Tag: Oil and Natural Gas Corporation (ONGC)

Exxon Mobil in talks to buy stake in Indian oil, gas fields: Oil Min Pradhan

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

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Energy supermajor Exxon Mobil Corp is in talks to buy a stake in producing oil and gas fields in India, Oil Minister Dharmendra Pradhan said on Wednesday showcasing efforts to raise domestic output to cut imports. Exxon Mobil had in October last year signed a memorandum of understanding (MoU) with state-owned Oil and Natural Gas Corporation (ONGC) to offer its expertise and technology for developing resources in offshore blocks.

Speaking at a webinar series on ’The Road To Atmanirbhar Bharat’ organised by Swarajya Magazine, he said India is looking to replicate the Texas model of raising domestic oil and gas production by involving small and mid-sized companies in exploration and production. ”Till 2014, the total acreage given for exploration and production (of oil and gas) was about 90,000 square kilometers. In two rounds of auction of small discovered fields (DSF) and five rounds of Open Acreage Licensing Policy (OALP), an additional 1.65 lakh sq km of the area has been offered,” he said.

The US shale oil and gas revolution was not brought about by big companies. ”Small companies have developed the Texas shale oil and gas sector. We are envisaging a similar scenario in India through progressive policy and involving a lot of small and mid-sized companies,” he said. But large companies would obviously be there, he said adding UK supermajor BP is investing USD 5 billion bringing to production the next wave of gas discoveries in KG basin block KG-D6.

Also, Shell and Total are present in India. ”Exxon Mobil is in active discussion with some of our companies to participate in some of our producing fields,” he said without giving details.

Also Read: Govt receives 3 bids for BPCL: Oil Minister Dharmendra Pradhan

The October 2019 MoU provided for ONGC and ExxonMobil jointly bidding for exploration assets in India. ONGC is currently developing deepwater oil and gas blocks on the east coast, which at a peak is envisaged to produce more than 15 million standard cubic meters per day (mmscmd) of gas.

Also in October 2019, Exxon signed another memorandum with the country’s biggest refiner Indian Oil Corporation (IOC) to explore ways to supply liquefied natural gas to meet India’s burgeoning gas demand. While Shell operates a 5 million tonnes a year LNG import facility in Gujarat, Total of France has partnered with Adani Group in city gas projects.

Pradhan said the exploration acreage offered speaks volumes about the government’s intent and policies. ”If our policy is not investment friendly, if our policy is not open, if our policy is not transparent, how this kind of investment is coming,” he asked.

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

HPCL raises Rs 2,000 cr debt to fund its current year capital expenditure

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

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Hindustan Petroleum Corp Ltd (HPCL) on Friday said it had raised Rs 2,000 crore in debt for funding its capital expenditure during the current year.

In a stock exchange filing, HPCL said it has “issued un-secured, redeemable, non-convertible, non-cumulative, taxable, debenture of Rs 10 lakh each aggregating to Rs 2,000 crores on private placement basis for funding of capital expenditure, including recoupment of expenditure already incurred.”

The coupon rate will be 4.79 percent per annum for the debt instruments, which will mature on October 23, 2023.

HPCL debt raising follows similar moves Indian Oil Corp (IOC) and Oil and Natural Gas Corp (ONGC) earlier this week.

IOC raised Rs 2,000 crore through non-convertible debentures or NCDs on a private placement basis for the refinancing of existing borrowing and funding of capital expenditure.

ONGC said it raised Rs 1,140 crore through a three-year debenture issue on a private placement basis at an interest rate of 4.64 percent per annum payable annually.

IOC on Thursday informed stock exchanges that its Board of Directors would on October 30 consider approving borrowings up to Rs 20,000 crore during a financial year through a private placement of bonds/ debentures in one or more tranches.

This will be within the overall borrowing limit of Rs 1,65,000 crore approved by shareholders at the last Annual General Meeting.

