RIL to drill two more wells in KG-D6 block

Reliance Industries (RIL) is set to drill two more wells in the KG-D6 block that may boost gas production from the field where output has stagnated since April at about 60 million metric standard cubic meters per day (mmscmd). 

“The government has approved RIL’s proposal to drill two more wells as part of D1 and D3 field-development plan,” an official in the Directorate General of Hydrocarbon (DGH) said. 

The directorate, a technical arm of the oil ministry, is the custodian of the country’s oil and gas assets. 

Experts in the oil ministry said that the two wells (A21 and B16) may help RIL increase gas production from the field and sustain the higher production. 

“RIL has told us that the current (gas) production from the field is unlikely to increase beyond 60 mmscmd in the near future. It is making efforts to achieve the peak production of 80 mmscmd,” an official in the ministry said. 

“We do not wish to comment (on this subject),” RIL spokesman said in an email reply. The company’s current production of around 60 mmscmd comes from 16 wells of D1 and D3 and 5 wells of D26 fields, RIL said in a press statement issued on Tuesday. The D26 field is located next to D1 and D3 field in the same KG-D6 block. 

RIL has been producing crude oil and gas from D26 (also known as MA) field since September 2008. But major gas field, D1 and D3 commenced commercial production on April 2, 2009. 

The company managed to ramp up gas production from KG-D6 to 60 mmscmd in just nine months, but output is stuck at that level. RIL is, however, hopeful of achieving the peak production of 80 mmscmd by 2012, an oil ministry official said. 

The government had awarded the KG-D6 block (KG-DWN-98/3) to a consortium of RIL and Niko in 2000, under the first round of auction of New Exploration Licensing Policy (Nelp-I). In 2002, the consortium made the largest gas discovery of the time in the block. RIL holds 90% stake in the asset, while balance 10% is held by Niko.

Source: Economic Times

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ONGC plans to invest $5 bn to develop gas fields to boost output by 60 pc

Oil & Natural Gas Corporation plans to spend $5 billion to develop gas fields to boost output by almost 60% in six years, two people with direct knowledge of the matter said. 

The New Delhi-based explorer sought permission from the oil and gas regulator on July 16 to invest the funds in nine natural gas discoveries off India’s east coast to produce 35 million cubic metres a day by 2016, one person said, declining to be identified before the directorate general of hydrocarbons approves the plan. 

The amount is triple ONGC’s planned spending on its largest oil field and follows the government’s decision in May to double the price at which the explorer sells gas. India is ramping up gas output at the fastest pace in the world, according to BP’s 2010 Statistical Review of World Energy, after companies including Reliance Industries discovered new fields. “ONGC has been discovering new reserves for a while but the concern is being able to convert them to production,” said Rohit Ahuja, a Mumbai-based analyst with Centrum Broking in Mumbai. “The company is looking to address this with the very good discoveries they have in the east coast.” 

The producer of almost 25% of the crude oil used by India is starting new fields at home as output declined at aging areas off the west coast. Reserves added in fields operated by ONGC in the year ended March was the equivalent of 82.98 million metric tonne, the highest in the past 20 years, the explorer said April 26.

Source: Economic Times

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India plans to launch shale gas auction in august 2011

The identification of the gas producing areas will be done by early next year

Major Indian energy companies like Reliance Industries Ltd (RIL), which have so far been scouting overseas for shale gas resources, may get a chance to bid for domestic shale gas blocks in about a year. The country is looking to launch the first-ever auction of shale gas areas in August 2011.

The identification of the gas producing areas will be done by early next year. This will be followed by carving out suitable blocks. Jitin Prasada, minister of state for petroleum and natural gas, had recently called a meeting of officials in the Directorate General of Hydrocarbons (DGH) and his ministry to discuss the future potential of shale gas. “The DGH has accordingly prepared a roadmap for the shale gas auction,” said a ministry official.

This will be the second unconventional natural gas source in India after coal bed methane. Several basins — Cambay (in Gujarat), Assam-Arakan (in the North-East) and Gondwana (in central India) are known to hold shale gas resources.

In March this year, the ONGC board approved a pilot project for exploration of shale gas in the Damodar Basin at an expenditure of Rs 128 crore.

DGH and the ministry would study worldwide fiscal and contractual regimes before framing a shale gas policy. It is being worked out and is likely to be in place by the end of the current financial year.

