewing from February 28, 2016.
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October has been a hectic month for the DGH as rushes to complete quarterly review meetings for all E&P blocks within the month.
8The exercise involves CBM blocks, producing blocks, NELP blocks with discoveries and those which are only in the exploration phase.
8It is a massive exercise by any yardstick particularly because every block has its own peculiarities and it takes time to resolve the differences that often crop up between the regulator and the operator.
8In all there are a total of 137 blocks and only a few of them are producing while the rest are all exploratory.
8So far reviews of 90 blocks have been completed.
8The rest are to be done within the next few days.
8Clearly, things have improved under the Modi government. Earlier, these meetings would take months to organize and they were often postponed because bureaucrats in the ministry were not available.
8This time around, the signals are clear from the top: all timelines must be followed and that is exactly what the DGH doing.
8There is no doubt that the regulator indeed burning the midnight oil.
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8The exercise involves CBM blocks, producing blocks, NELP blocks with discoveries and those which are only in the exploration phase.
8It is a massive exercise by any yardstick particularly because every block has its own peculiarities and it takes time to resolve the differences that often crop up between the regulator and the operator.
8In all there are a total of 137 blocks and only a few of them are producing while the rest are all exploratory.
8So far reviews of 90 blocks have been completed.
8The rest are to be done within the next few days.
8Clearly, things have improved under the Modi government. Earlier, these meetings would take months to organize and they were often postponed because bureaucrats in the ministry were not available.
8This time around, the signals are clear from the top: all timelines must be followed and that is exactly what the DGH doing.
8There is no doubt that the regulator indeed burning the midnight oil.
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The new government seems to take the "Made in India" philosophy seriously when it comes to seismic surveys.
8Fresh regulations have stated that the government will preferIndian companies being deployed for seismic surveys, particularly offshore studies.
8Should foreign companies be deployed, prior approval of Ministry of Defence (MOD) should be obtained and data should be collected under under supervision of the MOD.
8All vessels deployed in the area by contracted companies will have to undergo naval security inspection.
8A copy of all data collected during survey should be forwarded to Naval Head Quarters (MoD) and Chief Hydrographer, Dehradun free of cost, by the licensee within 2-3 weeks of completion of survey and a copy of compliance should be submitted to DGH. Details
8Fresh regulations have stated that the government will preferIndian companies being deployed for seismic surveys, particularly offshore studies.
8Should foreign companies be deployed, prior approval of Ministry of Defence (MOD) should be obtained and data should be collected under under supervision of the MOD.
8All vessels deployed in the area by contracted companies will have to undergo naval security inspection.
8A copy of all data collected during survey should be forwarded to Naval Head Quarters (MoD) and Chief Hydrographer, Dehradun free of cost, by the licensee within 2-3 weeks of completion of survey and a copy of compliance should be submitted to DGH. Details
Fresh guidelines have said that for development of new roads and tracks related to exploration activity, prior sanction of Ministry of Defence will have to be obtained.
8It is not clear whether this is going hold for all exploration activities in India or only those areas that are sensitive by the MOD.
8While the fresh guidelines were meant to apply only for offshore seismic surveys, this new caveat has caused some confusion among operators.
8Does this mean that every track or road constructed for E&P work across the country will require MOD approval?
8If so, this is going to be a time consuming affair, according to some E&P operators.
More clarification is awaited on this front. Details
8It is not clear whether this is going hold for all exploration activities in India or only those areas that are sensitive by the MOD.
8While the fresh guidelines were meant to apply only for offshore seismic surveys, this new caveat has caused some confusion among operators.
8Does this mean that every track or road constructed for E&P work across the country will require MOD approval?
8If so, this is going to be a time consuming affair, according to some E&P operators.
More clarification is awaited on this front. Details
The new guidelines also say that intimation on award of offshore contracts to parties must be forwarded to MOD suitably in advance of operations by the licensee.
8The work programmed must be submitted at least 6 months prior to vessels deployment by operators.
8There is also the usual caveat that contracted companies will have to ensure that all foreign personnel on board vessel have been duly cleared by Ministry of Home Affairs and immigration authorities and clearance documents produced to the naval inspection authorities.
