For petrol, Indians shell out the most in the world
Petrol in India is more expensive than 98 other countriesFor all those already reeling under a series of hikes in petrol prices on the back of zooming inflation, here is some news that will enrage you further. Data of retail prices in countries across the world shows that Indian prices are amongst the highest in the world at current exchange rates. And, if you even out the differences in purchasing power of different currencies then Indian petrol and diesel prices become the highest barring some tiny, remote countries.
Even a simple comparison of retail prices in different countries by converting them to Indian rupee reveals that petrol in India is more expensive than 98 other countries. Among 157 countries for which data is available, those belonging to the Organization of Petroleum Exporting Countries have the lowest price.
The Organisation of Petroleum Exporting Countries (OPEC) are the ones that have huge oil reserves and are its main producers. So, petrol is cheapest in Venezuela at just Rs 1.14 per litre. In Iran it sells for Rs 4.8 per litre. The second group comprises of countries like the US, Iraq, Indonesia, etc, where minimal tax is levied on petroleum products. They also have lower prices than India. A litre of petrol costs Rs 42.82 in the US.
India tops the group of countries which have moderate to high tax regimes. Others in the group are the EU countries and others like Singapore, New Zealand, Thailand and Brazil. At Rs 69.90 -the average price of petrol in 24 Indian cities -Indian prices are now comparable to price of petrol in EU. Romania has EU's cheapest petrol at Rs 72.33 per litre.
However, price comparisons done like this - by converting into one currency using the exchange rate - are deceptive. Petrol prices equivalent to Rs 96.39 in the UK might not pinch the English in the same way as Rs 69.90 will clobber Indians.
So, how does one compare prices across countries? This is done by the widely used Purchasing Power Parity (PPP) method. Differences in purchasing powers are evened out and relatively real price comparisons emerge. Using PPP prices, petrol is by far much more costlier in India than most countries. PPP price of petrol in India is $3.95, lower than just three small countries - Timor-Leste, Malawi and Eritrea.
Petrol costs less than a dollar in the OPEC and USA while in most of Europe, Russia, Japan, China and the Americas it is priced between one to two international dollars by PPP calculations.
Despite huge subsidies, diesel is more expensive in India than 136 other countries. Costing $2.46 at PPP, India is 23rd most expensive in diesel prices. Can anybody explain why Indians have to bear this unbearable burden? Courtesy: TOI
Sunday, October 9, 2011
BPCL to venture into niche petrochemicals
BPCL to invest Rs 40,000 crore to venture into niche petrochemicals
20 Sep 2011
Bharat Petroleum Corporation Ltd (BPCL) is planning to invest Rs 40,000 crores to venture into the niche petrochemical segment. With this, India's second biggest oil marketing company will diversify its business portfolio and de-risk its business model, as per a DNA report.
Talks are underway with several foreign players who might be interested in sharing technology with BPCL and picking up equity stake in the project. The investment will be done over the next five years which will help to strengthen company's current operations, expand its refining business, enable investment in exploration and production and diversification into newer areas such as petrochemicals.
The company will invest around Rs 5,000-6,000 crore in a complex which will be operational in the next five years, and produce polypropylene and acrylic acid. Feedstock will be supplied by BPCL's 9.5 mln tpa Kochi refinery which will also be expanded further to 15.5 mln tpa in the next five year period.
20 Sep 2011
Bharat Petroleum Corporation Ltd (BPCL) is planning to invest Rs 40,000 crores to venture into the niche petrochemical segment. With this, India's second biggest oil marketing company will diversify its business portfolio and de-risk its business model, as per a DNA report.
Talks are underway with several foreign players who might be interested in sharing technology with BPCL and picking up equity stake in the project. The investment will be done over the next five years which will help to strengthen company's current operations, expand its refining business, enable investment in exploration and production and diversification into newer areas such as petrochemicals.
The company will invest around Rs 5,000-6,000 crore in a complex which will be operational in the next five years, and produce polypropylene and acrylic acid. Feedstock will be supplied by BPCL's 9.5 mln tpa Kochi refinery which will also be expanded further to 15.5 mln tpa in the next five year period.
