Open acreage System
In a strategic move, the government is planning to shift from the tried and tested National
Exploration Licensing Policy mechanism of offering exploration blocks to an “open acreage
system” in the near future. The proposed system would impart domestic and foreign oil and
gas majors flexibility to select blocks of their interest from the available acreages. Further the
companies can bid for the blocks round the year. The open acreage system is aimed at
significantly increasing the pace of oil and gas exploration activity in the country. A pre-
requisite for shifting to the new system is setting up of a Central Data Repository (CDR).For
this, the government would introduce a statutory Bill directing operating exploration
companies to give all the geo-scientific data acquired by them to the repository.
The CDR would store all exploration and production (E&P) data i.e., the 2D and 3D seismic,
drilled wells and other geophysical and geochemical data acquired by all companies in a
format conforming to the existing international practice. This will then be put in the public
domain.The companies can view the data round the year and can purchase it at a nominal
cost. They can work out the additional exploration inputs for the blocks in their area of their
Setting up of CDR and making data available in public domain will take about 4-5 years. Till
such time, the government will continue to offer exploration blocks for international
competitive bidding through the National Exploration Licensing Policy. The directorate
general of hydrocarbons would, in the meantime, examine similar systems adopted by
different countries. Modalities for working out similar contracts would be then worked out
Oil India’s New Thrust Areas
Oil India (OIL) plans to join hands with a foreign exploration company to explore for oil and
gas in the thrust belt in Assam and Arunachal Pradesh. The tie-up could extend to bidding for
one of the three blocks in Assam which are under offer in the fifth round of the New
Exploration Licensing Policy (NELP). The block falls in the Naga Schuppen belt while the
other two blocks are in the shelf part of the Assam-Arakan basin. The thrust belt falls in
Assam and Arunachal Pradesh up to the Nagaland border and is believed to have a high oil
potential. OIL is targeting 1-1.5 million tonne oil production from the area in the three years.
Besides the thrust belt, OIL plans to focus in the riverine areas of Arunachal Pradesh and the
Brahmaputra river belt. This is part of its strategy to double its oil production to 7 million
tonne in three years. OIL is planning to carry out seismic survey in the Brahmaputra river bed
with an estimated investment of around Rs 138 crore through seven international companies.
With most of the north-east has been explored, OIL is now turning to more difficult and
geologically more complex frontier areas like the belt of Schuppen, exploration of
stratigraphic traps and the river bed. The joint integrated project evaluation by OIL and
Australia’s ISIS covering part of Upper Assam basin was also carried out leading to
identification of possible reserves.
The Government has allowed ONGC Videsh Ltd (OVL), to make investments of up to Rs 3
billion (US $75 million) in oil and gas properties abroad without approaching the Union
Cabinet for approval. Prior to this, the OVL board was empowered to take investment
decisions of up to Rs 2 billion or $50 million. The enhancement of OVL's powers shall
enable the board to take fast decisions to acquire medium-sized projects and ventures to
increase oil and gas production from overseas participation to augment the energy security of
the country. OVL has stakes in oil and gas properties in Vietnam, Sudan, Russia, Myanmar,
Libya, Iran, Iraq, Syria, Australia, Egypt, Qatar and Ivory Coast and is pursuing opportunities
in Angola and Ecuador among other countries. In its efforts to provide energy security for the
nation, OVL has already invested $3 billion in overseas exploration and production (E&P)
projects. In addition, various other projects involving an investment of $4-4.5 billion are
under implementation and different stages of finalisation. All major projects are being
executed under the financial assistance of the parent company Oil and Natural Gas
ONGC has decided to increase the paid up share capital of its wholly-owned global
subsidiary, ONGC Videsh Limited (OVL), from Rs 3 billion to Rs 10 billion. OVL’s current
authorised capital is Rs 5 billion. This is being done to meet the company’s future investment
requirements and improve the debt-equity ratio. OVL aims to increase its share of oil and oil
equivalent gas production to 20 MMTPA by 2010 and 60 MMTPA by 2025 from its
international oil and gas ventures. From a single asset company till 2000, OVL has today
become a company having 15 oil and gas projects in 12 countries besides executing a 241 km
product pipeline project in Sudan. During 2004-05 alone, the company acquired stakes in five
oil and gas projects and signed the Sudan pipeline project. From “nil” commercial production
of oil and gas till January 2003, the company today has annual production of gas of 1.325
billion cubic metres and oil of 3.70 million metric tonne in 2004-05, with estimated sales
revenues and net profits of over Rs 5 billion and Rs 10 billion respectively. While two of
OVL’s assets i.e Block 6 in Vietnam and GNOP in Sudan, are currently producing gas and
oil, production from other projects mainly Sakhalin- (Russia), Block 5A (Sudan) and Block
A-1 (Myanmar) will be added in the near future.
OVL is in talks with Venezuela's PDVSA for a stake in Tomoporo oilfield containing about
one billion barrels of recoverable light crude reserves. Venezuelan state oil company
Petroleos de Venezuela S.A (PDVSA) plans to increase output at its Tomoporo oilfield, one
of the country's largest, from 90,000 barrels per day to 130,000 barrels per day and is
considering giving a strategic investor 49 per cent stake. Global oil majors including French
major Total, Norway's Statoil, Royal Dutch/Shell, Spain's Repsol and US majors
ExxonMobil and ChevronTexaco are also believed to be keen on partnering PDVSA in
Also on OVL radar is Venezuela's new bidding round of offshore natural gas licences the for
5 offshore blocks in the Gulf of Venezuela and one off the coast of Falcon state in the first
phase of the "Rafael Urdaneta" project. PDVSA will retain the option of taking 35 per cent
take in projects that go commercial. The six blocks are Urumaco I, II, and III, Moruy III and
Cardon III, all in the Gulf of Venezuela, and La Vela Sur off the coast of Falcon. Their size
ranges from 160 sq km to 998 sq km. The Venezuelan Gulf, north of the oil-rich Maracaibo
Lake in the country, holds an estimated 23 trillion cubic feet of gas and some 7 billion barrels
Sudan has signed with the Sudanese White Nile Petroleum company — a consortium of
Malaysian state oil firm Petronas, which owns 68%, ONGC, which has a 24% stake and
Sudan’s state oil company Sudapet with 7%., a $400 million deal to develop its southern Thar
Jath oil fields to an initial capacity of 80,000 barrels per day (bpd) by the end of March 2006.
The reserves of the Thar Jath oil fields, in Block 5A in the southern Unity state, were
estimated at a minimum of 250 million barrels.
OVL is talking to US oil and gas producer Pogo Producing Co, to buy its 46.34 per cent
stake in an offshore Thailand field, valued at $600-700 million. ChevronTexaco Corp owns
51.66 percent stake in gas and oil fields in the 1,200 sq mile area known as Block B8/32 in
the Gulf of Thailand. Thaipo Ltd., a subsidiary of Pogo Producing Co. has 46.34 percent and
Palang Sophon Ltd.has two per cent. Block B8/32 produces oil and natural gas from three
fields, namely Tantawan, Maliwan and Benchamas. The daily production in 2003 from these
fields was 104 million cubic feet of natural gas and 24,600 barrels of crude oil.
