Cairn India Ltd, the operator of the offshore Ravva field intends to set up an automatic actuated rim seal fire detection and extinguishing system for its floating roof crude storage tanks in the terminal.
8The following services are envisaged to be completed by the contractor:
-- Design
-- Engineering
-- Supply
-- Installation and Commissioning
8In view of the nature of the scope, only those contractors possessing the requisite and proven record of performance in completing and fully commissioned at least one LSTK/EPC contract.
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Oil India Limited (OIL), the operator of the KG-ONN-2004/ 1 block, is planning to go ahead with additional exploratory drilling in the fields of Andhra Pradesh and Punducherry, with an estimated cost is Rs.775 crore.
8OIL has identified 23 locations out of which 15 wells will be appraisal and rest exploratory.
8As per the minimum work program for the already aprroved clearance, OIL was committed to drill 8 wells in a time bound manner.
8But till now only two exploratory wells were drilled, out of which Dangeru-1, struck gas on very first attempt whereas Balusuttipa-1, was abandoned as no prospective sands were not found.
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After a marginal de growth during the previous month, the consumption of diesel (HSD) is up by 6.3% during August 2015 as against low growth in previous month.
8In August 2015, the total all India sales volume of HSD was around 5444.4 MT .
8The other factor that seems have affected sales is the shift of consumer preference from diesel to petrol driven passenger vehicles.
Speculation and subsequent price reduction in diesel that happened on 1st September, 2015 prompted dealers to drop inventories at retail outlets, resulting in shifting of HSD sales to September, 2015 and therefore lower sales in August, 2015.
8Commercial vehicles sales registered a growth of 8% during August 2015. The medium and heavy commercial vehicles sales continued to record an impressive 35.3 % positive growth in August month.
Growth of 4.4% was also noticed in port traffic during August, 2015 which was due to the improvement in cargo handling at ports.
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After the GAIL pipeline blast that took the lives of 23 people, no one wants to be taking a chance with pipeline security.
There has been a sharp hike in the need for pipeline security and safety realted services.
Oil india Limited's (OIL) pipelines are also no exception to this trend.
The company is now planning to conduct intensive policing of its gas pipeline network located in Dibrugarh and Tinsukia districts of Assam.
8The entire ROWs have been divided in three sectors as detailed below:
-- Sector A = 87.5 KM
-- Sector B = 92 KM
-- Sector C = 77.5 KM
8The grand total for three sectors is 257 KM.
8The idea is to get line walkers in each sector cover a minimum length of 6 to 7 KM per day.
8Whoever gets the contract will get for two years, extendable by another one year at the discretion of the company.
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BHP Billiton believes that it will not be possible to contain the increase in temperature to just 2 degree centigrade.
8The company's modeling has shown that the increase will be in the region of 3 degrees.
8The multinational is now looking at a 20-year plan based on the central based on such a temperature increase and after taking into account shock events to test the resilience of its portfolio of assets across a range of possible futures.
8The evaluation of the assets are determined by what will the cost attributed by governments to carbon emissions. One estimate is that the average price will reach US$50/tCO2-e by 2030. This reflects key global economies such as China, the United States and the European Union going beyond their current climate commitments and significantly increasing demand for long-term emissions reductions. The higher ambitions are matched by stronger policy support to help deliver emissions reduction potential.
8In the unlikely and extreme shock event, the carbon price rises up to US$80/tCO2-e by 2030, driven by very ambitiousgovernment targets.
8Carbon markets are currently limited but if there is a global accord, such markets are likely to expand.
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The study has come out with some startling findings.
8In all states, households that rely exclusively on biomass, and pay for some or all of it, end up spending more money on cooking energy than those who exclusively use LPG.
8Analysis of responses in UP indicate that though the distribution infrastructure for LPG is poor, they show higher subscription rate for LPG.
8This could partially be explained by the fact that a significant proportion of population rely on market procured firewood (as opposed to collecting it for free), and hence subsidised LPG (at the prevailing prices) becomes an economically economically competitive option.