BPCL to focus on low cost refinery expansions
BPCL to focus on low-cost refinery expansions
19 Sep 2011
Bharat Petroleum Corporation plans to achieve refining capacity of nearly 42 million tonnes by 2015-16 where the focus will be on low-cost expansions. Kochi Refinery will see the largest capacity increase to 15.5 mt from 9.5 mt during this period. The recently commissioned Bina refinery, a joint venture with Oman Oil, will be up to nine mt as part of a ‘creeping expansion' exercise using the existing infrastructure.
Mr R.K. Singh, Chairman and Managing Director, told Business Line that in the case of the Mumbai refinery, two decades-old crude distillation units would be replaced by a brand new one. As a result, its capacity would go up to 14 mt from 12 mt.
More importantly, this will create more space and ensure better fuel efficiency in the refinery. “Strictly speaking, this is really not an expansion, but (it) will help improve capacity utilisation,” he said.
Investment outlay The Numaligarh refinery in Assam will stay untouched at three mt though sources said that its capacity could be doubled at a later stage depending on the availability of crude.
These initiatives on the refining front will form part of BPCL's Rs 40,000-crore investment outlay over the next five years. The money will also be earmarked for entry into new areas like gas and petrochemicals with Rs 10,000 crore set aside for exploration & production.
After 2015-16, BPCL will look at the second phase of the Bina refinery expansion to 15 million tonnes, though Mr Singh reiterated that revenue generation for the project would remain top priority. The company will then consider the new Allahabad refinery (whose capacity could be 9-12 mt) if there is growing demand for petro-products in the northern region.
If these projects go according to schedule, BPCL's refining capacity would be a little over 60 million tonnes by 2020. “For the moment, though, we prefer the low-cost expansion route to setting up a grassroots refinery,” Mr Singh said.
Observers of the oil industry say this approach makes sense in the context of the refiners' losses incurred on selling subsidised fuel such as diesel, cooking gas and kerosene.
When compensation from the Centre takes time in coming, borrowings increase (BPCL's alone is closer to Rs 24,000 crore) but the show will literally have to go on in terms of investments in key infrastructure.
19 Sep 2011
Bharat Petroleum Corporation plans to achieve refining capacity of nearly 42 million tonnes by 2015-16 where the focus will be on low-cost expansions. Kochi Refinery will see the largest capacity increase to 15.5 mt from 9.5 mt during this period. The recently commissioned Bina refinery, a joint venture with Oman Oil, will be up to nine mt as part of a ‘creeping expansion' exercise using the existing infrastructure.
Mr R.K. Singh, Chairman and Managing Director, told Business Line that in the case of the Mumbai refinery, two decades-old crude distillation units would be replaced by a brand new one. As a result, its capacity would go up to 14 mt from 12 mt.
More importantly, this will create more space and ensure better fuel efficiency in the refinery. “Strictly speaking, this is really not an expansion, but (it) will help improve capacity utilisation,” he said.
Investment outlay The Numaligarh refinery in Assam will stay untouched at three mt though sources said that its capacity could be doubled at a later stage depending on the availability of crude.
These initiatives on the refining front will form part of BPCL's Rs 40,000-crore investment outlay over the next five years. The money will also be earmarked for entry into new areas like gas and petrochemicals with Rs 10,000 crore set aside for exploration & production.
After 2015-16, BPCL will look at the second phase of the Bina refinery expansion to 15 million tonnes, though Mr Singh reiterated that revenue generation for the project would remain top priority. The company will then consider the new Allahabad refinery (whose capacity could be 9-12 mt) if there is growing demand for petro-products in the northern region.
If these projects go according to schedule, BPCL's refining capacity would be a little over 60 million tonnes by 2020. “For the moment, though, we prefer the low-cost expansion route to setting up a grassroots refinery,” Mr Singh said.
Observers of the oil industry say this approach makes sense in the context of the refiners' losses incurred on selling subsidised fuel such as diesel, cooking gas and kerosene.