Redesigning CBM Projects
ONGC is reworking its plan for the commercial production of coal-bed-methane (CBM).
This is due to delay in finalisation contracts for exploratory and development
drilling,originally planned to be in place by November 2004. ONGC is expected to award the
exploratory and development drilling contracts for coal bed methane (CBM) in May this year.
ONGC's latest initiative to hire the services of technology providers and carry out the project
on its own has not seen much progress so far. The company is also considering redesigning
the entire project. As against the initial scheme to start development drilling in the proven
field in Jharia in Jharkhand and start exploratory drilling in four other blocks in Jharkhand
and one block in West Bengal, ONGC is now considering launching the project only in Jharia
and North Karanpura blocks in the first phase. The company holds the Jharia block through a
90:10 joint venture with Coal India Ltd. It has identified a substantial reserve in Jharia. The
North Karanpura block on the other hand was secured jointly with IndianOil (20 per cent) in
CBM Policy-I. Exploration may also be initiated in the Bokaro block also held jointly with
KG Basin: RIL’s Development Plans.
Reliance Industries Ltd (RIL) is likely to start drilling development wells in the Krishna-
Godavari (KG) basin in January-April next year. The directorate General of Hydrocarbons
(DGH) had in October-end approved the $2.49-billion development plan for the Krishna-
Godavari block, off the east coast. DGH has approved the development plan of Reliance for
drilling of 35 wells in deep-sea block KG-DWN-98/3. Mining lease for 20 years, effective
from March 2, 2005, has been granted. Reliance holds 90 per cent stake in the gas block,
while Niko Resources of Canada owns the remaining 10 per cent. Govt to develop gas
pipeline network to utilise K-G Basin resources
Reliance has so far drilled 14 exploratory wells in the Krishna-Godavari basin off Andhra
Pradesh coast—of which only the first three—at Dhirubhai 1, 2 and 3—have been declared
commercial. Reliance expects to produce 40 million standard cubic metres gas per day from
Dhirubhai 1 and Dhirubhai 3 fields by the end of 2007 or early 2008. The company is
expected to bring the gas to a processing facility near Kakinada through a 35-km, 24-inch
pipeline. However, the plans have been delayed till March 2008 as against the earlier August
2007 deadline. In a bid to utilise natural gas resources available in the Krishna-Godavari (K-
G) Basin within Andhra Pradesh, the state government has decided to develop a gas pipeline
network under public-private participation before the commencement of production in the
year 2008 and all the companies, including Reliance will be asked to use the same pipeline
network to evacuate and supply gas to the consumers. The newly created infrastructure
department will work out the modalities for the proposed public private partnership. A
regulatory mechanism for the pricing and supply of gas at the state level will also be
considered at a later date. The pipeline project will cover both industrial and domestic
IOC bids for South Pars.
Indian Oil Corporation Ltd (IOC) and Petropars, Iran, have submitted a joint proposal to the
National Iranian Oil Company (NIOC) for developing an upstream block in South Pars gas
field and setting up of LNG (liquefied natural gas) liquefaction facilities with 9 million metric
tonnes (MMT) per annum capacity in Iran. The joint proposal seeks in-principal approval for
the two from NIOC to award the projects to them on nomination basis. In November last year
IOC had inked a MoU with Petropars for the purpose as well as having marketing rights for
IOC for 9 MMT of LNG. As per the agreement, IOC is expected to have 40 per cent stake in
the exploration block, with Petropars holding the rest. For the second project, the LNG
facility, IOC plans to have 60 per cent stake and the rest remaining with Petropars.
Diversified Petroleum Import Basket
India has indicated its preference to meeting its energy requirements through a more
diversified crude import basket to ensure stable, secure and sustainable energy supply from a
variety of sources. It is working on reinforcing its oil trade with Saudi Arabia through
strategic mutual investments. It is also pursuing the proposed $4.16 billion India-Iran gas
pipeline project via Pakistan, despite Washington’s reservations in this regard. y reliance on
any single country, by a widening its import base. Nigeria, Iran, Kuwait and Venezuela are
tipped as immediate destinations for sourcing crude oil.
Indian Oil Corporation(IOC) is showing increasing preference for Iraq crude, better known
as `Basra Light', primarily due to the price advantage it offers. Having entered the Iraq
market last year, the company procured 4.8-million metric tonne (MMT) Basra Light in
2004-05. It is now planning to step up imports from Iraq to 8 MMT mt during the current
fiscal, on term contract basis. IOC procures close to 40 MMT of crude from the world
market to feed its seven refineries. Of this, 25-26 MMT are on annual term contract basis and
the rest are spot purchases. Apart from Iraq, the other countries from which IOC is expected
to procure in substantial quantities on term contract basis during 2005-06 are Kuwait (7
MMT), Saudi Arabia (4.5 MMT), UAE (2 MMT), Iran (2 MMT) and Nigeria (2 MMT).
Oil PSUs are showing increasing interest in the futures trading, the most recent entrant in the
field being BPCL. In terms of volumes traded, however, PSUs are still a poor comparison to
their private counterparts. IOC, which had set the trend three years ago, is yet to register any
significant volume in the futures market. The situation is same for BPCL.
More Gas from Qatar
Qatar has agreed in-principle to increase the supply of liquified natural gas (LNG) from the
current five million tonne to 20 mt within the next 10 years to India. Both countries have
agreed to explore possibilities of consultancy, turnkey projects and sub-contracting by Indian
companies in Qatar’s plans for energy -intensive and export-oriented projects. Qatar currently
supplies 5 million tonnes of the gas per annum to the Dahej terminal of the Petronet LNG
Limited (PLL). Qatar has agreed to supply an additional 2.5 million tonnes per annum of
LNG to PLL's upcoming Kochi terminal from June 2008.
