Archive for the ‘ Oil & Gas ’ Category

Contracts like Reliance’s KG-D6 are designed to benefit private players:

After the CAG, the high-level Ashok Chawla Committee has criticised the system of Production Sharing Contracts like the one Reliance Industries signed for the gas-rich KG-D6 block, saying these contracts are designed to benefit private players at the government’s expense.

Reliance bagged the KG-DWN-98/3 block in the first round of NELP, which was pioneered by the NDA government, and signed the PSC for the block in 2000.

The PSCs provides for the operator to recover all capital and operating expenditure become the government’s share of profit from a field rises to as high as 85 per cent. This system gives “incentive to (an operator to) increase his investment, or front-end his work plan” in order to see that the threshold where government’s profit take rises rapidly is not reached, the Chawla panel said in its report.

At the heart of the PSC lies the ‘investment multiple’, the ratio of net cash income to exploration and development costs. The investment multiple defines the share of profits that go to the government. The higher the expenditure, the lower the IM and hence, the government’s share of profit. Citing the example of KG-D6, the Chawla panel said, “The relationship between the pre-tax investment multiple (PTIM) and the share of contractor profit petroleum changes dramatically once the PTIM crosses 2.5, with the government’s share increasing from 28 per cent to 85 per cent.” “It is useful to remember that this schedule is bid by the operator and not determined by the government,” it said. “A high share of some PTIM will help to win the bid, depending on the financial model of evaluation used, but it does raise concerns that such a radical change would provide very strong incentives for any operator to adopt all investment and strategies possible to ensure that the PTIM stays within the 2.5 limit,” the panel report said. The CAG, in a draft report on its audit of the KG-D6 accounts, had also criticised the current PSC structure saying it was “unsuitable for protecting the government of India’s financial interests.

CAG saleuthes after prolonged examination could not find anything to substantiate their claim of Gold Plating of cost by Reliance Industries in the flag ship project of the Company.

2012
05/20
CATEGORY
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Oil & Gas
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Key infra sectors growth plunges to 2.3%

Growth in six infrastructure industries plummeted to 2.3% in August 2008 as compared to 9.5% a year ago i.e. in August 2007 including crude oil and petroleum refinery, showing depressing performance.

Crude oil showed a negative growth by 1% in August 2008 compared to a positive growth rate of 6.5% in August 2007.

Growth in petroleum refinery products fell sharply to 2.5% in August 2008 from 8.2%, The crude oil production registered a negative growth of 0.9% during April-August 2008-09 compared to 1% during the same period of 2007-08.

Coal production registered a growth of 5.9% in August 2008 compared to growth rate of 8% in August 2007. Coal production grew by 7.3% during April-August 2008-09 compared to an increase of 2.1% during the same period of 2007-08.

Electricity generation registered a growth of 0.8% in August 2008 compared to a growth rate of 9.2% in August 2007.

Cement production showed a growth of 1.9% in August 2008 compared to 16.7% in August 2007.

Finished (carbon) Steel production witnessed a growth of 4.4% in August 2008 compared to 9.6% in August 2007.

We have seen major downside in our markets since January 2008, we are seeing the effect of US sub prime & later collapse of financial institutions there. Our top politician made us to believe that Indian markets are insulated from the US. If these numbers are anything to go by writing is very clear on the wall….

Its not only sentiments and emotions but the very fundamentals that Indian economy is on target & may miss the mark by 1% seems hard to believe.

May be more pain still left to be seen…. Happy Investing

 

 

2008
10/09
CATEGORY
Economy
Indian Trade
Infrastructure
Market
Oil & Gas
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Stock Idea : Aban Offshore

Aban Offshore Ltd., formerly Aban Loyd Chiles Offshore Limited, is an off-shore oil and gas drilling company. The Company has two business segments: Offshore Oil Drilling and Production services, and Wind Power generation. The Company together with its sub-sidiaries, provides oil field services for offshore exploration and pro-duction of hydrocarbons in India and internationally.