The Petroleum and Natural Gas Rules, which govern the oil and gas exploration activity, will be amended prior to the floating of the first round of auction.

MILKING THE ROCKS

# Companies like Reliance Industries Ltd have so far has been scouting overseas for shale gas resources

# The identification of the gas producing areas will be done by early next year. This will be followed by carving out suitable blocks

# Shale will be the second unconventional natural gas source in India after coal-bed methane

# Basins like Cambay (Gujarat), Assam-Arakan (the Northeast) and Gondwana (Central India) are known to hold shale gas resources

# A policy is being worked out and is likely to be in place by the end of this financial year

# The Petroleum and Natural Gas Rules will be amended before floating the first round of shale gas auction

India is also likely to sign a cooperation agreement with the US Geological Survey later this year for knowledge sharing in the area of shale gas. The US has successfully exploited its shale gas reserves, which currently account for 20 per cent of the country’s gas production. An Indian delegation was also expected to visit shale gas sites in the US sometime this year, the ministry official said. Countries like Canada and China are also increasingly exploiting their shale gas reserves.

Hydrocarbon found in the form of shale gas has over the past few years transformed the energy scenario for the world’s biggest energy consumer, the US. Indian energy companies have shown interest in developing this resource. While RIL recently acquired a 40 per cent stake in Atlas Energy’s Marcellus Shale acreage in the US, the Y K Modi-promoted Great Eastern Energy Corporation Ltd is keen to take part in the shale business.

Companies worldwide are increasingly looking at investing in shale gas, which they consider a lucrative business.

Source: Business Standard

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ONGC: Expressed Interest to Buy BP Stake in Vietnam Gas Block

Oil & Natural Gas Corp. has expressed its interest to Vietnam Oil and Gas Group, or PetroVietnam, to buy BP PLC's stake in a gas block in Vietnam, the chairman of India's state-run oil and gas explorer said Thursday.

"Yesterday we have indicated our willingness to PetroVietnam to buy BP's stake. Let us see now," R.S. Sharma told Dow Jones Newswires.

BP holds a 35% stake in the block and is also the operator. ONGC owns 45%, while PetroVietnam has the remaining 20%.

BP announced Tuesday that it has agreed to sell assets in the U.S., Canada and Egypt to U.S. oil company Apache Corp. for $7 billion. BP also said it plans to sell gas fields and a pipeline in Vietnam, as well as exploration licenses in Pakistan to help pay for damages related to the Gulf of Mexico oil spill.

Source : online.wsj.com

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Oil ministry seeks Rs 13,500 cr for OMCs

Finance ministry contests figure.

The ministry of petroleum and natural gas has sought Rs 13,500-crore subsidy from the government to compensate the revenue loss incurred by the three oil marketing companies during the first quarter of this financial year. The ministry of finance, though, is not likely to grant the amount in the forthcoming first supplementary to the budget.

A senior finance ministry official said parliamentary approval would be sought only for Rs 14,000 crore subsidy that was due for payment to Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation Ltd for 2009-10.

“There will not be any provision for the current year in the supplementary, which will be presented in the monsoon session of Parliament, starting July 26. Subsidy for the current year would be given only after the sharing mechanism is decided. The two ministries have held several rounds of meetings but a final view will be taken by an empowered group of ministers,” said the official.

The Budget 2010-11 had provided only Rs 3,108 crore for petroleum subsidy for the current year but the ministry of finance would now need to make a provision of Rs 14,000 crore which the three companies have already accounted as accruals in their accounts for 2009-10.

The government has asked upstream oil and gas producing companies – ONGC, GAIL India and Oil India Ltd – to shell out Rs 6,500 crore as part of a subsidy-sharing mechanism for the April-June quarter. It will partially make up the revenue loss incurred by the marketing companies for selling auto and cooking fuels below international rates.

The underrecoveries have been calculated assuming an average crude oil price of $75 a barrel for the whole year. Speaking to Business Standard, petroleum secretary S Sundareshan said, “Underrecoveries came to Rs 20,000 crore, of which Rs 6,500 crore comes from the upstream companies. We have written to the ministry of finance to contribute the rest. Discussions will be held to arrive at the final figures.”

On what was the basis of the calculation of underrecoveries, the secretary said they were calculated on the trade parity formula devised by the Rangarajan committee.