PLL plans to expand capacity at Dahej to 10 million tonnes from the present 5 million tonnes
and Kochi terminal from 2.5 million tonnes currently to 5 million tonnes in future. LNG from
Qatar after regasification costs $3.37 million British thermal unit (mbtu), which is about 17
per cent cheaper than gas being sold by the consortium operating in the Panna, Mukta and
Oil diplomacy peaks
India public sector (ONGC, IOC, OIL, GAIL) hydrocarbon presence has increased to 47
countries worldwide. India is currently examining specific expressions of interest from
Ecuador, Columbia, Trinidad and Tobago and Surinam in South America, Chad, Niger, Sao
Tome-Principie, Gabon, Congo-Kinshasa and Tanzania in Africa, Saudi Arabia, Qatar,
Uzbekistan, Turkey and Kazakhstan in Asia. Attempts are also being made to add
Turkmenistan and Azerbaijan. Proposals being pursued include 15 E&P projects in 14
countries, eight refinery and pipeline projects in six countries, five marketing projects in five
countries besides four gas projects in three countries including transit through Pakistan and
Aviation Turbine Fuel
The proposed Civil Aviation Policy envisages setting up an airport economic regulatory
authority (AERA) to regulate air tariffs and performance standards for the domestic aviation
sector. The policy will also have provisions to end the monopoly of state-run oil companies
in providing aviation turbine fuel (ATF) at the Indian airports. This is expected to bring down
ATF prices. The civil aviation ministry decided last month to acquire the entire fuel supply
hydrant systems and other related infrastructures in the major airports and refuelling centres
for aircrafts at a book value from the Airport Authority of India (AAI). Subsequent to the
acquisition, all ATF-producing companies would be given equitable access to the
infrastructure. Reliance had recently submitted technical bids for setting up refuelling stations
at major airports of the country such as Delhi, Mumbai, Kolkata along with 72 airports where
the AAI wants to set up aviation fuel stations. Essar has also filed an application with the
ministry seeking its permission to distribute ATF in India. Oil and Natural Gas Corporation
(ONGC) has obtained permission to distribute ATF in India as it has commissioned an ATF
production cell at its refinery in Mangalore.
Private petroleum majors are gearing up for a foray into the domestic aviation turbine fuel
(ATF) market as the monopoly of state-owned companies, Indian Oil Corporation, Hindustan
Petroleum Corporation and Bharat Petroleum Corporation, comes to an end this April. The
other reason for Reliance Industries and Essar Oil to vie for distribution of this high-quality
fuel is that several new airlines, foreign and domestic, are entering the market. Reliance has
3.6 million metric tonne per annum (MTPA) ATF production capacity at its Vadinar refinery
in Jamnagar district of Gujarat. It has been exporting most of its as private companies were
not allowed to sell ATF in the domestic market.
Tourism ministry has sought rationalisation of ATF and other taxes. Tourism minister has
indicated that high sales tax on ATF charged by state governments had made the domestic
tourism more expensive, forcing tourists to look for other destinations. The government is
considering a ban on export of kerosene oil (jet kero) and aviation turbine fuel (ATF), which
are similar to kerosene, to boost supplies of kerosene for public distribution system (PDS).
India imports kerosene as its requirement for PDS could not be met with indigenous
production. Kerosene availability for April, May and June is short by 100,000 tonne per
International Crops Research Institute for Semi-Arid Tropics (ICRISAT) will collaborate
with Nandan Biomatrix Ltd to grow bio-fuel and medicinal plants on wasteland. The Agri-
Science Park (ASP) established at ICRISAT will host the bio-fuel project. Apart from
providing expertise and technical services, ICRISAT will extend infrastructure support to the
project through its state-of-the-art laboratories, farms and seed material propagation facilities.
The ASP is a hub of public-private partnerships to enhance the development and
commercialisation of science-generated technologies and knowledge through market
mechanisms. The goal of the ASP is to help achieve ICRISAT’s mandate to develop
agriculture in the semi-arid tropics. The ultimate objective is to reduce poverty and hunger,
and also to protect environment. The ASP consists of an Agri-Biotech Park (ABP), an Agri-
Business Incubator (ABI), Private Sector Hybrid Parents and Bio-pesticide Consortia, and the
SAT Eco-Venture (agro-ecotourism).
Kochi Refineries Ltd (KRL) has plans to set up a pilot plant to extract biodiesel from rubber
seed oil, to look at the feasibility of the project. KRL has plans to invite global tenders for the
design, installation, commissioning and performance of the plant. KRL is also parallelly
initiating studies into the availability of rubber seed oil.
Another company, TeamSustain is talking with the US-based Biodiesel Industries for
producing biodiesel from palm kernel and rubber oil and has asked AF Fergusson to
undertaken a market survey. The proposal was to set up a plant with a daily capacity of
30,000 litres. The investment was expected to be around Rs 200 million.
The State Bank of India has signed an MoU with D1 Mohan Bio Oils, a JV between UK-
based D1 Oils and Mohan Breweries and Distilleries, for funding Rs 1.3 billion to farmers in
Tamil Nadu to plant up to 40,000 hectares of Jatropha Curcas, the key input for bio-diesel in
The Ministry of Petroleum and Natural Gas and the Ministry of Panchayati Raj have come
together to seek the advice of the Parliamentary Consultative Committees on initiatives in
alternative fuels. The discussion will be on the steps that can be taken by the Ministry of
Panchayati Raj for promoting Jatropha curcus (the oil from which bio-diesel can be
produced) on community lands and indicative policies that can be considered by the Ministry
of Petroleum for providing demand-end support for buying bio-diesel. The government has
undertaken a programme to replace 5% of diesel consumption by 2006 with 2.6 million
tonnes of Jatropha bio-diesel produced on 2.2 million hectare. The petroleum ministry is
preparing a bio-diesel policy promising incentives to village panchayats to lure farmers into
Jatropha cultivation. The private sector has also entered the fray lured by the size of the
market which is estimated at $3.5 billion by 2010.
BPCL’s New Identities.
Bharat Petroleum Corporation Ltd (BPCL) has plans to launch of its first retail outlet with the
new visual identity in Kerala, which will give the company's retail outlets an international
look and feel. Nationally, it expects to have 150 new-look outlets in place by the end of April.
By the end of the next financial year, the company plans to have between 600 and 700 retail
outlets sporting the new visual identity. As part of its marketing efforts, the company recently
set up its first `vehicle care centre' at a retail outlet in New Delhi. During the course f the
next financial year, the company plans to establish 30 such `vehicle care centres' across South
India. Also on the cards is an expansion of the company's `In & Out' network of convenience
stores. At present, the company has 300 `In & Out' stores and plans to have 500 such stores
by the end of March 2006.
Royal Dutch/Shell Group and Total Gaz Electricite Holdings France, two of the private
liquefied natural gas (LNG) providers in the world, have formally announced the
inauguration of the Hazira LNG Terminal and Port at Hazira in Gujarat with the unloading of
the first cargo of LNG from the ship Gemmata. The terminal has been set up with an
investment of over Rs 30 billion. Shell Gas B.V holds 74 per cent of equity in the Hazira
companies, while Total Gaz holds 26 per cent. Instead of sourcing from a particular project
on long-term and then tying up long-term sales contract with customers in the importing
countries, it offers flexible customer tailored contracts. The first gas was sourced from
Australia's North West Shelf project, in which Shell has a 22 per cent stake. The cargo has
been sold to Gujarat State Petroleum Corporation (GSPC), at a price estimated to be few
cents more than Petronet's sale price of $ 3.66 per million British thrmal unit (mBtu). A
Shell-controlled tanker, Gemmata, carried the first cargo,in conformity with the new LNG
The LNG terminal's initial throughput capacity is of 2.5 million tonnes per annum (mtpa),
which the company proposes to raise to 5 mtpa. The site has been laid out for increasing
capacity up to 10 mtpa with two additional tanks. LNG for Hazira may be sourced from
Shell-partnered plants in Oman, Australia, Brunei and Malaysia or Total's LNG production in
Indonesia, Qatar, Oman and Abu Dhabi. The company has not tied up with any other
customer other than GSPC and was open to giving equity to a company that brought value to
the business. Further, the company was also open to various joint ventures for its container
and port projects. Meanwhile,Hazira Port Pvt Ltd, the company responsible for developing a
container terminal and bulk cargo port at Hazira, has roped in Essar Steel Ltd as a strategic
partner. Shell has plans to invest at least another Rs 10 billion for the bulk cargo port and
container terminal, being developed close to the LNG terminal site.
