Indian Stock Market

Reliance and Essar trying to get BP’s African Retail operation

Mukesh Ambani-run Reliance Industries and Essar Oil are among about half a dozen firms in race to buy crisis-hit British energy giant BP’s fuel marketing assets in east African countries.

BP is selling retail outlets, terminals and aviation fuel stations in Botswana, Tanzania, Namibia, Malawi and possibly also in Zambia, to cover costs related to the worst oil spill in US history, industry sources said.

Reliance and Essar have offered between $400 to 500 million for BP’s assets in the East African nation, they said.

A South African firm and National Oil Corp of Libya are said to be other serious bidders among about half a dozen firms who have evinced interest.

While Essar Oil spokesperson did not offer any comments, a Reliance spokesperson said: “We do not comment on market speculation as per company policy.”

Sources said Reliance may be looking at supplying gas oil, gasoline and jet fuel from its twin refineries at Jamnagar in Gujarat to the east African nations.

It also exports fuel to Gulf Africa Petroleum Corp, a firm it had acquired in 2007. Gapco owns retail outlets in countries like Tanzania, Uganda and Kenya.

Essar Oil had last year acquired a 50 per cent stake in 4 million tons a year Kenya Petroleum Refinery in Mombasa.

The British energy giant BP intends to sell $30 billion of assets — mainly upstream oil and gas fields– over the next 18 months to help pay for the Gulf oil spill clean-up and compensation.

BP owns retail outlets selling gasoline (petrol) and gas oil (diesel) as well as aviation refueling facilities at major airports in Botswana, Tanzania, Namibia, Malawi and Zambia.

The acquisition would give a company a ready market for auto and aviation fuel with scope for further expansion into neighbouring high growth countries, sources said.

In Botswana, BP operates 30 retail sites, mostly in the country’s main cities of Gaborone and Francistown and supplies fuel to the booming mining industry. Air BP in Botswana sells aviation fuel at Sir Seretse Khama Airport in Gaborone and Maun airport, on the edge of the famous Okavango Delta.

Besides selling fuel, lubricants and liquefied petroleum gas (LPG), BP is the largest aviation fuel supplier in Tanzania with about 92 per cent market share.

BP owns half of BP Malawi, which operates 46 service stations. Press Corp has the remaining 50 per cent. It is the sole supplier of aviation fuels and aviation lubricants to the nation’s two international airports at Lilongwe and Blantyre.

BP Namibia’s network includes 29 service stations, five depots and aviation services.

In Zambia, BP owns 53 out of the 196 pumps and a largest number of fuel storage and handling depots in the country. It sells aviation fuels at Lusaka International Airport and also Ndola, Livingstone and Mfuwe airfields.

RIL and RNRL today signed gas supply agreement

Delhi sees CNG price shock

Indraprastha Gas Ltd (IGL) today hiked Compressed Natural Gas (CNG) prices here by over 25 per cent, following the government’s move to more than double the price of natural gas.

CNG rates in Delhi will go up by Rs 5.60 per kg – from Rs 21.90 to Rs 27.50 per kg, IGL said in a statement here.

“The new consumer price of Rs 27.50 per kg in Delhi and Rs 30.60 per kg in Noida, Greater Noida and Ghaziabad would be effective from midight tonight,” it said.

The hike was necessitated because of the government’s decision to raise natural gas prices from Rs 3.2 per cubic meter to Rs 7.5 per cubic meter ($4.2 per million British thermal unit).

IGL, however, did not increase the price of gas that it pipes to households for cooking purpose. Piped natural gas will continue to be priced at Rs 15.92 per cubic meter.

Sources said a rate hike would have resulted in piped gas losing its cost competitiveness over rival domestic LPG. IGL may decide to raise piped gas price by close to a rupee if the government were to raise LPG prices.

“We are constrained to increase the retail selling price of CNG in Delhi, Noida, Greater Noida and Ghaziabad due to the increase in the input price of gas procured by IGL along with its corresponding taxes and duties,” IGL Director (Commercial) Manmohan Singh said.

59% saving

Even after today’s price hike, CNG would still offer 59 per cent savings in terms of running cost compared to petrol driven vehicles at the current level of prices in Delhi. When compared to diesel driven vehicles, the economics in favour of CNG at revised price would be 28 per cent.

Singh said the increase in CNG prices will marginally impact the per kilometer running cost for the vehicles.

“For autos, the increase would be just 16 paisa per km, for car/taxi it would be 27 paisa per km and in case of buses, the increase would be Rs 1.60 per km, which translates to less than 3 paisa per passenger-km,” he said.

Prior to the price hike, CNG gave 40-41 per cent better fuel efficiency than diesel and 67 per cent saving over petrol in terms of cost.

CNG still the cheapest:

Even after the hike, CNG in Delhi will be the cheapest fuel in the country.

IGL in Delhi and MGL in Mumbai are the only city gas companies in the country that buy government-controlled gas, called APM gas, the price of which were raised last month.

APM gas makes up for 90 per cent of the fuel that IGL buys. It buys about 2 million standard cubic meters per day of APM gas from state gas utility GAIL India and the rest 0.2 mmscmd from Reliance Industries. PTI ANZ KM 06161826 NNNN

RIL ( Reliance Industries ) Oil discovery in Gujarat Block.