When compensation from the Centre takes time in coming, borrowings increase (BPCL's alone is closer to Rs 24,000 crore) but the show will literally have to go on in terms of investments in key infrastructure.
Wednesday, February 23, 2011
BPCL cannot relocate its Mumbai refinery
Bharat Petroleum Corporation's Mumbai refinery is smack in the middle of the city, with residential buildings a stone's throw away. It is not the easiest of times during occasions such as Diwali when firecrackers are all over the place. Yet, BPCL knows that the show will just have to go on.
Relocating the Mumbai refinery or replicating its business model elsewhere in terms of capacity, access to a port with supporting infrastructure is not going to be that easy. The city needs supply of products which explains why this refinery is so relevant,? Mr R.K. Singh, Chairman and Managing Director of BPCL, told Business Line.
Setting up a new refinery would also require investments upwards of Rs 25,000 crore at a time when the public sector oil companies are literally scrounging for cash.
In addition, it is not as if finding 3,000 acres elsewhere is a cakewalk.
Land is the least of the problems as there would be other environment-related issues to contend with. Mumbai Port Trust will also be hit considering that oil is one of its biggest revenue streams.
BPCL's neighbour, Hindustan Petroleum Corporation, was contemplating a total relocation to coastal Maharashtra but has since altered its plan. Its Mumbai refinery will stay while the new project in Ratnagiri will kick off with a lower capacity of nine million tonnes, down from the earlier 15 million tonnes.
?At present, we have no plans to shift out but if the situation becomes difficult, the state government may step in. However, we cannot remove the entire oil infrastructure from Mumbai at one go and put in place another pipeline to meet the growing demand,? Mr Singh said.
Hence, even if push turns to shove in the future, the best way forward would be to shift the refinery in phases while ensuring that there is a parallel start-up of operations in the new location. This is the only way to guarantee that there will be no disruption in supply of products. ?Will all this actually happen? One really cannot say but it is not in our minds for the moment,? the BPCL chief said.
This also explains why HPCL will just have to hang in there as far as its Mumbai operations are concerned. In the first place, its new refinery is not going to be commissioned until after 2015 and, as sources say, a whole lot of things could happen in the interim. ?Land acquisition is a tricky exercise and environment concerns could delay a project forever,? they add.
From BPCL's point of view, the top priority is to be vigilant. ?We have to be extra alert as far as security and safety is concerned and need to win the confidence of the community around us,? Mr Singh said. Courtesy: BL
24 Feb 2011, PB
Relocating the Mumbai refinery or replicating its business model elsewhere in terms of capacity, access to a port with supporting infrastructure is not going to be that easy. The city needs supply of products which explains why this refinery is so relevant,? Mr R.K. Singh, Chairman and Managing Director of BPCL, told Business Line.
Setting up a new refinery would also require investments upwards of Rs 25,000 crore at a time when the public sector oil companies are literally scrounging for cash.
In addition, it is not as if finding 3,000 acres elsewhere is a cakewalk.
Land is the least of the problems as there would be other environment-related issues to contend with. Mumbai Port Trust will also be hit considering that oil is one of its biggest revenue streams.
BPCL's neighbour, Hindustan Petroleum Corporation, was contemplating a total relocation to coastal Maharashtra but has since altered its plan. Its Mumbai refinery will stay while the new project in Ratnagiri will kick off with a lower capacity of nine million tonnes, down from the earlier 15 million tonnes.
?At present, we have no plans to shift out but if the situation becomes difficult, the state government may step in. However, we cannot remove the entire oil infrastructure from Mumbai at one go and put in place another pipeline to meet the growing demand,? Mr Singh said.
Hence, even if push turns to shove in the future, the best way forward would be to shift the refinery in phases while ensuring that there is a parallel start-up of operations in the new location. This is the only way to guarantee that there will be no disruption in supply of products. ?Will all this actually happen? One really cannot say but it is not in our minds for the moment,? the BPCL chief said.