Source: Business Standard

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Gas EGoM likely to okay supply for Lanco, GMR, Sravanthi power units

When the empowered group of ministers (EGoM) meets for gas allocation on July 27, it is likely to commit supply for power plants coming up in 2011-12.

Among those likely to get allocation are Lanco Infratech, GMR and the South India-based Sravanthi group. It would be a tough call for the EGoM, though, since the government has received requests totalling over 350 million standard cubic metres a day (mscmd).

Lanco is likely to get an allocation for the 742 Mw third phase of its Kondapalli power plant, near Vijayawada. The Gurgaon-based company has two operational gas-based power plants, at Kondapalli and at Karuppur in Tamil Nadu. Currently, it has units of 368 Mw and 366 Mw at at Kondapalli. The Karuppur unit is a small one, with 120 Mw capacity.

Officials said GMR was also seeking natural gas for 768 Mw capacity, while Sravanthi plans to set up a 228 Mw plant.

The Anil Ambani group has sought 28 mscmd for four gas-based power projects, including Dadri in Uttar Pradesh, Shahapur in Maharashtra's Raigarh district, Jambusar in Gujarat’s Bharuch and Samalkot in Andhra Pradesh.

The group that had fought a bitter battle with Mukesh Ambani-owned Reliance Industries Ltd for gas for its Dadri power project seems to have diluted the demand for this one. “Since Dadri power plant is under litigation in the Supreme Court over land acquisition, the request for Dadri is subject to case being resolved,” said an executive close to the development.

A senior official said the Ministry of Petroleum and Natural Gas would be briefing the EGoM on the production profile of the Reliance Industries’ D6 field. Following the scheduling of the meeting, the ministry had asked the directorate general of hydrocarbons to send a fresh estimate of D6 production, currently around 60 mscmd of gas. This was to be raised to 80 mscmd and remain at that level for eight years. The government has already made firm allocations for about 62 mscmd and a fall-back (temporary) allocation for another 30 mscmd.

Since the production equals the firm allocations, the new allocations might be made from the fall-back quantities. The meeting of the group would be the first one after the Supreme Court upheld the union government’s sovereign right over natural gas and made the Ambani brothers renegotiate a gas deal in compliance with the government policy.

Source: Business Standard

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Reliance Industries in talks to buy stake in Quicksilver

Energy major Reliance Industries is in talks with Texas-based Quicksilver Resources , including for a possible buyout of the US firm that develops shale gas and coal-bed methane, a newspaper reported on Monday. 

The talks also include buying a part stake or partnering Quicksilver for one of its major projects called the Horn River Basin assets in British Columbia, the newspaper said, citing unidentified sources familiar with the development. 

Quicksilver, which is estimated to have sales of $900 million this year, currently has two large shale basins with proven reserves of around 2.4 trillion cubic feet, the paper said. 

Source: Economic Times

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IOC to acquire oilfields in Africa in $1-bn push

Indian Oil Corp, the country’s second-biggest refiner, plans to acquire oilfields in Africa as part of a $1 billion overseas investment plan, its chairman said.

“Africa is top of our list to buy assets because it is near India and has good quality crude,” Brij Mohan Bansal said in an interview at his office in New Delhi today. “We are planning retail outlets in Indonesia.”

State-run Indian Oil’s renewed plans to expand overseas came after the government freed gasoline prices from its control last month and said it will eventually allow refiners to set diesel rates, helping to increase cash flow. The refiner has set aside $1 billion for acquisitions overseas, Bansal reiterated.

“Africa offers many grades of crude and gives refiners security of supplies to have fields there,” said Vinay Nair, a Mumbai-based analyst with Khandwala Securities Ltd. “They will, however, still need financial support from the government to help make profits.”

The refiner delayed crude-processing and pipeline projects overseas, including Nigeria and Turkey, because of reduced cash flow after selling fuels below cost, Bansal said in July last year. Indian Oil and Turkish builder Calik Holding had planned to spend $4.9 billion to build a 300,000 barrel-a-day refinery in Ceyhan on the Mediterranean coast.

The companies, with Eni SpA, Europe’s fourth-largest oil company, had also planned to spend $2 billion on a pipeline from Samsun on Turkey’s Black Sea coast to Ceyhan to transport as much as 1.5 million tonnes of Central Asian crude oil a day.

