Tag: Oil and Natural Gas Corporation (ONGC)

Agreements signed to connect ONGC’s natural gas fields with North East Gas Grid

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oil and Natural Gas Corporation Limited (ONGC) and Indradhanush Gas Limited (IGGL) have signed three hook-up agreements to connect the former’s natural gas fields with the North East Gas Grid (NEGG) for transportation of natural gas.

The natural gas will be transported from Jorhat, Silchar and Tripura Assets of ONGC to the consumers, an official release said on Thursday.

IGGL is laying a 1,656 km long natural gas pipeline connecting the capital cities and the demand centres of all the eight north eastern states.

These hook up agreements will facilitate connection of the natural gas fields of ONGC with the IGGL’s pipeline for evacuation of natural gas, IGGL Director Sanjay Kumar said.

“The hook-up agreements signed with IGGL is a strategic move to enhance the connectivity of ONGC fields with the North East Gas Grid which will benefit both the companies”, he said.

It will make domestic gas available to the customers and will contribute to the country’s economy as a whole, he said.

NEGG infrastructure, the hydrocarbon potential of the northeastern region can be fully utilised for development of a gas-based economy in line with the Centre’s Hydrocarbon Vision 2030, Kumar said.

IGGL is also in touch with other natural gas producing companies to hook up their gas fields with NEGG.

The hook-up agreements will facilitate withdrawal of 1,85,000 SCMD of Natural Gas from Jorhat Asset, 82,500 SCMD from Silchar asset and 7,00,000 SCMD from the Tripura asset of ONGC through NEGG.

The NEGG project being implemented by IGGL has achieved 75.52 per cent physical progress as on date, the release added.

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ONGC signs an agreement with Norway’s Equinor for E&P and clean energy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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State-owned Oil and Natural Gas Corporation (ONGC) on Wednesday said it has signed a pact with Norwegian energy giant Equinor ASA for collaboration in oil and gas exploration and production as well as clean energy projects. The memorandum of understanding (MoU) was inked on April 26, the company said in a statement.

The agreement is “for collaboration and partnership in areas of upstream exploration and production, midstream, downstream and clean energy options, including carbon capture utilisation and sequestration (CCUS),” it said.

Equinor is the leading operator on the Norwegian continental shelf, present in around 30 countries worldwide.

Also read: ONGC commissions projects worth Rs 6,000 crore to boost oil, gas output

The MoU was signed during the visit of a high-level delegation of Norway to India. Union Minister of Petroleum and Natural Gas Hardeep Singh Puri, Norwegian Foreign Minister Anniken Huitfeldt, ONGC Chairman and Managing Director Alka Mittal and Executive Vice President of Equinor Irene Rummelhoff were present on the occasion.

“As per the agreement, both ONGC and Equinor will collaborate with each other in the field of upstream oil and gas, midstream, marketing and trading, besides exploring further options in low carbon fuel, renewables, Carbon Capture Storage (CCS) as well as Carbon Capture Utilisation and Sequestration (CCUS) opportunities in India,” it said.

The MoU is valid for two years under which both companies have agreed to work together in the areas identified.

Also read: India could become carbon neutral before its 2070 goal, says IRENA chief

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Crude price to hold at $65-70/bbl for next year; aiming renewable capacity at 10 GW: ONGC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Rajesh Kumar Srivastva, Director – Exploration, ONGC, on Wednesday, said that rising crude and gas prices are a positive for the company. According to him, crude oil prices are not expected to come down below $65-70/ barrel (bbl) for the next year. He, however, mentioned that crude prices are way above the break-even prices for the company.

He said, “As far as the forecast in terms of oil prices is concerned, for this year as well as by 2022-23 as well, they are not going to come down below the level of USD 65-70/bbl level and that would be well above the cost of production for ONGC per se. This is a good sign and this generates revenue which is going to be plugged into aggressive exploration strategy.”

It is to be noted that crude oil prices had clambered to a 7-year high in the face of Russia-Ukraine tensions. Crude oil price, on Wednesday, however came off its high levels, in the face of Russia pulling back some of its troops but USD 92-93 per bbl is still holding strong.

Also Read: Commodities round-up: Crude oil price off 7-year high

On renewables, he said that the company is aiming to increase capacity to 10 giga watts (GW).

“Roughly 1 GW of solar would be around Rs 6,000 crore and in the offshore wind, it would be of the order of about Rs 9,000 crore per GW. In a bid to move towards that, we are going to do a pilot of the order of 200-300 megawatt in offshore wind. These studies are in progress and they are, almost, going to be finalised and the first pilot would be taken up in terms of that and we will continue our journey towards the realisation of those goals which we have planned as our 2040 target,” Srivastva said.