This also explains why HPCL will just have to hang in there as far as its Mumbai operations are concerned. In the first place, its new refinery is not going to be commissioned until after 2015 and, as sources say, a whole lot of things could happen in the interim. ?Land acquisition is a tricky exercise and environment concerns could delay a project forever,? they add.
From BPCL's point of view, the top priority is to be vigilant. ?We have to be extra alert as far as security and safety is concerned and need to win the confidence of the community around us,? Mr Singh said. Courtesy: BL
24 Feb 2011, PB
Oil ministry wants a duty cut on crude oil and petroleum products
As crude oil prices climbed to a two-and-half year high of $ 108 per barrel, the Petroleum Ministry is pinning hopes on customs and excise duty cut in the Union Budget to avoid hiking petrol and diesel prices. “The spurt in international oil prices following crisis in Libya has meant that the difference between domestic retail selling price and the imported cost widens. This situation is not sustainable,” an oil ministry official said.
The basket of crude oil India buys yesterday touched $105.05 per barrel, necessitating a hike in fuel prices. “With Parliament in session, I dont see it will be possible to even raise price of petrol, which had been freed from government control in June last year,” the official said. “Also, there are concerns of the inflationary impact of the hike in prices particularly of diesel on food prices”, the official said.
Petrol, whose prices were last raised by Rs. 2.50 a litre in January, is being sold at a discount of Rs. 2.50-2.75 a litre to its imported cost. On diesel, state-owned Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum lose Rs. 10.74 a litre. Besides, they lose Rs. 21.60 per litre on kerosene and Rs. 356.07 per 14.2-kg domestic LPG cylinder.
The three firms are currently losing Rs. 430 crore per day and at current rates are projected to end the fiscal with Rs. 76,559 crore revenue loss. “If prices cannot be raised, the next best option to limit the impact of rising international oil prices is to reduce duties,” the official said.
The ministry is hoping Finance Minister Pranab Mukherjee in his Budget for 2010-11, to be presented on Monday, will abolish customs duty on crude oil and cut excise on petrol and diesel to avoid a further increase in retail prices.
It wants customs or import duty on crude oil to be reduced to zero from 5 per cent at present. Also it wants the customs duty on diesel slashed to 2.5 per cent from 7.5 per cent at present, along with a reduction in the specific excise duty imposed on the most-consumed fuel in the country.
“Eliminating customs duty on crude and correspondingly bringing down duty on finished products would reduce the under-recoveries (revenue loss on selling fuel below cost) that are compensated by the government,” he said.
“Instead of collecting customs duty on crude and later refunding the same as under-recovery compensation, the government may eliminate the duty on crude as was done earlier,” he said.
The average price of crude oil during 2008-09 was around $82 per barrel, when the duty on crude oil was reduced to zero. The average price of crude oil during 2010-11 has already crossed $82 per barrel and may increase further.
The abolition of customs duty on crude oil would reduce diesel under-recovery by Rs 1.48 per litre. Although the gross impact of reduction of crude duty would be Rs 15,880 crore, the net impact on the Budget would be limited to Rs. 5,212 crore.
This is after taking into account compensation for under-recoveries of IOC, BPC and HPC to the tune of Rs 10,668 crore in a full year. The oil ministry is hoping that Mukherjee would reduce specific excise duty of Rs 2.60 per litre on diesel and Rs 12.35 a litre basic and additional excise duty on petrol, the official said. Courtesy: THE HINDU
24 Feb 2011 PB
The basket of crude oil India buys yesterday touched $105.05 per barrel, necessitating a hike in fuel prices. “With Parliament in session, I dont see it will be possible to even raise price of petrol, which had been freed from government control in June last year,” the official said. “Also, there are concerns of the inflationary impact of the hike in prices particularly of diesel on food prices”, the official said.
Petrol, whose prices were last raised by Rs. 2.50 a litre in January, is being sold at a discount of Rs. 2.50-2.75 a litre to its imported cost. On diesel, state-owned Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum lose Rs. 10.74 a litre. Besides, they lose Rs. 21.60 per litre on kerosene and Rs. 356.07 per 14.2-kg domestic LPG cylinder.
