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Dec 2015

The website also elaborates here the different kind of technologies available for desalinization
 8Mainly, thermal and Reverse Osmosis technology platforms are in vogue.
 8A comparison of the two types of technology are made here.
 8Important improvements are highlighted
 8Also given here are the advantages of both technologies in the Indian context as well as the main parameters that influence the cost of these plants in India.
 8Raw water quality, temperature, intake arrangement and required product water quality are important determinants.
 The best choice would depend upon the following parameters:
 --Salinity and quality of the water to be desalinated.
 --Target water quality requirements:
 --Desired desalination plant production capacity
 --Reliability and availability
 --Available energy supply sources for a desalination plant and associated costs
 --Energy usage
 --Robustness of desalination technology
 --Construction timeframe
 --Recovery and sea water intake
 --Reject outfall
 --Water production cost
 --Market trend/share globally & in India of the preferred technology
 Click on Reports for more Details
The following are the major components of a desalinization plant based on the Reverse Osmosis platform:
 --Offshore sea water intake & outfall facilities
 --Onshore intake chamber and pumping station
 --Water conditioning by dosing of chemicals
 --Pre treatment by means of DAF units, backwashable disc filter followed UF membranes
 --Desalting by two pass RO membrane, energy recovery device
 --RCC Intermediate storage tanks
 --Storage, dosing and pumping system
 --Re carbonation and Remineralisation system
 --Electrical power distribution
 --Instrumentation and control
 --Allied facilities.
 Click on Reports for more Details
IOC has unfolded plans to spend a massive Rs !,75,000 crore over the next seven years.
 8The investments will be spread over refining, exploration, marketing and the petrochemical business subject to techno-economic feasibility of the projects.
 8A total of 13 projects have been identified.
 8Moreover, specific plans have been drawn up for brownfield expansion of refineries over the next five years.
 Click on Reports for names of specific projects and the scope and extent of the brownfield expansions. Details
Will Underground Coal Gasification (UCG) ever take off in India?
 8The progress so far has been slow even though the government has now identified seven blocks -- five lignite and two coal -- where the technology can be deployed.
 8Some progress is now taking place but the politics of climate change may well have an unpredictable impact on this form of energy.
 Click on our Reports section to learn more on progress made by India on UCG projects. Details
Despite the climate of uncertainty, the promoters of the Turkmenistan-Afgainistan-Pakistan pipeline is prodding ahead with the project.
 The following are the latest developments:
 8Now that Turkmengas has been selected as the consortium leader for the TAPI Pipeline Company Ltd, it is taking its job seriously. The ground breaking ceremony will be held on December 13, 82015 for laying the pipeline on the Turkmenistan side side, right up to the border with Afghanistan.
 8The consortium partners believe that contractors will be selected through a process of competitive bidding.
 8GAIL had signed a GSPA for 38 MMCMD of gas for 30 years from the pipeline but it may now have to take on more gas as Afganistan has stated that its appetite will be only between 1.5 to 4 mmsmcd of gas as against 14 mmscmd that it originally wanted to pick up.
 8GAIL has now shown willingness to pick the extra gas.
 Click on Reports for more Details
The report goes on to analyze what will be the best technology to use for manufacturing power from coal, given that its growing usage will be unavoidable.
 8What is being promoted is the Ultra Super Critical technology route that burns coal with greater efficiency.
 8Then there is the Integrated Gas Combine Cycle Technology that is called "integrated" because the syngas produced in the gasification section is used as fuel for the gas turbine, and the steam produced by the syngas cooler in the gasification section and heat recovery steam is used by the steam turbine in a combined cycle.
 8An exhaustive cost benefit analysis is conducted of different technologies now in use to make power from coal, involving ultra super critical, super critical and sub-critical technology.
 8The results are a little mixed for quite a few variables have been taken into account, including the nature of power plant construction contracts, the boiler type and coal price, along with financing costs.
 8While ultra critical technology is the best option, it may not be the most cost effective when the financing cost is high.
 Click on Reports for more Details
For reference purposes, the website here carries projected data for the year 2016 which is important for the oil and gas sector as a whole.
8The report contains the following:-
-- World Liquid Fuels Production and Consumption Balance
-- Non-OPEC Crude Oil and Liquid Fuels Production Growth
-- OPEC surplus crude oil production capacity
-- OECD Commercial Stocks of Crude Oil and Other Liquids
8The graphical comparisons will give a fair idea on how things will evolve next year.
Click on our Reports section for more. Details
The TAPI pipeline will traverse through some of the most dangerous terrains in the world. It is natural therefore for the promoters of the project to keep security as their top priority.
 8The Asian Development Bank, the Transaction Advisor for the project, had commissioned  security consultant, Pacific Strategies & Assessments, Inc. (PSA), to conduct a study and come with a set of recommendations.
 8PSA has suggested the establishment of an Inter-Government Joint Security Task force (JSTF) to serve as the nucleus of the security programme.
 8The JSTF should be authorized by each country at the highest level with clear cut roles and responsibilities, the consultant has said. 
 8Another recommendation is for the establishment of a team that enables operational continuity in case of a crisis and is capable of rapid repair of critical facilities and equipments.
 Click on Reports for more Details
 Ferrying gas through a pipeline still remains the cheapest option for India, according to a recent study.
8The study compares the cost of an onland pipeline with that of supplying the same quantity of gas through the LNG route and an undersea pipeline from Iran and finds the land route to be the cheapest.
8Because there is no liquefaction and regasification cost involved, it saves around $4/mmbtu.
8The study assumes a transportation cost of $2.25/mmbtu for the deepwater pipeline in comparison to the LNG ferrying cost of 0.5/mmbtu from Iran, $1/mmbtu from other parts of Asia and $2.25/mmbtu from the US.
8It is only with the onland pipeline from Iran that there are no other charges except a transportation cost of $2.35/mmbtu, which makes it the cheapest option to bring in gas.
8The same logic can be extended to TAPI through the transportation cost is expected to be higher because a longer distance is to be traversed. Also provision of adequate security will ratchet up the cost significantly.