ASSETS

It owns and oper-ates offshore drilling rigs, as well as provides drilling services to vari-ous oil and gas operators. The Company pos-sesses twenty offshore assets including fifteen jack-up offshore drilling rigs, two drill ships, one floating production platform and a jack-up rig and drill ship each on bareboat charter. It enjoys the privilege of part-nering with several global players in the oil and natural gas industry by offering them reliable, state-of-the-art drilling services. Its notable cus-tomers include ONGC, Hardy Exploration & Production (India) Inc., Oriental Oil Co. (Dubai), Shell Burnei, Shell Malaysia, Hind Oil Explo-ration Co. Ltd, Cairn Energy, Petronas Carigali etc. It is India`s largest offshore drilling entity in the private sector. Its innovative and cost ef-fective solutions make the company one of the most efficient interna-tional drilling contractors. Aban Singapore Pte. Ltd. (ASPL) was formed as a wholly owned subsidiary of Aban Offshore Ltd. to offer drilling services to large global oil and gas operators.

INVESTMENT RATIONALE:

Aban Offshore has received a contract to drill two wells and for two optional well programmes. The firm period of the contract, ex-pected to commence following the delivery of the rig from the yard in the first quarter of 2009, is likely to last for 150 days with an es-timated revenue of USD 30 million during the firm period.

Venture Drilling AS, in which the Aban Singapore (ASPL), sub-sidiary of Aban Offshore, has a 50% indirect shareholding, has agreed with ExxonMobil for a six month extension of the present drilling contract, in direct continuation and on same terms (at an operating day rate of USD 425,000 after withholding tax). The ex-tended period is likely to last till July 2009.

The company has received a contract to drill 3 wells in Malaysia. The estimated revenue from the contract is USD 17 million for 90 revenue days.

It has won another contract worth USD 38 million to drill 6 wells and one optional well program in Malaysia. Aban Offshore signed an agreement with Exxon Neftegas for the deployment of the jack-up rig Murmanskaya Offshore Russia for a 2 well programme. The project is expected to generate USD 34 mil-lion worth revenues, which has an estimated duration of 160 days and will commence in direct continuation of its present contract that is expected in June 2008.  It will strengthen the top & bottam line of the company.

The company received letter of intent for the deployment of the newly built jack-up rig Aban VIII in the Middle East for 18 wells plus 4 optional wells programme. The company expects USD 300 million in revenues over 4 years. The deployment is to commence following delivery of the rig, which is expected in the second quar-ter of 2008.

2008
09/13
CATEGORY
Aban Offshore
GSPC
ONGC
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Reliance Industries: Refining blues

In the June 2008 quarter, RIL posted GRMs of $15.7 per barrel, which disappointed the Street which had pencilled in margins of $16-17 per barrel, given the sharp rise in crude oil prices. Refining contributes about 55 per cent to the company’s revenues which were Rs 1.37 lakh crore in FY08. Moreover, industry watchers believe there could be a slight delay in the output of gas from KG-D6 basin with it now being available only in November or even later.

Analysts say less than robust demand and fresh refining capacity coming into the market—much of it in Asia and the middle east– over the next couple of years, could cause refining margins to fall 20-25 per cent from FY 2008 levels.

Over one million barrels per day (bpd) of crude oil distillation capacity is estimated to come on stream in CY08 while twice that capacity is expected to be commissioned in the following year. GRMs, which were ruling at roughly $15 per barrel in FY08 could, therefore, come off to levels of around $12 per barrel by FY10.

Towards the end of August, Singapore refining margins had dropped sharply the result of a fall in the margins for diesel.

With the new refineries being complex in nature, the demand for middle distillates such as diesel and kerosene is likely to be met. However, margins for diesel could nonetheless remain higher than those for gasoline.

RIL’s petrochemicals business which brings just over 40 per cent of revenues is expected to do well with petrochemicals margins firming up in recent weeks. Also, the risks of the company being asked to pay a windfall tax appear to have receded.

RIL is expected to end FY09 with revenues of around Rs 1.9 lakh crore and a net profit of close to Rs19,000 crore.

BS Report

2008
09/12
CATEGORY
KG Basin
Market
Reliance
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Reliance, divesting KG D6 Assets ?