Delay in plans 

The shares have increased 23 per cent in Mumbai trading this year, compared with the three per cent gain in the benchmark Sensitive Index of the Bombay Stock Exchange. The stock declined 3.8 per cent to Rs 374.45 today.

Indian Oil, which owns stakes in ventures in Africa and West Asia, had plans to invest in refinery and pipeline projects in Nigeria, former company spokesman M Kali Krishna said in October 2006.

Source: Business Standard

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Diesel subsidy may be set at Rs 1.49/litre

Diesel price decontrol may only be partial, unlike in the case of free pricing of petrol, as the government may continue to provide a fixed subsidy of Rs 1.49 per litre irrespective of the rise or fall in its market-linked retail price. 

The government freed up prices of petrol and diesel on June 25, but capped the increase in the case of diesel to Rs 2 per litre against a required hike of Rs 3.49 a litre. 

There is no clarity within the government about the balance Rs 1.49-a-litre hike needed to lift diesel to market rates. 

“What this means is that on diesel we will give a (virtually) fixed per-litre subsidy of Rs 1.49,” a finance ministry note circulated to top decisionmakers in the country said. 

Irrespective of variations in the pump price of diesel, the note says, consumers will continue to get the Rs 1.49-a-litre subsidy cushion. 

In its June 25 decision, an empowered group of ministers headed by finance minister Pranab Mukherjee fully deregulated petrol and diesel prices. While the price of petrol immediately rose to what it would cost in a free market — by Rs 3.5 a litre in Delhi — in the case of diesel the EGoM pegged the increase at Rs 2 a litre, Rs 1.49 per litre short of what the free market price would have been. 

While the assumption was that diesel prices would gradually rise to a free-market price, the government does not seem to be so clear. 

“There is no clarity who will bear this burden (shortfall of Rs 1.49 a litre),” a senior executive of a public sector oil marketing company said. 

The note pointed at the ambiguity in the EGoM decision. 

“I stressed this (fixed subsidy on diesel) at the EGoM and there was some discussion on it. But in various statements coming out subsequently this got muffled. So observers are not clear if diesel has been decontrolled or not,” a senior official said in the note. 

The oil ministry seems to think the EGoM freed pricing of both petrol and diesel. “The EGoM has deregulated both petrol and diesel prices on June 25 and it has not proposed any fixed subsidy on it,” an official in the ministry said. 

But he could not say why the government restricted retail price increase in diesel to only Rs 2 a litre while the then market price would have required an increase of Rs 3.49 a litre. 

The government’s statement issued on June 25 did say that “the pricing of petrol and diesel both at the refinery gate and the retail level will be market-determined”. 

But it was vague on moving towards a market-determined diesel price. “... in respect of diesel, the initial increase in retail selling price of diesel will be Rs 2 per litre ... Further increases will be made by the public sector oil marketing companies in consultation with the ministry of petroleum & natural gas,” it had said.

Source: Economic Times

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Shale: A home remedy for India’s gas problem

Taking a cue from the US, India is seriously looking at the unconventional shale gas, which, if successful, could mean a substantial improvement in the country’s energy outlook within the next few years. 

The government is gearing up with policy guidelines for shale gas exploitation and auction shale gas blocks within the next two years, even as various E&P players are moving ahead with their pilot projects. ONGC has tied up with Schlumberger for a pilot project in Damodar valley at a capital cost of Rs 128 crore. Similarly, Oil India has initiated a project in Assam, while Reliance Industries is active in Cambay basin. 

However, the project timelines are not short. ONGC, which has been researching shale gas in India since 2006, is expected to spend the next two years gathering geological data in its Damodar valley field, followed by drilling and resource estimation by 2013. In 2014 the company will be able to assess the feasibility and consider production from this pilot project. 

While state-owned players are trying to source shale gas technologies from foreign players, Reliance Industries has chosen to learn the trade by working on live projects. RIL has agreed to invest over $3.1 billion in two separate deals over the next four years to garner 3,08,000 acres of shale in the US. 

Shale is a common rock found across the world and the petroleum explorers are well aware of hydrocarbon deposits trapped in it for a long time. But its exploitation was considered impossible due to the solid nature of shale that prevented hydrocarbons to flow up. With development of newer drilling techniques in the past few years, it has become possible to tap this energy reserve. 

