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Viability gap funding model for gas pipelines in offing

The petroleum ministry has proposed viability gap funding (VGF), similar to such support given to roads and airport projects, for cross-country gas pipelines. This is in sync with finance minister Arun Jaitley’s announcement in the Budget to lay 15,000 km of gas pipelines through PPPs. “The bidder quoting the least transporting tariff and seeking minimum viability gas funding would win the project. The ministry is working out the modalities in discussion with Petroleum and Natural Gas Regulatory Board,” a government official working on the proposal told FE. The ministry is first putting together a bidding mechanism before deciding which pipe-lines are to be auctioned based on demand and availability of natural gas, the official added. There has been lukewarm response to laying of gas pipelines in India, as there is no certainty on availability and the domestic market is not conducive to absorbing expensive imported gas. There is a need for setting up a gas grid because, unless infrastructure is laid, the economies for a gas market would not evolve, say industry experts. “The success of a gas pipeline depends on modelling it with availability, demand and pricing of the gas. Viability gap funding would hedge the risk associated with these things. So it is a welcome move,” Kalpana Jain, senior director at Deloitte Touche Tohmatsu India. Jaitley had said in his Budget speech that India has about 15,000 km of gas pipeline systems. “In order to complete the gas grid across the country, an additional 15,000 km of pipelines are required. It is proposed to develop these pipelines using appropriate PPP models. This will help increase usage of gas, domestic as well as imported which, in the […]

Nagarjuna Oil Refinery Fixes Book Closure for 4th AGM

The Register of Members & Share Transfer Books of Nagarjuna Oil Refinery Ltd will remain closed from September 12, 2014 to September 26, 2014 (both days inclusive) for the purpose of 4th Annual General Meeting (AGM) of the Company September 26, 2014. Shares of NAGARJUNA OIL REFINERY LTD. was last trading in BSE at Rs.4.2 as compared to the previous close of Rs. 4.22. The total number of shares traded during the day was 29367 in over 114 trades. The stock hit an intraday high of Rs. 4.3 and intraday low of 4.16. The net turnover during the day was Rs. 123992. Courtesy :  Equity Bulls

Oil ministry plans to relaunch Nelp X to bring simpler sharing of revenues

NEW DELHI: The oil ministry plans to introduce simpler revenue-sharing in the next auction of oil and gas blocks, so it does not need to micromanage oilfield affairs and companies have no incentive to inflate costs, official sources said. The ministry will shortly seek Cabinet approval after inviting public comments. It plans to launch the 10th round of the New Exploration Licensing Policy ( Nelp-X) by December, officials said. The revenue-sharing system was suggested by a panel headed by C Rangarajan, who proposed ending the controversial system in which oil companies recover costs before sharing profit. The ministry has several disputes with exploration firms on issues linked to cost of development, which has an impact on the government’s share. CAG has criticised the government’s handling of contracts. “Since cost recovery is at the root of the problems experienced, it is proposed to dispense with it, in favour of sharing of the overall revenues of the contractor, without setting off any costs,” Rangarajan panel noted. However, the Vijay Kelkar panel said the proposed model would discourage companies, though some officials, including the former director general of hydrocarbons, disagree. The panel’s final report is expected by September. Kelkar committee was constituted in 2013 “to prepare a roadmap for enhancing domestic production and sustainable reduction in import dependency by 2030.” The Rangarajan panel, however, had a specific mandate including review of production sharing contracts, including in respect of profit-sharing mechanism with pre-tax investment multiple as base parameter, say government sources. In the next Nelp auction, 46 explorations blocks in 3 sedimentary basins may be offered though the number could change, officials said. Courtesy […]

Shale gas to drag world agro prices lower

The “gale of shale” is hitting the US and the world with surplus energy. In 2000, shale was 2% of natural gas supply; in 2012, it was about 37%; and will be about 65% within the next two decades. The US is poised for shipping out shale gas in liquefied form as net exporter of energy. According to some analysts, crude oil prices may be clipped by 30% (say, from $100 to $70 per barrel) in the foreseeable future. American motorists are consuming less gasoline, thereby limiting the blend of biofuels like ethanol. The “energy security” lobby of the US is no longer supportive of biofuels. Ethanol is produced from corn in the US. (Brazil and India produce ethanol from sugarcane.) Apart from human consumption, corn is extensively consumed by livestock as animal feed. About 970 million tonnes of corn is produced worldwide—the largest single crop in the world. Wheat is around 700 million tonnes, rice is 470 million tonnes and soybean about 300 million tonnes. The US’s maize output, the highest among all countries, is about 360 million tonnes. Out of this, 36% (130 million tonnes) of corn is consumed for ethanol. With sufficiency and viability of shale gas, the future demand of ethanol will shrink, resulting into demand compression of corn, especially in the US, and its price will move southwards in the coming years. As of now, corn and wheat are trading, respectively, at $190/200 and $240 per tonne FOB—lesser by 20% from last year. There exists an empirical equation of corn with other agro commodities. For easy understanding, if corn is priced at $200 per tonne in any future exchange, wheat will be around $250-260 […]

RIL plans to invest $2 billion in US shale gas assets

Mumbai: Reliance Industries Ltd, India’s biggest private sector company by revenue, plans to invest $2 billion (around Rs.12,000 crore) in its three shale assets in the US, betting big on the potential of extracting natural gas and oil from the sedimentary rock formations. Having already invested $7.3 billion since 2010 towards development of shale gas and oil in the booming US market, the company has now firmed up the new investments in the three joint ventures it has in the US, said two persons familiar with the plan. The plan to step up RIL’s shale-gas investment comes at a time when the company is at loggerheads with the Indian government on the issue of increasing the price of natural gas produced from the company’s D6 block in the Krishna-Godavari (KG) basin. The newly elected National Democratic Alliance (NDA) government has deferred until 30 September a decision on a proposed price hike pending modifications to a price formula suggested by the C. Rangarajan committee that would have nearly doubled the price of gas. Last month, it decided to join arbitration proceedings initiated by RIL and its partners seeking a price increase. On 30 June, in its full-year earnings statement, Canadian company Niko Resources Ltd, which is a 10% partner in the D6 block, said the partners will defer their investment plans for the KG basin if the gas pricing issue is not resolved. While these issues have deterred RIL’s domestic investment in exploration and production (E&P), the company has been steadily increasing its interests overseas with its bet on the shale oil and gas ventures, which have become a revenue generator for the company in a short span of three years. According to […]