Sharing about the company’s exploration plans, he said that capex for this purpose will be around Rs 40,000-45,000 crore in the next 3-4 years. Giving details, he clarified that for FY23, the capex will be around Rs 10,000 crore. He added that ONGC has already acquired some acreages and the company will be opening up some new basins as well.

On production, he mentioned that in FY24, the company should be able to see production to the tune of 45,000 barrels per day at the KG basin. The basin is also expected to produce gas.

Also Read: ONGC shares give up day’s gain despite oil price rise, strong earnings; what to do with the stock?

“We plan to reach a level of about 45,000 barrels per day kind of production level and in terms of gas, the number should be around 8-10 mmscmd,” said Srivastva.

For the entire interview, watch the accompanying video

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oil explorers gain amid higher crude oil prices; ONGC, Oil India shares hit 52-week high

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Portions of oil explorers were higher in trade on Wednesday following higher crude oil prices globally. Brent crude oil on the Intercontinental Exchange was up 0.6 percent at $74.05 per barrel.

On Wednesday, at 12:25 pm, shares of Oil & Natural Gas Corp (ONGC) gained four percent at Rs 128.85, Oil India rose 3.3 percent at Rs 204.95, while those of Indian Oil Corporation were up 0.9 percent at Rs 116.25.

ONGC and Oil India shares hit their 52-week highs at Rs 130.65 and Rs 208.8, respectively, on Wednesday.

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Oil prices climbed on Wednesday as data reportedly showed a larger than expected drawdown in crude oil stocks in the US which is the world’s largest oil consumer and on hopes of demand recovery as vaccine roll-outs pick up pace, as per reports.

Higher crude oil prices lead to higher realisation for oil explorers and help shore up their profitability, said analysts.

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However, shares of Bharat Petroleum Corporation Ltd were trading 0.7 percent lower on Wednesday at Rs 489.75.

Shares of these oil explorers have rallied 28-91 percent YTD.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ONGC removes marketing margin but refuses to lower gas price

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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State-owned Oil and Natural Gas Corporation (ONGC) has agreed to do away with charging users a marketing margin on the gas it plans to produce from its KG basin field but refused to lower the minimum rate, according to tender documents. ONGC, India’s top oil and gas producer, last month sought bids for sale of initial 2 million standard cubic meters per day of gas from its KG-DWN-98/2 block (KG-D5).

The company asked bidders to quote a rate linked to prevailing Brent crude oil prices. It fixed the floor or minimum rate at 10.5 percent of the three-month average Brent crude oil price. On top of it, the firm sought USD 0.20 per million British thermal unit. Potential bidders however opposed the levy of the marketing margin as well as the ”high” floor price.

Responding to queries raised by bidders, ONGC said the floor price cannot be changed but the marketing margin is being dropped. ”Change in Reserve Gas Price (floor rate) is not agreed. However, considering requests from various bidders, the levy of marketing margin of USD 0.20 per mmBtu over and above contract price is removed,” it said.

At the current Brent crude oil price of close to USD 70, the minimum price comes to USD 7.3 per million British thermal unit. This price, however, will be subject to the ceiling or cap fixed by the government for deepsea fields every six months. The cap for six months beginning April 1 is USD 3.62 per mmBtu.

This essentially means that bidders may corner gas by offering to pay USD 7, but the buyers will have to pay no more than the ceiling price of USD 3.62. ONGC in the tender offered to sell 2 mmscmd of gas for a duration of 3 to 5 years at Odalarevu in East Godavari district of Andhra Pradesh, which is connected to state gas utility GAIL’s KG basin pipeline network as well as PIL’s East West Pipeline which is connected to KG basin network and further to Gujarat gas grid.

”Bidder is required to quote ’P’, which would be the slope to Dated Brent Price. This slope should be more than or equal to 10.5 percent,” the tender document said adding that ’P’ can be made in the increment of 0.1 percent.” Gas price (in USD per mmBtu) ”shall be the lower of the quoted slope (percent) * Dated Brent Price or notified ceiling price during the period,” it said. The auction is to be conducted next week.

In pre-bid meetings, bidders raised the issue of high reserve price. Bid prices starting from 10.5 percent of dated Brent price must be revised downwards so as to account for cheaper alternatives available from other LNG terminals, according to a bidder query posted on the ONGC tender document.

Another bidder said, ”Regarding the pricing formula, it is of our view that the starting slope to dated Brent price at 10.5 percent is quite a higher side. Crude oil demand is going to recover this year and it is going to increase in short. In other domestic gas tenders from KG-D6 (2 years back) was also linkage with brend however the slope was very low ie 8.5 percent.” ”Also our gas consumption points are in the western and northern part of India and the location of the gas field on eastern side also adds up transportation cost of multiple transporters.