The disinvestment process of Oil India Limited (OIL)is being delayed due to the differences
between the Ministry of Petroleum and Natural Gas and the Ministry of Finance on the ways
and means to be adopted. While the Finance Ministry was of the view that the IPO route
should be adapted to divest 15 per cent Government equity in the company, the Petroleum
Ministry wanted the new issue proceeds to go to OIL. An offer of 15 per cent equity will
amount to selling 32 million shares and with a price band of Rs 312-375 a share, it can raise
Rs 10-12 billion. Currently, the Government's stake in OIL is 98.13 per cent, with remaining
equity being owned by the employees of the company.
The argument put forth by the Petroleum Ministry was that the funds from the IPO could help
OIL in expanding its operations. The company has plans to double its production capacity
and hike its gas output, which is hoped to be achieved through improving production of the
existing capacity, expanding production from blocks acquired as well as through acquisitions.
The finance ministry, however, was of the opinion that the company did not need more
money as it had been unable to utilise the funds it currently had. OIL has reserves and surplus
of Rs 38.546 billion at the end of March 31, 2004.
The proposal of Indian Oil Corporation buying government equity in OIL has been put on
hold as the government wanted to preserve the distinct identity of OIL, which is closely
identified with the sensitive north-eastern region. Petroleum Ministry is also waiting for the
report of the Committee on Synergy in Energy, expected by May.
Revamping PDS kerosene
Government’s draft policy paper on the revamping of the public distribution system (PDS),
involving a network of about 500,000 retail points, to strengthen the distribution and
marketing of kerosene indicate an active participation of the State governments, district
administrations, Panchayati Raj institutions, voluntary organisations and consumer bodies
said. As per the proposal, 5-10 sub-wholesale points would be created in consultation with
the district administration. These wholesale points will supply to retail points. The supplies
to the sub-wholesale points will be made under the direct supervision of oil companies. It has
been proposed in the draft policy that oil marketing companies would establish at least one
wholesale kerosene dealership in each development block with storage tanks having a
minimum capacity of 20 kilo litres, electronically metered dispensing pumps, adequate
number of barrels for delivery of kerosene to sub-wholesale points, and one or more barrel
sheds. Existing wholesale dealers will also be given these facilities. As per the draft
guidelines, the expenditure incurred in creation of these facilities would be borne either by
the Government or the oil marketing companies. A dedicated fleet of tanker trucks for
transportation of PDS kerosene has also been suggested.
Market-driven Gas Pricing
Gas from Panna, Mukta and Tapti gas fields was priced at $4.08 per million metric British
thermal unit (MMBtu), up 31 per cent from the earlier price of $3.11 per MMBtu. However,
the gas sold to GAIL (India) will attract a price of $3.86 per MMBtu. Gujarat Gas Company
Ltd, Reliance Industries’ Hazira plant, IPCL’s Gandhar and Baroda unit and the Gujarat
state-owned Gujarat State Petroleum Corporation (GSPC ) have started drawing the gas at the
new rate. Currently, the BG group and its consortium partners — ONGC and RIL — sell 10.8
to 11 million metric cubic feet of gas per day (mmcmd) . Of the total 11 mmcmd of gas, as
per the new agreement, GAIL will get only 6 mmcmd and the rest will be marketed to other
industries. BG Group and its consortium are expected to earn additional revenue of $100
million. This solution came after the shut of the the Tapti field, which supplies roughly one-
fifth of the total 34 mmscmpd gas to customers along the Hazira-Bijaipur-Jagdishpur (HBJ)
pipeline, for 10 days.The ONGC-Reliance-British Gas consortium has been forced to shut
down wells at its Tapti gas field for the first time in eight years, after GAIL (India) - its
largest gas buyer — cut purchases to one-third. Production has come down from 10.8
mmscmpd to 6.8 mmscmpd after GAIL cut purchases to 1.5-2 mmscmpd instead of the
contracted 6 mmscmpd.
Balloning Oil subsidies.
The failure of the government to permit the Indian oil marketing companies to enahance the
price of petroleum products in line with the increase in the price of crude oil imported, the
under-recoveries of oil marketing companies — IOC, HPCL, BPCL and IBP — on petrol,
diesel, LPG and kerosene will touch Rs 30 billion every month.
India’s oil refiners, who had so far been i nsulated from the vagaries of the international oil
market, may now have to take some of the pain. The prices that the refiners get for their
major products — diesel, petrol, LPG and kerosene — were not revised on 1 April. This
could impact the margins of standalone refineries such as Reliance, MRPL, Chennai
Petroleum (CPCL) and Kochi Refineries (KRL). Oil marketing companies such as Indian Oil,
Hindustan Petroleum, Bharat Petroleum and IBP would benefit from the move.The oil
marketing companies purchase petroleum products — diesel, petrol, LPG and kerosene —
from petroleum refineries and sell them to the end consumer. The oil refiners are paid the
‘import parity price’ for these products. Thus, their profits were protected from fluctuations.
As a result, while the profits of oil marketing companies fell in the first three quarters of
FY05 due to poor retail margins, the profits of standalone refiners had increased in line with
refining margins internationally.
If the import parity principle was followed, the refinery gate price of diesel and petrol should
have increased by about Rs 1/litre, say industry sources. In case of kerosene, the increase
should have been Rs 3.5-4/litre, while LPG prices should have gone up by Rs 700/tonne. A
change of Rs 1/litre translates into about $3/barrel. These four products together account for
about 60% of the total petroleum products produced in India. Thus, a freeze on prices would
impact refinery margins.
Indian Oil Corporation (IOC) has been allowedby Union Cabinet to directly charter ships for
crude oil imports instead of going through Transchart, the centralised chartering wing
attached to the shipping ministry. However, other state-run refiners Hindustan Petroleum,
Bharat Petroleum and Mangalore Refineries would continue to depend upon Transchart/SCI
for meeting their chartering requirement. Until now, IOC was importing crude on FOB basis
and the shipping ministry monitored the chartering arrangements. However, IOC wanted to
make its own shipping arrangement to reduce its freight bill and improve refinery margins as
competitive bidding and negotiations help reduce the freight which accounts for about 10%
of the value of imported crude. IOC imported 25.87 million tonne of crude oil worth Rs
274.61 billion in 2002-03, of which the freight component was about Rs 12 billion.