8Even then, gas from Turkmenistan is expected to arrive in India at a competitive price
Click on Reports for more Details
Will a day come when an LNG supplier will pick up an equity stake in an Indian company just so that it can sell its stranded LNG to it?
 8Is it possible for a large Indian fertilizer company to have a back to back arrangement with a distressed LNG supplier from Australia or Canada or even the US wherein it is supplied LNG at a price that is permanently pegged a few cents lower than the lowest long term LNG supply price?
 8While this is an extreme case, a lot of possibilities have been thrown up by the looming glut of LNG in the market even though the big Indian players and their attendant gas handling infrastructure does not allow for easy entry to new players.
 8The current crisis in the LNG market has been driven by demand deceleration and the oil price crisis.
 8The new wave of LNG supply that is under construction (mostly in the US and Australia) comes at a time of increasing price pressure under uncertain demand growth, especially in Asia.
 LNG suppliers have figured out that they have to spur demand, beyond just tapping big markets such as Europe or China.
 8The focus is on new importing countries and new sectors (such as bunkering)
 8Going directly to the sellers and giving them lucrative deals will be one way the LNG industry is likely to adapt going ahead.
 Click on Reports for more. Details
LNG producers are now looking at paring down infrastructure cost to be able to survive in a bloody market.
 8An analysis shows that that on a market price of $7.1/mmbtu in Japan, the cost of infrastructure makes up from 50% to 115%  of the price.
 8There are wide variations in cost structures -- made up of infrastructure cost, upstream costs and carrier charges -- among suppliers.
 8While there is scope for tinkering with upstream costs by pushing suppliers to cut rates, there is less scope of doing so with freight rates.
 8So the focus has shifted to bringinf down the cost of infrastructure.
 8Eventually however, there has to be an adequate resurrection of demand for the LNG.
 8Merely building a liquefaction plant is not going to work anymore.
 8The terminal builder will have to be geared towards low-cost highly flexible models, deeper pockets and a higher engagement in demand creation.
 Click on Reports for more. Details
For sellers and buyers of LNG, the website carries here the following related information on the sector:
 8Data on growth of exporting and importing countries from 2000 to 2015
 8New terminals that have come up in the last 10 years, in terms of FSRUs and land based terminals.
 8Data on new class of consumers, particularly on the economics of bunkering.
 8The growth of non-NOC players in the LNG business in China and its implications
 8LNG demand prospects, regas capacity and contracted supply.
 8Recommendations on balancing global market for LNG while diversifying supply as most of the new terminals are currently "sub commercial" in the face of weak demand and aggressive pricing of gas by Russia in Europe and China.
 Click on Reports for more. Details
A study done by an Asian consultancy says that East Asia -- made up China and India among others -- will continue to use coal as a dominant source of  primary energy even by 2035, contributing almost 60 per cent of the total energy produced.
 8In absolute term, coal consumption will almost double from 2,507 Mtoe in 2011 to 4,155 Mtoe in 2035.
 8Of the coal fired power generation of a massive 11,406 Twh, China's share will be 65% and India 20%.
 8Interestingly, the projections show that the percentage share of coal fired power generation in total generation goes down only marginally in the next 20 years in the region.
 8This is bad news for global warming but those are the economic compulsions of the region that seems to drive demand.
 8For those who believe that gas does not have a future in Asia, here is some good news: Gas demand will show the highest annual growth at 4.3% up to 2015, followed by electricity (2.4%) and oil (2.7%).
 8Consequently gas share will increase from 7% in 2012 to 11% in 2035. Electricity share will also increase from 20% to 25%. On the other hand, coal share will decline from 22% in 2012 to 16% in 2035
 8The modeling used to arrive at these figures was very rigorous so there is a lot of credibility to these projections.
 Click on Reports for more Details
Even though global warming is at stake and alarmist are calling for a stoppage to the use of coal, projections show that a total of $1.803 billion will be invested in coal mining and coal fired businesses by the year 2035 by East Asian countries. .
 8That's a big level of investment by all considerations.
 8China will be the biggest investor, at $ 856 billion, of which $751 billion will be in coal fired power and $104 billion in coal mines.
 8India will spend a very large amount too: $ 629 billion in all, of which $41 billion will be in coal mines and $588 billion in coal based power.
 8Clearly the paper shows that coal will continue to be the centre point of the region's quest to generate more power to uplift millions of people who are still steeped in poverty.
 8These are large numbers by any yardstick.
 Click on Reports for more Details
Indian Oil Corporation Ltd (IOCL) is planning to enhance the capacity of its Koyali-Sanganer Pipeline (KSPL) to 5.0 MMTPA at a cost of Rs 276.23 crore.
 8This will be done by augmenting station pumping and other allied facilities of the pipeline.
 8Augmentation of KSPL broadly involves the following:
 --Replacement of 1 existing motor-driven MLPU (Main Line Pumping Unit) at Koyali with a new MLPU of adequate capacity.
 --Replacement of 2 existing mainline pumps at Koyali with new pumps of adequate capacity.
 --Installation of 3 (2+1) motor-driven MLPUs of adequate capacity at Viramgam to help push up output in the Viramgam-Sidhpur section.
 --Replacement of all existing engine/motor-driven MLPUs at Sidhpur and Kot with new MLPUs of adequate capacity.
 --One LBT of 10,000 kl nominal capacity at Kot.
 8It is pertinent to mention that there is no work involved in the RoU for the mainline, nor any new acquisition of land for the augmentation project. The work is involved only at the existing stations.
 8For meeting the power requirement for running of essential operational equipment and fire fighting system during failure of normal power supply, DG set of appropriate capacity will be provided at each location.
 8The augmentation scheme is expected to be completed in a period of 30 months after getting statutory clearance.
 Click on our Reports section for more. Details
The entire demand for petroleum products of North Gujarat and Rajasthan is currently met from the Koyali refinery through the Koyali-Sanganer Pipeline (KSPL).
8In the absence of any alternative means of supply, product placement at these locations is severely affected in the event of a shutdown of the Koyali refinery, thereby necessitating supply from other sources through un-economical modes.
8To address this problem new pumping units at Kandla have been approved ,which involves transportation of products received coastally from Kandla till Viramgam only ,while further transportation and delivery to Tap-off-Points (ToP) at Sidhpur, Salawas, Chittaurgarh and Jaipur will be done through the KSPL after its augmentation.
8Also, considering the expansion of the Panipat Naphtha Cracker, the annual additional requirement of Naphtha is around 800 TMT.
8This requirement of naphtha is met through tank wagons through rail movement from Koyali to Panipat.
8Considering the volume to be transported and the inherent advantage of the pipeline over other modes such as safety, reliability, less energy consumption and environment-friendliness, it is thought prudent to transport Naphtha through the KSPL upto Sanganer and from Sanaganer, IOC proposes to lay a new 340 kms pipeline (Jaipur-Panipat Naphtha Pipeline) for inward transportation.
8The transportation of naphtha also necessitates augmentation of KSPL.
Click on our Reports section for more details on throughput projections for the years 2016-17 and 2021-22.
Click on Reports for more Details
Here is a highly researched primer on what moves global oil prices -- along with excellent graphics -- for our readers' reference.
 8The following factors are reportedly at work:
  -- Crude oil prices react to a variety of geopolitical and economic events
  -- World oil prices move together due to arbitrage
  -- Economic growth has a strong impact on oil consumption
  -- Changes in expectations of economic growth can affect oil prices
  -- In OECD countries, price increases have coincided with lower consumption
  -- Changes in non-OPEC production can affect oil prices
  -- Non-OPEC supply expectations indicate changes in market sentiment concerning oil supply
  -- Changes in Saudi Arabia crude oil production can affect oil prices
  -- Unplanned supply disruptions tighten world oil markets and push prices higher
  Click on the Reports for more. Details
It is indeed very smart on GAIL's part to have bought into the LNG supply chain from the Sabine Pass terminal.
 8The Sabine Pass Terminal is one of the three terminals developed by Cheniere Energy of the US.
 8The company has plans of setting up capacities totaling up to a massive 60 MMTPA by 2025 at an investment of $50 billion, making up a significant 14% of the global LNG capacity.
 8Six trains are under development in the Sabine pass liquefaction facility, totaling up to 27 mmtpa, another five trains are coming up in its Corpus Christi terminal with a cumulative capacity of 22.5 mmtpa, followed by capacities in
 8Live Oak and Louisiana, at 5 MMTPA each.
 8First LNG from Sabine Pass is expected by late 2015, from Corpus Christi by late 2018, and from Live Oak and Louisiana by late 2021.
 8Around 87% of the LNG volumes for trains under construction are already under long term SPAs and the company expects to sell the rest of the LNG under shorter-term contracts or on a spot basis.
 Click on Reports for more Details
According to documents available with this website, the first LNG cargo from the gigantic Sabine Pass liquefaction terminal in the US  -- with which GAIL has entered into a 20-year take or pay arrangement -- will be shipped out in December 2015.
 8The completion of Train-1& 2 is expected by March, 2016 when full shipments can take place.
 8GAIL has committed to pay a massive $584 million per year as fixed annual fees to buy 182,500,000 mmbtu of LNG.
 8The fixed fees come to $3/mmbtu and the LNG cost has been pegged at 115% of the  Henry Hub price.
 8But the first charge on LNG cargoes from Trains 1 & 2 will not devolve on GAIL but on the BG Group
 8GAIL's contract only begins when Train 4 is commissioned and that is going to be in March, 2018.
 8Engineering, Procurement, Subcontracts and Construction are 100%, 99.4%, 50.4% and 48.5% complete in Train 4 against Target Plan of 99.0%, 98.8%, 65.8% and 59.6% respectively.
 Click on Reports for more Details
The Sabine Pass LNG terminal will be able to deliver among the cheapest LNG in the world, according to documents available with this website.
 8Calculations show that the terminal will be able to provide an LNG price of between $7.7-8.4/mmbtu ex-ship Asia.
 8This is one of the cheapest delivery price in the world.
 8Data shows that the ex-ship Asia break-even price for West Africa is between $9.5 to $11.5 from West Africa., $12-13 from Western Canada, $14-16 for Northwest Australia and $14-17 for East Africa.
 8The Sabine Pass calculations are based on a Henry Hub price of $3/mmbtu.
 8The terminal can make money at low LNG rates. At an LNG sale price of $9/mmbtu in Asia, the implied margin has been calculated at a healthy $3.25/mmbtu.
 Click on Reports for more Details
The breakeven ex-ship price of GAIL's shipment from the Sabine Pass terminal to India -- of around $7.7-8.4/mmbtu -- can well be the yardstick that Indian E&P companies can take to benchmark their own pricing matrices and IRRs for future production of gas.
8The actual LNG price that domestic gas will compete with may eventually be around $10/mmbtu
8First gas from Sabine Pass is expected in 2018, and this is around the time that ONGC's KG Basin development can hit first gas too, provided the ONGC Board clears the Rs 53,000 crore project soon.
8US landed pricefor gas  in India is expected to be the cheapest long term gas supply, except for shipments from the Gulf, and this price can safely be taken as the floor price in India when domestic prices are freed..
8Given that ONGC's breakeven price is expected to be around $5-6/mmbtu, the margins are clear.
8What is now needed is an announcement from the government that gas prices should be market driven, for the price garnered under the Rangarajan formula is unlikely to deliver results.
Click on Reports for more Details
What is the gas price at which the discoveries of ONGC's KG-DWN-98/2 block 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 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..
 Click on Reports for more Details
Given the looming glut of LNG terminals in the world, every country with LNG liquefaction facilities is today eying India -- for its supposedly voracious appetite -- as a market.
 8The news that finance minister of British Columbia met petroleum minister Dharmendra Pradhan today comes as no surprise.
 8A PIB release said that British Columbia alone might have the world's second largest proven reserves of gas.