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

ONGC to look at HPCL, MRPL merger post-June 2021

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

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State-owned Oil and Natural Gas Corp (ONGC) is likely to look at merging its two oil refining subsidiaries, Hindustan Petroleum Corp Ltd (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL), post-June 2021, its chairman Shashi Shanker said on Friday. ONGC, India’s biggest oil and gas producer, in 2018 completed the acquisition of HPCL for Rs 36,915 crore. After this takeover, it has two refining subsidiaries — HPCL and MRPL.

At a news conference post company’s annual general meeting, Shanker said HPCL sells more fuel than it actually produces at its refineries. On the other hand, MRPL is a pure oil refining company. “There are a lot of synergies in the merger of MRPL with HPCL. For one, it will balance the fuel marketed by HPCL with the refining capacity, eliminating the need to buy fuel from other companies,” he said.

But before this merger happens, ONGC is looking at merging ONGC Mangalore Petrochemicals Ltd (OMPL) with MRPL, he said. MRPL holds 51 percent stake in OMPL, while ONGC has 48.9 percent. MRPL is to acquire ONGC’s shareholding in the company.

“We have received approval from the Petroleum Ministry for the merger and we hope to complete this by June 2021. Post that we will look at the merger of MRPL with HPCL,” he said. ONGC holds a 71.63 percent stake in MRPL. It holds a 51.11 percent stake in HPCL. HPCL currently holds a 16.96 percent stake in MRPL. ”First stage is the merger of OMPL with MRPL and the merger with HPCL will follow that,” he said.

HPCL Chairman and Managing Director Mukesh Kumar Surana has been since January 2018 talking of the synergy MRPL acquisition will bring to the company. For one, HPCL sells more petroleum products than it produces, and bringing MRPL’s 15 million tonnes a year refinery under the fold would help bridge the shortfall. Also, there can be synergies in crude oil procurement as well as in optimising refinery set-up, he has been saying. MRPL is not a new company for HPCL.

It was an HPCL company before ONGC in 2003 acquired joint venture partner A V Birla Group’s stake. HPCL has 23.8 million tonnes of annual oil refining capacity. Together with 15 million tonnes refinery of MRPL, it will become India’s second-biggest state-owned oil refiner after Indian Oil Corp (IOC). Overall, it will become the third-biggest refiner behind IOC and Reliance Industries.

MRPL will be the third refinery of HPCL, which already has units at Mumbai and Visakhapatnam.

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

Massive fire breaks out at ONGC plant in Gujarat’s Surat, no casualty reported

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

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A huge fire broke out at Oil and Natural Gas Corporation’s (ONGC) Hazira plant in Gujarat’s Surat this morning. The fire broke out between 3 and 3.15 am. No casualty has been reported so far.

Officials say the fire, which was visible from a distance, broke out after multiple blasts at the plant. The cause, however, is still unknown.

#WATCH Gujarat: A fire breaks out at an Oil and Natural Gas Corporation (ONGC) plant in Surat. Fire tenders present at the spot. More details awaited. pic.twitter.com/6xPKHW5PrR

— ANI (@ANI) September 23, 2020

Fire tenders were rushed to the spot. The company said that the fire has been brought under control. The blaze, which was preceded by three blasts, has been extinguished, the official said, adding no one was hurt.

“The fire broke out in the inlet gas terminal after three massive blasts at 3.05 am. The compressed gas was depressurised to bring the fire under control,” Surat District Collector Dhaval Patel said. Fire vehicles of the ONGC, Surat Municipal Corporation and local industrial units rushed to the spot and brought the blaze under control, he said.

The inlet gas terminal where the fire broke out was cordoned off and the plant secured, he said, adding the cause of the fire will be ascertained after cooling operations are completed. No other industry in the area was affected, he said.
There was no confirmation from the district administration of reports that the fire was apparently caused by a rupture in the 36-inch Uran-Mumbai gas pipeline.