8There is also a significant amount of mixed use.The mixed use of traditional fuels and LPG is a result of availability of free-of-cost biomass and its use alongside LPG, since it does allow for some cost savings.
8However, the adverse health associated with emissions from the use of traditional fuels are not accounted for by the decision makers of these households.
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IOCL has proposed to reduce the capacity of its oil tankage facility located at the Jawaharlal Nehru Port Trust, Navi Mumbai.
8The reduction in kerosene requirement, as LPG replaces SKO rapidly through rural India, has led IOCL to reduce its tankage to 5000KL from 10000 KL.
8The delay in completion of the new international airport project in Navi Mumbai has also pressurized IOC to reduce ATF tankage to 25000KL.
8Also, as per the government guidelines, its is mandated that ethanol should be mixed with motor spirit (MS). Hence 210 KL of tankage will also be build for storing ethanol.
8List of existing and proposed capacities is as follows:
-- Motor Spirit( Capacity changed (from 10000KL to 8070KL)
-- Superior Kerosene Oil (from 10000KL to 5000KL)
-- High Speed Diesel (New tankage with proposed capacity of 10020KL)
-- Aviation Turbine Fuel (from 30000KL to 25000KL)
-- Ethanol (new installation of 210KL)
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Building LPG handling infrastructure is always going to be lucrative proposition in India.
8Given its vast population, the demand for LPG will continue to grow for a long time to come.
88The PPAC has estimated that demand will grow at a CAGR of 2.6% between 2016-17 and 2021-22.
8The domestic demand-supply gap is likely to widen over the years, from 6635 TMT in 2016-17 to 7503 TMT in 2020-21.
8In this context, import of LPG will continue well into the future.
8Keeping this in mind, and now that it has a first rate jetty in place at Paradip, IOC Is planning to make Paradip a marketing and import hub for LPG to cater to all of East India.
8The LPG produced from its Paradip refinery along with imports will be the LPG stock that will then be shipped out via the Paradip-Haldia-Durgapur-Barauni-Patna-Muzaffarpur pipeline to LPG bottling plants in West Bengal and Bihar.
8Lorries will also be used to ferry the LPG.
8The need for another hub was felt after the company's Haldia LPG facility could not take the load on account of severe draft as well as jetty availability problems.
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Transocean -- the supplier of deepwater rigs in India to companies such as ONGC and RIL -- is currently embroiled in a corruption scandal in Brazil.
8The top brass of Brazilian national oil company, Petrobras, has admitted that payments have been paid by Transocean to one of them for a drilling contract.
8The admission was made before Brazalian authorities which are investigating the corruption charge.
8Petrobras claims that the payments were made despite the fact that no favour was shown to Transocean as it was already qualified for the contract.
8Transocean claims that it has been following transparent procedures in all its contracts and it is willing to cooperate with authorities in their investigation.
8Multinational has not identified any wrongdoing by any employee or any of its agents in connection with the company's business.
8Comment: It is necessary to take large corporates such as Transocean to task if they have violated corruption laws in Brazil. Authorities in India too must carefully scan all the transactions entered into by oil and gas companies with Transocean to see that they were done with transparency and fairness. The multinational has supplied rigs with rates running into thousands of crores of rupees in India.
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Now that the government is determined, it looks like at least five to six urea units may come up within the next four to five years.
8This totals up to an investment of anywhere between Rs 30,000 to Rs 36,000 crore.
8All of the units are going to be state pushed but a few of them will depend on private capital to be set up.
8Two units are already state sponsored, the unit in Ramagundam and the other in Talcher in which public sector enterprises are actively involved.
8The ones in Gorakhpur, Sindri, Barauni and Namrup are meant to be set up with private capital.
8But the moot point remains will private capital be interested to come in when the return on investment will be determined entirely through government fiat.
8There are uncertainties on two fronts that may keep private capital out. One is the uncertain price of RLNG on which the these units are likely to be eventually based though the government claims that ONGC's new discoveries will feed these units. Given the low international and domestic price of gas, it remains a moot point how much of ONGC's new deepwater gas will ever reach the point of production.