Reliance Industries (RIL) has scrapped its plan to transfer 80% of its participatory interest in the famous D-6 block of the Krishna Godavari basin gas field, perhaps the company’s most valued asset, to four of its subsidiaries. The company had sent a letter to the petroleum ministry on Thursday (August 28) withdrawing its earlier application which sought permission to transfer the stake to the subsidiaries. Under the production sharing contract, any contractor (here RIL) is supposed to get the government’s nod for transferring stake in any asset.

In the letter, RIL says that it has organised funds required for the exploration and production of the block, officially known as KG-DWN-98/3, and therefore wants to abandon its plan to transfer its participatory interest to the subsidiaries.

In its application to the ministry for the proposed transfer three months ago, it had said the move was aimed at increasing flexibility in organising finances for the development of the project. RIL’s investment in the KG basin blocks is expected to be around $8 billion. Interestingly, RIL, had got the go-ahead from the Directorate General of Hydrocarbon on this on August 21. The proposal had then been forwarded to the petroleum ministry.

When contacted, a RIL spokesperson confirmed the development. “RIL has raised the requisite financial resources and is no longer pursuing the application for assignment of participating Interest (PI) to the subsidiaries. Implementation of the project has not been hindered,” the spokesperson said.

“However, in view of non-receipt of such approval/confirmation, we have successfully firmed up alternate means of financing and have met the cash requirements of the project…. We are entitled to assign the PI as envisaged in the…PSC but having raised the requisite finance as aforesaid, there is no need at this time for us to pursue the means of financing that would envisage assignment of PI and for the record hereby formally withdraw the..application and request that no further action need be taken thereon,” RIL said in its letter addressed to the joint secretary (exploration) in the ministry of petroleum. ET has a copy of the latter.

Industry experts said RIL’s move could have been partly driven by the criticism of its big shareholders. A few major shareholders, especially the foreign institutional shareholders, had questioned the logic of the proposed move in the past few days after the development came to the fore on Tuesday.

RIL clarified the next day that these four companies, Reliance KG Exploration and development, Reliance KG D6 E&P, Reliance KG Basin and Reliance E&P KG, are wholly-owned arms. But there were reports saying at least one of these companies could be part-owned by two top-level RIL executives.

The timing of RIL’s withdrawal from the proposed move assumes significance. RIL has withdrawn the transfer of the participatory interest on Thursday (August 28), four days before the hearing of the legal case between the company and Anil Ambani’s Reliance Natural Resources (RNRL) in the Bombay High Court.

Source : ET, INfraline

2008
09/01
CATEGORY
Exploration
KG Basin
Oil & Gas
Reliance
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RIL to start crude production from KG basin next month

With a FPSO (Floating, Production, Storage and Offloading) vessel set to stream into Kakinada from Singapore shortly , Reliance Industries Ltd is gearing up to extract crude from its Krishna Godavari basin wells by the second half of September.

The MA Fields in the D-6 block in the KG basin will produce about 40,000 barrels a day. The crude evacuated through pipeline grid set up will be shipped through tankers to refineries, according to RIL officials.

However, the gas produced from the KG wells will be pumped back into the wells as there is no possibility to store the gas. Meanwhile, the onshore gas processing facility at Gadimoga is nearing completion. “After the FPSO moves to Kakinada shores from Singapore, within a couple of weeks we expect production to commence from these wells. Initially, it could be about 15,000 barrels a day to be gradually ramped up to 40,000 barrels a day,” the official explained.

Asked about the gas production in the KG basin (Doubling India’s Gas Supply ny 2010), the official said that most of the installations and pipeline work of 1,400 km from Kakinada to Bharuch had been completed barring small link-ups.  

The undersea equipment has been procured. It is likely that by the fourth quarter of this year, the gas wells will be ready for production,Dhirubhai-I, the floating oil production unit chartered by Reliance, has been built by converting a large tanker in Singapore.

According to information reaching here from Singapore, the floating unit left Jurong yard last Wednesday and is scheduled to arrive at the eastern coast of India by Friday.

The floating oil unit is on a 10-year charter from the Norwegian company Aker and the initial contract value was $750 million. Aker will also operate and maintain the FPSO under a separate five-year contract.

