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Nov 2015

Refinery production during October, 2015 was 18268.543 TMT which was 4.22% lower than the target for the month and 4.43% lower than the production during corresponding period of last year.However, cumulative production during April-October, 2015 was 130869.137 TMT which was 1.35% higher than the target for the period and 2.44% more than the corresponding period of last year.
 8PSU Refineries’ production during October, 2015 was 9890.397 TMT which was 5.09% lower than the target for the month and 0.25% lower than the production achieved in the corresponding month of last year. Cumulative production of PSUs during April-October, 2015 was 70562.232 TMT which was 0.52% higher than the cumulative target and 2.36% higher than that of the corresponding period of last year. 
 8Production in JV refineries during October, 2015 was 1544.650 TMT which was 22.37% higher than the target for the month and 4.53% higher than the production achieved in the corresponding month of last year. Cumulative production in JV refineries during April-October, 2015 was 10073.809 TMT which was 26.52% higher than the cumulative target and 47.32% higher than the production during the corresponding period of last year.
 8Production in private refineries during October, 2015 was 6833.496 TMT, 7.54% lower than the target for the month and 11.52% lower than the production achieved in the corresponding month of last year. Cumulative production in private refineries during April-October, 2015 was 50233.096 TMT which was1.45% lower than the cumulative target and 3.35% lower than the production during the corresponding period of last year.
 Click on our Reports section for more. Details
The website carries here, for reference purposes, a snapshot of India's oil and gas data (updated upto October 2015).The following details are carried in the document which can serve as a ready reckoner:
 8Quantity and value of Crude Oil Imports
 8Indigenous Crude Oil Production
 8Domestic Oil & Gas Production
 8Coal Bed Methane (CBM) Gas development in India
 8Refineries: Installed Capacity and Crude Oil Processing
 8Gross Refining Margins (GRM) of Refineries
 8GRM of North East Refineries 
 8Industry Marketing Infrastructure
 8Pipelines Infrastructure
 8Gas Pipelines under execution
 8Existing and Expected LNG Terminals
 Click on our Reports section for more. Details
Eastern Pipelines Division (EPL) is currently operating 3366 km length of cross country underground pipelines passing through six different states.
 8The details are as follows:
 --West Bengal (7 Districts) - East Medinipur, West Medinipur, Hooghly, Burdwan, Birbhum, Jalpaiguri and Alipurduar
 --Assam (6 districts) - Kamrup, Nalbari, Barpeta, Bongaigaon, Chirang and Kokrajhar
 --Jharkhand (2 districts) - Jamtara and Deoghar
 --Bihar (6 districts) - Begusarai, Patna, Bhojpur, Buxar, Lakhisarai and Jamui
 --Uttar Pradesh (9 districts) - Gajipur, Chandauli, Mirzapur, Allahabad, Kausambi, Fatehpur, Kanpur, Unnao and Lucknow
 --Orissa (4 districts) - Jagatsinghpur, Kendrapara, Bhadrak and Balasore
 8Details of the Pipelines are as under:
 Crude oil pipeline-
 --Paradip-Haldia-Barauni Pipelines (PHBPL)
 8Product pipelines-
 --Barauni-Kanpur Pipelines (BKPL)
 --Haldia-Mourigram-Rajbandh-Barauni Pipelines ( HMRBPL)
 --Guwahati- Siliguri Pipelines (GSPL) Details
Indian Oil's eastern pipeline division (EPL) is planning to deploy detective agencies to control pilferages occurring in these pipelines.
 8Subsequent to a series of mishaps and gross negligence of safety procedures by India's public sector oil and gas companies, IOCL is now looking for a way out.
 8These sorts of incidents carry in their wake potentially higher safety hazards such as fire
 8The crude oil pipeline effects supply of crude oil to Haldia, Barauniand Bongaigaon refineries, whereas the product pipelines transport finished products from refineries to various parts of Eastern India.
 8The intelligence agency will broadly cover the following:
 --Investigation of oil pilferage incidents
 --Safeguard IOCL's interest from attracting adverse reaction of Citizens, Media, DGR and District administration.
 --Gathering of intelligence on suspected movements around pipeline Right of Way (ROW) to prevent further pilferages.
 Click on our Reports section for more. Details
ONGC is all set to carry out a series of surveys in the oil and gas fields of its Rajahmundry asset in Andhra Pradesh.
 8The exhaustive list includes reconnaissance surveys, cadastral surveys, detailed surveys, corrosion surveys and the soil investigation work.
 8The scope of work covers oil and gas fields that fall in the West Godavari and Krishna districts of Andhra Pradesh. These installations are at a distance of 90 to 200 KM from the Rajahmundry town.
 8The reconnaissance survey will cover the proposed pipeline route from starting to end point.
 8The again, detailed survey for a pipeline on the approved reconnaissance route will be done for a width of 15 Mtrs by maintaining separate field books for chaining and leveling.
 8The cadastral survey of the pipeline will be carried out for a width of 15 Mtrs of the ROU.
 8Carrying out corrosion surveys will including the measurement of soil resistivity at an interval of 500mtr along the ROU whereas chemical analysis of soil and water will also be done at an interval of 10km.
 8The scope of work also includes the identification of three alternate feasible routes to facilitate selection of the most economical route.
 Click on our Reports section for more. Details
IOCL plans to completely replace the 18 inch pipeline section lying between the Koyali  and Viramgam stations of the Koyali- Sanganer product pipeline (KSPL). .
 8The pipeline section has been in operation for the last 36 years.
 8The section was commissioned in 1978 originally for transporting crude oil to the Koyali Refinery as part of Salaya- Mathura Crude Pipeline ( SMPL).
 8Later in 2003 a new 28” crude pipeline was laid between Viramgam and Koyali for supply a higher quantity of crude to Koyali Refinery.
 8Subsequent to this, the section was converted to evacuate products from the Koyali Refinery to Viramgam and other ToPs beyond Viramgam such as Sidhpur, Salawas, Ajmer, Jaipur and others.
 8IOCL is now planning to replace the Koyali – Viramgam sections of KSPL, wherein its new pipeline is proposed to be laid adjacent to the existing operational KSPL/SMPL ROW. 
 8The proposed pipeline will be laid initially in the SMPL ROW up to 45 km ahead of Koyali  after which the pipeline will be laid in the common ROW of SMPL and KSPL.
 CLick on Reports for more Details
All expansion of refining capacity will now stand on hold in the North East of India on account of the withdrawal of incentives.
 8The website supports the withdrawal of incentives.
 8This is on account of the fact that these kind of subsidies have not really helped the people of North East.
 8The forward and backward linkages are extremely weak of such subsidy driven industrial activity in the region.
 8A better way out will be to use the subsidy saved to build infrastructure projects or social capital or schools and hospitals.
 8Even direct transfer of cash will have a far greater impact than funding incremental refinery capacity through tax breaks.
 8This rationale is now quite apparent to the Modi government which does not want to play to galleries by perpetuating such subsidy regimes.
 8But hopefully a new format will replace the old mechanism. The savings made by withdrawing the scheme must be pumped back into the North East through more targeted schemes. Details
It seems BPCL has no option but to shelve its Rs 20,000 crore expansion of the Numaligarh Refinery after the central government has decided to suspend fresh registration of industrial units under the North East Industrial and Investment Promotion Policy (NEIIPP), 2007  as the committed liabilities under the package were already far greater than its annual budget allocation.
8No new registrations are being entertained from December 2014.