The ONGC in a tweet said, “A fire was observed in the Hazira Gas processing plant in the morning today. Fire has been brought under control. There is no casualty or injury to any person.” “Fire has been completely extinguished. Efforts are being made to resume normal operations at the earliest,” it
said in another tweet.

With inputs from PTI

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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

ONGC gas pipeline bursts in Assam, no damage reported: Official

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

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An underground gas pipeline at Assam’s Geleky oilfield of energy major Oil and Natural Gas Corporation (ONGC) ruptured on Monday, leading to leakage of gas in the entire area, a senior company official said. However, it immediately stopped supply of gas through the damaged pipeline and started repair work, which is likely to be competed by tonight, ONGC Executive Director (Assam Asset) Sanjeev Kakran told PTI.

“At around 12:30 pm, a leakage occurred in an underground four-inch pipeline inside ONGC’s gas compressor plant at the Geleki field. It was followed by a small blast and the gas came out,” he said. Kakran, however, claimed the leakage did not catch fire and there is no injury of any kind to anybody as well as no safety hazard to the sorrounding environment or people living nearby.

“The gas pipeline was immediately depressurised and isolated. ONGC’s team is on the site to repair the pipeline, which should be completed by tonight itself,” the official added. He also said ONGC is investing Rs 265 crore to replace all the pipelines of Geleki operations and 70 per cent of the work is already over.

“This is one of our very old oil fields. We undertook replacement of entire pipeline network here, comprising crude, gas and water injection lines. The work is likely to be completed by May 2021. We plan to invest more money to upgrade our operations,” Kakran said.

A gas well of another PSU major Oil India at Baghjan in Tinsukia district of Assam has been spewing gas uncontrollably for the last 69 days since May 27, and it caught fire on June 9, killing two firefighters at the site.

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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

Lesser-known firms win ONGC’s 49 oil, gas fields

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

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Lesser-known firms such as Duganta Oil and Gas and Orissa Stevedores Ltd have won 49 small and marginal oil and gas fields that state-owned ONGC had bid out on government direction.

ONGC had at the close of bidding in January received bids for 50 out of the 64 small and marginal oil and gas fields it offered in a bidding round for raising production by involving private companies.

Of these, the company has now awarded 49 of them.

“Oil and Natural Gas Corporation Ltd (ONGC) placed Notice of Award (NoA) to seven successful bidders in 13 contract areas comprising of 49 marginal oil and gas fields,” the company said in a statement.

ONGC clubbed the 64 fields in Gujarat, Assam, Andhra Pradesh, and Tamil Nadu into 17 onshore contract areas by clubbing some of them. These have a cumulative 300 million tonnes of oil and oil equivalent natural gas reserves.

As many as 12 companies made 28 bids for 50 fields at the close of bidding on January 17.

Sources said 28 bids were received for 14 clusters, covering 50 fields, but none for three clusters that cover 14 fields.

“Through a detailed process of evaluation as per the tender conditions, seven companies have now been awarded 13 onland contract areas spread across the states of Gujarat, Tamil Nadu, Andhra Pradesh and Assam,” ONGC said in the statement without giving details of the winners.

Sources said the winners include Duganta Oil and Gas Pvt Ltd which was sole bidder for fields in Assam and Cauvery basin of Tamil Nadu, and Orissa Stevedores Ltd that was bidder for two clusters in Assam.

“It is expected with the award of these contract areas, the production from these marginal fields would be enhanced,” the statement said.

Duganta Oil and Gas Pvt Ltd had made four bids, while Orissa Stevedores Ltd, Priserve Infrastructure Pvt Ltd and Udayan Oil Solutions Pvt Ltd made three bids each.

ONGC bid out the fields on government instructions.

The government, sources said, wasn”t happy with the efforts of ONGC and saw output rising with the involvement of private companies.

In the bid document, ONGC sought partners who could raise output beyond a pre-agreed baseline and will share revenues from such incremental production with them.

The sources said salient features of the ONGC offering included complete marketing and pricing freedom to sell oil and gas on arm”s length basis through the competitive system.