8The biggest uncertainty however will be on the urea subsidy regime. It is unlikely that the price of urea will ever be equal to the cost of production in the foreseeable future. In that case, the return on investment will depend entirely on the subsidy regime that will be in vogue when the units are in production.
8The government has been notorious in the past in delaying the dispensation of subsidy and denting legitimate cost claims of the the industry.
8Will a private entrepreneur risk his capital in such high value investments when the future is not known?
8Any time will provide an appropriate answer.
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Royal Dutch Shell, which set up a 5 million tone LNG terminal at Hazira in Gujarat nearly a decade back, is all set to grab a bigger share of the growing demand for imported gas in India.
8Andhra Pradesh Gas Distribution Corporation (APGDC), GDF Suez, Shell and GAIL have signed a memorandum of understanding (MoU) to set up a floating LNG terminal with an initial capacity of 5 mt, which could be doubled at a later stage.
8The prposed project is planed to set up Kakinada at Andhra Pradesh.
5 MT LNG terminals is expected to cost around $1 billion.
8A floating LNG terminal will reduce the cost of the project as there is no need for long pipelines to onshore terminal, compression platforms to push gas to the shore, near shore works such as dredging and jetty construction, and onshore development such as building roads, lay-down areas and accommodation facilities.
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There has been a dramatic fall in E&P expenditure since crude prices have fallen.
8So far, the data shows that over $200 billion in global new project spending has been delayed, postponed or cancelled.
8Canada’s oil sands is taking largest hit with a 40% decline in capital spending in its oil & gas industry in 2015
8Shale producers reported losses of about $15 billion in Q2 2015 compared to profits of nearly $5 billion in Q2 2014
8US energy companies default on loan rate has accelerate to 4.8%--highest level since 1999 and up from 3.3% in August
8EIA has been consistently bringing down US crude production forecast every month.
8Clearly, low prices are hurting non-OPEC production and investment that may eventually lead to the rebalancing of the market in 2016 and that is the reason why OPEC producers like Saudi Arabia are pumping in production into the market even if low prices are hurting their economies.
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BHP Billiton is one of the largest mining companies in the world and it has published an "Economic contribution and payments to governments Report 2015" that transparently lays down all the payments it has made to governments around the world.
8Mining has been one of the least transparent businesses in the world and the multinational's publication is the step in the right direction.
8In 2015, the multinational paid $ 7.3 billion globally in taxes, royalties and other payments to governments.
8The data is drilled down the project wise payments so that local communities have a clear understanding about the revenue gained by their governments from the extraction of natural resources and how this is allocated in their country’s economic and social development.
8When companies provide transparent information about revenue, the potential for corruption is reduced. Countries that transparently and effectively allocate natural resource wealth for the benefit of their communities have the potential to attract greater, more responsible and longer-term business investment.
8It is imperative that businesses, governments and civil society work in partnership to support transparency.
8Corruption directly impedes development, denying millions of people around the world their rights to the education and training necessary to earn a livelihood, to basic health services and to the essential infrastructure to improve their lives.
8Large Indian companies can take some cues on how the data is laid down and the the disclosures that BHP Billiton has made.
8Regulators can also lean from the process.
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Kalsi has clearly hit the proverbial gold at the end of the rainbow with his E&P bet.
8Kalsi deserves full credit for his entrepreneurship, for it is indeed a gigantic leap of faith to go from being a shoe manufacturer from Kanpur to a successful E&P operator that the world is now waking up and taking notice.
8Both Vikram Mehta and Sashi Mukundan -- both Indians -- are better known in the E&P circuit in India and around the world than the low profile Kalsi.
8But Mehta and Mukundan are the biggest destroyers of corporate wealth in the country. While Mehta, as the Indian manger of Shell, gave away the lucrative RJ-ON-90/1 to Cairn India for a song, Mukundan has run the $7.4 billion investment of BP to the ground.