The US is today witnessing excessive availability of natural gas, which is depressing its imports, increasing its inventories and pressurising prices. 

A number of Indian sedimentary basins, including the hydrocarbon bearing ones — Cambay, Assam and Damodar — are bestowed with thick sequences of shale. Though not all shales are good candidates for shale gas exploration, substantial potential for gas from shale is expected from these basins. 

ONGC informed that parameters like productive shale volumes, gas content, thermal maturity, type and amount of organic matter, lithology & extent, mineralogy and saturation, need to be assessed before shale formation can be considered promising. 

While learning the technology to exploit these shale gas reserves is a key hurdle, lack of transporting and storage infrastructure for natural gas and policy framework are other impediments. The entire shale gas exploitation process also carries a number of environmental risks which need to be addressed for sustainable growth. 

Although it is too early, India’s ability to successfully exploit shale gas could go a long way in supporting its future growth. A home-grown remedy to domestic energy needs could indeed be the key in sustaining economic growth and strengthen India’s position in global economics.

Source: Economic Times

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RIL, Essar to hit the highway to fuel oil profits

With the government deregulating prices of petrol and planning to do the same in case of diesel, private fuel retailers like Reliance Industries (RIL) and Essar plan to aggressively expand their presence along India's national highways, giving public sector oil marketing companies (OMCs) a run for their money .

OMCs have traditionally controlled this high-volume business segment of the retail market. Intense compe tition from private players could put pressure on OMCs' retailing margins. "After price deregulation, there would be significant investments by private players in petroleum retailing, but they are likely to focus on highways," says Ajay Arora, an energy expert with global consultancy firm Ernst & Young.

Now that both refinery and retail prices of petrol have been deregulated, RIL and Essar can sell the fuel at any price of their choice.

This will put pressure on OMCs to keep their prices competitive, making the current practice of fortnightly price revisions irrelevant.

Competitive pricing is going to be the name of the game.

Both RIL and Essar have relatively larger and technologically more advanced refineries capable of processing a higher share of tough, heavy and sour crude oil which is cheaper. They also have the flexibility to produce more petrol and diesel out of the same barrel of crude oil. As a result, their refining cost is lower than that of PSUs like IOC, BPCL and HPCL, which have relatively older and smaller refineries.

However, refining facilities of private players are concentrated in a particular area unlike public sector players who have facilities across the country . For example, both RIL and Essar have their refineries in Jamnagar. This translates into higher transportation and distribution costs. "We are well-positioned to face competition from private players. Our overhead cost may be higher, but our distribution cost would be lower," IOC chairman BM Bansal told FE. Besides, OMCs have also acted fast in improving customer services at retail outlets.

Private players will have to further reduce their refining costs to offset the impact of higher distribution costs. Setting up new refineries to achieve geographical spread is not an option due to high capital costs. Continued from Page 1 Private players have been swapping products with O M C s t o s ave t r a n s portation costs. But it is difficult to say how long this understanding would hold once competition for market share intensifies.

The global slowdown of the last two years led to some demand contraction for petrol and diesel in North America and west Europe, both of which were favourite destinations for Indian petro-product exports.

However, the Indian market still remains lucrative, given the strong demand for auto fuels in the country.

So, it makes sense f o r p r iv a t e p l ay e r s , wh i ch h ave b e e n e x porting a sizeable quantum of their production, to expand their footprint in the domestic market.

Source: Financial Express

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Government approves $5.25 per mmBtu for ONGC gas

The government has approved a higher price of gas for ONGC’s C-Series fields in Mumbai offshore taking a step forward in its policy to bring all gas prices closer to market-determined rates. 

The C-Series gas priced has been fixed at $ 5.25 per million British thermal unit (mmscmd), which almost a dollar higher than the price at which Reliance Industries sells gas from the its fields in Krishna Godavari basin. 

Reliance gets $ 4.215 per mmBtu for the gas it produces from KG-D6 fields. The price for ONGC is a tad lower than $ 5.5 per mmBtu which it had sought earlier, said a oil and gas ministry official. 

The government had recently increased the price of gas sold at controlled price (administered price mechanism or APM gas ) by state owned upstream oil companies to $ 4.2 per mmBtu bringing it at par with KG D-6 gas. 