ONGC said the contractors were selected on a revenue-sharing basis.

The revenue will be shared on incremental production over and above the baseline production under Business-As-Usual (BAU) scenario.

The contract period will be for 15 years with an option to extend by 5 years.

ONGC invited bids under the production enhancement contract (PEC) from the interested companies, who can bring in technology for raising the output.

The government has been unhappy with ONGC over its stagnant oil and gas production, and inducting partners in small and marginal fields was a way of raising output that was agreed to in a meeting with Prime Minister Narendra Modi in 2018.

ONGC had previously experimented with PEC contracts for two fields but has not been able to select a partner because of receiving conditional bids.

The latest PEC tender was on more liberal terms. There will be a reduction of 10 per cent in the royalty rate for additional production of natural gas over and above BAU scenario.

Exploration will be permitted during the contract period, including the right to explore all kinds of hydrocarbon.

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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

ONGC to Govt: Waive cess, royalty as plummeting oil prices not enough to cover operating cost

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

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State-owned ONGC has asked the government to waive payment of oil cess and royalty as plummeting international oil prices have meant that the rate it now gets does not even cover the operating cost, sources said.

While the slump in international oil prices to more than two-decade low is good news for fuel consumers, it is spelling economic havoc on oil and gas producers.

Sources said Oil and Natural Gas Corp (ONGC) management has told the government its average price realization of USD 22 per barrel in April is not enough to cover even the operating cost.

On top of it, the drop in natural gas prices to a decade low of USD 2.39 per million British thermal unit is leading to a loss of about Rs 6,000 crore annually.

ONGC, sources said, has asked the government to abolish oil development cess if price realized by producers is less than USD 45 per barrel. It also wants royalty that the central government charges on oil and gas produced from the offshore area to be waived.

The company has so far maintained a capex of Rs 30,000-34,000 crore in the last few years but the current prices do not generate enough surplus to cover even operating expenditure or opex.

Currently, the government levies 20 per cent ad-valorem oil industry development (OID) cess on the price that producers get. Also, ONGC/OIL are required to pay 20 per cent royalty on the price of crude oil it extracts from onland oil blocks to the state governments. The central government charges 10-12.5 per cent royalty on oil produced from offshore areas.

Sources said the company wants the royalty charged by the central government to be waived for now.

It also wants the formula of pricing domestically produced natural gas at rates prevalent in gas-surplus nations such as the US and Russia. The rates using the formula came to USD 2.39 per million British thermal unit (mmBtu) from April.

This price is the lowest that the company will realize since 2010 when the government had moved towards deregulating gas pricing.

In May 2010, the Cabinet had approved an Oil Ministry’s proposal to raise the rate of gas sold to power and fertilizer firms from USD 1.79 per mmBtu to USD 4.20.

Sources said OID cess, which has increased from USD 3 to USD 13 over the years, is causing a lot of stress on current and new oil and gas projects.

OID cess is levied on crude oil produced as excise duty under the Oil Industries (Development) Act of 1974. The cess is being levied on crude oil from nominated blocks and pre-NELP exploratory blocks only.

The OID cess was raised from Rs 2,500 per tonne to Rs 4,500 per tonne in March 2012. The price of the Indian basket of crude oil stood at around USD 110 per barrel then.

With the fall in global crude oil prices in mid-2014, companies were asked for reducing the levy and converting it into 8-10 per cent ad-valorem. The government had changed the levy of the cess to 20 per cent ad-valorem in March 2016.

Sources said ONGC has communicated to the government that the current rate of taxes is threatening to push the firm into cash losses and will impact its planned capex.

Unless profits are made, future investments are at a risk, they said, adding ONGC fields are old and past their prime and it would be a “big, big mistake” to believe they would behave as they did a decade back without investments in pulling up recovery rates.

Sources said cutting the cess rate will make over 200 million barrel of oil equivalent of production viable at the entire industry level.

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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