The finance ministry has questioned how continuing with the centralised shipping
arrangement through Transchart could help improve user satisfaction. The shipping ministry,
in its draft maritime policy circulated to various ministries for comments, has not suggested
any change in chartering norms of the ministry. The finance ministry has also said the
practice of insisting on the free-on-board (FOB) imports by the government and the public
sector units (PSUs) was also not clear. In FOB contracts, the importer has to only pay for the
cost of the material. The shipping ministry is of the view that once companies were free to
make its own shipping arrangements, they would start importing on cost and freight (C&F)
Synergy in Energy: India- Saudi Arabia
Hindustan Petroleum Corporation Ltd (HPCL) was interested in setting up a refinery in Saudi
Arabia. India was also looking for long-term crude contracts with Saudi Arabia. India is also
inviting Saudi investment in oil refining and fuel retailing and exploring opportunities to
invest in developing gas fields in Saudi Arabia. Leading Saudi oil companies like Saudi
Aramco, are now gearing up to pick up stake in HPCL’s Vizag and IOC’s Paradip refineries.
Saudi Aramco had earlier evinced interest in coming as a strategic partner for HPCL when
the government was planning to privatise the company. Saudi Aramco was keen on picking
up a stake in an existing refinery and then partnering the Indian company in other
downstream ventures. In what could be a barter deal, HPCL has been invited by Saudi
Aramco to pick up stake in the upcoming Yanbu export-oriented refinery in the Red Sea.
Saudi Arabia will supply crude oil to the Vizag refinery and possibly also to Paradip, which
will export refined petroleum products to markets in the East. The details of the deal — the
percentage of stake to be picked up and the value — would be sorted out in soon. Saudi
Aramco has also invited GAIL and ONGC Videsh to bid for gas blocks, which will be up for
bidding by the year-end.
Indian Oil Corporation and Saudi Aramco may build a merchant storage terminal to sell
crude oil to other oil companies, instead building strategic crude storage facility for India.
The two companies have not yet decided the cost or size of the commercial venture. IOC and
Hindustan Petroleum Corporation (HPCL) would also be holding discussion with Aramco on
cross investment in the refinery sector.Saudi Arabia has offered HPCL a stake in its Yanbu
refinery off the Red Sea. HPCL would, however, be required to bid along with other global
players to get a share in Yanbu. Another area of cooperation identified in the hydrocarbon
sector was gas exploration. India expressed its interest in Ruv-al-Khali gas reserves as a
starting point. ONGC Videsh Ltd and Gail (India) Ltd will bid for gas blocks.
Strategic Petroleum Reserves
Work on creating strategic crude oil reserves for the country has hit a roadblock with the Oil
Industry Development Board (OIDB) refusing to offer a grant for the purpose, and is instead
sanctioning a loan. OIDB recently approved a loan of Rs 300 million for Indian Strategic
Petroleum Reserves Ltd (ISPRL), a wholly owned company of Indian Oil Corporation, which
registered its protest with the government. This was when OIDB was in a position to claim in
excess of Rs 510.076 billion from the government as proceeds from cess on domestic crude
and gas. ISPRL had also sought another Rs 1 billion for the current year from OIDB. The
company was finding it difficult to even get clearances for locating the strategic reserves.
Project consultants Engineers India Ltd identified Mangalore and Visakhapatnam as the
appropriate locations for the reserves. But at both these places, land acquisition is a
problem.Mangalore Refinery and Petroleum Ltd, for its expansion, was looking at the same
piece of land which had been identified by the consultants. The location in Visakhapatnam
was also posing a problem to ISPRL since it was naval land. Mangalore will have 1.5 million
tonnes of crude reserves while Visakhapatnam will have about 1 million tonne. Both the
issues of financing and land acquisition were put up for mediation by IOC to the petroleum
Net Tax Gains
The “additional revenue earnings, inclusive of that on account of increase in additional excise
duty (cess), during 2005-06 as a result of hike/ restructuring in excise duty on petrol and
diesel” are Rs 33.87 billion for petrol and Rs 86.87 billion for diesel. This is in contrast to the
losses owing to Customs duty reduction, which is Rs 54.80 billion for crude oil, Rs 15 billion
for petroleum products and Rs 22 billlion due to the excise duty reduction on LPG (domestic)
and Kerosene (PDS). This shows that the exchequer is set to profit by Rs 2,8.94 billion.
The standing committee on petroleum and natural gas has recommended that the government
rationalise the duty structure on petroleum products so that there was no cascading effect of
the increase in international prices on customers and has asked the government to set up a
price stabilisation fund to bring in stability in the prices of petroleum products. The fund
could be created using the money collected from cess on indigenous crude.
Profits for Oil PSUs
Oil companies currently earn a net profit of between Re 1 and Rs 3.50 on every Rs 100 sales.
While the profit margin of IOC is 3.5 per cent, BPCL's is now below 1 per cent. These
companies would end up earning an average return of about Rs 20 for every Rs 100 invested
in thebusiness for the year ended March 2005. Though the return has declined from about 30
per cent to 20 per cent, it is still higher than the average return generated by private sector
companies, whose average is about 13 per cent.
The Oil and Natural Gas Corporation (ONGC) made a net profit of Rs 125 billion in the last
financial year and Rs 300 billion in last three years. However ONGC has revised downwards
its estimated turnover for 2004-05 to Rs 460.25 billion and estimated net profit to Rs 121.75
billion following instructions from Ministry of Petroleum and Natural Gas to continue the
practice of sharing of under-recoveries on PDS kerosene and LPG for the fourth quarter of
The Department of Public Enterprises (DPE) has favoured yet another extension of the
purchase preference policy for products and services of central public sector enterprises
(CPSEs) beyond March 31, 2005. Under this policy, PSEs are preferred over other bidders in
tenders floated by state-owned companies if their bid is within 10% of the lowest bid. The
proposal has, however, not found favour with the commerce and petroleum ministries, the
Confederation of Indian Industry (CII), the Central Vigilance Commission and the National
Highways Authority of India. In a note to the group of ministers (GoM) set up to decide on
the policy, the DPE has pitched for extending the preference policy on the grounds that this
would be in keeping with the government’s national common minimum programme (NCMP)
objectives. Issues presently being deliberated by the GoM relate to whether the extension
should cover PSUs alone or their joint ventures also; whether sectoral exemptions should be
given or the policy extended universally; the level of purchase preference and whether the
extension should be conditional and if so the nature of these conditions.