 8Pertinently, IOC has a 10% stake in the Petronas promoted Pacific Northwest LNG project (an integrated upstream and LNG development) in Canada,. which is currently awaiting statutory clearances.
 8It is not known what transpired between the two ministers, but for the LNG project to be viable, the ex-ship price of LNG will have to come down and match those offered by US terminals.
 8An analysis from filings made by companies shows that the breakeven ex-ship price for LNG from Western Canada into Asia $12-13/mmbtu as against the US benchmark of $7.7-8.4/mmbtu.
 8There is a big difference between the two figures.
 8Unless the breakeven price comes down, the project may find it difficult to accumulate long buyers.
 8This in turn can make financial closure difficult.
 8IOC will need to look at the project economics once again before committing funds.
 Click on Reports for more Details
In a scathing indictment, the CAG has accused ONGC of sloppy planning, deficiencies in the tendering process and mal deployment of  drilling rigs over a four year period, from 2010 to 2014.
 8The CAG said that there glaring inefficiencies and gross neglect of rules and regulations were noticed during its audit.
 8The scale of loss was a staggering, running into tens of thousands of crores of rupees, when direct and indirect costs are taken into account.
 8The wastage was gargantuan  in scale. The Rig Requirement Plans that were drawn up by ONGC for its various assets were found to be deeply faulty.
 8As much as 86.26 to 93.89 per cent of the total non-productive time (NPT) -- when rigs stand hired but remain unused --  were on account of controllable factors. The RRPs, thus, had an in-built inefficiency.
 8The CAG has found it strange that no RRPs were prepared for onland areas.
 8The auditor has found that  13 rig hiring contracts out of 23 in offshore areas and as many as 8 out of the the 9 tenders in onland areas were not finalized within the given deadline. Delays of up to 508 days were noticed.
 8There were persistent delays at each stage of the tendering process, in initiation and finalisation of the indent, issue of NIT, finalisation of the tender and even in signing of the contract. Delays were also noticed in cases where the rigs already in use were being re-hired.
 8The delay in the hiring process led to la oss of 391 rig months during 2010-14 which rendered the ONGC unable to drill planned locations.
 Click on Reports for more Details
While the delays were bad enough, there were serious deficiencies in the contracting process for rigs.
 8In two tenders (out of 32 tenders finalised over 2010-14), the company relaxed the Bid Evaluation  Criteria (BEC) after bids had been received and, thus, accepted the rigs that did not conform
 to BEC.
 8In both cases, rigs were not mobilized by the contractor subsequently and the company lost precious rig months (in one case the loss was 33 rig months while in the other  the loss was 15 rig months).
 8Acquisition of new offshore rigs (as against hiring them) had been proposed in 2002 but no decision was taken for  over a decade. Meanwhile, four out of six owned offshore rigs had outlived their economic life of thirty years.
 8Then again decision making was not consistent.
 8While six onland drilling rigs were procured (2012) despite negative NPV, five mobile rigs were not procured on the same grounds.
 8These  five onland mobile rigs were required for replacing existing rigs already laid off/ proposed to be  laid off and, therefore, the decision affected availability of onland mobile rigs.
 Click on Reports for more Details
The CAG has found serious inconsistencies in ONGC's rig deployment plan.
 8One-third of the locations actually drilled by the Company during 2010-14 were not in as per the Rig Deployment Plan
 8There were 615 unplanned locations drilled against 1,867 planned locations which rendered the  elaborate annual planning exercise for budgetary and revised estimates meaningless.
 8The planned availability of rigs for drilling was set at 95 per cent for owned rigs and 100 per cent for charter hire rigs.
 8However, rigs remained out of cycle for prolonged periods which resulted in actual rig availability being much lower (87 to 91 per cent). During 2010-14, rigs remained out of cycle for 12 per cent of the available time leading to loss of 679 rig months.
 8In the Western Offshore area, where the highest number of jack-up rigs (22 rigs) were deployed Rs 517 crore was charged off on account  of rigs out of cycle during 2010-14.
 8In addition to rigs remaining out of cycle, rigs remained idle for considerable periods even after being deployed for drilling. Idling of rigs led to lower utilisable rig months and increased drilling cost.
 8Non Productive Time (NPT) of rigs in 2010-14 ranged between 19 to 23 per cent. While a fraction of NPT was on account of non-controllable factors like weather, the bulk of idling time (valued at a whopping Rs 6,418 crore) was well within the control of the company and could have been addressed through better planning and coordination.
 Click on Reports for more Details
The CAG said that rigs lay idling as deployment locations were not ready for drilling, for want of material supply and on account of non-availability of manpower.
 8Even as rigs remained idle waiting for ready sites, facilities remained idle for want of deployment of rigs.
 8In the Mumbai offshore Asset, though 21 platforms were ready for drilling (2010-14), rigs had not been deployed and the platforms remained idle for upto 777 days which resulted in idling of facilities and deferment of estimated production valued at  Rs 4,003 crore for oil and Rs 1,174 crore for gas.
 8There were losses too resulting from the fact that the target cycle speed fixed in ONGC's performance contracts was consistently lower than the cycle speed targeted in the annual plans of the company. What is more, the CAG has observed that the single target cycle speed fixed for Drilling Services Group was not an appropriate benchmark to measure performance as the actual performance of onland and offshore rigs varied widely: against the target cycle speed of Drilling Services group of 677  metres, offshore rigs achieved only 353 metres while cycle speed of the onland rigs was 803 metres.
 8The efficiency of ONGC owned rigs was poor (ranging from 27 per cent to 49 per cent) with owned offshore shallow water rigs achieving less than half the cycle speed of hired rigs while the drilling cost of company owned rigs was much higher (ranging from 34 to 131 per cent) than that of hired rigs.
 Click on Reports for more Details
The auditor has also accused ONGC of a faulty rig repair policy leading to long outage time and other deficiencies.
 8According to ONGC's own formulations, dry dock and major lay-up repairs of all six jack-up rigs was to be completed by 2009. As against this plan, repair of only three rigs had been carried out so far (April 2015) with the tender for repair of another rig under process.
 8Non adherence to the repair schedule led to rigs being operated with outdated equipment which was not an efficient operational practice.
 8While establishing the rationale for repair and refurbishment of jack-up rigs vis-à-vis hiring or acquisition of rigs,  ONGC considered the efficiency of old owned rigs to be on par with hired and newly acquired rigs. However, efficiency of owned rigs had always been much lower than that of charter hire rigs (over the ten year period 2003-13, the efficiency, in terms of cycle speed, of comparable charter hire rigs have been more than 2.52 times that of owned rigs).
 8The proposal for repair of old rigs would not be economically viable vis-à-vis hire/ purchase of rigs if realistic efficiency of owned rigs were considered.
 8Besides, there were inordinate delays in finalising the scope of work (36 months for rig Sagar Ratna and 48 months for rig Sagar Uday) which led to cost escalations (156 and 57 per cent)  further skewing the financial viability of repairs.
 8Post repair, the efficiencies of jack-up rigs and drillships did not improve significantly.
 8The inhouse rig, the  Sagar Vijay, upgraded for drilling wells with water depth of 900 metres did not drill a single well of more than 400 metres water depth between 2005 and 2013.
 Click on Reports for more Details
The CAG has now recommended that ONGC should follow a more rigorous planning process to ensure that planning and deployment of rigs were consistent. The situation where one out of every three wells drilled is un-planned needs to be corrected.
 8Another suggestion was that the controllable non-productive time of past periods should not be loaded to future rig requirement plans.
 8With induction of new technology and hi-tech rigs, realistic targets for rig requirement ought to be set to have the desired stretch in performance.
 8Suitable  measures need to be taken to reduce the non-productive time of the rigs, particularly in eliminating rig waiting due to controllable factors like waiting for locations, ready drill sites, environment clearance, material, manpower and logistics support.
 8The tendering process needs streamlining, with the initiation of indents and tendering procedure for acquisition/hiring of rigs, which are entirely within the control of the Company, needs to be done on time with proper planning so that rigs are mobilised on time.
 8In particular, indents for re-hire of rigs on  expiry of their existing contracts should be issued expeditiously so that the ONGC does not suffer from non-availability of rigs between the periods of de-hire and re-hire.
 Click on Reports for more Details
The CAG has recommended the policy for acquisition of rigs, pending for over a decade, should be finalised immediately  considering that most offshore rigs owned by ONGC had outlived their useful lives,
 8The cycle and commercial speed targets for the company's Drilling Services Group should be aligned with the planned cycle and commercial speed of the company.
 8Considering the very different activities carried out in offshore and onland and the consistently poor performance of owned offshore rigs, there is a need for setting separate targets for each category and adequately monitoring for attainment of such targets.
 8The auditor has called for immediate correction of the imbalance in drilling manpower necessary for efficient operations of owned as well as hired rigs.
 8A suitable review of the current manpower position needs to be taken up by the company and the gaps rectified in a time bound manner.
 8The assumptions made while analysing cost-benefit of repairing old owned rigs, having outlived their useful lives, should be realistic, based on past experience, particularly with regard to efficiency expected of such rigs after repairs.
 Click on Reports for more Details
What are the policy changes that petroleum minister Dharmendra Pradhan can bring about that can change India's ranking dramatically.
 8It is possible to bring about a dramatic change in perception as it happened in case of China, when its ranking went up to 61 from 117, all in a span of one year.
 8India is not China but the minister can do well to examine what the Chinese did that made such a dramatic difference in perception in just one year. Some elements of those changes can be adapted to India.
 There are few obvious policy prescriptions that can cause a change in ranking.
 The website believes that junking the revenue sharing model and sticking to the Pre-Tax Investment Multiple model is a more pragmatic way of attracting E&P investments.
 8How would a company know by scanning sparse seismic data made available in a DGH data room on a deepwater block whether it will have enough oil or gas for it to come up with a revenue share number while bidding for the block?
 8A deepwater well can cost anywhere above $ 25 to 100 million and it is not possible for anyone to accurately project what kind of revenue it will generate at the very beginning, even before exploration work can starts in the block.
 8The revenue share model can work when there is some kind of certainty on the prospectivity of a block or the exploration work has been completed and a Field Development Plan has been drawn up.
 8Then again, there is so much  uncertainty on the gas pricing front that it will be difficult to get investors to make long term commitments without more clarity on the future gas price. There is also uncertainty over how the oil and gas sector will fare in the years ahead given changes on the ground brought about by global warming and disruptive technologies.
 8Lobbies are already calling for keeping most of the global oil and gas reserves untapped in order to ensure that global warming does not cross the 2 degree threshold. This website predicts that the revenue share model will fail in India.
 8And the sooner policy makers realize it, the better it is for the country. The  best way to encourage the industry will be to retain the PTIM Model despite its obvious disadvantages.
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The survey shows that 40% of the respondents found India's oil and gas policies mildly deterrent to investment. whereas only a little more than 30% found the same to be true for Pakistan.
8Similarly the a larger percentage of respondent found Indian policies to be strongly deterrent than Pakistan or China.
8But interestingly more respondents would never invest in Pakistan than in India despite the fact that they found India to be a harder place to do business.
835% of the respondents found Chinese policies to be mildly deterred.
8Significantly a lesser percentage of respondents found China's oil and gas sector policy formulations a strong deterrent to investment in comparison to India
8Similarly, a much lesser number of respondents will not invest in China compared to India.
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There are also a few other changes that Pradhan can root for:
Make the DGH autonomous: This is the best way to instill confidence among investors. The ministry had never wanted to give up control over the DGH and there is a structured command and control system in place where permissions are required right from the level of the minister for even the smallest of decisions relating to the PSC for an individual block. Pradhan should give up these powers and make the DGH somewhat like the PNGRB.
Make the ministry more transparent: The petroleum ministry should publish all key policy papers on its website for stakeholder comments. Communications with external stakeholders such as PSC operators or oil marketing companies or public sector E&P companies should be made known to the public.