8In this context, Kalsi, bereft of pedigree of the kind possessed by Mehta or Mukundan, has, by sheer dint of courage and enterprise, built an E&P asset that can easily fetch him a very large sum of money.
8Kalsi is now busy building the infrastructure to produce gas and sell it.
8A Rs 4000 crore investment is planned and more is likely to follow.
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An economic analysis of the Mangala EOR project has been carried out and the project is found to be viable with an IRR of 39.21%.
8In fact, an economic analysis of all the four major fields together -- Mangala, Aishwariya, Raageshwari and Saraswati (better known as MARS) -- in the Rajasthan block was carried out. The pipeline cost was apportioned accordingly on the basis of the ratio of the revised total production profiles.
8Based on the various assumptions and cash flow projections made, the NPV in both cases -- MARS standalone and with the proposed EOR -- turned out to be positive.
8Considering the present framework of fiscal terms and conditions with royalty becoming cost recoverable, the project has been found to be robust and financially viable even for ONGC.
8ONGC has independently done a viability exercise. The results of the economics for ONGC`s share of 30% (Cairn holds the rest of the equity) upto PSC expiry period of May 2020 shows that with the implementation of the EOR schemes, considering a 14% discount rate, the NPV for the revised FDP for the Mangala field, by including the EOR project, works out to a staggering $1,558.28 million, providing an IRR of 39.21%. The total FDP cost for the Mangla project, including the EOR plan, is $2,969.88 million
8The project has been evaluated by Deloitte, which has concluded that the polymer flood EOR FDP is viable and therefore recommended for investment.
8Comment: Given that the money is good, Cairn, along with ONGC, must ensure that the environmental damage is limited and workers are well protected. For otherwise the cost is going really very high.
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Gross domestic product for the current fiscal year, which ends March 2016, is expected to be at 7.4 percent, down from the bank's estimate in March of 7.8 percent.
8For fiscal year 2016, growth is forecast at 7.8 percent, down from the earlier GDP growth forecast of 8.2 percent.
8Slow global economic growth and a general lack of investor confidence are dragging on India's growth.
8“On the upside, inflation is trending down, crude oil import prices have fallen sharply, and tax revenue and net foreign direct investment inflows are up, which augurs well for a bounce back in the economy," the report said
8India is likely to be benefited from the low crude oil prices, but an up tick in prices for commodities, including crude oil, are expected to boost inflation in FY2016.
8The slump in exports in the first quarter is likely to continue with listless global demand and a drop in exports of refined oil products.
8According to report, some recovery in oil prices and improved demand for industry and investment will likely push import growth to 8.0% in FY2016 for India.
8Moreover, exports are also likely to recover, growing by 3.5% as higher petroleum prices boost the value of exports of refined petroleum products and as external demand improves.
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VLCC hire rates are likely to go up on account of higher demand triggered off by lower crude prices.
8It is expected that oil demand growth will accelerate in coming years, and the forecast is of an increase of 1.6 to 1.8 MMB/d for the 2015 and 2016, which will benefit the oil tanker business.
8Moreover high Mid East OPEC crude production has always supported the VLCC earnings. During the first quarter, where oil production from Mid East increased from 22.25 million bpd to 23 million bpd, VLCCs also showed an increase in their spot prices which from $ 50000 per day to $ 65000 per day.
8Output from Non OPEC countries also bring in a positive push, as production is expected to grow at a steady rate, touching 60 million bpd mark by 2019.
8The shipping business is now expected to sail comfortably as a consequence of higher output.
8There are however certian trade shifts which occurred on a global level but that is unlikely to affect the shipping industry. Among the shifts are:
-- USA no longer imports light crude but its heavy crude imports from Middle East remain intact.
-- Asian demand is said to remain strong which is underpinned by China’s efforts at expanding refinery capacity and filling up strategic reserves.
-- WAF (West Africa) light crude trade lane to USA has dried up and it has shifted its attention to Asian markets.
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Petronet LNG Ltd (PLL) has made it clear that the low offtake of long term LNG contracted with Qatar will continue in 2016-17 as spot prices will remain lower than long term contracts.