8New investments in refineries in the North East are no longer viable as the key incentives for setting up additional capacities have been suspended.
The following incentives were given under the policy:
--Central Capital Investment Subsidy @ 30% of investment in Plant and Machinery
--Central Interest Subsidy @ 3% of working capital loan availed for a period of 10 years from the date of commencement of commercial production (DOCP)
--Reeimbursement of insurance premium paid towards insurance of fixed capital assets for a period of 10 years from DOCP
--Excise Duty exemptions for a period of 10 years from DOCP
--Income Tax exemption for a period of 10 years from DOCP
8Clearly, what BPCL had sought was a capital subsidy of a whopping Rs 8,800 crore that in fact goes well beyond the 30% limit laid by the now defunct policy.
8Over and above that the excise exemption would have been a large amount of money too.
8"Given that the policy has been withdrawn because the obligations are already more than the annual allocation under the head, it seems unlikely that the government would have taken on the onus of a Rs 20,000 crore investment by BPCL. And while Assam is going to polls and every kind of promise is likely to be made in the run up to the polls, it will indeed be foolhardy in today's day and age -- when disruptive technology can make the use of diesel and petrol redundant --  to mount such a massive investment ridding piggyback on a government subsidy regime," a government official said.
8There is a already a demand to reduce subsidies on fossil fuel investments because of global warming and in this context, any fresh investment that does not earn an IRR beyond the hurdle on free market economics should be actively discouraged by the petroleum ministry. Details
IOC will have to re-work the viability of the Rs 3300 crore capacity expansion-cum-up gradation project to meet BS-IV specifications of its subsidiary, Bongaigaon Refinery and Petrochemicals Ltd (BRPL) in light of the withdrawal of the incentive policy for investments in the North East.
 8While the transition to BS-IV fuels is inevitable and does not require any subsidy, the creation of additional capacity from 2.35 MMTPA to 2.70 MMTPA may not elicit the requisite income tax and excise relief now that the concessions have been withdrawn from December, 2014.
 8The scenario that is likely to emerge is that the existing capacity will get the necessary relief but the incremental capacity will not.
 8Accounting for the differential duties will be a nightmare both for the government as well as IOC.
 8The project IRR will also be different now and has to be recalculated.
 The following facilities are to be set up in the Bongaigaon refinery:
 --Crude processing capacity enhancement from 2.35 to 2.7 MMTPA
 --DHDT capacity enhancement from 1,200 TMTPA to 1,800 TMTPA to meet BS-V/VI HSD specification
 --CRU-MSQ revamp to meet BS-V/VI MS specification
 --Selective Desulphurisation (SDS) Unit
 --An INDMAX project along with an Indmax Gasoline De-Sulphurisation Unit
 --The capacity expansion is taking place because the capacity of the Haldia-Barauni pipeline that supplies low sulphur imported crude -- over and above sweet crude from the Assam fields -- is being expanded. The crude availability at the refinery now stands at 2.7 MMTPA.
 --Bongaigoan has two CDUs and it is the capacity of the second CDU that is going to be raised from 1 to 1.35 MMTPA.
 Click on our Reports section for more  Details
Some questions have to be asked of IOC's decision to install an INDMAX FCC unit -- which the company claims is the pride of IOC's R&D division -- in the Bongaigaon refinery.
 8The unit will eliminate the production of demand limited black oils such as LDO, LVFO, LSHS as well as naphtha and instead produce high value products such as LPG and MS conforming to BS-IV specifications.
 8The unit will have a design capacity of 740,000 MTPA. 
 8The LPG treatment facility will be part of the INDMAX unit.
 8What is more there will be an Indmax Gasoline De-Sulphurisation Unit too, with a design capacity of 312,000 MTPA to reduce Sulphur content in Indmax Gasoline so to meet BS- IV/V/VI equivalent specifications for MS.
 8The ballpark cost estimate of the proposed Indmax project is Rs. 2,500 Crore.
 8IRR for the Indmax project at 90% capacity utilization based on feed availability is calculated at 11.2% post-tax considering debt-equity ratio of 1:1 with interest rate of 9.0% and a 15 year- operating life.
 8The project is scheduled to be completed by April, 2019.
 Comment: Is there a conflict of interest in the licensor also being a captive buyer? In the attempt to promote its own R&D can it cause a loss to BRPL because a tender process has not be adopted to select the best technology for translating black oil into value added products?  The post tax IRR of 11.2% is just above the hurdle rate but is there any other licensor that can provide a better IRR? A company like IOC should never venture into becoming a process licensor because it does not pay to become one. No other refinery will want to buy the process on account of competitive principles. There are already licensors in the business who know how best to do these things. Will the project economics change now that tax and excise concessions have been withdrawn from the North East by the Modi government? Was IOC trying to palm off the INDMAX unit to Bongaigoan because there was a subsidy buffer available? Will the hurdle rate fall below 10% now?  Eventually, it will be up to the CAG to comment on whether it is fair on the part of IOC to place a Rs 2500 crore order on itself on a nomination basis.
 Click on our Reports section for more  Details
For reference purposes, the website carries here an written by this website on the inadvisability of extending subsidies to the Rs 20,000 crore expansion that BPCL had chalked out for its Numaliugarh Refinery.
8This website believes that the Modi government should reject two big proposals that Numaligarh refinery, a subsidiary of Bharat Petroleum Corporation Ltd (BPCL), is pushing for approval. One seeks a Rs 20,000 crore expansion of the refinery in Assam from 3 to 9 MMTPA and the other calls for installing a bio-refinery project using bamboo as the feedstock. 
8BPCL has asked the central government for a Rs.8,800 crore capital subsidy for the Rs.20,000 crore expansion plan 
8The capital subsidy alone will not be enough to make the refinery viable. BPCL has said that the excise duty relief of 50% already available on products sold by the Numaligarh refinery because it is based in the North East, should be made 100% to enable the expansion to take place.
8When the refinery is expanded, most of the the extra capacity will only cater to demand originating outside of the North East. The industrial climate in the region is poor and it is unlikely that enough demand for petroleum products will be created there to keep a 9 MMTPA refinery going. There are three other refineries already operational in Assam and jostling for market share. What is the point of importing crude via a pipeline all the way from the East Coast, either from Haldia or Paradip, and then taking finished products back, perhaps for the same distance to the mainland through a pipeline that will run parallel to the one importing crude?
8A 6 MMTPA refining capacity is sought to be built with a capital subsidy of Rs 8000 crore and a excise duty relief amounting to a whopping Rs 8400 crore a year! The 50% excise duty relief on the existing capacity is Rs 600 crore a year. And if the capacity is expanded by another 6 MMTPA and 100% relief is granted as sought by BPCL, the figure totals up to Rs 7200 crore on the incremental capacity. If duty relief is to cover the entire 9 MMTPA capacity, the subsidy will come to Rs 8400 crore.