Resolve the arbitration cases: The fact that billions of dollars are stuck in arbitration proceedings does not send the right signals to the global oil and gas community. The government should play a proactive rather than a adversarial role in arbitration procedures. Once awards are decided, they should be implemented quickly but of course by following the due process of law. The fact that government forced 8 adjournments in 12 hearings in its appeal against an arbitral award in favour of Hardy Oil in Block CY-OS/2 in the Delhi High Court is a delaying tactic. This sends the wrong signals again.
 Allow the market to determine gas prices: Freeing gas prices from the vagaries of the Rangarajan formula will help create the right environment for renewed interest by foreign oil and gas companies.
 Dismantle entry barriers in the midstream and downstream segments: The public sector oil marketing companies have a stranglehold on physical infrastructure. This monopoly must be broken so that private sector companies can have easier access to such infrastructure. Threshold investment limits to gain access to this segment should be done away with.
 Avoid opportunistic bids by local companies: What Pradhan needs to do is to elicit adequate interest from foreign companies (as well as large Indian companies) to the forthcoming auction of blocks. It is important to avoid predatory bids by small local companies which do not have the wherewithal to follow through their initial commitments. He should create a policy environment in which big companies, with money and technology, pick up the blocks.
Prepare to tackle the impact of global warming and disruptive technology:  Indian oil and gas companies are least prepared for disruptive change. But there are opportunities for Indian companies to tap into these opportunities provided they are equipped to handle the disruptions. Strategic groups and consultations will have to be put into place and Pradhan must the take the initiative here. He can earn himself a place in history through bold initiatives, such as pushing the oil companies to look for unconventional businesses. A venture capital fund to hunt for new technologies can be set up, which will invest in exciting opportunities across the world. Lessons can be drawn from across the world on how downstream companies are coping with the use of electric cars, particularly in places such as Germany, Norway and California. The sky is the limit in new opportunities.
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A prestigious global survey of top oil company executives has placed India behind Pakistan in ease of doing business in the oil and gas sector.
8Among what are called "medium reserve holders", India is perceived to be 7 places behind Pakistan in the Policy Perception Index Rankings.
8There are 38 countries in the list and India is placed almost at the bottom, at rank 32.
8Only Eastern Siberia, Yemen, Ukraine, Indonesia, Ecuador and war torn Syria are behind India.
8The Policy Perception Index judges the attractiveness of a country for investment in the oil and gas sector in terms of  regulatory climate, political risk, production taxes and quality of infrastructure.
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India also fares very poorly in the overall Policy Perception Index Rankings globally, when all 126 jurisdictions that formed the sample group for the survey were ranked by respondents.
 8India is ranked at 95th in terms of ease of doing business from among 126 jurisdictions by top company executives.
 8Pakistan is way higher in the 71st position
 8China is higher still at 63rd.
 8Vietnam is way up the rankings, holding the 53rd position.
 8Among neighbouring countries, Bangladesh is worse, with a ranking of 120th, just six spots lower than the last.
 8Myanmar is now better at 116th.
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The good news that the Modi government may want to highlight is that India has moved up the Policy Perception Index rating over the last one year.
 8India has moved up five rankings in 2015, from 110 position in 2014 to 95 at present.
 8The ranking stayed at 124th in 2012 and 2012.
 8The ranking however was higher at 109 in 2011 before going down the next two years.
 8The point to note is that Pakistan too has been improving its rankings despite the turmoil in the country.
 8It was ranked 129th in 2012, 92nd in 2013, 86th in 2014 and 71st in 2015.
 8In other words, Pakistan was moving up the rankings at a faster pace than India.
 8China has moved up the rankings with great rapidity. It was 101 in 2013 and in fact was at 117 in 2014, before jumping to the 67th position in 2015
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The Modi government is sensitive to image and perception. These rankings. drawn up by a prestigious survey. matter to the government even it were to feign otherwise.
8The fact that it has gone up the ladder in the last one year is of significance, after stagnating at lower levels during the earlier regime.
8But what is of concern is that Pakistan and China have moved up much more rapidly in the rankings than India.
8Perception is important because big oil and gas companies have a global investment portfolio and funds will only be channelized into those countries which are perceived to be investment friendly.
8Pakistan, for example, has lower reserves at 4.9 bboe in comparison to 15 bboe for India.
8Yet investment will flow into Pakistan than to India because the perception about investing in India is poorer.
8Indonesia has far higher reserves, at 23 bboe, than India but the government's excessive emphasis on awarding oil and gas contracts to Bhumiputras (sons of soil) is seen a strong deterrent. And given a choice between India and Indonesia to put in money, the preference may well be for India.
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 The proposal of using cyrogenic tankers to ferry gas seems to be run out of course.
 8Such a proposal was considered by IOCL and GAIL in context of feeding the urea unit of Madras Fertilizer Ltd's (MFL's )Manali unit.
 8Eventually, it was decided that the proposal was not economically viable because the period of time for such supply was taken as 12-18 months before the company availed of gas to be supplied via a pipeline.
 8The government had then decided to that MFL will continue to use naphtha till such time that the company gets an assured supply of gas either by pipeline or other means
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In the Paris climate change negotiations, India is seen as a "spoiler" of sorts for insisting on continuing with its usage of fossil fuel to power its economy well into the future.
 8India’s position is under mounting scrutiny as ministers began flying in to Paris to finalise a draft text of the accord that the French officials running the conference insist must be done by this Friday.
 8Many delegates have begun to speculate privately that opposition from India and a clutch of other developing countries may end up weakening the final accord substantially.
 8Nevertheless India's position is clear that it would use all means possible to keep carbon emissions under check but it will not back away from its stated goal of promoting economic growth, aimed at pushing millions of people out of poverty into financial empowerment.
 8There is a worry that India's dependence on fossil fuel to power its growth will slow down efforts to curb greenhouse emissions.