Once the FPSO is anchored and connected to the oil wells, which is expected to take at least two weeks, oil production from a developed field can commence within a month, said an oil industry expert.

Unlike normal tankers, which need dry-docking at least every two years, the FPSO is designed to operate for 10 years without dry-docking.

Dhirubhai-I can process 60,000 barrels of oil and 15 million cu m of gas a day and can store 1.3 million barrels of oil.

The 8.86 lakh dwt tanker –S.T.Polar – was originally built in the US. The refitting at the Singapore yard is expected to extend the 25-year-old vessel’s life by 15 years.

As reported In Business Line 

2008
08/15
CATEGORY
Exploration
KG Basin
Oil & Gas
Reliance
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KG Basin: Doubling India’s Gas Supply by 2010

India, Asia’s third-largest oil consumer, is encouraging use of natural gas to control its oil import bill and rein in inflation but there is not enough supply to satisfy rising demand. Gas demand in India, at around 179 million standard cubic meters a day, is far short of the supply of about 95 mmscmd (including LNG).

Supplies are expected to double by 2010 when KG-D6 reaches peak of 80 mmscmd and flow of additional LNG (read production from RIL K- G Basin blocks) . However, by them demand projections made by Petroleum Ministry see the need for about 230 mmscmd of gas.

K-G Basin Estimated Reserves:The Directorate General of Hydrocarbons, the oil and gas regulator, had earlier said gas reserves in the block amount to 1.38 tcf. Reliance Industries’ block, one of the largest discoveries in the country, in the same basin has reserves of 11.3 tcf.

Patel also said GSPC had booked a capacity of 10 million cubic metres per day (mcmd) in the gas pipeline that Reliance Industries is laying to transport its oil from Andhra Pradesh to Gujarat.

On Shore Terminal at Kakinada: Modi added that 300 acres had been acquired in Kakinada, Andhra Pradesh, to build an onshore gas processing terminal.

GSPC has drawn a master-plan at a cost of Rs 8,000 crore for setting up city gas distribution projects in 40 cities in Gujarat, the company said in a statement recently.

Source: BS, Hindu

2008
07/18
CATEGORY
Exploration
GSPC
KG Basin
Oil & Gas
Reliance
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Historical leap towards India’s energy security

Reliance is investing $5.2 billion to develop Krishna Godavari, its largest field. Gas produced in the area is expected to more than double the country’s total output.

The Mumbai-based group’s Reliance Petroleum Ltd unit is building the 580,000 barrel-a-day refinery adjacent to a 660,000 barrel-a-day plant owned by the parent. Once complete, Reliance will own the world’s biggest refinery, according to the parent.

Chairman Mukesh Ambani earns more from each barrel of oil than overseas refiners by processing cheaper, lower grades of crude at a plant two days away by ship from Middle East oil fields. Reliance earned $15.5 from processing a barrel of oil into fuel in the quarter ended March 31, compared with $7 for a plant in Singapore, the company said on April 21.

Ambani, the second-richest Indian and the world’s fifth-wealthiest person, according to Forbes magazine, needs higher profits to fund $24 billion of planned investments in chemical projects in the gas-rich Middle East and increase oil and gas exploration to benefit from record energy prices. The expansion will help Reliance triple earnings in the next five years.

As reported in 34th AGM

2008
07/17
CATEGORY
Economy
Oil & Gas
Reliance
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NELP VII : Future of Oil exploration