8The question that immediately comes to mind is what really prompted BPCL to come up with such a preposterous demand and yet maintain a straight face. The only plausible answer is that the new government will buy the argument that the capacity is coming up in industry-deficient and militancy ridden North East of India where industrialization should be promoted. This was exactly the logic on which the existing refinery was set up when Rajiv Gandhi signed the Assam Accord with the agitating All Assam Students Union in 1984. But a lot of a water has flown down the Brahmaputra since then. It is stagnating crude production from the Assam fields that has prompted BPCL to suggest a 1,350 km crude import pipeline all the way from Paradip to feed the refinery expansion. It is also a well established fact that a state-of-art refinery employs very few people and the Numaligarh refinery per say had little or no economic linkages with the rest of Assam's economy. The crude is processed within the refinery and while some of the petrol and diesel is distributed locally the rest is shipped out to the mainland
8And who has really befitted from it? It is just a few hundred people employed in the refinery. Ironically though, the Numaligarh refinery has accentuated the social divide in Upper Assam as a small class of privileged public sector employees is created from amongst the mass of un-empowered and impoverished people dotting the surrounding landscape. A few hundred people lead an ivory tower existence amidst tight CISF provided security at Numaligarh with virtually no connection with the local economy or population. The crude is piped into the refinery from Oil India's fields around Duliajan and shipped out and that's about all there is to it. Clearly the model of using large publicly funded and subsidy driven industrial plants to act as a catalyst for industrial development of the North East has failed to work.
8It is also a myth that Numaligarh can help sell Indian petroleum products in Bangaldesh and Myanmar. The route to Myanmar is long and torturous, and traverses difficult terrain. A pipeline will be unviable given low offtake in areas bordering India and the fragile border roads will not be able to take the load of tankers ferrying MS and HSD from the plains of Assam to the Burmese border. 8A pipeline to Bangladesh may make more economic sense but it may not be an easy country to do business with. Currently we have a friendly regime in the neigbouring nation but when the tide turns and the regime changes, anything can happen. 
8The website believes that it will not be wise for the Modi government to dole out a Rs 8,800 crore capital subsidy on a  Rs 8400 crore excise relief to the refinery. 
8If indeed the government is a mood to dole out subsidies, the capacity can be set up elsewhere in mainland India without any subsidy and can then be notionally attributed to Numaligarh refinery. The capital subsidy saved can be used through a Special Purpose Vehicle to develop schools, hospitals and infrastructure in Upper Assam. The annual excise dole sought by BPCL should be used to maintain and expand the infrastructure created by the capital subsidy.
8The Assam economy and its people will benefit much more that way than through an expansion of the Numaligarh refinery.
 Click on our Reports section for more  Details
Things are somewhat not right with BPCL anymore.  It seems to have lost the trust that was reposed on it for so long by its admirers.
 8There has been a failure of leadership in the last few years-- and a few extremely bad decisions -- which have the potential of turning what is a first rate company into a laggard.
 8It has a good team of people and a strong work culture inherited from the erstwhile Burmah Shell  which in turn was laboriously nurtured by a strong Indian leadership ever since it was nationalized in 1976.
 8But the company seems to have lost its earlier strengths.
 8Its risk assessment ability has shrunk remarkably and the management seems to have lost the capacity to differentiate between what is a risky investment and what is not.
 8And that seems to be a little strange given that the management has its roots in the placid but stolid Indian downstream industry
 8The ability to not understand what kind of investments to make and the lack of capacity to assess the risks involved is a very ominous precedent for an otherwise cautious company.
 8The fact that chairman S. Varadarajan could lobby for a capital subsidy of  Rs 8000 crore and an excise relief plan for a Rs 20,000 investment in Numaligarh is an example of severe shortsightness. Isn't there a team in Mumbai that should have alerted him about the dangers of investing so much money on the back of a claim for a Rs 8400 crore subsidy on a 9 MMTPA refinery? How long would such a subsidy regime have gone on, especially when disruptive technologies -- like battery powered cars-- are making the very existence of refineries doubtful? Would IOC, for example, have taken the risk of expanding its refineries in Assam like BPCL was planning to?
 8The Modi government has woken up to this inconsistency and has already withdrawn the benefit as the burden is too much to shoulder, more so as the susbidy given does not have a proportionate welfare impact on the people of the state.
 8What would BPCL have done if the subsidy was withdrawn a year after the capacity was set up? No refinery anywhere in the world, leave alone in Assam, can come up with a subsidy burden as high as what Varadarajan had wanted. And even if the government of the day were to say "yes" to such an investment in the run up to the forthcoming Assembly elections in Assam, the BPCL management must still shy away from going ahead. For you never know when the next government would turn off the tap. And this uncertainty will always be there because the basic math behind the investment is wrong.
 8The BPCL brass must remember that the Numaligarh refinery was a bargaining chip that was used by Rajiv Gandhi to entice agitating students of the All Assam Students Union to sign the Assam Accord. Such fortuitous circumstances will not recur again for an additional expansion of capacity.  Details
By pushing for the Numaligarh refinery, the management has exposed the chinks in its armour and in its thought process. These chinks were further on display when the company went ahead and picked up a 10% stake in the Mozambique LNG project .
 8Fingers are now pointing towards Bharat Petro Resources Ltd (BPRL), a BPCL subsidiary, for exposing itself to such a high level of risk in the project.
 8BPCL neither has the understanding nor the staying power to handle a 10% exposure in the project which involves an investment of a massive $20-22 billion. The exposure levels are too high and the danger now is that such risks are directly leveraged to BPCL`s balance sheet.
 8The project has been put on hold by the main promoter, Anadarko, after the company incurred heavy losses and the economics turned unviable.
 8"At best BPCL is a middle level downstream company operating under a controlled environment and for the management to expose itself to the violent gyrations of the international E&P and gas markets, both of which are fraught with so much risk that only the strongest of companies in the world can survive such large vulnerabilities, may not have been appropriate," an industry observer said.
 8The ability to move from a completely controlled downstream environment in India to picking up a stake in wild Africa is too much of a leap of faith for BPCL.
 8BPRL`s IRR was at 11.75% at a FOB price of $12 for its 10% exposure in the project last year when both LNG and Oil prices were at record highs but now that the gas price has plunged, the  IRR has gone below the 10% level. The return can currently be in a negative territory, in fact.
 8There is merit perhaps in the argument that a downstream company should stay confined to its own business -- particularly when the landscape has become more competitive with the advent of private players -- and not go up the value chain unless it has the financial muscle to do so. In this case BPCL is punching far above its weight.
 8Going up the value chain is a concept that is no longer in vogue. 
 8Does BPCL have the staying power or the financial muscle power in Mozambique is a question that needs a straight forward answer
 8It may even be appropriate for the Modi government to open the files once again to see what prompted BPRL to take that leap straight into Mozambique. 
 8Some skeletons may come tumbling out of the closet in the process.
 Click on Reports for more Details
It is not as if BPCL is not without its capacity to assess risks correctly and get out when the need arises.
 8The fact that it has abandoned setting up a Floating Liquefied Natural Gas terminal at Mangalore is a step in this direction.
 8But clearly more needs to be done. It has to get out of more such projects or scrap those on the drawing boards that are not viable entirely.
 8The LNG plant was meant to have been set up through a consortium of ONGC and Mutsui.
 8The initial investment was slated at $ 770 million for a 3 MMTPA plant, sand this was to have been later scaled up to 5 MMTPA.
 8The consortium had also carried out the feasibility study for the project, for which the report is yet to be announced, but looking at the low utilization of Petronet LNG Ltd's (PLL) 5 MMTPA plant at Kochi and inadequate distribution infrastructure in the immediate region, BPCL has now scrapped the proposal.
 8Clearly, scrapping a project that was only in the planning stages is far easier than a project where a big premium was already paid to acquire equity, like in the case of BPRL's 10% stake in Mozambique. The company can't just up and leave. It has to dig in and wait for the future to unfold.
 8This is one investment, where its success or failure is not in the hands of BPCL anymore.
 8And there can't be any bigger risk than being in a situation entirely outside your control. Details
This website had commented earlier that promoters of LNG regasification terminals but redo their arithmetic before rushing ahead with their plans.