The three firms are currently losing Rs. 430 crore per day and at current rates are projected to end the fiscal with Rs. 76,559 crore revenue loss. “If prices cannot be raised, the next best option to limit the impact of rising international oil prices is to reduce duties,” the official said.
The ministry is hoping Finance Minister Pranab Mukherjee in his Budget for 2010-11, to be presented on Monday, will abolish customs duty on crude oil and cut excise on petrol and diesel to avoid a further increase in retail prices.
It wants customs or import duty on crude oil to be reduced to zero from 5 per cent at present. Also it wants the customs duty on diesel slashed to 2.5 per cent from 7.5 per cent at present, along with a reduction in the specific excise duty imposed on the most-consumed fuel in the country.
“Eliminating customs duty on crude and correspondingly bringing down duty on finished products would reduce the under-recoveries (revenue loss on selling fuel below cost) that are compensated by the government,” he said.
“Instead of collecting customs duty on crude and later refunding the same as under-recovery compensation, the government may eliminate the duty on crude as was done earlier,” he said.
The average price of crude oil during 2008-09 was around $82 per barrel, when the duty on crude oil was reduced to zero. The average price of crude oil during 2010-11 has already crossed $82 per barrel and may increase further.
The abolition of customs duty on crude oil would reduce diesel under-recovery by Rs 1.48 per litre. Although the gross impact of reduction of crude duty would be Rs 15,880 crore, the net impact on the Budget would be limited to Rs. 5,212 crore.
This is after taking into account compensation for under-recoveries of IOC, BPC and HPC to the tune of Rs 10,668 crore in a full year. The oil ministry is hoping that Mukherjee would reduce specific excise duty of Rs 2.60 per litre on diesel and Rs 12.35 a litre basic and additional excise duty on petrol, the official said. Courtesy: THE HINDU
24 Feb 2011 PB
Saudi petroleum giant has big plans for India
Petrochemicals major Saudi Basic Industries Corporation (Sabic) is planning big investments in India that may run into billions of dollars. Sabic, which ranks among the world’s top five petrochemical companies, has been in talks with Indian petrochemical players for a joint venture to tap the huge potential of the Indian market with cracker projects and downstream refineries, Ahmed Alumar, vice president Asia Pacific and member of the board of directors of Sabic Asia Pacific, told Business Standard.
“India is an equally important market for us like China and we are looking at similar investments, if required, in India. It is early to reveal more details and names of companies we are discussing with.”
India, which imports over $22 billion of petrochemical products ever year, offers Sabic the perfect platform to tap the potential for its core business areas like chemicals, fertilizers, innovative plastics, polymers and performance chemicals, he said.
Mukesh Ambani-owned Reliance Industries is planning to investment about Rs 16,000 crore to set up a cracker unit at Jamnagar in Gujarat. The unit would produce ethylene, propylene, low-density polyethylene and mono ethylene glycol that have a wide range of applications in various industries. Sabic is the largest producer of mono-ethylene glycol in the world.
Two weeks ago, India’s largest refiner Indian Oil Corporation had commissioned the country’s largest naphtha cracker plant at Indian Oil’s Panipat Complex built at Rs 14, 439 crore. The plant has a capacity to produce 800,000 tonnes per annum (TPA) of ethylene. GAIL-promoted Brahmaputra Cracker and Polymer Limited (BCPL) is also setting up a Rs 5,600 crore project in Assam.
Sabic has been operating in India since 1994 and has about 530 employees in the country catering to 1,000 plus customers across various industries. However, they used to primarily import products from its facilities in Saudi Arabia and Europe into India. “Actually we started business with India before we did with China. India is very near to Saudi Arabia than China and it is like a home environment for us here,” said Alumar.
Sabic, which had revenues of $27 billion in 2009, had entered into a 50:50 joint venture with Chinese Government-controlled China Petroleum and Chemical Corporation (Sinopec) two years ago to construct a three million tonnes per annum capacity petrochemical complex at Tianjin. It had invested over $2.5 billion in the project.