In the recently concluded NELP VII round of bidding under the new exploration licensing policy (NELP) the government has offered 57 oil & gas blocks under NELP-VII. This included 19 deepwater blocks, 29 are onland blocks and nine blocks are in shallow water. 
NELP So far
In previous six rounds, the government awarded 162 blocks. So far, the largest commitment of $3.32 billion investment was received in under NELP-VI where 52 blocks was awarded. Under NELP rounds, 49 oil and gas discoveries have already been made in Cambay onland, North East Coast and Krishna Godavari deepwater areas, accreting over 600 million tonnes of reserves.
NELP VII
Out of 19 deepwater blocks, GVK-BHP got seven blocks, ONGC bagged three blocks and Cairn has been lucky with one deepwater block and BP-RIL bagged one. There has been no takers for seven deepwater blocks. The bidding round (launched on December 13, 2007) was originally scheduled to be closed on April 11. The deadline was first extended to April 25, later it was changed to May 16 and finally to June 30. 
Big player Missing from Show
Big oil companies like ExxonMobil, Chevron, Total and Shell, among others, preferred to stay away.
New entrants like LN Mittal (one block with HPCL), BHP Billiton (seven blocks with GVK group), RIL-British Petroleum combine(one deepwater block).
DGH Response
“Response for gas expecting blocks are lukewarm because of lack of clarity on policy related issues,” said Director General of Hydrocarbons VK Sibal on the response and the bids. Exploration companies have taken a conservative approach and have bid cautiously, given the uncertainties in the tax regime, an analyst said.

“The bidding was low and the response was lukewarm,” a senior official from the director general of hydrocarbons said. While 12 blocks, out of a total of 57, failed to get even a single bid, as many as 19 got just one bid. As many as seven of the no-show blocks were in the deep water region. The response for the smaller fields, however, was relatively good.

Source : DGH, Media Reports, Industry

2008
07/06
CATEGORY
Aban Offshore
Economy
Essar Shipping
Exploration
Jindal Drilling
NELP
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ONGC
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Aban Offshore $55 Million Contract Malaysia

Two contracts secured for Deep Driller

Aban Offshore Ltd. has received letters of intent for the deployment of the jackup rig Deep Driller 2 offshore Malaysia for two separate well programs.

The first three-well program, with revenue of $17 million, has an estimated duration of 90 days in direct continuation of an existing contract.

The second contract has an estimated duration of 210 days and is for a six firm well plus one optional well program, Aban said. The estimated revenue from the contract is $38 million. The deployment is to commence in direct continuation of the first program.

Related post : Rig Market In India , Offshore Support Companies on Rise

 

Source : Oil & Gas Industry

2008
07/01
CATEGORY
Aban Offshore
Exploration
Market
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PCPIR, Kakinada AP: $85 Billion Investment

Hyderabad: ONGC Ltd has decided to exit the proposed refinery-cumpetrochemicals project at Kakinada in Andhra Pradesh, making way for the GMR Group, which will hold 51% equity in the project that was originally to cost Rs 31,000 crore.

The project is part of Andhra Pradesh’s Petroleum Chemical and Petrochemical Investment Region (PCPIR) proposed over 600 square miles and envisaged to attract investments worth Rs 340,000 crore over the next ten years.

GMR’s entry is expected to put PCPIR on the fast-track now.

However, the refinery project is likely to cost close to Rs 40,000 crore with GMR indicating that it would like to increase the capacity upwards of 20 million tonnes to make it more viable, sources privy to the proceedings of a board meeting today told DNA Money.

It is understood that GMR has proposed a higher capacity upwards of 20 million tonnes of refining to make the export oriented project more viable.

Reliance Industries had started its own refinery with a capacity of 30 million tonnes and was now going in for an expansion, it was pointed out at the board meeting held on Monday.

ONGC had hiked the initial proposal of 7.5 million tonnes to 15 million tonne and 4.5 lakh tonne per annum petrochemcial complex within the PCPIR to improve viablilty.

But unhappy with the AP government’s reluctance to grant tax sops to the tune of Rs 16,000 crore over eight years, ONGC had been dilly-dallying with the proposal for some time. The two had signed an agreement for the project in September 2006.

ONGC subsidiary Mangalore Refinery and Petrochemcials Ltd (MRPL), held 46% in project, while the Infrastructure Leasing & Financial Services Ltd and the Kakinada Sea Ports Ltd were to hold 51%. The Andhra Pradesh Industrial Infrastructure Corporation (APIC) was to own the remaining 3%.

With the enty of GMR, as per the revised equity structure IL&FS and the Kakinada Sea Ports will hold 46%,while APIC will continue to have its 3% equity. “All issues were resolved at a board meeting on Monday,” Sam Bob, principal secretary, industries department, AP, told DNA Money.