Although both the petroleum and commerce ministries have opposed extending the policy
beyond March 2005, they have suggested certain modifications if it becomes absolutely
essential to continue with the preference policy. As per the commerce ministry, the degree of
purchase preference may be reduced from 10% to 5% and the policy extended only to tenders
of Rs 10 crore and above instead of Rs 5 crore, as is applicable now. On its part, the
petroleum ministry has sought sectoral exemption and has proposed that the oil sector in
general, and the exploration and production (E&P) sector in particular, be exempted from the
BG India along with consortium partners Oil and Natural Gas Corporation (ONGC) and
Reliance Industries Limited has decided to invest approximately $500 million for
development and expansion of the Tapti gas field, offshore Mumbai. Consequently, the
committed investment by the joint venture amounts to over $ 900 million.The government
has approved the investment plan for the development of the mid-Tapti field with installation
of a processing platform and new compression facilities to increase production in 2007. Tapti
has estimated gas in place of 3.75 trillion cubic feet. A single wellhead platform will be
installed to drill up to eight new wells in order to raise gas production from the current rate of
250 million standard cubic feet per day (mmscfd) to 450 mmscfd. A new 20-inch export
pipeline will be laid and in the initial stage four wells will be drilled. In November 2004, the
partners installed compression facilities on the south Tapti field, at a cost of $ 16 million,
increasing gas production from 180 mmscfd to 250 mmscfd.
Sharing of `profit gas'
EVEN as the Government is yet to make up its mind on whether it would take in kind rather
than in cash its share of `profit gas' under production sharing contracts (PSCs) at privately
operated gas fields, differences have cropped up between the private gas producers and GAIL
(India) Ltd. Under the New Exploration Licensing Policy (NELP), all gas producers have
signed production sharing contracts agreeing to the arrangement of the Government taking its
entitled share of profit gas either in cash or kind. But private producers, both domestic and
foreign, including British Gas, Reliance and Exxon-Mobil, have voiced their opposition to
the proposal of paying profit gas in kind. According to Gail, globally payment in kind is
common where the Government as production sharing contract partner takes its share of the
gas and then markets it through a nominee and this profit gas in kind does not affect the
profitability of gas production. Vietnam, Indonesia and Myanmar are examples where the
profit gas is taken in kind. One of the reasons cited by the private gas players is that the move
would be a deterrent to natural gas market growth in India. To take profit gas in kind would
mean that the producer would no longer have the right to market all gas, according to the
players. They have also been arguing that profit gas world over is taken in cash, saying that it
would hurt the gas sale agreements and make it difficult for gas majors to make long-term
¬ Indian Oil Corporation Ltd has announced the opening of its first automobile LPG
dispensing station in Kerala with the simultaneous launch of `Autogas', brand of
LPG for automobiles.
¬ Exxon-Mobil Corp is keen on acquiring a stake in Reliance Industries' D6 block in the
Krishna-Godavari basin in the Bay of Bengal and the operatorship in KG-DWN-98/3.
¬ The Union Cabinet on Thursday deferred implementing Bharat Stage II diesel fuel
norm across seven States, namely Uttar Pradesh, Rajasthan, Uttaranchal, Madhya
Pradesh, Punjab, Himachal Pradesh and Jammu & Kashmir by six months.
¬ Central UP Gas Ltd, a joint venture by GAIL (India) Ltd and Bharat Petroleum Corp
Ltd (BPCL) has been launched for supplying compressed natural gas (CNG) in
¬ Numaligarh Refineries Ltd (NRL) in Assam has plans to send by barges its first
consignment of high-speed diesel for discharge at Budge Budge in West Bengal.
¬ GAIL (India) Ltd proposes to spend Rs 31.24 billion towards gas pipeline projects
that include the Dahej-Uran pipeline, Jagdishpur-Haldia pipeline, Vijaipur-Kota
pipeline, Dadri-Panipat pipeline, and Thulendi-Phulpur pipeline.
¬ India’s crude oil imports declined by 1.9 per cent to 6.94 million tonnes in February
2005 even as the domestic oil product consumption rose marginally by 1.1 per cent to
9.17 mt . Diesel which forms 40 per cent of total sales of petroleum products in the
country, recorded a 2.1 per cent fall in demand in March 2005 compared to last
¬ Mangalore Refineries & Petrochemicals Ltd (MRPL) and Ashok Leyland will form a
joint venture company for setting up retail outlets for petroleum products and
servicing facilities for trucks.
¬ TAta Motors and Indian Oil Corporation have undertaken a pilot project to understand
the feasibility of using bio-diesel in light commercial vehicles.
¬ Oil and Natural Gas Corporation's Tatipaka mini -refinery at Rajahmundry achieved
the MoU target of 80,000 tonnes in respect of value-added products (VAP) for 2004-
05 in February and achieved the performance target of 90,000 tonnes of VAP
products for 2004-05 on March .
¬ India is exploring opportunities for importing more crude from Saudi Arabia and also
more collaborative efforts with that country.
¬ India will resume talks with Pakistan on building a natural gas pipeline from Iran and
other issues of bilateral cooperation in the hydrocarbon sector.
¬ ONGC has entered into an agreement with the Bangladesh Development Corporation
Ltd (BDCL) to liaise and firm up upcoming business opportunities in Bangladesh.
¬ National Thermal Power Corporation (NTPC) will sign an agreement with Reliance
Industries Ltd (RIL) for supply of gas to its Kawas and Gandhar power plants in
Gujaratat a price of $2.97 per MMBTU (million British thermal units).
¬ Sri Lanka has put off indefinitely a decision to sell off part of the Ceylon Petroleum
Corporation to Bharat Petroleum as trade unions threatened to stop work.
¬ Bharat Petroleum Corporation Ltd (BPCL) is planning to expand its retail business to
south Asian countries starting with petroleum retailing Singapore through market
¬ Kochi Refineries Ltd (KRL) has signed an MoU with Bharat Petroleum Corporation
Ltd, which envisages a crude oil throughput of 7.5 million tonnes and a turnover of Rs
128.62 billion for 2005-06.
¬ The Bharat Petroleum Corporation Ltd (BPCL) has decided to enter into a deal with
the Gujarat Adani Energy Ltd (GAEL) for retail sales of compressed natural gas
(CNG) in Ahmedabad.
¬ GAIL India Ltd has modified its previous stand of cutting down supplies to the extent
of 6.75 million standard cubic metre of gas per day (mmscmd) beginning April 1 and
clarified that it will not be reducing gas supplies along the HBJ system.
¬ The Tamil Nadu Industrial Development Corporation (TIDCO) has invited expression
of interest from those engaged in the hydrocarbon and petrochemicals sectors for a
naphtha cracker project.
¬ Multi Commodity Exchange of India (MCX) has registered a record daily turnover of
Rs 1149 million in the crude oil April contract as on March 23 with average daily
volumes of Rs 700 million. MCX has also recorded average daily volumes of 4 lakh
barrels with an open interest position of equal volume size.