 The fact that BPCL has scrapped its LNG project in Mangalore is indicative of a re-thinking among promoters of all such projects.
 This is what the website wrote:
 8Given the dramatic pace at which the energy sector is evolving these days and the breathtaking pace of technological change, does it make sense to set up an LNG terminal today in India along with its attendant pipeline network?
 8For anyone to set up a terminal, a 15 to 20 year perspective is needed. Is LNG a viable energy option for India in that kind of a time perspective?
 8The latest BP Technology report says that gas is the cleanest alternative for the globe until the year 2050.
 8Even assuming a steep carbon tax on emissions -- something that the oil & gas industry must realize is inevitable -- gas still remains a viable option to produce power in comparison to coal based power or even renewable energy resources such as solar and wind, the BP report had claimed.
 8But the problem is that BP's calculation is based on US data, and the cost reasonability holds for domestically priced US gas. The report specifically says that it does not hold for LNG as it involves a large processing and carriage fee that makes the landed price much more expensive.
 8There is no doubt a huge amount of LNG capacity is coming up world over. Concomitantly, there will be a requirement for gasification terminals. There is near consensus that India will be one of the largest destination points for all the LNG liquefaction terminals that are being built.
 8But a promoter of an LNG regasification plant in India will have to get his math right. 
 8He just can't go by his gut instinct anymore or he cannot put money into a project based on the thumb rule that because there is a huge appetite for energy in India, LNG is an inevitable choice.
 Click on Reports for more Details
Operating a downstream distribution network for dispensing petroleum products is not an easy job.
 8An example of this is evident from how CPCL transfers its products via pipeline to different marketing terminals at Chennai.
 8The pipelines transfers are carried out round the clock.
 8The process involves ensuing positive isolation (Sealing of Inlets) of other tanks from the dispatch tank at CPCL and the receiving tank at any of the other oil marketing companies.
 8Positive isolation is achieved by sealing tap off points to other locations which are not receiving the product before giving clearance for transfer.
 8The need is to gauge the supply tank at CPCL and receiving terminal tank; record the temperature, density, before and after, for each pipeline transfer (PLT)
 8Recordording and maintaining all the planned or effected PLTs with signatures of the officers concerned for each PLT in dip memos are also part of the work.
 8All this data has to be collated and validated to rule out discrepancies in receipt
 8Details have to be collected from Tondiarpet, Korukkupet & Fore shore Terminal of CPCL (or its parent company, IOC) and from BPCL's Tondiarpet and HPCL's Cossimodu terminals.
 Click on Reports for more Details
Bharat Petroleum Corporation Ltd (BPCL) is planning to conduct a maintenance check of its impressed current cathodic protection ICCP system in Mumbai-Manglya pipeline.
 8This is being done to reaffirm  the healthy condition of the 610 Km underground pipeline.
 8The pipeline ferries petroleum products from BPCL's Mumbai refinery to Mangla in Madhya Pradesh.
 8For the monitoring and maintenance of cathodic protection system, the pipeline is divided into four sections as follows:
 --Mumbai to SV-8
 --SV-8 to SV-15
 --SV-15 to Maharashtra Border
 --Maharashtra Border to Manglya.
 Click on the Reports for more. Details
HPCL-Mittal Pipelines Limited (HMPL) a wholly owned susbidiary of HMEL is planning to expand the Mundra-Bathinda crude oil pipeline from its existing capacity of 9 MMTPA to 11.25 MMTPA.
 8This will be done so by converting two of its existing intermediate pigging stations (IPS) into pumping stations.
 8Hence on successful completion of the proposed development, pumping stations will increase the pressure of the crude oil inside the pipeline, boosting the flow in the pipeline.
 8The pipelines runs between the Mundra port in Gujarat to HMEL's Bathinda refinery in Punjab.
 8The stations --IPS-1, IPS-2, IPS-4, IPS-5 -- are already operational pigging stations and therefore have adequate land for conversion into pumping stations.
 8The IPS-1 land on the pipeline route is in the name of HPCL-Mittal Pipelines Ltd that can also be converted into a pigging cum pumping station.
 8The pipeline already consist of two licensed underground tanks of 20 m3 storage capacity each existing at IPS-2, IPS-3, IPS-4 & IPS-5 respectively.
 8Additional two underground tanks of 20 m3 storage capacity each will be constructed at IPS-1 in addition to other ancillary facilities.
 Click on the Reports for more. Details
There are two sides to the massive 17.5% spurt in consumption of petroleum production in October 2015 in relation to the same month in the previous year.
 8The first reaction is that the economy is on a upswing: car sales have gone up and demand has spurted, egged on by low crude oil prices.
 8The government says that the rise in sales is also on account of what is the highest ever pre-Diwali increase in currency in circulation.
 8Besides the festival demand, there was spurt in consumption of petroleum products due to elections in Bihar.
 8The elections in Bihar have lead to an increase in vehicular traffic, pushing up sales.
 8The other side of the picture is that India's dependence on crude goes up by an unprecedented quantum. The cumulative April-October growth rate is a high 9.9% in comparison to an average global growth of around 1.65%.
 8And this is bad news because India's dependence on imported crude will go up as domestic oil and gas production remains stagnant.
 8It is also bad news on the emissions front. The sharp rise in consumption or petrol and diesel will make it that much more difficult for India to meet its emission markets for the world in general to stay within the two degree temperature increase by the end of the century.
 8There will of course be those who will cheer India's growing consumption of petroleum products primarily when its own emissions are still far lower than those of Europe and the US. POL demand in the  US grew by 2.2% but in absolute terms, it is a higher growth than that of India's.
 8Now that India is growing rapidly, it is being unfairly singled out by the climate lobby for contributing disproportionately towards global warming.
 Click on Reports for more Details
Since India has a lot to make up in terms of economic growth, these rapid rates of increase in POL consumption are likely to persist well into the future.
 8And high Indian consumption will be in the cross hairs of the global climate lobby
 8Clearly, demand for hydrocarbons is likely to dip in the advanced world sooner -- spurred by the rapid infusion of energy efficiency measures and green energy -- than in India.
 8India has millions of people who are yet to step into the economic mainstream and they will need to buy cars and consume electricity.
 8So what is the way out for India, particularly when climate change is a real threat and is likely to harm India more than most other countries in the world?
 8Pushing clean energy is the way out. India's intention to put up 1.75 GW of clean energy capacity by 2022 is an ambitious but a laudable exercise.
 8Raising energy efficiency levels to bring down the fossil fuel content per unit of economic output should be another goal.
 8The best bet for India lies in disruptive technology, when electric cars become more cost effective than conventional vehicles and the cost of battery storage technology reduces to a point where, when combined with solar power, the cost of power is lower than what is generated from fossil fuels.
 8There is eventually no escaping discouraging the growth of petrol and diesel and a carbon tax, steep enough sober the galloping POL sales, will be the need of the hour, however unpopular it may seem.
 8In other words, the cost of diesel and petrol will have to be pegged much higher at the retail outlets to keep consumption down even if global crude prices are low, using taxation as a vehicle for demand destruction.
 8Alternatives such as hydrogen fuel cell powered cars will have explored and encouraged and battery powered cars in the future will have to carry a lower excise duty burden than conventional cars.
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MS sales observed a growth of 14.5% during October 2015 as compared to the same month of the previous year on low price.
 8In October 2015, oil marketing companies (OMCs) sold a total of 1850.3 TMT of MS, as compared to 1616.2 TMT sold during the same month last year.
 8October was a cracker of a month for car makers, posting an impressive 22% growth, selling about 2.66 lakh units, making it the third highest sales dispatch in a month in the history of the Indian automotive industry.
 8The spike in sales was on the back of the festive season coupled with lower interest rates on vehicle loans and other special offers rolled out ahead of Diwali led to more consumption.
 8Cumulatively,12,550.7 TMT of petrol was sold during the April-October period, registering a growth of 14.2% as compared to 10990.2 TMT last year.
 8The declining price of MS translated into a greater usage of cars and two wheeler. Consumer preference for petrol driven cars was noticed as the price differences between petrol and diesel has narrowed down significantly.
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With a total all India sales volume of 6343.1 TMT, HSD sales during October 2015 registered a 16.3% growth as compared 5455.0 TMT registered for the same month last year..
 8Medium and heavy commercial vehicles sales recorded an impressive 24% growth during October, 2015 which this is mainly attributed to the positive sentiments in the economy and rising demand for logistics and transportation services following a boom in the e-commerce industry.
 8Other factors behind increased diesel consumption are the start of mining activity in the Chhattisgarh belt and initiation of road projects in many parts of the country and completion of road repairs earlier than scheduled due to very low monsoon activity.
 8Commutatively also, HSD recorded a sales of 42573.8 TMT during the period from April, 2015 to October, 2015 witnessing a 7.1% growth as compared to 39764.2 TMT during the same period last year.
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The LPG sales also registered a growth of 12.5% during the month of October,2015 and a cumulative growth of 8.5% was registered for the period from April to October,2015.
 8This is the 26st month in a row that LPG sales has recorded a growth. LPG growth can be juxtaposed against a  3.4% negative growth of SKP in the April-October 2015
 8During the period April-October 2015, release of 109.6 lakh new connections and 59.9 lakh DBCs also contributed to the growth of LPG packed domestic consumption
 8LPG for non-domestic consumption registered a a growth of 66.3% in October 2015 and cumulative growth of 42.6% during April to October 2015. High growth in the LPG-Packed non-domestic segment may be attributed to low price of non-domestic LPG and curb in diversion of subsidized domestic cylinders, pursuant to implementation of DBTL.
 8Negative growth during April to October 2015 is also due to high base of the previous year and one-time upliftment by ONGC for their petrochemical unit last year.
 8Bulk LPG recorded a positive growth of 10.9% during October, 2015 and -0.2% during April-October 2015.
 8Auto LPG registered a positive growth of 7.0% in October, 2015 and 7.5% during April to October 2015.Growth of Auto LPG is mainly due to curb in diversion of subsidized domestic cylinders.
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On month on month basis, after witnessing positive growth for previous three months, natural gas consumption saw a decline of 2.39% during October, 2015 while naphtha and FOLSHS, which competing liquid fuels, saw a massive 31% and 28% spurt respectively
 8In terms of volumes, total consumption during October, 2015 was 3,167 MMSCM as compared to 3,244 MMSCM in October, 2014.
 8Natural gas consumption has shown a decline even through power and fertilizer units -- that consume the bulk of the gas in India -- registered a rise in consumption of 7.2% and 2.7% respectively.
 8The overall decline in sales was on account of a whopping 40.61% decline in offtale, from 442 MMSCM in October, 2014 to 262 MMSCM in October, 2015, in segments that included steel, sponge-iron, refineries, manufacturing and other miscellaneous industries.
 8Also there was a marginal decrease of 0.48% in gas consumption in the CGD sector from 332 MMSCM in October, 2014 to 330 MMSCM in October, 2015 due to decrease in off-take in the Western region.
 8Certain high volume consumers of CGD have switched from gas to other liquid fuel alternatives after steep a decline in oil prices.
 8Cumulatively, consumption declined by 2.83% from 22,398 MMSCM during April to October 2014 to 21,764 MMSCM during the same period this year.
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While Aviation Turbine Fuel (ATF) sales for October, 2015, the growth in consumption of ATF was 10.6% and on cumulative basis, a growth of 6.1% during the period April to October, 2015 has been recorded.
 8There has been a huge growth of 20.1% in the number of passengers carried by domestic airlines during January to September, 2015, fueling the growth of the aviation sector.
 8Naphtha consumption recorded a growth of 31.3% during the month of October, 2015 and a growth of 21.7% on cumulative basis for the period April to October, 2015.
 8Naphtha demand in the petrochemical sector registered growth due to increased demand by RIL, IOCL, ONGC and APCL petrochemical plants..
 8Higher demand was spurred by lower prices and substitution of natural gas with naphtha.
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8FO+LSHS
 --FO+LSHS consumption registered a growth of 28% during October 2015 riding on cheaper prices brought about by low crude prices.
 --On a cumulative basis, there was 8.7% growth for the period April to October, 2015.
 --The growth is mainly from the fertilizer, steel, power and general trade sectors.
 --While the consumption of LSHS has reduced due to shift to natural gas by major customers like power and fertilizer industries, it gained volumes in the steel and sponge iron segments.
 8Pet coke
 --Pet coke consumption continued to register a positive growth of 22.6% during October 2015, at 1324.2 TMT as compared to 1080.5 TMT in October 2014.
 --Cumulatively, sales for the April-October 2015 period, stood at 9727.9 TMT, registering a growth of 22.2% from 7963 TMT witnessed during the same period in the previous year.
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During Oct 2015, sales of Light Diesel Oil (LDO) registered a growth of 59.9%, while bitumen sales grew by 65% as compared to corresponding month of the previous year.
 8LDO
 --Total sales of LDO during October 2015 stood at 36 TMT as against 22.6 TMT witnessed in the corresponding month of the previous year.
 --LDO consumption recorded a high growth rate during the month due to deficient monsoon, leading to higher use in pumping sets in the agricultural sector.
 --LDO month wise demand also fluctuates depending on its requirement at power plants for boiler restart as it trips. LDO is also extensively used in various types of furnaces and a rise in industrial production leads to increase in its consumption..
 8Bitumen
 --Total sales during October, 2015 stood at 482.1 TMT as against 292.2 TMT witnessed in the corresponding period of the previous year on account of road building activity.
 --Cumulatively, there was a drop of 13.1% for the period April-October,2015 at 2896.8 TMT as compared to 2560.8 TMT in the same period last year.
 --Due to deficient rains in the country, road repairs and minor works were undertaken earlier than usual, forcing up bitumen consumption during the month.
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 The Union Cabinet chaired by the Prime Minister Narendra Modi has given approval for determination of marketing margin for supply of domestic gas to urea and LPG producers. 
 8This decision is a structural reform. Marketing Margin is the charge levied by gas marketing company on its consumers over and above the cost or basic price of gas for taking on the additional risk and cost associated with marketing gas.
 8Currently, different transporters are charging different marketing margins for supply of natural gas.
 8With this decision, there would be uniformity in the marketing margin on domestic gas charged by gas marketers for the regulated sectors, namely, Urea and LPG.
 8There would be a reduction in marketing margin paid by Urea and LPG producers as a result of this decision.
 8Further, the rate would be fixed on non-discretionary basis.
 8The issue of vast disparity in marketing margins was looked into by the Petroleum & Natural Gas Regulatory Board (PNGRB) and the marketing margin finalized today is based on the recommendations of PNGRB.
 8Future escalations in the marketing margin upto wholesale price index (WPI) would be decided by the Ministry of Petroleum & Natural Gas itself.
 8This decision is likely to enhance transparency and provide an element of certainty for future investments in gas infrastructure sector. Details
The website carries here the latest landed price of LNG in key markets around the world.
 8The data has been collected from the US Federal Energy Regulatory Commission and is depicted in US $/mmbtu.
 8Landed prices are based on a netback calculation.
8Prices are the monthly average of the weekly landed prices traded during the prior month. The data is available for October.
 8The calculations show that the landed price of LNG is the highest in India, at $ 6.84/mmbtu while the price in China is $6.63/mmbtu.
 8Japan's price is $6.78/mmbtu while Korea pays $6.78/mmbtu.
In the UK the price tag is $6.28, $6.22 in Spain.
 8In South America the price is between $6.75 to $6.77/mmbtu.
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The petroleum ministry must conduct an exercise on why India has the highest landed price for LNG in the world.
 8The key LNG suppliers, particularly GAIL, must be brought in to explain the situation.
 8A higher price for gas works itself into the economy in insidious ways and it is imperative that we keep our landed price as low as possible.
 8This is more so because the government owned GAIL has a near monopoly in the supply of LNG to the power and fertilizer sector through the gas pooling mechanism.
 8This supply monopoly throttles competition, leaving it to the monopoly supplier to contract for LNG cargoes on its own.
 8As we all know a monopoly does not help keep prices down, and in this context, the fact that India pays the highest LNG price in the world comes as no surprise.
 8A mechanism must be evolved to allow bulk buyers to be able to source their own LNG.
 8For the fertilizer sector, the Fertilizer Association of India, can be given the mandate to compete with GAIL to source LNG cargoes abroad.
 8It must also be investigated whether the high LNG price paid by offtakers because supplies are tied in with unfavorable long term contracts, as is the case of Petronet LNG with Qatar, is responsible for keeping the price high.
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Like everything else in the energy sector today, the LNG market is also evolving at a frightening rapid pace, leaving both buyers and sellers grasping for growth.
 8The fragmenting market is one more reason why more Indian buyers should enter the market and not be at the mercy of GAIL alone.
 8This is also because the public sector gas major may not be nimble enough to exploit the opportuniti4es thrown up by a rapidly moving global gas market.
 8Supplies have now become flexible and buyers must have to move in tandem.
 8If all contracts that are to be renewed are taken as flexible because the buyer has the right to chose the contract he wants, as much as 25% of LNG to be traded in 2015 will have flexible parameters in terms of pricing, volumes and length of contract. This figure will go up to 42% in 2025, though some experts believe that this is a conservative figure.
 8LNG is now slowly moving towards becoming a global commodity.
 8The drivers are of course the increased liquidity in the market and and a rising number of participants. There is also a fragmentation of the market place that helps in the commoditization of LNG. Plans to set up LNG and gas hubs in Asia will also drive this trend.
 8But on the other hand there are some inhibitors too. Existing long term contracts will take time playing through. Juxtaposed against this is the fact that LNG terminals can come up only if long term financing is secured and this has to work in consonance with long term supply contracts. 
 8Commoditization however is likely to get a boost as there is increasing demand uncertainty and buyers have competing fuel options.
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ONGC has completed the environmental clearance process for drilling 45 development wells along with a Floating, Production, Storage and Offloading (FPSO) system and a fixed offshore platform at a cost of Rs 53,085 crore in the block.
 8The company on November 17 submitted all the relevant papers -- including the EIA report, risk assessment studies, public hearing meetings, certified monitoring reports and NOCs for working in the CRZ,
 8The final environment clearance is now likely to come through soon.
 8Besides the surface facilities, the E&P major also plans to set up subsea production systems (SPS) and subsea pipelines connecting to the landfall point from the existing onshore terminal for custody transfer to GAIL.
 8The drilling depth of the wells is 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.
 8As this proposed block is located in deep and ultra-deep water, a drill ship 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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 While the total oil initially in place (OIIP) in the Krishna-Godawari deepwater block KG-DWN-98/2 is estimated at 106 million cubic metres (MMm3), production of only 26.71 MMm3 is envisaged during the 2019-2031, period.
 8Then again, the gas initially in place (GIIP) is estimated at 69.57 BCM, of which only 51.33 BCM can be produced during the 2018-34 period.
 8The offshore part of the KG Basin categorized as shallow and deep waters, covers the area of the Srikakulam coast in the north to off Nellore in the south and is considered as highly prospective for hydrocarbon exploration.
 8The discovery area of the block has been split into two: the Northern Discovery Area (NDA) and the Southern Discovery Area (SDA). While the NDA is spread over 3,800 sq km, the SDA covers an area of 3,494 sq km.
 8The Northern Discovery Area (NDA) is further divided into two primary production areas: Cluster-1 and Cluster-2. Cluster 1 is a predominantly gas-rich area, located in the north of NDA, which includes fields D, E and G4. The nominated Godavari PML block also falls in this area. Cluster 2 area, located in the south of NDA, has both oil and gas and includes oil fields (Cluster 2A) A2, P1, M3, M1 and G-2-2. The gas fields (in Cluster 2B) are R1, U3, U1, and A1.
 8Exploration efforts carried out so far in the block have led to discovery of hydrocarbons in the entire block and established the Northern Discovery Area (NDA) with significant discoveries like Annapurna (R-1), Kanakadurga (G2P1) and Padmavati (M1) and the Southern Discovery Area (SDA) with UD-1 discovery.
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The break-up of costs are as under:
 8Full field development (capex): Rs 31,782 crore
 8Full field development (non-capex): Rs 4,986 crore
 8Drilling cost (capex): Rs 12,810 crore
 8Drilling (non-capex): Rs 3,510 crore
 8Total cost of the project: Rs 53,058 crore
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The following details are also carried about the project:
 8Geological setting of the deepwater block
 8Map showing the proposed drilling locations
 8Drilling process to be adopted
 8Deepwater drilling technology to be used
 8Deepwater well abandonment process to be followed
 8Subsea equipment, pipelines and architecture
 8Offshore processing facilities
 8Risks in exploratory drilling operations
 8Risk mitigation measures
 8Response of marine ecosystems to oil spills
 8Oil spill contingency plan
 8H2S protection in drilling operations
 8Coordinates of the proposed locations
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One discovery that is unlikely to be exploited anytime soon is the UD-1 discovery in the Southern Discovery Area. The discovery has around 80 BCM of gas reserves.
 8This is because the discovery is at a water depth of 2800 metres while the total depth of the reserve is a massive 6576 metres.
 8An appraisal well to delineate the contours of the UD-1 discovery, dubbed UD-2, that went down to a total depth of 6216 metres, turned out to be dry and had to be abandoned.
 8Then again, there was another appraisal well, UD-3, also going down at a depth of 6713 metres, that was found to be gas bearing.
 8Two other appraisal wells, UD-4 and UD-5, drilled to total depths of 7032 and 5732 metres respectively were not found to be gas bearing. While the  UD-4 well was permanently abandoned because of technical problems, the  UD-5 was temporarily abandoned.
 8It is unlikely however that these UD-1 discovery will every be tapped anytime soon because the technology is not there to drill such deep wells.
 8And even if the technology is found, it is unlikely to be viable given the low price of gas and projections that gas prices may not up enough for sometime in the future.
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What is the gas price at which the discoveries in the Northern Development Area going to be viable?
 8ONGC sources pointed out that an exercise done in October, 2014, when plant and equipment prices were still to go down, IRRs of as high as 26% were recorded for the NDA discoveries at a gas price of $7/mmbtu.
 8The IRR for the independent G-4, D and E fields were at around 19% at that price.
 8These IRRs were very attractive and well above the normal IRRs in some of their other discoveries.
 8The total cost of the project was then pegged at around $8.2 billion. The cost estimates that were submitted to the government by ONGC now is $8.8 billion.
 8The point to note however is that the latest cost estimates have not taken into account the sharp fall in cost of equipment and services, particularly in the deep sea arena where there has been a sharp pullback of investments world over.
 8There is no reason whatsoever for the cost to go up from $8.2 estimated in October, 2014 to $8.8 billion at present unless the scope of the project has undergone a change that entails a higher capital investment.
 8In fact, ONGC can, through astute bargaining, bring down costs for various deepwater activities to be undertaken in the block by anywhere between 20 to 40%.
 8This in fact is the time for both the petroleum ministry and ONGC to take very proactive measures to beat down prices, so as to be able to make the exploitation of the reserves viable in the Indian context and price..
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The ONGC board has put off contracting actives in the KG-DWN-98/2 block
 8And rightfully so.
 8The current government controlled gas price of $4.2/mmbtu (on NCV basis) is just not viable.
 8There is also a question mark on whether the KG-DWN-98/2 discoveries are entitled to a "premium" under the gas pricing regime as their DOCs date back to a point beyond the cut off date or they will eventually be allowed to charge at market rates.
 8But now that gas prices are low, and the landed price of LNG is currently at around $6.8/mmbtu in India, the paradigm under which these Indian deepwater discoveries will be viable has undergone a dramatic shift.
 8It is now established that these discoveries will require a free market pricing regime to stay viable.
 8The ceiling price will not be what the government determines but it will be pegged to the landed price of LNG in Indian ports.
 8Given the cost economics, and in the context of the fact that the cost of equipment and services has fallen sharply, ONGC's KG-DWN-98/2 block should be viable at la price much lower than $7/mmbtu.
 8A price of between $5-$6/mmbtu can be a competitive price for ONGC at their current hurdle rate.
 8This price is below the landed price of LNG.
 8Since gas prices worldwide are already low, it is safe to assume that landed LNG price will not go very down from here on.
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It is time for India to start bringing down flaring and venting of natural gas and other emissions in the E&P industry to zero levels.
 8A study has shown that methane is the second most prevalent GHG emitted from human activities in the US, and nearly 30% of these emissions come from oil production and the production, transmission, and distribution of natural gas.
 8Higher emission control standards for such emissions will now be the norm than the exception, especially in India.
 8The global warming potential (GWP) of methane is 25 times greater than that of carbon dioxide (CO2), and the venting of methane releases more than nine times as much CO2 equivalent GHG on a tonnage basis
 8Technology not only exists but is readily available that provides 100% combustion efficiency against flaring or venting of gas, so that hydrocarbons are fully converted to CO2 and water vapor.
 8The venting of gas happens in the production of oil and gas.
 8Similarly, VOC emissions and pollutants known as air toxics, in particular, benzene, toluene, ethylbenzene, and xylene (BTEX) are released in the natural gas dehydration process.
 8Technology now exists to reduce these pollutants to benign CO2 and water vapor through clean, efficient combustion technology that uses 60% to 80% less fuel gas than a traditional flare,
 8Using such technology makes business sense too as reduction in operating costs typically delivers a payout in fewer than 6 months on the capital investment.
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America has made a big success of its shale gas reservoirs, thereby dramatically changing the oil business forever.
 8But will this revolution ever spread to India?
 8Many claim that India does not have the kind of shale reservoirs seen in the US, China or other places. Our shale reserves are smaller and estimates vary of how much oil and gas they contain. Not enough footwork has been done on the ground to pinpoint where these reserves are, and how economical they will be to exploit.
 8There are those who also claim that India's high population density and low availability of water will not allow shale gas exploitation on a big scale.
 8Nevertheless India must attempt to look at the shale option more seriously before abandoning it. The Uniform Licensing Policy will help simultaneous exploitation of reserves but that itself may not be the solution.
 8The North East of India is one area where large reserves of shale oil and gas are likely to be found, in Assam and Arunachal Pradesh. These prospects must be looked at seriously given that the North East is sparsely populated and water is available in large quantities for fracking activities.
 8A presentation carried here calls for setting up of an independent and autonomous Shale Oil and Gas Authority
 8The authority should pool resources available with leading public sector oil and gas companies to focus on developing a cost effective technology for shale oil and gas exploration, the presentation claims.
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Low oil prices have forced Cairn India Ltd to cut capex in 2015-16 to $300 million from $1.1 billion in the previous year in its Rajasthan block.
 8Low prices have in fact forced the company to slash the budget to $300 million from $500 million that it intended to spend this year.
 8The company has pegged the budget for 2016-17 at $500 million but if oil prices go up, then expenditure in the year can jump to $1.6 billion.
 8The cut in investment is somewhat surprising and reflects an over cautious approach, particular when the company admits that over 90% of the volumes are resilient in the current crude environment
 8The cost of production from Rajasthan is as low as $ 6/bbl and yet the company has decided to hold back its investments.
 8The idea seems to be to keep its reserves underground until prices firm up. That way it can bring in more profit for the company when prices rise.
 8The moot point however is whether prices will go up at all as there are predictions that crude values will remain at low levels until 2020. Details
Cairn Energy has not spelled out whether it has also curtailed its investment in exploiting its gas reserves in the Rajasthan block -- now that the overall budget has been drastically pulled down for 2015-16 -- because of low prices.
 8budget that was approved for the gas field and accompanying infrastructure was $500 million, already down by $200 million from what it had sought but all of it will not be spent this year. The investment will be spread out over two or more years
 8The cost has come down on account of the fact that GSPL will now build the 200 km pipeline that will connected it to the Gujarat gas grid instead of Cairn
 8A further cut or a go slow on account of low prevailing prices is likely to hit gas production targets.
 8But some of the investments already made are shoring up gas production. Output went up to 30 mmscfd in Q2 2015-16 as against 19 mmscfd in Q1.
 8Future gas output will have to be sustained through a hydro fracturing campaign, and therefore a 15 well hydro-frac campaign is to be undertaken in the current year itself.
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Cairn Energy has now finalized the FDP for the new Aishwariya Barmer Hill formation that entails the recovery of around 20-30  million barrels of oil. Already 8 horizontal and 4 vertical appraisal wells have been drilled. Successful laterals --  of 800 to 1200 m long -- have been completed. The company plans to apply a new-tech Microseismic hydrofrac monitoring system for the first time in India
 8In its core fields, Cairn India has ugraded fluid handling capacity to 800,000 barrels per day and the company has also put in captive power facilities to increase reliability and facility uptime. The Aishwariya infill campaign to help arrest its natural decline, has already seen 12 out of 20 drilled wells come online by end of Sep 2015
 8Meanwhile, the Revised FDP for the Bhagyam Enchanced Oil Recovery (EOR) project has been prepared but is still subject to approval. Even though a go-ahead is yet to come, Cairn has gone ahead and awarded contracts for Front End Engineering Design, while tendering for rigs, drilling & completion long lead items has started
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Cairn Energy has boasted that its polymer flooding plan for its Rajasthan block to step crude production from declining is one of the largest such programmes in the world.
 8A huge amount of money is to be spent:  $566 million has been earmarked for the Mangala polymer flooding programme and 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 Q1 to 200,000 polymer solution per day in Q2 2015-16.
 8Cairn expects to ramp up the polymer injection volumes to 400,000 blpd  by end of FY16.