Sabic and Sinopec are also planning further co-operation and investments in various areas. Sabic has ten manufacturing facilities in China, where as its investments in India are limited to facility and technology centres it acquired in Baroda and Bangalore through its global acquisition of GE’s plastics division a few years ago. Sabic has six offices in India.
Alumar said Sabic was planning to expand its research and technology center in Baroda by hiring more than 280 research staff. The facility will be ready by the year-end or early 2012. The company is also setting up a new muti wall sheet (MWS) facility in Baroda. This is expected to commence operations in July 2011. Courtesy: BS
24 Feb PB
“India is an equally important market for us like China and we are looking at similar investments, if required, in India. It is early to reveal more details and names of companies we are discussing with.”
India, which imports over $22 billion of petrochemical products ever year, offers Sabic the perfect platform to tap the potential for its core business areas like chemicals, fertilizers, innovative plastics, polymers and performance chemicals, he said.
Mukesh Ambani-owned Reliance Industries is planning to investment about Rs 16,000 crore to set up a cracker unit at Jamnagar in Gujarat. The unit would produce ethylene, propylene, low-density polyethylene and mono ethylene glycol that have a wide range of applications in various industries. Sabic is the largest producer of mono-ethylene glycol in the world.
Two weeks ago, India’s largest refiner Indian Oil Corporation had commissioned the country’s largest naphtha cracker plant at Indian Oil’s Panipat Complex built at Rs 14, 439 crore. The plant has a capacity to produce 800,000 tonnes per annum (TPA) of ethylene. GAIL-promoted Brahmaputra Cracker and Polymer Limited (BCPL) is also setting up a Rs 5,600 crore project in Assam.
Sabic has been operating in India since 1994 and has about 530 employees in the country catering to 1,000 plus customers across various industries. However, they used to primarily import products from its facilities in Saudi Arabia and Europe into India. “Actually we started business with India before we did with China. India is very near to Saudi Arabia than China and it is like a home environment for us here,” said Alumar.
Sabic, which had revenues of $27 billion in 2009, had entered into a 50:50 joint venture with Chinese Government-controlled China Petroleum and Chemical Corporation (Sinopec) two years ago to construct a three million tonnes per annum capacity petrochemical complex at Tianjin. It had invested over $2.5 billion in the project.
Sabic and Sinopec are also planning further co-operation and investments in various areas. Sabic has ten manufacturing facilities in China, where as its investments in India are limited to facility and technology centres it acquired in Baroda and Bangalore through its global acquisition of GE’s plastics division a few years ago. Sabic has six offices in India.
Alumar said Sabic was planning to expand its research and technology center in Baroda by hiring more than 280 research staff. The facility will be ready by the year-end or early 2012. The company is also setting up a new muti wall sheet (MWS) facility in Baroda. This is expected to commence operations in July 2011. Courtesy: BS
24 Feb PB
Thursday, February 10, 2011
Crude oil prices under pressure
Crude oil prices came under pressure mainly on the back of China’s step to increase its interest rates in order to curb inflation. Additionally, mixed sentiments in the global financial markets also led oil prices to trade lower.
Despite unrest in Egypt, the movement in Suez Canal was not affected. Nymex crude oil prices declined around 0.6 percent and closed at $85.82/bbl on Tuesday. On the MCX, crude oil (February futures contract) declined more than 1 percent and touched a low of `3905/bbl on Tuesday. Appreciation in the Indian Rupee extended losses on the domestic markets yesterday.
According to the report released by the American Petroleum Institute (API) on Tuesday, US crude oil inventories unexpectedly declined by 558,000 barrels in the week ending 4th February. Gasoline inventories increased 3.2 million barrels, while distillate inventories decreased by 538,000 barrels in the last week.