“Apart from GMR, the Hundujas and Essar were the other contenders for the project and we decided on the former seeing their past record,” Bob said. GMR will have management control of the project and will come up with its own detailed project report based on the initial work done by ONGC.

“It is good that we now have GMR in the picture which is a local company and known for its speedy implementation of project,” said APIC vice chairman and managing director B P Acharya.

Another refinery proposed to be developed by the HPCL near Achutapuram near Visakhapatnam at the other end of the proposed PCPIR, is the second anchor for the ambitious special zone.

“The project will be undertaken through a special purpose vehicle of the GMR Holdings Group,” a GMR official said, adding that the group believes the project will help it achieve its overall growth objectives apart from delivering value and creating jobs.

Source : DNA

2008
06/30
CATEGORY
Economy
Market
Oil & Gas
PCPIR
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Indian Currency: Impcat of High Crude Price

The fall in the rupee is primarily being attributed to the high crude oil prices, which touched all-time high of over $135 per barrel on May 22, 2008.

India imports 73 per cent of its crude oil requirements, thus raising concerns over its widening trade deficit-the difference between the value of goods and services exported and imported by a country. The trade deficit, which is already estimated to be about 10 per cent of the GDP, will further worsen with the rising crude oil prices as oil importing companies will have to buy a higher amount of dollars to meet their needs.

Falling Indian Currency:
 Uncertainty about global crude oil prices coupled with heavy demand for US dollar from oil majors to pay the higher crude bill.
 Dollar Inflow in terms of FII & FDI money has remained muted since the fall of Indian stock market from its peak in January 2008.
 Rising crude oil prices also have a cascading effect on the already soaring inflation, currently above 8% mark.
 High Trade deficit leading to further devaluation of the currency (According to estimates, a $10 per barrel rise in crude oil prices may lead to the trade deficit moving up by about $6.5-7 billion or 7 per cent).

Impact of falling Currency:
 For export-oriented companies, which were feeling the pain of the appreciating rupee just a few months ago, this reads like good news.
 Will lead to higher cost of imported goods & make some of the capital intensive projects more expensive to execute.
 Will increase the cost of dollar loans taken by companies.

 

2008
06/07
CATEGORY
Currency
Economy
Indian Trade
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Rig Market in India

A boom in exploration in India has tripled rig usage over the past four years, adding to a global shortage and causing delays in tapping natural gas off the Indian east coast. Transocean, the world’s largest offshore drilling company, may raise rig prices further after India completes the biggest auction of offshore blocks.

  • With crude oil prices galloping over $ 135/bbl, increased investments in exploration and production space globally has become inevitable.However, lack of availability of rigs will continue to keep the day rates firm.  

  • Rents have tripled since 2005 for new rig contracts stretching up to 2012 as explorers seek to decrease the delay between discovery and development to take advantage of high oil prices.

 

Indian Market

Transocean, the world’s largest offshore drilling contractor with 82 units, made $296 million, or 10.2 percent, of total sales from India, according to its 2005 annual report. Revenue from India more than doubled since 2003, the fastest among Transocean’s main markets

Future Expetation

Reliance is paying $320,000 a day until August 2008 to rent the Deepwater Frontier rig, more than twice what the rig’s owner, Transocean, charged an earlier client, according to Transocean’s Web site. The rent is set to rise to $477,000 a day, if Reliance extends the contract in 2008 for another three years.

Riding on Market Boom :

Aban Offshore (Aban), with its 22 rigs (post acquisition of Sinvest) is well poised to leverage on the industry dynamics. Historically, Aban has clocked the highest operating margins in the industry at a global level.

Contract renewals for six of Aban’s assets (including Sinvest) are due over the next 10 months. With the current tightness in the rig market, the re-pricing of these contracts is expected to happen at significantly higher rates compared to their existing rates.

Essar Oilfields Services, a unit of Essar Shipping & Logistics, in Cyprus, paid $220 million for Transocean Wildcat, a 30-year-old offshore rig that can operate in depths of about 400 meters and capable of drilling up to 7,600 meters

 

Source : BS, Hearld, Transocean

 

2008
05/29
CATEGORY
Aban Offshore
Aban Offshore
Essar Shipping
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Oil prices making headlines..