 8The announcement today that emissions have fallen by 0.6% in 2015 even as the world grew at 2-3% is likely to strengthen India' argument that developing nations should be given the space to undertake the economic transition that the developed world had already done. Details
A group of organizations in Paris are still trying to claim that global warming is a myth.
8This group is handing out 4000 pages of data to show that there is no scientific basis to justify global warming
8Among those who were present in the press conference were representatives from the Hearland Institute and the Advancement of Sound Science Coalition.
8They have claimed that trillions of dollars were being mis-spent on the wrong assumption that global warming was indeed happening.
8They said that an analysis of temperature data from the world's largest meteorological stations showed no warming at all. The had accused climate alarmists of manipulating the data  to show a warming pattern in the run up to the Paris climate summit.
8They have also contested the claim that global warming is going to melt the ice in the polar caps, leading to a sharp rise in global temperatures. They said that the polar ice has been melting for the past 100 years and there been no acceleration in this process in recent times as has been claimed by climate activists.
8One view is that the fear should not be about global warming but about global cooling.  In fact there is a little ice age around the corner as the long term trend is that of global cooling than warming, the group claims.
8Their argument is that activists are trying to stall economic progress in developing countries by trying to curb the use of fossil fuels that can power hundreds of millions of people out of poverty in developing countries such as India and those in Africa.
8Meanwhile, the world's biggest oil company Exxon Mobil is under investigation by the New York Attorney General for hiding the fact from investors that the multinational knew that green house emissions would cause global warming which would ultimately have a negative impact on the company. The multinational has funded groups like the Hearland Institute and the Advancement of Sound Science Coalition which openly canvass support for the fossil fuell industry..
8For those in the Indian oil and gas sector, it is important to understand what these lobbyists are saying. They do have a view point and for those in the sector, it is best to find out more..
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Representatives from Big Oil companies are present in Paris but they are maintaining a very low profile.
 8Media interviews are regularly refused and, when executives do speak at one of the countless conference events, the moderator is either part of an energy company or at the very least an industry-friendly voice.
 8The oil and gas sector does not have much to gain at these negotiations.
 8Nevertheless, the companies are pushing for countries to adopt carbon pricing systems and for nations to come up with a strong climate agreement, so that the industry knows what to expect in the years ahead.
 8Carbon pricing is likely to help natural gas gain supremacy over coal and oil companies have a vested interest in pushing for it.
 8But there are some who claim that oil and gas companies are missing an opportunity to improve perception.
 8Clearly, what is needed is for Big Oil CEOs to not just talk about wanting carbon pricing, but should roll up their sleeves and aggressively lobby for such policies. In addition, they need to explain how they see their business model evolving and can they offer a convincing vision of surviving and thriving in a low carbon world. 
 8Oil companies will have to begin repositioning the image of the industry as a solution instead of as a problem.
 8It's difficult for Big Oil to even cast itself as committed to helping the world transition to a low-carbon future, since the investments by them in renewable energy are dwarfed by the money spent on new oil and gas projects. Details
In the US, shale oil and gas production has changed the dynamics of the business entirely.
 8But India has been very slow on the uptake . Progress has been very slow and India is nowhere near kick starting the process to reach the point when production can begin..
 8Shale gas is still at a preliminary exploratory state.
 8ONGC has so far drilled only 4 R&D wells in 2010 in the Damodar Valley Coal Basin in West Bengal and that's about all that has been done so far.
 8Some amount of pick up has happened after the PSUs were granted the right to look for shale formations in 2013 but more on paper than on the ground.
 8Budget allocations have been made by ONGC and OIL for 2015-16.
 8Nomination blocks have been identified but it will take some time before exploratory work begins in earnest.
 8In this context, actual shale gas or oil production is still very away. Details
The PNGRB has extended the last date of bid issuance for the 6th round of CGD bidding for 34 Geographical Areas.
 8This is a big round and a lot of interest is likely to be shown.
 8The last date for bid issuance is January 8, 2016 and the last date of submission is January 15.
 8Technical bid opening dates have been set for batches of GAs so that the PNGRB can cope with the pressure.
 8Meanwhile, the regulator has issued a set of clarifications on the bids.
 8One clarification is that the petroleum ministry has not made up its mind is on allowing license holders to set up CNG stations in other GAs.
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The PNGRB has refused to acknowledge a request once again by Haryana City Gas Distribution Ltd to justify its claim to be a legitimate CGD entity.
 8The company had tried to argue that the regulator had the power to authorize a CGD entity under Section 16 of the Act only after July 15, 2010 and not from October 1, 2010 as demanded by PNGRB.
 8The PNGRB said that CGD regulations were notified on March 19, 2008 and it was made clear at that point that all the company would have to submit information on its Rohtak CGD network to the regulator.
 8However the company was not able to submit the necessary documentation to prove its point that it was a pre existing CGD entity.
 8The regulator has said that it will not be able to take cognizance of NOCs or authorizations given by the state governments as natural gas is a central subject and state accreditations are not recognized. Details
Cairn India Ltd is well suited to wait out low oil prices that prevail at present in its prolific Barmer field in Rajasthan..
 8The company's opex, using water flooding for its EOR programme, comes to just US$5.4/boe in H1 FY2016.
 8So the company can go on pumping oil at very low oil prices
 8This is dubbed as the best in the class opex.
 8Meanwhile the company has cut costs by 15%, and this was done by realizing better cost efficiency in drilling completion of wells in the right oil reservoir in the Barmer Hill over a period of one year.
 8Polymer injection is in full steam, going up from 80,000 to 200,000 blpd.
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Gas reserves have now been firmly established in Cairn India's Barmer field.
 8Reserves are now estimated at more than 0.8 TCF, and in fact, the indications are that they may inch towards the impressive 1 TCF mark.
 8The reserves are from the Raagashree Deep field
 8The production potential has been estimated at around 15-20,0000 boepd.
 8A deal has been signed with Gujarat State Petronet Ltd for a gas pipeline
 8And this has reduced the capex of the gas development project by $ 100 million.