8The MOD has two different sets of clearances, one at the headquarter level and the other at the command level for two different categories of offshore vessels
8Category 1 (where headquarter permission is needed): These include governmental or departmental vessels with foreign participation, all semi-private party vessels, private party vessels and foreign vessels engaged in any form of Research, Survey, Exploration and Exploitation activities in the Indian maritime zone working for the govenrment and whose activities fall under the purview of the MOD Guidelines 1996 (as amended from time to time). Category 1 vessels, will also include include all rigs, non-research and non survey vessels flying foreign flags, crewed by foreigners and with foreign ownership
8Category 2 vessel comprise of non-survey vessels (viz MSV, OSV, AHT, Tug, Boat, Dredger, Diving Tender and Tanker), barges, drilling ships/rigs and Floating Production Units of Indian registration, Indian wwnership with fully Indian Crew and flying an Indian Flag engaged for the purpose of providing support for E&P activities such as site survey, safety and environment survey, transportation of crude oil & gas and other support activities related to platform construction, pipeline repair, drilling support, logistics support and Inspection, Maintenance & Repair (IMR) support; and not involving foreign participation in any manner whatsoever. Government vessels engaged in research, survey, exploration and exploitation activities without any form of foreign participation shall also fall in this category.
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8The work programmed must be submitted at least 6 months prior to vessels deployment by operators.
8There is also the usual caveat that contracted companies will have to ensure that all foreign personnel on board vessel have been duly cleared by Ministry of Home Affairs and immigration authorities and clearance documents produced to the naval inspection authorities.
8The MOD has two different sets of clearances, one at the headquarter level and the other at the command level for two different categories of offshore vessels
8Category 1 (where headquarter permission is needed): These include governmental or departmental vessels with foreign participation, all semi-private party vessels, private party vessels and foreign vessels engaged in any form of Research, Survey, Exploration and Exploitation activities in the Indian maritime zone working for the govenrment and whose activities fall under the purview of the MOD Guidelines 1996 (as amended from time to time). Category 1 vessels, will also include include all rigs, non-research and non survey vessels flying foreign flags, crewed by foreigners and with foreign ownership
8Category 2 vessel comprise of non-survey vessels (viz MSV, OSV, AHT, Tug, Boat, Dredger, Diving Tender and Tanker), barges, drilling ships/rigs and Floating Production Units of Indian registration, Indian wwnership with fully Indian Crew and flying an Indian Flag engaged for the purpose of providing support for E&P activities such as site survey, safety and environment survey, transportation of crude oil & gas and other support activities related to platform construction, pipeline repair, drilling support, logistics support and Inspection, Maintenance & Repair (IMR) support; and not involving foreign participation in any manner whatsoever. Government vessels engaged in research, survey, exploration and exploitation activities without any form of foreign participation shall also fall in this category.
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According to the guidelines, intro block or intra area of inter-operator jobs, the operators are to inform the petroleum ministry of any shift from the one block or area to another.
8Here the status quo as under the earlier guidelines will be maintained.
8But the new notification now says that for faster clearance these requests should be communicated on time.
8Naval security inspection of Category 2 vessels having valid security clearance, the process of seeking fresh permission will be dispensed with, when shifting from one coast to another coast and operating with the same operator provided that the operators keeps the MOD informed.
8This is of course subject to Command Headquarters under, whose area the vessel has shifted to, is satisfied that a Naval Inspection as required by MOD Guidelines 1996 is not required.
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8Here the status quo as under the earlier guidelines will be maintained.
8But the new notification now says that for faster clearance these requests should be communicated on time.
8Naval security inspection of Category 2 vessels having valid security clearance, the process of seeking fresh permission will be dispensed with, when shifting from one coast to another coast and operating with the same operator provided that the operators keeps the MOD informed.
8This is of course subject to Command Headquarters under, whose area the vessel has shifted to, is satisfied that a Naval Inspection as required by MOD Guidelines 1996 is not required.
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A handful of Indian companies have made good in the Indian E&P business.