Natural gas produced from C-Series fields is sold to Gail which further markets it to end users. ONGC began production from C-Series fields last month and is currently producing between 0.8 to 1.2 million standard cubic meters per day from the wells drilled so far. 

The peak output from the field is expected to be 2.8 mmscmd after all the 15 wells are drilled after monsoon season. 

Source: Economic Times

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India targeting first-ever offer of shale gas blocks in 2012

India is planning its first-ever offer of shale gas areas for exploration in 2012, even as it targets the launch of the ninth and possibility last auction of oil and gas blocks later this year. "Shale gas (gas locked in sedimentary rocks) is an emerging area. It has become an important source of energy in a few countries who have been able to commercially exploit this resource," Oil Minister Murli Deora said at the signing of contracts for blocks awarded under the eighth round of the New Exploration Licencing Policy (NELP). India has so far only explored for oil and gas. 

Shale gas is the new focus area in the US, Canada and China as an alternative to conventional oil and gas for meeting growing energy needs. These unconventional deposits have raised estimates for US gas reserves from 30 years to 100 years at current usage rates. 

Shale gas deposits weren't considered worth tapping before Houston billionaire George P Mitchell pioneered new extraction techniques in the 1990s. Action is on to "develop a framework for an assessment of resource potential, which would lead to exploitation of this resource. Our intention and endeavour is to put in place a policy framework in about an year''s time," Deora said. DGH Director-General S K Srivastava said the oil regulator is working on a shale gas policy. 

"Several basins in India are known to hold shale gas resources. Primarily, our focus is on three basins — Cambay (in Gujarat), Assam-Arakan (in the North-East) and Gondwana (in central India). 

He said the first offer of shale gas areas was likely in one-and-half years' time. "You can say in 2012." 

Deora said the ninth round of oil and gas block auctions under NELP was likely in the third quarter of 2010. NELP-VIII, which concluded in October last year, attracted a minimum investment commitment of USD 1.3 billion in 34 oil and gas blocks that were awarded out of the 70 offered. 

"The total investment under the earlier NELP rounds stands at USD 13.8 billion," he said. Production Sharing Contracts (PSCs) for 31 exploration blocks awarded to 23 companies under the eighth round of NELP were signed today. 

"Out of 31 blocks, 17 blocks are awarded to national oil companies — ONGC, Oil India and NTPC. Forteen exploration blocks are awarded to private and foreign companies, including BHP Billiton, BG Exploration and Cairn Energy," he said. He said the government intends to move towards an Open Acreage Licensing Policy (OALP) regime as soon as possible. 

Under OALP, companies can suggest any block for offer at any time, without waiting for the regular bid rounds under NELP. "The blocks will be awarded to the party giving the best bid," he said.

Source: Economic Times

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Soon, oil firms to choose blocks for exploration

Oil exploration companies may soon be able to choose the blocks they want to take up for their hydrocarbon search.

“The Government's intention is to move to the Open Acreage Licensing Policy (OALP) regime as soon as possible,” the Petroleum Minister, Mr Murli Deora, said.

Speaking at the production-sharing contract (PSC) signing ceremony for the blocks awarded in the eighth round of oil and gas blocks auction (NELP-VIII), he said, “Under this policy (OALP), companies can suggest any block on offer at any time, without waiting for the regular bid rounds under NELP. The blocks will be awarded to the party giving the best bid.”

For the OALP to become operational, the establishment of the National Data Repository (NDR) is a pre-requisite. The Directorate-General for Hydrocarbons (DGH) is in the process of setting up the NDR, which will archive all the exploration and production data under one roof.

“Certain regulations regarding ownership of data and sharing of information in the public domain will be required to be formulated while setting up the NDR. These issues are being looked into,” Mr Jitin Prasada, Minister of State, Petroleum and Natural Gas, said.

PSCs signed

Under NELP-VIII, of the 70 blocks offered, only 36 attracted bids. Bids for two blocks were rejected and 34 blocks were awarded. Out of these 34 blocks, PSCs for 31 were signed on Wednesday and the remaining will be inked later. ONGC and its consortium won 17 blocks.