RIL, Essar may resume fuel retailing by Diwali

MUMBAI: Mukesh Ambani-led Reliance Industries (RIL) and the Ruias’ Essar Oil are all set to restart their petro-retail operations as diesel prices are likely to be de-regulated by Diwali. The price differential between the market price and sale price of diesel has narrowed down to Rs 1.33 paisa per litre since the start of August on the back of falling crude oil prices, an appreciating Indian rupee against the dollar and the 50-paisa monthly increase in diesel prices since January 2013. RIL — after having cornered about 14% of diesel sales within a couple of years of getting into petro-retailing — had to close down its pumps in 2008 due to the differential with the diesel prices of state-owned oil marketing companies (OMCs) and private retailers. “RIL will open its pumps once the diesel price is fully de-regulated. About 1,100 pumps are closed since 2008 and the idea would be to start them first before setting up new pumps,” said a source close to the company. Essar Oil plans to more than double its 1,400 retail outlets to 3,000 in the next three years to capitalize on the de-regulation of the diesel sales. “Essar Oil has about 1,400 retail outlets across the nation, with over 300 in various stages of commissioning. We are now working to restart diesel sale from our retail outlets in phases,” said an Essar Oil statement. Shell India has close to 100 retail outlets and is keeping a watch on the de-regulation process to start scaling up its fuel retail operations. Shares of RIL and Essar Oil ended marginally up at Rs 1,013 and […]

IOC to invest Rs 1,200 cr on LPG pipeline projects

IOC to invest Rs 1,200 cr on LPG pipeline projects Chennai: State-owned Indian Oil Corporation has proposed to invest about Rs 1,200 crore during the current financial year for expanding its Liquefied Petroleum Gas (LPG) pipeline projects. “Recently, the Corporation has renewed focus on LPG pipelines so as to leverage the economics and safety aspects of LPG transport via pipelines. With increased LPG imports and significant evacuation through tankers, LPG piplines are in the next growth avenue,” IOC said in its annual report. “Paradip-Haldia-Durgapur Pipeline and Ennore-Trichy- Madurai Pipeline are being planned for transportation of LPG. The Corporation has planned to invest Rs 1,200 crore during the current financial year for implementing various pipeline projects,” the report said. Courtesy :  PTI

Govt reduces waiting time for green approvals

NEW DELHI, AUGUST 18: The Narendra Modi Government has picked up pace in giving several projects environment clearances, as it seeks to reboot the investment flow in the country. Data from the Ministry of Environment and Forests shows 30 projects have so far been given clearance since the new regime took charge on May 26. The pace of providing project clearances significantly picked up in the last one month, since the Government completed 50 days in office. In the first 50 days, only five projects were cleared and since then 25 projects were cleared. The clearances were given for key projects such as coal mining at Chhatrasal for Sasan Power, Mahanadi for Coal India and the Adani Ports and Special Economic Zone at Mundra. Oil and gas projects Clearances have also been given for oil and gas projects by the Ministry of Defence. Currently, no oil and gas block is pending clearance by the Defence Ministry, Dharmendra Pradhan, Minister of State (Independent Charge) Petroleum and Natural Gas, informed Lok Sabha on July 28. In the Chhatrasal block, which has 160 MT of reserves, three mines were allotted to Sasan Power, a special purpose vehicle of Reliance Power. Coal from the mine is expected to fuel Reliance power’s 4,000 MW plants in Sasan and Chitrangi. The clearances will also help Coal India, which has been asked to raise output by Piyush Goyal, the Minister of State (Independent Charge) Power, Coal and New and Renewable Energy. Constraints Goyal recently told the Lok Sabha that projects worth ?400 crore which would have added 50 MT […]

Viability gap funding model for gas pipelines in offing

The petroleum ministry has proposed viability gap funding (VGF), similar to such support given to roads and airport projects, for cross-country gas pipelines. This is in sync with finance minister Arun Jaitley’s announcement in the Budget to lay 15,000 km of gas pipelines through PPPs. “The bidder quoting the least transporting tariff and seeking minimum viability gas funding would win the project. The ministry is working out the modalities in discussion with Petroleum and Natural Gas Regulatory Board,” a government official working on the proposal told FE. The ministry is first putting together a bidding mechanism before deciding which pipe-lines are to be auctioned based on demand and availability of natural gas, the official added. There has been lukewarm response to laying of gas pipelines in India, as there is no certainty on availability and the domestic market is not conducive to absorbing expensive imported gas. There is a need for setting up a gas grid because, unless infrastructure is laid, the economies for a gas market would not evolve, say industry experts. “The success of a gas pipeline depends on modelling it with availability, demand and pricing of the gas. Viability gap funding would hedge the risk associated with these things. So it is a welcome move,” Kalpana Jain, senior director at Deloitte Touche Tohmatsu India. Jaitley had said in his Budget speech that India has about 15,000 km of gas pipeline systems. “In order to complete the gas grid across the country, an additional 15,000 km of pipelines are required. It is proposed to develop these pipelines using appropriate PPP models. This will help increase usage of gas, domestic as well as imported which, in the […]