The US Energy Department (EIA) is expected to release its weekly inventory data later in the evening today. According to the Reuters poll, crude oil inventories are expected to increase by 2.4 million barrels for the week ended 4th February. Distillates stocks are predicted to decline by 1.2 million barrels and gasoline inventories are expected to increase by 2.5 million barrels in the last week. Courtesy:COMMODITY ONLINE
10 Feb 2011 PB
Despite unrest in Egypt, the movement in Suez Canal was not affected. Nymex crude oil prices declined around 0.6 percent and closed at $85.82/bbl on Tuesday. On the MCX, crude oil (February futures contract) declined more than 1 percent and touched a low of `3905/bbl on Tuesday. Appreciation in the Indian Rupee extended losses on the domestic markets yesterday.
According to the report released by the American Petroleum Institute (API) on Tuesday, US crude oil inventories unexpectedly declined by 558,000 barrels in the week ending 4th February. Gasoline inventories increased 3.2 million barrels, while distillate inventories decreased by 538,000 barrels in the last week.
The US Energy Department (EIA) is expected to release its weekly inventory data later in the evening today. According to the Reuters poll, crude oil inventories are expected to increase by 2.4 million barrels for the week ended 4th February. Distillates stocks are predicted to decline by 1.2 million barrels and gasoline inventories are expected to increase by 2.5 million barrels in the last week. Courtesy:COMMODITY ONLINE
10 Feb 2011 PB
RIL turns to Shell to fix D6 snags
Falling gas production has prompted Mukesh Ambani-promoted Reliance Industries Ltd (RIL) to seek help from US oil major Shell International to rectify technical glitches in its D6 block in the Krishna-Godavari (K-G) basin on the country’s eastern coast.
Shell International is likely to provide technical assistance for the flagship asset that has increased India’s natural gas production by about 40 per cent.
RIL, which has been producing natural gas and crude oil from the K-G basin since April 2009, was unable to pump gas to full flow due to low well-head pressure. High pressure is very important to extract natural gas.
Sources close to the development said, “RIL is a 10-year-old company which is managing a gas block of KG- D6’s size for the first time. Shell, an expert in the sector, can help RIL understand why the reservoir is behaving so. Whatever data Shell generates through its study will help RIL decide what measures it can take to improve the production.”
Shell had earlier audited RIL’s Jamnagar refinery, in Gujarat.In an emailed statement, a Shell spokesperson said the company had no comments to offer on this issue. An email to RIL did not elicit any response, either.The natural gas output from the KG-D6 field averaged 54.5 million standard cubic meters a day (mscmd) in the quarter ended December 31, 2010, down from 60 mscmd achieved in the April-June quarter.
The current production is made up of natural gas output from Dhirubhai-1 and 3 wells, known as D1 and D3, in the KG basin block KG-DWN-98/3 or KG-D6, and D-26, or MA oilfield.RIL would need international expertise as Indian companies, including oil exploration major ONGC, would not have experience in this area since the block is in the high seas. “Reliance will not get this help cheap. Global oil companies might ask the company to part with some of the stake in the block, in exchange for technical expertise,” said a person close to the development.
Global majors like Shell and Chevron have earlier shown interest in picking up stakes in the block. Chevron’s five per cent equity in the erstwhile Reliance Petroleum, now merged with RIL, was also on the understanding that the company could pick up stakes in the D6 block.
D1 and D3 have seen their output fall from 53-54 mscmd achieved in mid-2010, to 42-44 mscmd in the week ending December 26. D-26, or MA oilfield in the same block, is producing about 8 mscmd as associated gas. Together, the output from KG-D6 at present stands at 50-52 mscmd. KG D6 is estimated to have gas reserves of 11.5 trillion cubic feet (TCF).
Total investment in D6 to date is $7.8 billion.The government’s Director General of Hydrocarbons S K Srivastava had recently said RIL was producing natural gas from 18 wells. “Two more wells have been drilled (but not put on production) and another two are expected to be done by March. Once all 22 wells come onstream sometime in April 2011, gas output will again touch 60 mscmd.”
RIL holds a 90 per cent stake in KG-D6, while Canadian hydrocarbon explorer Niko Resources Ltd owns the remaining 10 per cent.HSBC, in its recent report on RIL’s third-quarter performance, said: “RIL is unlikely to ramp up its natural gas production from current levels of 52-53 mscmd per day in the near term in absence of relevant regulatory approvals for new development, technical limitations with existing wells and long lead time for critical deepwater equipment.”