¬ The deadline for Mahanagar Gas (MGL), a joint venture of GAIL (India) and the UK-
based British Gas, to get listed on Indian bourses expires in December 2005. MGL
has plans to invest Rs 2.5 billion on expanding its presence in Maharashtra over the
next two years.
The Kochi Refineries Investors' Forum, group of minority shareholders of Kochi
Refineries Ltd, has protested the declared swap ratio of 9:4 for the company's
proposed merger with Bharat Petroleum Corporation Ltd. A member of the Rajya
Sabha has urged the Chairman of the Standing Committee on Public Sector
Undertakings (SCOPE) to re-assess the announced swap ratio. The Union ministry of
petroleum and natural gas will reconsider this issue.
¬ Oil and Natural Gas Corporation's two drilling rigs of Rajahmundry Asset have been
awarded ISO-9001:2000 certification for implementation and maintaining of Quality
Management System as per ISO standards.
¬ Six geoscientists of ONGC have bagged the National Mineral Award 2003 for their
contributions in fundamental and applied geosciences and also in the field of
hydrocarbon exploration and production.
¬ Bharat Petroleum Corporation (BPCL) has clocked a 6.3 per cent rise in lubes sales
between April 2004 and February 2005, higher than the industry growth of 1.9 per
cent. Indian Oil Corporation, the country’s largest lube marketer, acheived a 4.1 per
cent growth while Hindustan Petroleum Corporation (HPCL) recorded a 0.8 per cent
growth in the period.
¬ The Petroleum Minister has that the rising global crude oil prices and severe volatility
in the international oil market was a matter of concern, but India has sufficient foreign
exchange reserves to meet its crude oil import requirements. With international crude
price crossing the $58-mark per barrel, oil drilling companies such as ONGC and
Hindustan Oil Exploration Company Ltd (HOECL) are in demand at the stock
markets even as there is a concern over rising oil prices in general.
¬ Mumbai port is in talks with PSU oil companies for investing in its proposed Rs 1.5
billion oil berth and a single buoy mooring (SBM) facility at the port. The proposed
oil berth, which will be the fifth berth at the Marine Oil Terminal, will have a capacity
of 15 mt, with a draft of 17 mt to accommodate Suezmax tankers.
¬ ONGC is considering floating a sabbatical scheme to rationalise excess manpower.
Over the past two years, the company had rolled out two voluntary retirement
schemes to shed nearly 4,500 people. Both the schemes, however, received lukewarm
response from the employees.
¬ Under the new value-added tax regime,gas users in Mumbai may have to pay less for
compressed and piped natural gas.
¬ Indian Oil Corp. Ltd. has raised prices of jet fuel by Rs 3,900 per kilolitre to
25,110.43 before sales tax,( about 18 per cent) from April 1.
¬ ONGC, IOC and HPCL are keen on setting up a 4-6 million tonne per annum oil
refinery at a cost of Rs.40-50 billion in Rajasthan. They all have to submit a detailed
proposal by June 30.
¬ Royal Dutch/Shell will in April 2005 receive its first cargo of liquefied natural gas at
its Hazira terminal in Gujarat, which is India's second LNG import facility.
¬ Oil and Natural Gas Corporation (ONGC) and Ashok Leyland Project Services Ltd
(ALPS) will implement the Rs 250 billion integrated LNG project involving an LNG
re-gassification terminal, power plant and petrochemical complex.
¬ Larsen & Toubro Ltd (L&T) and its consortium partner, the US-based Global
Industries Offshore, have won a Rs 18.64 billion order from Oil & Natural Gas
Corporation (ONGC) to replace pipelines and modify platforms at Bombay High, off
¬ Kandla Port Trust, the country’s second largest p ort, has witnessed a significant
reduction in handling crude oil at its oil jetty at Vadinar in Jamnagar district. In 2004-
05, Kandla Port reported a 13 per cent reduction in oil traffic handling. This is
significant since its closest rival, India’s first privately developed port, Mundra Port,
is expected to report over 10 per cent growth in 2004-05.
¬ National Thermal Power Corporation (NTPC), the largest consumer of gas along the
GAIL (India) Ltd's Hazira -Vijapur-Jagdishpur (HVJ) pipeline, has refused to shell out
higher gas prices from the Panna-Mukta-Tapti .
¬ Kalpataru Power Transmission Ltd (KPTL) plans to enter the business of laying oil
and gas pipelines.
¬ Indian Oil Corporation Ltd (IOC) has been ranked as the top oil trading company
amongst national oil companies in the Asia-Pacific region for the successive second
year, as per the annual survey conducted by Applied Trading Systems (ATS),
Singapore, for the year 2004. IOC is followed by Petronas of Malaysia, Sinopec of
China, HPCL of India and ENOC of United Arab Emirates. The survey covered 79
major petroleum-trading companies in the Asia Pacific Region.
¬ Private oil retail outlets owners across the country, led by the Federation of All India
Petroleum Traders went on a one-day strike on April 18 to demand an increase in
dealers’ commission .
¬ National Thermal Power Corporation (NTPC) has decided to participate in the entire
LNG value chain involving procurement of gas, setting up liquifaction and re-
gassification facilities and transporting gas to its power projects. Interested in
procuring substantial quantities of gas, the state-owned power utility is looking at a
delivered gas price of less than $3 per mmbtu.
¬ Shareholders and creditors of Videocon Industries Ltd and Petrocon India Ltd (PIL),
have separately passed the resolutions for merger of PIL with Videocon Industries.
¬ Reva Electric Car Company Pvt Ltd (RECC) has signed an agreement with
Hydrogenics Corporation to develop fuel cell hydrogen cars for a future pilot project
by Indian Oil Corporation (IOC).
¬ Indian Oil Corporation Ltd (IOC), which is aiming to become a $60-billion company
from the current turnover of $35 billion, proposes to invest over Rs 58 billion in new
projects during the current fiscal.
¬ As part of the President’s Vision 2020, ONGC has launched its Corporate Social
Responsibility (CSR) project on providing urban amenities in rural areas (PURA) on
April 18, with a seed money of Rs 100 million and will spearhead integrated
economic development in roughly 50 villages in the oil or gas bearing areas of
Tripura, Assam, Andhra Pradesh, Tamil Nadu, Gujarat and Rajasthan.
¬ Paradip Port's oil jettyhas started functioning with the discharge 4,500 tonnes of
superior kerosene oil from "Suvarna Swarajya", a 35,000-dwt product tanker
belonging to the Shipping Corporation of India but on a charter hire to Indian Oil
¬ The Hindustan Shipyard Ltd has completed the repairs to, and modernisation of, the
ONGC's biggest jack rig (Sagar Pragati) which was carried out under the
inspection of Classification Societies American Bureau of Shipping and Indian
Register of Shipping.
¬ US President has expressed his country’s interest to work with India for mutual
economic benefit and cooperate in the civilian nuclear and other energy sectors.
¬ Lending institutions including Power Finance Corporation (PFC), ICICI and IDBI,
among others are increasingly reluctant to fund gas-fired power projects as compared
to coal-fired projects, even if these use imported coal.
¬ The acute shortage and non-availability of raw water from the Netravati River has
forced the Mangalore Refinery and Petrochemicals Ltd (MRPL) to partially shut
down some of the units in Phase-I of the refinery. However now the State
Government has permitted MRPL to pump water from the Sarapady dam across
¬ Videocon Industries Ltd has plans to spend Rs 8 billione on oil exploration and
production overseas in the next two years. It is in talks to invest in Sudanese oilfields
and is also considering Ukraine. The company will also spend Rs 12 billion in
exploration and production in India after it raises Rs 20 billion in global depository
¬ Though Indian Oil Corporation (IOC) has claimed that it had picked up shares in
Haldia Petrochemicals Ltd (HPL) at par,HPL has not confirmed that.
¬ Cairn Energy has indicated that it can produce upto 150,000 barrels per day by 2007-
end, 50 per cent more than the previously estimated 100,000 barrels per day from the
Mangala, Bhagyam and Aishwariya fields in the Rajasthan block.
¬ Reliance Industries Ltd.is planning to raise $250 million through a five-year
syndicated loan, to be launched by the end of April, to be used for capital
¬ The CPI(M) has quoted a standing committee report on petroleum duties to press for a
withdrawal of the decision to raise excise duty petroleum products. The Left parties
have demanded a rethink on the imposition of additional 50 paise road cess on petrol
¬ The government will review the deadline for implementation of Euro IV equivalent
norms. The auto-fuel policy had recommended Euro IV norms for 11 cities and Euro
III in rest of the country from 2010 but officials said a review would be done next
year after studying the impact of Euro III norms.
¬ The Centre has asked the Maharashtra Government to investigate the complaint of
IOC against Reliance Industries on marketing of diesel through retail outlets in and
¬ Nagarjuna oil Corporation Ltd, whose 6-million-tonnes-a-year refinery project at
Cuddalore in Tamil Nadu is seeing some progress after a long time, hopes to finalise
its equity holding structure by June end and achieve financial closure by September.
¬ ONGC is spending about Rs 6 million for the socio-economic development initiatives
in the Amalapuram-Rajahmundry area every year. Further, out of Rs 10 million spent
annually by the Ravva Project operated by Cairn Energy, ONGC has a share of Rs 4
million since it has 40 per cent stake in that venture.
¬ The Onshore Security Co-ordination Committee (OSCC), entrusted with the task of
overseeing the security of onland oil and gas installations of ONGC in the Andhra
Pradesh region, has reviewed the prevailing security environment in the KG Asset.
¬ Oil and Natural Gas Corporation is expected to finalise the detailed feasibility report
for the proposed petrochemicals project at the Dahej special economic zone (SEZ) in
Gujarat by the end of May.
¬ GAIL (India) Ltd and the Bureau of Indian Standards (BIS) has formed an exclusive
cell for development of uniform standards for high-pressure oil and gas transmission
pipeline systems, to be in line with similar international standards such as the
American Petroleum Institute and European Standards.
¬ The Standing Committee on Petroleum & Natural Gas on demands for grants (2005-
06) of the Ministry of Petroleum has questioned GAIL (India) Ltd on its non-
compliance with a Presidential Directive cancelling the tender for Dahej-Uran
Pipeline Project (DUPL) and issuing fresh tenders and directed the Ministry for
Petroleum and Natural Gas to appoint a high-level fact-finding team to look into the
matter and submit its report to the committee within a fortnight.
¬ Shell India has opened swanky new retail station, its first in Chennai and third in the
¬ Oil and Natural Gas Corporation Ltd (ONGC) is actively considering buying a very
large crude carrier (VLCC), for use in bringing oil into the country from its overseas
locations or sell it to other countries.
¬ ONGC is considering stepping up the capacity of the proposed power plant at
Palatana to 1,500 MW and has announced a Rs 4 billion investment plan for stepping
up natural gas production capacity in Tripura from 1.7 million standard cubic metres
per day (mmscmd) to 4.5 mmscmd by 2007 through drilling additional wells, setting
up three gas storage stations, revamping existing storage facilities and laying a
pipeline connecting the production wells to the power plant.
¬ India and Saudi Arabia are expected to sign draft for collaboration in R&D,
commercial exploitation and technology.
¬ The target set for the production of crude oil for the current year (2005-06) is 34.45
million tonne as against 33.98 mt in the previous year.
¬ Oil and Natural Gas Corp has begun a Rs 4 billion drilling campaign in Bengal
offshore after a gap of around 15 years. ONGC has already spent Rs 1.75 billion in
3D seismic survey, data processing and interpretations and other geological and
geophysical studies in this block.
¬ India has sought greater collaboration between the oil majors of India and China for
building greater energy security.
¬ The BG group is planning to pick up a minority stake in the Gujarat Paguthan Power
Station which is expected to expand capacity to 1,000 Mw.
¬ Indian Oil Corporation (IOC) is looking at exporting petrochemicals from its Panipat
refinery to Pakistan. It has also asked the Railways to work out the feasibility of
transporting diesel to Pakistan from Panipat or Mathura refineries. Railway
undertaking Container Corporation of India (Concor) is working out the feasibility of
transporting petrochemicals in containers.
¬ Residents of a number of societiesin Delhi have written to the service provider
Indraprastha Gas Ltd (IGL), seeking clarifications regarding the safety aspects of the
piped natural gas system.
¬ Gujarat has asked the Union Government to do away with the monopoly of GAIL
(India) and to give approval to its gas grid as and when it comes up. It has also sought
the intervention of the Prime Minister Manmohan Singh to ensure continuance of the
existing discounted pricing of gas from these fields of British Gas led joint venture
consortium of ONGC and Reliance.
¬ Loss of trade in diesel on account of lower tax rates in the neighbouring States of
Punjab, Haryana and Himachal Pradesh has prompted the Delhi Government to roll
back diesel sales tax rate from the current 20 per cent to 12.5 per cent. Diesel is out of
VAT as its prices are not fully market determined.
¬ The government's move to impose an extra cess of 50 paise per litre on high speed
diesel to maintain and develop national highway has been endorsed by the Standing
Committee on finance.
¬ The detailed feasibility report prepared by Engineers India Ltd for the expansion of
Hindustan Petroleum Corporation Ltd's (HPCL) Vizag refinery to 15 million tonnes
will be ready by the end of the first quarter of the current fiscal.
¬ Gail India and Indian Oil Corporation (IOC) had entered into a 25-year agreement
with National Iranian Gas Export Corporation to buy 7.5 million tonne (mt) LNG
from Iran beginning 2009.
¬ The Ministry of Petroleum has written to the Finance Ministry urging that government
directors be accorded the status of `independent director'. Apart from functional
directors, most public sector undertakings have two government directors on board.
Under Clause 49, government directors on the boards of PSUs are not considered