8The company has claimed that the LNG prices in the spot markets declined sharply due to the declining crude prices.
8However, the prices under the long-term contract, which have benefited the Indian consumers for the past decade, will take a longer time to align with the current market prices due to the contract price being linked to the 60-month JCC average
8This has led to a decline in the RLNG off-take by the Petronet off-takers – GAIL, IOCL and BPCL – citing low acceptability of the RLNG prices among their consumers.
8This low off-take situation is expected to continue in the next year.
8Company is currently "urgently working" on plans to alleviate the situation but did not specify what kind of action will be taken. "Your Company is working to mitigate impact
of high priced LNG due to sharp decline of crude oil prices along-with off-takers GAIL, IOCL and BPCL," is all that PLL is willing admit for the time being.
8Clearly the floor price of Qatar LNG, aligned to the price of crude, has to be revised downwards for the price of long term contacts to come down and no indications are available from the company on whether the terms are being renegotiated.
8As per the terms of the agreement, PLL will have to account for take or pay arrangements as per the contract with Qatar but how exactly this is going to pan out is till not know. Clearly, PLL has to account for the outstanding payments under the take or pay head as contingent liability pending resolution of the tussle.
8During 2014-15, the Dahej Terminal handled 154 LNG cargoes and supplied 520.78 TBTUs of re-gasified LNG in India. As many as 2666 LNG road tankers were loaded and dispatched during the year
8Comment: It will be grossly unfair for PLL to soft-pedal its responsibility to revise the Take or Pay arrangement with RasGas for supply of LNG. The cost of gas is very low for Qatar and the bulk of the JCC-linked price elicited for the gas is sheer rent. In this context, it will not be fair to pick up Take or Pay penalties from customers and pay RasGas for the gas that has not been supplied. Many options are possible including deferred delivery. But whatever be the options, the floor price for crude linked to PLL's LNG price has to come down. Or else, given that there is ample supply of LNG in the market, RasGas should be told in no uncertain terms that the agreement stands void. Oman did the same thing with the OMIFCO JV, when they just dictated a higher price of gas despite the fact that a long term agreement was place for supply of gas at a confessional rate. Standing on niceties will not help.
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LNG Bharat Private Limited (LNGBL) has proposed to set up a 5 MMTPA Floating Storage Unit (FSU) LNG facility with onshore storage tanks, cryogenic road tanker loading and regasification facilities at the existing Krishnapatnam Port in Andhra Pradesh.
8The proposal was submitted initially with 40 acres as land requirement; however, after detailed engineering and considering safety regulations, it was found that 40 acres of land was not sufficient for the proposed LNG handling terminal.
8Hence, an additional 80 acres of land adjacent to the existing 40 acre land within the Krishnapatnam port area has also been acquired.
8Accordingly, an addendum to the original MoU with the Krishnapatnam port indicating allotment of additional 80 acres has been signed.
8Moreover, the Comprehensive Environmental Impact Assessment (CEIA) studies (including Marine modelling, Risk assessment and CRZ studies) has also been conducted for the entire 120 acres of land.
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HMEL wants certain amendments in the already approved expansion project in its Bhatinda refinery, from 9 MMTPA to 11.25 MTPA..
8It was advocated that the membership of common treatment storage disposal facility (TSDF) should be obtained for the disposal of hazardous waste and the copy of authorization or membership of TSDF should be submitted to Ministry's Regional Office.
8The chemical sludge should be sent to the treatment storage disposal facility for hazardous waste.
8But HMEL, instead of directing the waste to the TSDF, wants to dump the waste at its operational "Secured Landfill" (SLF) inside the site.
8The company claims that the SLF has been designed to CPCB standards and has the capacity to store 20000m3 of hazardous waste.
8To validate its argument, the company puts forward the authorization letter from PPCB for the operation of the SLF facility till 31.3.2019.
8Therefore, HMEL does not feel the need for taking membership of the common TSDF again.