According to Macquarie Research, KG-D6 output fell six per cent quarter on quarter due to reservoir issues and dragged down average gas production to 54.5 mscmd.Royal Bank of Scotland said RIL’s stock price had not risen due to concerns on its E&P operations and lack of guidance on production/ reserves is a risk.
Credit Suisse says continued silence from RIL on its E&P business can affect confidence. “The risk is that until there is clarity on E&P, the RIL stock many not see full benefit of the improving refining and petchem businesses,” the report adds. Courtesy:BS
10 february 2011 PB
Shell International is likely to provide technical assistance for the flagship asset that has increased India’s natural gas production by about 40 per cent.
RIL, which has been producing natural gas and crude oil from the K-G basin since April 2009, was unable to pump gas to full flow due to low well-head pressure. High pressure is very important to extract natural gas.
Sources close to the development said, “RIL is a 10-year-old company which is managing a gas block of KG- D6’s size for the first time. Shell, an expert in the sector, can help RIL understand why the reservoir is behaving so. Whatever data Shell generates through its study will help RIL decide what measures it can take to improve the production.”
Shell had earlier audited RIL’s Jamnagar refinery, in Gujarat.In an emailed statement, a Shell spokesperson said the company had no comments to offer on this issue. An email to RIL did not elicit any response, either.The natural gas output from the KG-D6 field averaged 54.5 million standard cubic meters a day (mscmd) in the quarter ended December 31, 2010, down from 60 mscmd achieved in the April-June quarter.
The current production is made up of natural gas output from Dhirubhai-1 and 3 wells, known as D1 and D3, in the KG basin block KG-DWN-98/3 or KG-D6, and D-26, or MA oilfield.RIL would need international expertise as Indian companies, including oil exploration major ONGC, would not have experience in this area since the block is in the high seas. “Reliance will not get this help cheap. Global oil companies might ask the company to part with some of the stake in the block, in exchange for technical expertise,” said a person close to the development.
Global majors like Shell and Chevron have earlier shown interest in picking up stakes in the block. Chevron’s five per cent equity in the erstwhile Reliance Petroleum, now merged with RIL, was also on the understanding that the company could pick up stakes in the D6 block.
D1 and D3 have seen their output fall from 53-54 mscmd achieved in mid-2010, to 42-44 mscmd in the week ending December 26. D-26, or MA oilfield in the same block, is producing about 8 mscmd as associated gas. Together, the output from KG-D6 at present stands at 50-52 mscmd. KG D6 is estimated to have gas reserves of 11.5 trillion cubic feet (TCF).
Total investment in D6 to date is $7.8 billion.The government’s Director General of Hydrocarbons S K Srivastava had recently said RIL was producing natural gas from 18 wells. “Two more wells have been drilled (but not put on production) and another two are expected to be done by March. Once all 22 wells come onstream sometime in April 2011, gas output will again touch 60 mscmd.”
RIL holds a 90 per cent stake in KG-D6, while Canadian hydrocarbon explorer Niko Resources Ltd owns the remaining 10 per cent.HSBC, in its recent report on RIL’s third-quarter performance, said: “RIL is unlikely to ramp up its natural gas production from current levels of 52-53 mscmd per day in the near term in absence of relevant regulatory approvals for new development, technical limitations with existing wells and long lead time for critical deepwater equipment.”
According to Macquarie Research, KG-D6 output fell six per cent quarter on quarter due to reservoir issues and dragged down average gas production to 54.5 mscmd.Royal Bank of Scotland said RIL’s stock price had not risen due to concerns on its E&P operations and lack of guidance on production/ reserves is a risk.
Credit Suisse says continued silence from RIL on its E&P business can affect confidence. “The risk is that until there is clarity on E&P, the RIL stock many not see full benefit of the improving refining and petchem businesses,” the report adds. Courtesy:BS
10 february 2011 PB
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