8Focus Energy is one such company. Another is Great Eastern Energy Corporation Ltd (GEECL).
8GEECL has made its money in the CBM business.
8The money is currently coming in from gas produced from its Raniganj (South) license area, which covers 210 sq. km, with 2.62 TCF of Gas-in-Place.
8The Company's second asset is the Mannargudi license situated in the state of Tamil Nadu in India, which covers an area of 667 sq. km and 0.98 TCF Gas-in-Place.
8The money made is good: On a turnover of $ 37.46 million in 2014-15, EBITDA was $ 24.80 million and cash generation of US$ 20.21 million.
8The six monthly results of the company is to be declared on November 30, 2015.
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8Focus Energy is one such company. Another is Great Eastern Energy Corporation Ltd (GEECL).
8GEECL has made its money in the CBM business.
8The money is currently coming in from gas produced from its Raniganj (South) license area, which covers 210 sq. km, with 2.62 TCF of Gas-in-Place.
8The Company's second asset is the Mannargudi license situated in the state of Tamil Nadu in India, which covers an area of 667 sq. km and 0.98 TCF Gas-in-Place.
8The money made is good: On a turnover of $ 37.46 million in 2014-15, EBITDA was $ 24.80 million and cash generation of US$ 20.21 million.
8The six monthly results of the company is to be declared on November 30, 2015.
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ONGC is expecting a steep cut in offshore exploration and development work in the current year.
8Our expectation is a reduction of anywhere between 15 to 50% across various categories of work.
8The focus is on the development of the KG-DWN-98/2 block but work has been kept on hold pending approval from the Board of ONGC. There is currently apprehension that the price of gas is too low to make the investment viable. The company is now waiting for an assurance of a more remunerative price for gas before going ahead with contracts worth Rs 53,000 crore.
8ONGC is currently in the process of inviting offshore OEM manufacturers and packagers for enlistment in the vendors list.
8The contracts can be negotiated and finalized only after the Board approval comes through.
8Nevertheless, given that cost of equipment and services have come down, the company is likely to negotiate hard for the best price that vendors can provide.
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8Our expectation is a reduction of anywhere between 15 to 50% across various categories of work.
8The focus is on the development of the KG-DWN-98/2 block but work has been kept on hold pending approval from the Board of ONGC. There is currently apprehension that the price of gas is too low to make the investment viable. The company is now waiting for an assurance of a more remunerative price for gas before going ahead with contracts worth Rs 53,000 crore.
8ONGC is currently in the process of inviting offshore OEM manufacturers and packagers for enlistment in the vendors list.
8The contracts can be negotiated and finalized only after the Board approval comes through.
8Nevertheless, given that cost of equipment and services have come down, the company is likely to negotiate hard for the best price that vendors can provide.
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ONGC is in the midst of a prgramme to drill a total of 45 development wells in the Krishna-Godawari deepwater block KG-DWN-98/2, at a whopping cost of Rs 53,085 crore, which also includes setting up a Floating, Production, Storage and Offloading (FPSO) system and a fixed offshore platform.
8The E&P major is also installing subsea production systems (SPS) and subsea pipelines connecting to the onshore terminal for custody transfer to GAIL.
8The drilling depth of the wells will be between 2,000 to 3,000 meters from the sea bed. The water depth in the area ranges from 320 m to 3100 m.
8Each well will take around 90-100 days to drill. Drilling is to begin in 2016.
As this block is located in deep and ultra-deep water, three semis and two drill ships with Dynamic Positioning (DP) and specialized deep water technology tools will be used for drilling activities.
8Then again, because of extreme temperature and pressures at these depths, special drilling muds will have to be used to prevent formation of hydrates at the sea bed level and to combat dual gradients.
8The NELP-I offshore block KG-DWN-98/2 is located 22-45 kms off the coast of Godavari Delta in the east coast of India.
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8The E&P major is also installing subsea production systems (SPS) and subsea pipelines connecting to the onshore terminal for custody transfer to GAIL.
8The drilling depth of the wells will be between 2,000 to 3,000 meters from the sea bed. The water depth in the area ranges from 320 m to 3100 m.