 8Meanwhile, the company has decided to cut its capex by about $ 1 billion until oil prices recover but running expenses will be met and exploratory and development work will not suffer, the company has claimed.
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Anil Agarwal is an intrepid entrepreneur and this means that he has to go against the grain of conventional thinking. He believes where there is a will, there is surely a way.
 8In doing so, Agarwal can be credited for pushing through several policies which other E&P players thought the government would never agree.
 8He can be credited for the policy that allowed exploration while a block was in production whereas earlier no exploration was allowed. His company, Cairn India, has been one of the biggest beneficiaries as a result of this policy, opening up previously undiscovered reserves in the Barmer block.
 8There were several other relaxations in the rules and procedures governing the PSC that Agarwal can be credited for pushing through.
 8Agarwal's push for allowing exploration of hydrocarbons like shale and CBM in the contracted area has forced a rethinking in the government. As a result, the Uniform Licensing Policy is on the anvil.
 8But there are some areas, where he has not had success: For example, he has been pushing for a 20-year automatic extension of the production sharing contract after the first term expires. This hasn't found favour with the government yet.
 8His immediate preoccupation is to get a 10-year extension for the Barmer Block instead of five years defined by the PSC.
 8Then again, the Cairn India chairman made an attempt to get back all the relinquished areas in the Barmer block but that was ruled out by the ministry.
 8Agarwal is at it again now. His company has announced that it is engaging with the government for review of oil and gas levies given the shift in oil prices. He is also pushing for a fair value for the Rajasthan crude.
 8Agarwal seems to have the knack of getting things done and that is was matters, eventually.
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The jury is still out on whether Agarwal will be able to elicit an extension of the PSC for the Barmer block according to his terms.
 8The oil field is allowed a five year extension term, but he is pushing for a minimum of 10 years on the ground that the block can also be termed as gas bearing, in which case it is entitled to a 10-year additional term.
 8He did attempt to aim for skies so as to be able to land on the tree tops by seeking a 20-year automatic extension but the government has rejected it outright.
 8The big challenge will be to garner a set of amiable terms and conditions that the government will impose for an extension of the PSC.
 8Even if Anil Agarwal were to get an extension in the block, he will have to pay a steep price.
 8The government is keen to pick up a higher chunk of the profit petroleum in lieu of an extension, be it for five or 10 years
 8Pertinently, the maximum government take of profit petroleum which is permissible under the present PSC provisions is 50%.
 8The PSC provides for an extension on mutually agreed terms.
 8So the government is saying it will okay the extension only if its take goes up significantly. 
 8The rationale behind this is that since this is a discovered field, there is no exploration risk associated with the block and with the current production rate, there is significant revenue that would accrue in the years ahead and therefore a proper profit sharing mechanism should be in place that is also beneficial to the government.
 8If the government's take goes up, Cairn India`s will go down.
 Comment: The government will have to look carefully before providing a 10-year extension. Is it a gas block or is it an oil block, that's where the interpretation is going to be important. Now that the potential for commercial sale of gas has been established, can it be termed as a gas block and an extension given for 10 years even when the block continues to be primarily an oil producing property? The government claims that the profile for the block -- encompassing the Mangala & Aishwarya and Bhagyam fields -- has shown that production of oil and gas will go on beyond five years after the expiry of the PSC  but what is the yardstick that is to be used for the extension?.  Should it be gas or oil, as there is a difference of five years in how the interpretation is made. There is also the question of how ONGC's interest will be accommodated. The public sector E&P major is already saddled with additional salutatory payment obligations in comparison with its private sector partner. ONGC is unlikely to agree to a lower profit take, so in the new terms and conditions, ONGC's interest will have to be taken into account as well.
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Petroleum minister Dharmendra Pradhan has agreed to pick up the subject of excise duty rationalization for the CGD industry with finance minister Arun Jaitley.
 8The minister is expected to use his personal rapport with Jaitley to resolve the impasse.
 8Meanwhile, Pradhan is keen to bring down emission levels in Delhi by planning more CNG stations in the city.
 8During the discussions, Indraprashta Gas Ltd had apprised the minister that it had adequate capacity to immediately cover100% of all needs
 8The Minister asked IGL to explore all options to increase CNG usage, including doling out incentives to car owner for refueling during non­peak hours and incentivizing CNG kit conversion.
 8Subsequently officials are advised to see how allotment of additional land can be done to IGL for construction of new CNG stations.
 Click on details for more. Details
The Mozambique LNG projects are among the largest in the world and they obviously have large economies of scale that can drive prices down. But even so, the project economics are such that they will not come up anytime soon, according to the global LNG report.
 8Rovuma Area 1 Offshore block is one of the two adjacent blocks that are being jointly developed to produce a massive 22 MMTPA of LNG in Mozambique.
 8The other block -- dubbed block A -- is operated by ENI.
 8Both the blocks run into each other, so there is a Heads of Agreement between the two sides for unitization.
 8The recoverable reserves have been pegged at anywhere between 50 to 70 TCF by Anadarko.
 8Between ENI and Anadarko, they plan to put up four trains of 5 MMTPA each, but Anadarko subsequentlyn decided to go for two trains of 6 MMTPA each.
 8According to an estimate made by PriceWaterhouseCoopers, the capex needed to build a two-train LNG project in Mozambique was a massive US$2.14 million per bcf of net gas volume. That’s a total investment of US$26.1 billion whereas Anadarko had last year pegged the cost lower at around $20 billion.
 8There is no doubt that costs have fallen since the PWC estimate but not by enough to get the project off the ground just yet.
 8ENI too, with much stronger financials than Anandarko, has not yet taken a decision to go ahead with its own project in Block A, based on an offshore LNG terminal model. 
 8There were indications that the Anadarko led consortium might have to delay the project till 2017, as ENI, who is also a part investor in the Block A onshore LNG terminal, said recently that an investment decision on it will have to wait two more years.
 8But given the glut and low ruling prices, the wait will now be longer not just for Anadarko but also ENI.
 8The project is viable at a gas price of $10/mmbtu.
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