Considering the above factors, we request for a reduction in slope.” Yet another bidder said, in view of outcomes of the recent domestic auctions, and further in consideration of the higher transportation costs in evacuating gas to the west and north India, the request is that the reserve gas price be changed to 9.5 percent of Dated Brent Price.

”In the current global/local gas market scenarios with improved market-priced domestic gas availability, spot LNG with endless flexibilities matching specific requirements of customers, the uncertainty of demand and affordability of small scale manufacturing sector, proposed Reserve Gas Price of 10.5 percent is not reflective of current market reality,” another bidder said.

”Also, in the instant case, considering marketing margin of USD 0.20 per mmBtu on GCV basis plus Rs 16.14 transportation tariff of KG basin pipeline network up to PIL interconnect point, the Reserve Gas Price works out to be more than 11 percent. In view of above, ONGC is requested to consider pragmatic gas reserve gas price of 8.5 percent offering win-win proposition to ONGC and prospective bidders,” the bidder added. In the bid document, ONGC said the marketing margin was to cover the cost of marketing and it does not form a part of the ceiling gas price.

Gas supplies from the block, which sits next to Reliance Industries Ltd’s KG-D6 block in Bay of Bengal, is to start from end-June. Earlier this month, Reliance Industries Ltd and its partner BP Plc of UK sold 5.5 mmscmd of additional natural gas from KG-D6 at a rate linked to Platts JKM (Japan Korea marker) – the liquefied natural gas (LNG) benchmark price assessment for spot physical cargoes.

The lowest bid that can be placed is JKM minus USD 0.3 per million British thermal unit. The highest acceptable bid would be JKM plus USD 2.01 per mmBtu. This is the same benchmark RIL-BP had used in February to sell out 7.5 mmscmd of gas from the block.

ONGC’s KG-DWN-98/2 or KG-D5 block is expected to have a peak production rate of 15.25 mmscmd of natural gas and 80,000 barrels per day of oil. The company is likely to come out with another tender later this year for the sale of 5 mmscmd of gas from next year.

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Oil min tells ONGC to sell oilfields; hive off drilling, other services

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The petroleum ministry has told India’s largest oil and gas producer ONGC to sell stake in producing oil fields such as to Ratna R-Series to private firms, get foreign partners in KG basin gas fields, monetize existing infrastructure, and hive off drilling and other services into a separate firm to raise production.

Amar Nath, additional secretary (exploration) in the Ministry of Petroleum and Natural Gas, on April 1 wrote to Oil and Natural Gas Corporation (ONGC) Chairman and Managing Director Subhash Kumar giving a seven-point action plan, ’ONGC Way Forward’ that would help the firm raise oil and gas production by one-third by 2023-24.

The action plan, reviewed by PTI, calls on ONGC to consider sale of stake in maturing fields such as Panna-Mukta and Ratna and R-Series in western offshore and onshore fields like Gandhar in Gujarat to private firms while divesting/privatising ’non-performing’ marginal fields. It wanted ONGC to bring in global players in gas-rich block KG-DWN-98/2 where output is slated to rise sharply by next year, and the recently brought into production Ashokenagar block in West Bengal. Also identified for the purpose is the Deendayal block in the KG basin which the firm had bought from Gujarat government firm GSPC a couple of years back.

The ministry also wants the company to explore creating separate entities for drilling, well services, logging, workover services and data processing entities. This is the third attempt by the oil ministry to get ONGC to privatise its oil and gas fields under the Modi government.

In October 2017, the Directorate General of Hydrocarbons, the ministry’s technical arm, had identified 15 producing fields with a collective reserve of 791.2 million tonnes of crude oil and 333.46 billion cubic metres of gas, for handing over to private firms in the hope that they would improve upon the baseline estimate and its extraction. A year later, as many as 149 small and marginal fields of ONGC were identified for private and foreign companies on the grounds that the state-owned firm should focus only on big ones.

The first plan couldn’t go through because of strong opposition from ONGC, sources aware of the matter said. The second plan went up to the Cabinet, which on February 19, 2019, decided to bid out 64 marginal fields of ONGC. But, that tender got a tepid response, they said adding that ONGC was allowed to retain 49 fields on condition that their performance will be strictly monitored for three years.

The ministry note of April 1, 2021, said two years have elapsed since the Cabinet decision and non-performing fields need to be identified for divestment and privatisation. It suggested market-friendly bid terms such as lower royalty rates and complete marketing and pricing freedom.