PSCs were signed with 20 companies for eight deepwater blocks, 11 shallow water offshore, and 12 onland blocks. Apart from ONGC, Oil India Ltd, and NTPC, those who signed the PSC include BHP Billiton Petroleum International Exploration Pvt Ltd, BG Exploration and Production India Ltd, Cairn Energy India Pty Ltd, Bengal Energy International Inc, Esveegee Steel Gujarat Pvt Ltd, Harish Chandra (India) Ltd, Jubilant Oil & Gas Pvt Ltd, and Jay Polychem (India) Ltd.

In addition, nine companies that have participating interest with operating companies such as Adani Welspun Exploration Ltd, Andhra Pradesh Gas Infrastructure Corporation Pvt Ltd, GAIL, GSPC, and Indian Oil Corporation, also signed the PSCs.

“Considering the global economic situation, the committed investment in NELP-VIII by these companies is $1.1 billion. The actual investment made under the earlier NELP rounds stands at $13.8 billion,” Mr Deora said. The Government plans to launch NELP IX in the third quarter of 2010 and offer about 30-40 blocks.

More attractive

The Petroleum Secretary, Mr S. Sundareshan, said, “Efforts are on to make the NELP regime more attractive.” As regards clarity on whether the definition of mineral oil will include natural gas for tax purposes, he said, “We have taken up the issue with the Ministry of Finance. There can be no question of NELP-IX without tax breaks being worked out for gas as well.”

On shale gas, Mr Deora said, “We have initiated action to develop a framework for an assessment of resource potential which would lead to exploitation of this resource. Our endeavour is to put in place a policy framework in about a year's time.” Shale gas is natural gas located in shale rock areas and is far beneath the earth's surface. Shale gas is one of a number of unconventional sources of natural gas.

Source: Hindu Business line

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Shale gas fields will be next on the block

Encouraged by the US’ success in the area, India is stepping on shale gas, a potentially abundant, yet untapped source of energy. It is preparing to start auctioning the fields which could be rich in this resource for exploration.

“The government’s intention and endeavour is to put in place a policy framework for effective exploration and production of shale gas in about a year’s time,” Union petroleum minister Murli Deora said on Wednesday. Shale gas is natural gas found in shale rock formations.

India’s shale gas reserves are estimated to be higher than its conventional gas reserves, although no definite assessment of the extractable quantity is available. Reliance Industries (RIL), the first among Indian companies to take exposure to the business through its investment in US shale gas acreages, is believed to be best-placed to play a leading role when India starts offering shale gas blocks for exploitation. Multinational energy giants like Exxon Mobil and Royal Dutch Shell are also expected to join the shale gas fray in India.

“The government will appoint an expert by early July to assess potential reserves and then create rules to tap unconventional energy sources before auctioning areas in about a year,” Bloomberg reported on Wednesday, quoting

SK Srivastava, director-general of hydrocarbons, India’s upstream hydrocarbon regulator.

Preliminary estimates show India’s shale-gas reserves may be larger than its proven conventional gas deposits, said PK Bhowmick, president of the country’s Association of Petroleum Geologists. India plans to join a boom in shale-gas exploration that has fueled more than $39 billion of acquisitions in the US by global energy companies.

India’s biggest energy explorer ONGC awarded a $26-million contract to Schlumberger in April to explore shale gas in east India, according to chairman RS Sharma. Drilling wells to assess reserves may be completed by the end of this year, he said. Shale rocks have been found in Gujarat, Assam, Jharkhand.

Shale gas has proven to be a game-changer in the US energy market, significantly reducing the country’s dependence on imported LNG. It can help India as well to bolster its energy security. Shale gas reserves in the US have been known for a long time. However, drilling technology to facilitate commercial exploitation of shale gas was developed only recently.

The Indian economy is projected to grow at 8-10% a year over the long term. The country will need to ensure its energy security if it is to maintain its economic growth. Shale gas offers hope in this regard.

Coal accounts for over 50% of India’s primary energy consumption. Coal remains the predominant fuel for the domestic power sector. India has decided to reduce its carbon emissions on a voluntary basis as part of its commitment to contribute to the global efforts against climate change. If the country has to meet its global commitment, it must shift its energy consumption pattern toward gas, which is a clean source of energy.

Before shale gas production started in the US, the country used to be a big importer of LNG. Global LNG market is vulnerable to volatility in crude oil prices. When crude oil prices surged during 2005-2008, LNG prices skyrocketed. The price of LNG in the spot market then had hit $22 per mmbtu....

Source: Financial Express

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