8Each well will take around 90-100 days to drill. Drilling is to begin in 2016.
As this block is located in deep and ultra-deep water, three semis and two drill ships with Dynamic Positioning (DP) and specialized deep water technology tools will be used for drilling activities.
8Then again, because of extreme temperature and pressures at these depths, special drilling muds will have to be used to prevent formation of hydrates at the sea bed level and to combat dual gradients.
8The NELP-I offshore block KG-DWN-98/2 is located 22-45 kms off the coast of Godavari Delta in the east coast of India.
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IOCL is looking for vendors to lay a 10.75-inch, 300 km LPG pipeline network from the company's Haldia and Paradip refineries to the bottling plants at Durgapur (West Bengal),
Budge-Budge(West Bengal), Kalyani (West Bengal) and Balasore (Odisha).
8The pipes will be transported fromdesignated stockpile locations at Kolaghat (West Bengal) and Palsit (West Bengal) and transporting them to work sites before they are laid.
8The work has been separated into two different groups
Details of the pipeline grid and the work involved are carried in our Reports section Details
Budge-Budge(West Bengal), Kalyani (West Bengal) and Balasore (Odisha).
8The pipes will be transported fromdesignated stockpile locations at Kolaghat (West Bengal) and Palsit (West Bengal) and transporting them to work sites before they are laid.
8The work has been separated into two different groups
Details of the pipeline grid and the work involved are carried in our Reports section Details
Now that a capital outlay of $566 million has been earmarked for the Mangala polymer flooding programme, another $260 million is to spend on a similar Enhanced Oil Recovery plan for the Bhagyam field.
8Under the Mangala EOR scheme, the polymer flooding rate has increased from 80,000 barrels of polymer solution per day in Q1FY16 to 200,000 polymer solution per day in Q2FY16. The injection ramp up plan is on track and impact of polymer injection on production has been seen, which is in-line with our expectation.
8Cairn expects to ramp up the polymer injection volumes to 400,000 blpd by end of FY16.
8Meanwhile, Front End Engineering Design contract has been awarded and Cairn is in advance stage of tendering for rigs, drilling & completion long lead items while awaiting the FDP approval for the Bhagyam field
8The company expects additional recovery of of around 40-50 Mbl of unswept oil still in-ground at the Bhagyam field.
8More polymer flooding work is expected..
8Importantly, Cairn's EOR programmes are very viable even at current domestic prices.
8The development cost for the Bhagyam field through the EOR will be just $5-6 per barrel of oil produced.
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8Under the Mangala EOR scheme, the polymer flooding rate has increased from 80,000 barrels of polymer solution per day in Q1FY16 to 200,000 polymer solution per day in Q2FY16. The injection ramp up plan is on track and impact of polymer injection on production has been seen, which is in-line with our expectation.
8Cairn expects to ramp up the polymer injection volumes to 400,000 blpd by end of FY16.
8Meanwhile, Front End Engineering Design contract has been awarded and Cairn is in advance stage of tendering for rigs, drilling & completion long lead items while awaiting the FDP approval for the Bhagyam field
8The company expects additional recovery of of around 40-50 Mbl of unswept oil still in-ground at the Bhagyam field.
8More polymer flooding work is expected..
8Importantly, Cairn's EOR programmes are very viable even at current domestic prices.
8The development cost for the Bhagyam field through the EOR will be just $5-6 per barrel of oil produced.
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Clearly given the current uncertainty in the global market, it is not clear how many of these FRSUs are going to come up.
8So far the news has not been all that great. The Kochi terminal is in trouble as the lack of an evacuation system has kept the capacity utilization at an abysmally low level.
8IOC seems keen to come up with the Ennore terminal and investment is lined up for the project in the midst of a lot of uncertainty.
8One more terminals is planned at Gangavaram in Andhra Pradesh and a few more are on the drawing boards.
8But the market has now turned volatile, with prices coming down and there is looming uncertainty ahead. Increasingly in India, liquid fuels are competing with RLNG, even though sport prices are attractive at this juncture.
8Though the long term story is intact, and India's appetite for gas is only going to go up, LNG projects are still not being pushed ahead.
8There is likely to be a wait-and-watch on the part of project developers. They would like to watch how the situation is going to unfold both globally and domestically before they put their money where it matters.
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8So far the news has not been all that great. The Kochi terminal is in trouble as the lack of an evacuation system has kept the capacity utilization at an abysmally low level.
8IOC seems keen to come up with the Ennore terminal and investment is lined up for the project in the midst of a lot of uncertainty.
8One more terminals is planned at Gangavaram in Andhra Pradesh and a few more are on the drawing boards.
8But the market has now turned volatile, with prices coming down and there is looming uncertainty ahead. Increasingly in India, liquid fuels are competing with RLNG, even though sport prices are attractive at this juncture.
8Though the long term story is intact, and India's appetite for gas is only going to go up, LNG projects are still not being pushed ahead.
8There is likely to be a wait-and-watch on the part of project developers. They would like to watch how the situation is going to unfold both globally and domestically before they put their money where it matters.
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Kakinada seems to be a sweet spot for LNG terminals.
8There is another terminal, this time backed by big players in the game, that is proposed to set up in exactly the same model as the one promoted by the VGS Group.
8Energy firms Royal Dutch Shell Plc and GDF Suez SA signed two in-principle agreements with the government of Andhra Pradesh and GAIL to start an FSRU at Kakinada.
8The two foreign energy firms signed a terminal company agreement with Andhra Pradesh Gas Distribution Corp. Ltd (APGDC) to build the unit at an initial investment of Rs.1,800 crore. APGDC is a joint venture between GAIL subsidiary GAIL Gas Ltd and AP Gas Infrastructure Corp. Ltd, a special vehicle floated by the state government to tap gas deposits.
8APGDC, GDF Suez and Shell will have 48%, 26% and 26% stakes, respectively, in the project, according to the terms of the agreement.
8Kakinada port was selected because of Hope Island, a tadpole-shaped landmass off the coast that protects the town and port from cyclones, tidal waves and tsunamis in the Bay of Bengal.
8TheFRSUt will have a peak capacity of 5 million tonnes per annum (mtpa), with a provision to double the capacity.
8GAIL, Shell and GDF Suez also signed a second trading pact to source gas and market regassified LNG from the terminal. They will have 48%, 26% and 26% equity, respectively.
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8There is another terminal, this time backed by big players in the game, that is proposed to set up in exactly the same model as the one promoted by the VGS Group.
8Energy firms Royal Dutch Shell Plc and GDF Suez SA signed two in-principle agreements with the government of Andhra Pradesh and GAIL to start an FSRU at Kakinada.
8The two foreign energy firms signed a terminal company agreement with Andhra Pradesh Gas Distribution Corp. Ltd (APGDC) to build the unit at an initial investment of Rs.1,800 crore. APGDC is a joint venture between GAIL subsidiary GAIL Gas Ltd and AP Gas Infrastructure Corp. Ltd, a special vehicle floated by the state government to tap gas deposits.
8APGDC, GDF Suez and Shell will have 48%, 26% and 26% stakes, respectively, in the project, according to the terms of the agreement.
8Kakinada port was selected because of Hope Island, a tadpole-shaped landmass off the coast that protects the town and port from cyclones, tidal waves and tsunamis in the Bay of Bengal.
8TheFRSUt will have a peak capacity of 5 million tonnes per annum (mtpa), with a provision to double the capacity.
8GAIL, Shell and GDF Suez also signed a second trading pact to source gas and market regassified LNG from the terminal. They will have 48%, 26% and 26% equity, respectively.
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The dramatic fall in oil and gas prices has lead to a slump in the prices of oil field equipment and services.
8Cairn has achieved a procurement savings of around 13% in Q2, 2015-16.
8For new contracts, the savings are higher as tough negotiations are undertaken to slash prices.
8Cost reduction has also been achieved in existing contracts through a process of renegotiations.
8Well cost has been cut by around 15% over the past one year and this has been done more through better cost efficiency in drilling and completion
8Among the measures that helped were optimizinging the well completion designs, comparable rate of penetration with the global players, improvement in cycle time and leveraging lower service providers cost.