For medium-sized producing fields, the action plan wanted ONGC to identify maturing fields such as Panna-Mukta, Ratna and R-Series in western offshore and Gandhar in Gujarat as well as fields such as Daman in western offshore which had upcoming development plans, for stake sale. It also wanted ONGC to consider developing new business models for monetisation of stranded assets/discoveries such as design, finance, built and operate as well as annuity and securitsation based models for development. Fields such as GK-28/42 and all unmonetised discoveries, either individually or as a bouquet, were identified for the purpose, the document showed.

The note said that to reduce dependence on import of crude oil and gas, the ministry has set the domestic production target of 40 million tonnes of crude oil and 50 billion cubic metres (bcm) of natural gas by 2023-24. The bulk of the targeted domestic production for 2023-24 is expected to come from ONGC, which is required to contribute 70 per cent of the domestic production (28 million tonnes of oil and 35 bcm of gas by 2023-24). It said the share of ONGC contribution in the oil and gas consumption of the country is decreasing continuously as its production is stagnant or decreasing for a long time. As a result import dependency is increasing.

ONGC produced 20.2 million tonnes of crude oil in the fiscal year ending March 31 (2020-21), down from 20.6 million tonnes in the previous year and 21.1 million tonnes in 2018-19. It produced 21.87 bcm of gas in 2020-21, down from 23.74 bcm in the previous year and 24.67 bcm in 2018-19.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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ONGC seeks buyers for KG gas, wants minimum $6.6 price

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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State-owned Oil and Natural Gas Corporation (ONGC) on Monday invited bids for the sale of initial 2 million standard cubic meters per day of gas from its KG basin fields at a minimum price of USD 6.6 per mmBtu. According to the tender document, ONGC intends to start natural gas sale from its KG-DWN-98/2 block, which sits next to Reliance Industries Ltd (RIL)-BP Plc operated KG-D6 fields, from June-end.

Initially, 2 million standard cubic metres per day of gas has been offered for sale through an e-auction. ONGC has sought bids indexed to Brent crude oil. Bids have been sought at a minimum of 10.5 percent of the three-month average Brent crude oil price.

At the current Brent crude oil price of USD 63, the minimum price comes to USD 6.6 per million British thermal unit. This price, however, will be subject to the ceiling or cap fixed by the government for deepsea fields every six months. The cap for six months beginning April 1 is USD 3.62 per mmBtu.

This essentially means that bidders may corner gas by offering to pay USD 7, but the buyers will have to pay no more than the ceiling price of USD 3.62. A senior ONGC official said the ceiling price is expected to rise to USD 5.5-5.6 at the next revision due on October 1.

”The current ceiling price is one-third less than the bare minimum cost of production from a deepsea field. After including the cost of money as well as margin, gas price should be USD 6 and not USD 3.62,” he said. Earlier this month, Reliance Industries Ltd and its partner BP Plc of UK sought bids for the sale of 5.5 mmscmd of additional natural gas that will be available for sale from their eastern offshore KG-D6 block.

The e-auction is slated for April 23 and the gas supply will start from late April or early May, according to the tender document. Bidders will have to quote a price linked to Platts JKM (Japan Korea marker) – the liquefied natural gas (LNG) benchmark price assessment for spot physical cargoes.

The lowest bid that can be placed is JKM minus USD 0.3 per million British thermal unit. The highest acceptable bid would be JKM plus USD 2.01 per mmBtu. This is the same benchmark RIL-BP had used in February to sell out 7.5 mmscmd of gas from the block.

At the current price, the lowest price for the 5.5 mmscmd of gas that RIL-BP are auctioning comes to near USD 6.5 per mmBtu. But just like ONGC, RIL-BP too is entitled to a maximum of USD 3.62 per mmBtu ceiling fixed by the government for a six-month period to September 30.

ONGC’s KG-DWN-98/2 or KG-D5 block is expected to have a peak production rate of 15.25 mmscmd of natural gas and 80,000 barrels per day of oil. The company is likely to come out with another tender later this year for the sale of 5 mmscmd of gas from next year.

Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Maharashtra Seamless has 40% exposure to ONGC, says MD Saket Jindal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Maharashtra Seamless Ltd (MSL), the flagship company of DP Jindal Group, on Friday said it has around 40 percent general exposure to Oil and Natural Gas Corporation (ONGC).

In an interview to CNBC-TV18, Saket Jindal, managing director, said, “We have around 40 percent of exposure to the oil and gas sector in upstream. ONGC has 80 percent out of the upstream. It is 15 percent, downstream.”

Jindal said the company got certain orders in ONGC recently and there are few tenders but it will take some time.

According to Jindal, Maharashtra Seamless has less export orders due to slowdown, however, domestic order book is good.

In seamless business, MSL can do 2.5 lakh tonne this year, he mentioned.

For entire discussion, watch video.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow