Monday, 28 December 2015

Oil and gas industry starved of business but the outlook is bright

The construction arm of L&T won business worth Rs 1178 crore in December, 2015.
8But an analysis will show that while it bagged orders in the Metallurgical and Material Handling, Power Transmission & Distribution segments, it drew a blank in the oil & gas space last month.
8Overall, orders from the oil and gas business in India has slowed down considerably but the reasons why there is a slowdown in India seems to be different from stagnation noticed in this sector in the world as a whole.
8The main bottleneck on the E&P side seems to be the stalemate over pricing of domestic gas. This has held up big ticket investments by ONGC and RIL, among others.
8Between them the investment planned is close to Rs 80,000 crore over a three year period, going up to Rs 100,000 crore if the wind blows in the right direction.
8On the downstream side, new fuel quality norms will witness an investment of around Rs 80,000 crore by Indian refineries over the next few years, giving this segment a fresh impetus.
8The midstream sector too will need investments as the pipeline laying business is expected to build momentum once capital approvals come through for new LNG terminals and City Gas Distribution projects.
8There is no doubt that low oil prices have a bearish impact on investments but except for Cairn India which is holding back investments waiting for prices to firm up, the public sector duo of OIL and ONGC or not holding back any plans for the time being.
8The main investment in the E&P sector is in gas assets and here, it is the tangle over government policies that seems to be the main constraining factor as of now.

For more details visit indianpetroplus.com

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