‘Drowning in oil’ – Economist March 1999
“$10 might actually be too optimistic. We may be
heading for $5.”

‘Oil reaches $30 a barrel’ – BBC 15th Feb 2000
“This rise in price is purely temporary”
-OPEC Secretary General Dr Lukman

‘Oil hits new record above $80′- FT 14 Sept 2007
“too little, too late,” verdict on decision by OPEC to raise output
by 500,000 barrels a day….global oil production is estimated to
have shrunk by 650,000 b/d in the third quarter”

 ‘Oil prices steady near $133 a barrel’ 

The Associated Press , BANGKOK, Thailand.  Wednesday, May 28, 2008

2008
05/28
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Oil & Gas Market, India

Reliance Industries (RIL), which is set to kick off the first spot crude oil market in the country, will be inviting price quotes from oil refining companies shortly.

This would also set the first benchmark for market-driven prices in the crude oil sector. RIL is set to be the first oil and gas private major to develop an oil and gas market in the country. RIL has had initial round of talks with refinery companies such as Hindustan Petroleum Corp for its Vizag refinery, Mangalore Refinery & Petrochemicals and Chennai Petroleum Corp, to name a few.

RIL would float the tender in a few days when the company would set an indicative benchmarked price based on the quality of the crude. Initial tests have shown the crude to be sweet and light in nature, which is a premium crude. Refinery companies bidding for the crude oil will have to quote a price that is a discount or a premium to the indicative price. Although a final decision is yet to be taken, RIL — which has two refineries, including the one being developed by Reliance Petroleum — will not bid for the crude. “This is aimed at keeping the price discovery process as fair and transparent as possible,” a source said.

MA field Development :

The company, which bagged several blocks under the bidding rounds of the new exploration and licensing policy (Nelp), made the biggest gas find in 2002. The company is planning to produce 40,000 barrels of oil from the MA field, which is a part of RIL’s D6 block.

It is learnt that RIL recently submitted commercial details of MA’s crude to the petroleum ministry. Oil ministry had asked the operator to submit crude lifting procedure and crude sales agreement between the contractor and buyers. According to the production-signing contract (PSC), RIL is expected to submit the same six months prior to commencement of production from the field,” the source said.

The government has approved $2.2-billion field development plan (FDP) of the MA field, an oil ministry official said. “The management committee constituted under the PSC, consisting of contractors (RIL-Niko) and government nominees, had approved the FDP of MA field (Dhirubhai-26) within the contract area of KG-DWN-98/3 (KG-D6) located in the deep waters of Krishna-Godavari (KG) basin off the east coast of Andhra Pradesh in April 2008,” an RIL source said.

According to RIL sources, in the Cretaceous section of D6 Block, the MA-2 well encountered the thickest hydrocarbon column discovered to date in D6. MA-2 reached a depth of 3,581 m and penetrated a gross hydrocarbon column of 194 m consisting of 170 m of gas/condensate (53º API) and 24 m of oil (42-43º API). MA-2 is located 2 km from the MA-1 discovery well. Fast-track development of KG-D6 MA Cretaceous oil discovery has been planned for production to be onstream during 2008. The commerciality of MA oil discovery was approved by the directorate general of hydrocarbons (DGH) on February 1, 2007. 
The field was discovered by RIL in 2006 and a development plan was submitted to DGH and other management committee members for approval. The development plan includes production through a floating production storage & offloading (FPSO) platform (see also : FPSO on MA Field ) The field’s peak oil production is estimated at 40,000 BOPD and an estimated gas of 240-350 MMSCFD.

“The production is likely to commence in the second half of 2008, and this will be the first deep-water production by a domestic company. The MA oilfield development plan is in addition to the development plan for gasfields D1-D3 within the same block,” RIL claimed in a statement.

RIL acquired the block KG-DWN-98/3 under Nelp-I. Niko (Neco) holds 10% participating interest in the block.

 Source : Economics Times, DGH, Media Reports

2008
05/27
CATEGORY
NELP
Oil & Gas
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