 8More polymer flooding work is expected going ahead
 8Importantly, Cairn's EOR programmes are very viable even at current domestic prices.
 8The development cost for the Bhagyam field through the EOR preogramme will be just $5-6 per barrel of oil produced.
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It is touted as one of the biggest polymer flooding programmes in the world and with that comes the question what harm injection of such a high concentration of chemicals in the virgin geology of Rajasthan do to the ecology of the state.
 8Will the chemicals seep into the water reservoirs, poisoning them in turn?
 8The pumping of huge volumes of Partially Hydrolysed Polyacrylamide Polymer (PAM) will have serious repercussions
 8Acrylamide is absorbed by animals and humans via ingestion or inhalation or through the skin. Extensive efforts have been made to assess human exposure to acrylamide by monitoring several metabolites excreted in the urine as well as products resulting from biological alkylations by acrylamide, and the results are not good.
 8On the basis of numerous studies, the International Agency for Research on Cancer has classified acrylamide as “carcinogenic to humans”
 8Then again, workers exposed to acrylamide exhibited symptoms of peripheral neuropathy, suggesting that the compound is a human neurotoxin.
 8Feeding water solutions of acrylamide (50-200 ppm) to female and male rats prior to breeding and through the gestation and lactation period (up to 10 weeks) produced disruptions in mating, interference with sperm ejaculation, depression in body weight gain and food intake, and depression in pup body weight at birth and weight gain during lactation.
 8The pumping of 400,000 barrels of barrels of polymer solution per day into the geological gut of Rajasthan and possibly another 200,000 barrels per day in Bhagyam will have a dramatically adverse impact on the environment in Rajasthan.
 8The point is whether the state government and the central government have the wherewithal to assess the kind of damage that is being caused. 
 8What are the environmental parameters under which such massive flooding programmes have been allowed.
 8These are questions that need more clarity before the damage becomes permanent. 
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Stringent emission norms for the oil and gas industry will soon see a new kind of technology to bring down emissions coming on to its own in this segment.
 8Technology is now available that will use the waste heat generated from clean combustion of gas (that turns methane into CO2), to vaporize waste water.
 8f the natural gas that is vented or flared is of sufficient quality and volume, then it could also be used to generate power with reciprocating engines for the site or the grid. If the volume or quality of the gas is poor, then
 the waste heat from clean combustion can be used to generate power for the site with an organic Rankine cycle engine.
 8Additionally, there is an opportunity to thermally treat the wastewater stream with the waste heat generated from the combustion of the associated gas.
 8In some reservoirs, if a well is not served by a pipeline infrastructure, the water handling expense alone will exceed the oil revenue.
 8Using the excess thermal energy from associated gas combustion under careful, controlled conditions, up to 85% of the produced water volume is vaporized.
 8The remaining 15% of the original volume is carefully diverted to storage and then disposed of by deep well injection.
 8By reducing the volume, the economics of flowing an isolated well just becomes positive
 8This method requires combustion with a device whereby the heat is contained and able to be transferred effectively. Note that the 85% water volume in this example is returned to the ecosystem instead of being lost to deep well injection.
 8To rephrase, this combustion technology is able to use waste heat to drive water, a valuable resource, into the environment where it will become part of the water cycle and be available for future use.
 Comment: In India, the environmental impact of oil and gas production and processing is largely ignored. Cairn Energy for example is undertaking one of the world's largest polymer flooding campaigns in the world but this entire exercise remains unpoliced. This could well lead to unmitigated environmental disaster. As more awareness seeps in, norms are likely to be tightened and also strictly monitored, and technologies that allow for 100% combustion will come into play Details
British Gas has now joined hands with other Big Oil companies to push for a tax on carbon emissions.
 8The company has joined the World Bank Carbon Pricing Leadership Coalition (CPLC), an initiative which brings together over 85 governments, corporate and civil society organisations to collaborate on carbon pricing systems and policies.
 8BG is also making public the internal carbon screening values it uses when reviewing investment decisions.
 8The multinational has been valuing carbon internally for a number of years, to estimate the cost of carbon emissions under existing carbon pricing regimes, and the impact of future carbon pricing systems, on its projects.
 8Valuing carbon on projects has enabled BG to identify design options which improve energy efficiency and reduce emissions.
 8Indian companies should look at the BG model and figure out whether such kind of modeling can help in their investment decision making.
 Comment: India needs to have its own policies on carbon pricing even as its aligns with global initiatives. Big Oil is lobbying for a cabon tax in its self interest, in the fond hope that the tax will ease out coal from the energy basket and promote gas. Any which way the bread is buttered, it is imperative that India puts together a carbon tax regime that is both practical and yet environmentally sustainable. And this is not going to be an easy job at all.
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Indian Oil Corporation Ltd is planning to check the adequacy of the entire flare network of Haldia Refinery including OSBL piping (main flare & sub- flare headers), flare KoDs, water seal drums, flare riser and stack etc and determination of governing flare load under various contingency scenarios such as cooling tower failure, localized power failure, general electrical power failure, simultaneous failure of all the units being fed from same substation, external fire case, blocked outlet case and simultaneous emergency depressurization of DHDS, the CDWU and the OHCU
 8A vendor will be hired to assess the governing flare load and adequacy based on acceptable philosophy such as. API RP 520/521 or the Shell Philosophy or any other applicable regulatory code.
 8The idea is to define the maximum capacity of the flare system considering both hydraulic design and acceptable ground radiation level considering various process units and tankages in the refinery.
 8The allowable back pressure at various battery limits are also to be estimated. This will form the basis on which new headers or sub-headers may be installed.
 8The vendor shall provide a cost estimate (±30% accuracy with all basis) for effecting the modifications that are envisaged under the proposed study.
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ONGC is planning to set up a new Gas Gathering Station along with an oil and gas processing facility in order to handle increase of production in the Gamil field in its Ahmedabad asset.
 8With the drilling of 189 oil wells and 99 of water injection wells in Gamij oil field, the peak production of oil will augment to 1775M3/day by 2018-19.
 8Presently the existing oil and gas processing facility (Gamij GGS-I, Gamij GGS-II and Gamij GGS-III) in the field is handling 500M3 of oil every day.
 8Thus, there is an urgent need to expand the oil and gas processing facility by by building the Gamij GGS-IV  to handle higher production
 8Pertinently, all the existing facilities qualify for third party certified environment management system based on ISO 14001 and this, in turn, is integrated with the quality management system (ISO 9001) and Health and Safety Management System (OHSAS18001).
 8Meanwhile, affluent treatment plans associated with the field are annually audited by schedule auditors at the behest of the Gujarat High Court and report is submitted to GPCB which in turn ensure compliance of observations raised during the audits.
 8Public hearing in the area had  been carried out already for setting up the new GGS.
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Increased domestic energy production in coming years could allow Egypt to re-export Iraqi oil as part of a larger plan to become an energy export hub, Egypt's petroleum minister Tarek El olla told the state news agency
on Monday.
8Russia, the world's top oil  producer, sees the gap between global oil supply and demand narrowing gradually, the country's Energy Minister Alexander Novak told reporters on the sidelines of the G20 summit in Turkey.
8The number of oil wells in North Dakota shale plays that have been drilled but not fracked eclipsed 1,000 for the first time in September, as producers delayed turning them n in hopes crude prices will soon recover.
8Unusually mild weather across the United States this autumn has sharply reduced heating demand and contributed to the substantial oversupply of both natural gas and heating oil Details
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