8Comment: The refinery must be subjected to more stringent environment management. Adequate precautions must be taken for an accident or a miscalculation can have serious consequences.
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The Competition Commission's observations can have wide ranging implications for buyers of RLNG that had been contracted through Petronet LNG under a crude oil linked long term agreement with RasGas of Qatar.
8PLL in turn has similar Take or Pay obligation with RasGas and these accounts have to be settled by the end of the year.
8With customers unwilling to take the expensive gas because the floor price for crude at which the RLNG was contracted by PLL is far too high and this makes the gas more expensive than spot LNG at the moment.
8If PLL has to pay penalties for not offtaking RLNG cargoes from RasGas, PLL in turn may have to ask offtakers like GAIL to pay up. The gas major will have to raise the money from customers of gas who have rejected RLNG supplies despite long term GSAs.
8"The prices of RLNG imported in the country by PLL are governed by the fuel oil linkages as part of the contracts signed between individual companies like RasGas and PLL. The end user price of RLNG is not subsidized by the Government of India and is a complex mix of various components such as purchase price, exchange rate, regasification charges, transmission charges, taxes, contractual risks, competing fuel pricing etc. Accordingly, the relevant product market in the instant case does not need categorization on the basis of pricing mechanism," the Commission observed, thereby ruling out any anti-competitive pricing behaviour.
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Forecast global LPG demand growth of 800 MBbl/d to 1 MMBbl/d by 2020 to be driven by petrochem projects in Asia and Middle East as well as residential, ommercial, alkylate and power generation demand
8Naphtha cracker conversion to LPG another potential demand driver that has not yet been factored into analyst estimates, adding about 1 MMBbl/d.
8Projects for extraction of C3 from LPG are coming up in large numbers in the China, Korea and US
8The market is growing at a CAGR of a rapid 9%
8Bulk of the additional supply is to come from the US.
8The demand is going to grow mainly in China, India and Saudi Arabia.
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Crude oil production during August 2015 was 3193.067 TMT, representing a huge 1.44 % increase from the planned monthly target of 3148 TMT. The production during the month was 5.57% higher than the figure of 3024 TMT in August last year.
8The cumulative production during April-August 2015 was 15638.31 TMT, which was higher than the target by 1.72%. The targeted production for the cumulative period was 15368 TMT. Comparative production during the period reveals a 0.52 % increases over the 15557 TMT produced in the corresponding period of the last fiscal (2014-15).
8ONGC`s total crude oil production was lower by 0.26% than its monthly target aggregating to TMT, 1929.293 as against the planned 1934 TMT due to the closure of a few high GOR wells and less than planned production from Mumbai High. . The cumulative production for the April-August period was also less than its target with the company producing 9384.609 TMT of crude as against the targeted 9430 TMT.
8Oil India Limited (OIL) produced 276 TMT of crude during the month, which is behind its planned production (302 TMT) by 8.7%. During April-August, the company produced 1388 TMT, which was behind its target of 1470 TMT. Production was affected by the net realization from old wells is 97 % of planned target. The gap is mainly due to bandhs, blockades and flood because of continuous rainfall.
8Private/JV companies' production was higher by 8.42% in August 2015, at 987.12TMT as against the targeted 911 TMT. Production over the April-August period stood at 4866 TMT as against the target of 4468 TMT. Output had been higher still but for the underperformance of the MA wells in the D-6 block and a few on land wells due to sand ingress in existing producers of Kharsang field in Arunachal Pradesh.
The Americans know how to innovate but even that will have its limits.
8According data available with this website, well cost has come down between 16 to 18% over the past one year in two of the largest shell oil plays -- the Mercellus and Utica -- in the US.
8The cost of well for every 1000 feet of lateral drilling was $1.357 million in 2014 and this has come down to $1.144 million in 2015. Similarly, for Utica, the cost is down to $1.289 million from $ 1.571 million.
8But while some shale plays still show a very high return on investment even at current low prices, there is data to show that a large number of shale plays are at below breakeven point at current gas and crude prices.
8Even the most profitable shale plays in the US are now cutting down on investments and reducing the number of wells to be drilled.
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GE Oil & Gas introduced its most efficient aero derivative gas turbine , the LM6000-PF+, to the oil and gas industry.
8The newly upgraded turbine has enhanced efficiency, excellent reliability and fuel flexibility in both power generation and mechanical-drive applications, whether installed onshore or offshore.
8LM6000 PF+’s compact size and weight make it ideal for FLNG and FPSO, offering faster installation and commissioning.
8The LM6000-PF+ aero derivative gas turbine is the product of GE’s cross-sector technology.
8The modularized design and advanced composite materials were keys to reduce overall package weight and size, while enhancing operability and maintenance performance - vital for offshore installations. It will cut installation time by 30%.
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BPCL is doing a wholesale audit of its LPG bottling plants, starting with its plant at Barelly, to bring down power consumption.
The scope of jobs will include the following:
8To conduct comparative study of design parameters and the present load requirement of the following electrical equipments.
--Transformer
--Circuit Breakers
--Bus bars
--Electrical equipments in hazardous and non hazardous area.
8Calculation of load factors and method to reduce the maximum demand.
8Energy saving methods for minimization of power consumption.
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The target depth of these wells will be between 3000-4500 meter/ basement.
8The drilling rig used in the block will be electrically operated.
8Only the water based drilling mud will be used for drilling appraisal wells.
8For the proposed project 4 to 5 acres of land will be acquired for each well.
8Drilling will continue for about 60-75 days for each well in the block.
8The power requirement of the drilling rig will be met by using the six DG sets.
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India’s state-operated oil and gas company Gujarat State Petroleum (GSPC) is in the process of selecting the winner for its tender for two spot cargoes.
8GSPC was seeking one cargo for October and one for November through the tender, which closed on 16 September.
8The validity period for the bids is until 21 September.
8Both cargoes are expected to be delivered to the 10mtpa Dahej LNG terminal, which is operated by Petronet, although GSPC also has a slot at the 5mtpa Hazira LNG terminal.
8Its pricing expectations were initially in the low-$7.00s/MMBtu, but have declined since the fall of spot prices over the course of last week.
8As a result, GSPC could secure a cargo at the $6.90-6.95/MMBtu range, according to one portfolio seller active in India.
8GSPC has indicated in its tender that it requires both cargoes to be offered on a fixed-price basis and that potential sellers have a master sales agreement (MSA) in place with the company.
8Sellers are, however, required to demonstrate an equity worth of at least $25m for the MSA. No history of previous cargo discharge is required.
8GSPC has direct supply contracts for gas with the downstream buyers as part of its gas transmission and distribution business.
8As such, the falling price of crude oil and associated opportunities in the competitive fuel market are seen as largely irrelevant in this case, as the company is working on a back-to-back basis with downstream gas buyers that do not have fuel-switching capacity.
8Besides GSPC, the list of India’s LNG buyers active in the short-term market now includes gas-network operator GAIL and Indian Oil Corp (IOC), traders said.
8Two buyers are, however, entirely out of the prompt market due to the low cost of competitive fuels, namely fuel oil.
8Indian oil company Bharat Petroleum Corp and Mumbai-based conglomerate Reliance Industries primarily purchase LNG as a feedstock for their refinery operations, rather than the downstream gas network.
8Both companies are out of the market because the alternative sources of feedstock are cheaper.
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Essar Oil, which owns and operates India’s second largest single location refinery of 20 MMTPA (405,000 BBL/day) will undertake a planned shutdown of its Vadinar Refinery for 30 days from September 18th to October 17th 2015.
8There will be no production during this period.
8During this period, Essar Oil will undertake major maintenance and inspection jobs of all its refinery units and also complete the conversion of the Vacuum Gas Oil Hydroteater (VGOHT) unit to Mild Hydrocracker unit (D-Max Project).
8DAll the units will be thoroughly inspected and wherever required, repairs will be carried out.
8Moreover, this opportunity will also be used for undertaking debottlenecking activities and improvement in facilities.
8The last such major planned shutdown was taken in Sept/Oct 2011, when it connected the base refinery with expanded units, which were then bought on-stream in phases in 2012.
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Russia seems to be turning to India for a market for its oil now that its deals with the Chinese are not working out.
8China and Russia finalized a gas deal in May 2014 which involved construction of two pipelines that would transport Russia’s gas to China. The first pipeline, originating in East Siberia was called the ‘Power of Siberia’ pipeline while the one originating in West Siberia was called the ‘Power of Siberia 2’ or ‘Altai’ pipeline. The equity firms in China suspended the ‘Power of Siberia 2’ project in July, leaving the Russians in jeopardy.
8The ongoing Chinese economic slowdown and stock market crash would mean that Russia needs to be extremely wary China’s investment plans. Statistics from InvestorIntel even revealed that Russia’s exports to China dipped by 20 percent when compared to last year.
8With the China story fizzling out, Russia is now planning to build up its presence in China’s neighbor India. With huge internal energy consumption and a bustling economy, India is set to grow faster than China in 2015 and 2016 according to the recent projections from the IMF. After China, India is the next best logical alternative for Russia to strengthen its Asian ties and move away from western sanctions.
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Production from a conventional field follows a well-defined pattern, ramping up quickly, then stabilising near the peak for a few years, before entering a long slow decline.
8Output rises initially as the field is developed from a single well to a full array of producing holes deployed to drain the reservoir efficiently.
8But as the oil, gas and water contained in the producing formations is depleted, pressure falls and the reservoir's natural energy declines.
8Eventually, production starts to fall as the wells flow more slowly and produce a higher proportion of water rather than oil.
8Field operators employ a variety of strategies to prolong production as long as possible and delay the onset of natural decline or at least reduce the decline rate.
8Associated gas brought to the surface with the oil can be re-injected to help maintain field pressure or gas can be pumped in from other sources.
8Fields can be placed on artificial lift with the installation of surface beam pumps (the famous nodding donkeys) or more commonly these days the installation of downhole electric submersible pumps (ESPs).
8And water, natural gas, carbon dioxide or special polymers can be injected into the fringes of the field to drive the remaining oil towards the producing wells
8Field management plans can increase the ultimate amount of oil recovered significantly, but eventually the fate of all wells and fields is the same: they produce mostly water and are eventually shut down.
8The operating costs of running the pumps and injecting water, gas or other materials eventually become greater than the value of the oil and the field becomes marginal and is abandoned.
8And this is going to happen sooner now than earlier because oil prices have come down.
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The Saudi Arabian Oil Company (Saudi Aramco) is the state-owned oil company of the Kingdom of Saudi Arabia (KSA). It manages the world's largest proven conventional crude oil and condensate reserves of approximately 265.8 billion barrels as at 2013, representing approximately 18 per cent of the world's proven crude oil reserves.
8In 2014, Saudi Aramco produced 9.7 mbpd of crude oil through its main oil facilities in Abqaiq, Haradh, Khurais, Khursaniyah, Nuayyim, Qatif and Shaybah. Of this, Saudi Aramco exported on average 7.1 mbpd or approximately 73 per cent of its production. Asia was the main importer of Saudi crude oil (67%) followed by North America (18%) and Europe (13%).
8The Saudi Arabian oil transportation market is closely linked to Saudi Aramco's oil production and exports. Between 70% to 90% of Saudi Aramco's export volumes are sold on FOB basis. For the remaining export volumes sold on Cost, Insurance and Freight basis, Bahri has been the primary provider of shipping services to Saudi Aramco.
8The Arabian gulf to East trade continues to serve as the principal trade route in the VLCC sector. Fast paced economic expansion in non-OECD Asia is driving demand.
8The Arabian Gulf to US trade decreased by 7% from 2013 levels, however it remains the second largest trade in the VLCC sector. Exports to the US have steadily decreased since 2003, sliding from 2.3 mbpd in 2003 to 0.8m mbpd in October, 2014, impacted by rising North American production.
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