8The water-flood operating costs remain low at $5.5/boe driven by decreases in the crude processing and facility maintenance costs.
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8Cairn has achieved a procurement savings of around 13% in Q2, 2015-16.
8For new contracts, the savings are higher as tough negotiations are undertaken to slash prices.
8Cost reduction has also been achieved in existing contracts through a process of renegotiations.
8Well cost has been cut by around 15% over the past one year and this has been done more through better cost efficiency in drilling and completion
8Among the measures that helped were optimizinging the well completion designs, comparable rate of penetration with the global players, improvement in cycle time and leveraging lower service providers cost.
8The water-flood operating costs remain low at $5.5/boe driven by decreases in the crude processing and facility maintenance costs.
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Cairn India Ltd has said that industry is lobbying hard to extract concessions out of the government to keep investment up in the E&P sector.
8The company claims to be contributing actively to the oil and gas policy formulation.
8The lobbying is done through what it called "structured and strategic engagement with government and its stakeholders".
8The company admits that is now working on the government to reduce cess in line in falling price of crude.
8It is also seeking a PSC extension policy on the same terms and conditions as existing when the PSC is under production but this is a proposal that has been turned down by the government.
8The ministry will be looking for a higher government take in case a PSC is extended.
8Cairn is part of the consortium of Indian E&P operators who is asking for freeing the pricing of gas.
8The company is also lobbying with committees constituted for coming out with International Petroleum Industry Practices (GIPIP) and Site Restoration Guidelines for Petroleum
Operations.
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8The company claims to be contributing actively to the oil and gas policy formulation.
8The lobbying is done through what it called "structured and strategic engagement with government and its stakeholders".
8The company admits that is now working on the government to reduce cess in line in falling price of crude.
8It is also seeking a PSC extension policy on the same terms and conditions as existing when the PSC is under production but this is a proposal that has been turned down by the government.
8The ministry will be looking for a higher government take in case a PSC is extended.
8Cairn is part of the consortium of Indian E&P operators who is asking for freeing the pricing of gas.
8The company is also lobbying with committees constituted for coming out with International Petroleum Industry Practices (GIPIP) and Site Restoration Guidelines for Petroleum
Operations.
Click on Reports for more Details
According to available documentation, the FSRU is proposed with a designed capacity of 3.6 MTPA in Phase 1 which will be finally extended to an ultimate capacity of 7.2 MTPA in Phase 2.
8An onshore development of 5 acre land at landfall point (LFP) will also be covered under the project.
8All the location specific studies such as bathymetry, geophysical and oceanographic investigations has already been carried out at the proposed FSRU along with the subsea pipe line route.
8The underground work mainly includes the subsea pipe line from the FSRU to the LFP and then from theLFP to the GAIL and RIL national grid.
8Power requirement of 22590 kW will be met through dual-fuel (gas and MDO) generation sets at the offshore terminal. The onshore power requirement will be minimum and will be met through the existing KSPL power supply.
The essential ingredients of the Jetty mooring system for FSRU consists of the following:
-- Unloading Platform
-- FSRU Platform
-- Service Platforms
-- Mooring Dolphins
-- Breasting Dolphins
-- Catwalks
Click on Reports for more Details
8An onshore development of 5 acre land at landfall point (LFP) will also be covered under the project.
8All the location specific studies such as bathymetry, geophysical and oceanographic investigations has already been carried out at the proposed FSRU along with the subsea pipe line route.
8The underground work mainly includes the subsea pipe line from the FSRU to the LFP and then from theLFP to the GAIL and RIL national grid.
8Power requirement of 22590 kW will be met through dual-fuel (gas and MDO) generation sets at the offshore terminal. The onshore power requirement will be minimum and will be met through the existing KSPL power supply.
The essential ingredients of the Jetty mooring system for FSRU consists of the following:
-- Unloading Platform
-- FSRU Platform
-- Service Platforms
-- Mooring Dolphins
-- Breasting Dolphins
-- Catwalks
Click on Reports for more Details