This is the 5th oil discovery of Reliance Industries. The discovery has been made in exploration block CB-ONN-2003/1, which is located in the Cambay Basin at a distance of about 130 km from Ahmedabad.

Reliance Exploration Bid:

Reliance had won the block in the fifth round of auction under the New Exploration Licensing Policy (NELP).

Well CB10A-J1 was drilled to a total depth of 1,957 metres in Part A of the block. “Hydrocarbon-bearing zone was identified at a depth of 1,376-1,385.5 metres,” it said.

“The well flowed at a rate of 255 barrels of oil per day” during conventional testing of the discovery, the company said.

Well CB10A-J1 was drilled with the objective of exploring the play fairway in the Miocene Basal Sand (MBS) of the Babaguru Formation and Eocence Pays of the Kalol Formation.

“The discovery is significant, as this play fairway is expected to open more oil pool areas, leading to better hydrocarbon potential within the block,” Reliance said.

About the exploration Block:

The block covers an area of 635 sq km in two parts, dubbed Part A and Part B. Reliance is the operator of the block with a 100 per cent participating interest.

The company has done 2D seismic surveys over the entire block area, while nearly 80 per cent has been covered with 3D seismic.

“Of the 15 exploratory wells drilled in the block by Reliance so far, 11 are located in Part A and the remaining four in Part B of the block. Reliance is continuing further exploratory drilling efforts in the block,” the statement said.

The discovery, named ‘Dhirubhai-48′, the fifth oil find in the block so far, has been notified to the government of India and to the Director General of the Directorate General of Hydrocarbons. “The potential commercial interest of the discovery is being ascertained through more data gathering and analysis,” RIL said.

Gujarat State Petronet profit at Rs.100 crores.

News article from Economictimes

Gujarat State Petronet Ltd today said net profit jumped two-fold to Rs 107.8 crore for the quarter ended March 31, 2010, over the same period last year.

The company had posted a net profit of Rs 34.7 crore in the same quarter of the previous fiscal.

Total income rose to Rs 269.9 crore for the January-March quarter from Rs 136.4 crore in the same quarter of the previous fiscal, Gujarat State Petronet Ltd (GSPL) said in a filing to the Bombay Stock Exchange.

The board has proposed a dividend of Rs 1 per share of Rs 10 each for the 2009-10 financial year.

During the full fiscal, the company had transported 11,572.71 mmscm of gas against 5,428.48 mmscm in the same period of the corresponding fiscal.

For the year ended March 31, 2010, the company has posted a net profit of Rs 413 crore, a jump of over two-fold from the same year-ago period.

Its clear that ICICI Lombard has insured 75% of Aban Pearl , an offshore rig owned by Aban offshore ltd.

Balance 25% is insured by New India Assurance and other general insurers.

But ICICI Lombard has said that its not going to get any hit as it has reinsured all the amount. It further added that the re insured has been intimated and is waiting for its advice regarding the same.

According to a note by domestic brokerage house Edelweiss, Aban Pearl was a significant financial contributor with annual revenues of USD 123 million. “The Aban Pearl accident and potential loss will be a significant negative. It may lower cash flows and debt repayment,” it added.

Indian Oil ( IOC )  has commissioned a world scale Naphtha Cracker Plant alongwith downstream polymer units at Panipat (Haryana).

The said Petrochemical Complex at Panipat consists of Naphtha Cracker- to produce 857 KTA of Polymer grade Ethylene and 660 KTA Polymer grade Propylene, Polypropylene unit – for production of 600 KTA Polypropylene, Swing Unit of 350 KTA capacity for production of Linear Low Density (LLDPE) and High Density Poly Ethylene (HDPE), High Density Poly Ethylene Unit for production of 300 KTA (HDPE) and MEG Unit for production of 300 KTA Mono Ethylene Glycol (MEG).

State-run explorer Oil and Natural Gas Corp (ONGC) expects natural gas production from its deep-sea block in the Krisha-Godavari basin to start in 2015/16, chairman RS Sharma said on Thursday.

He said current natural gas prices, fixed by the government, were too low to justify fresh investments

Engineers India in city gas distribution business. So much competition.

State-owned design & engineering consultancy firm Engineers India (EIL) plans to set up a city gas distribution business under a joint venture or independently. This will be EIL’s first independent business, EIL chairman & managing director AK Purwaha told ET. City gas distribution business refers to supply of piped natural gas to households and automobiles.

EIL, which is set to launch its follow-on public offer (FPO) in July this year, is planning to diversify its business portfolio. The company provides engineering support and consultancy services to companies undertaking oil and gas projects in India and abroad. EIL is in talks with Gail India and Gujarat State Petroleum Corporation (GSPC) for a possible joint venture and become a participant as well. We may even bid for city gas projects in the next round independently, said Mr Purwaha.

The decision to enter city gas business is consistent with the company’s article of association, he said. EIL plans to participate in the next round of bidding when downstream regulator Petroleum & Natural Gas Regulatory Board (PNGRB) will invite bids for select cities. The date of bidding is yet to be announced by the regulator. Mr Purwaha was earlier the CEO of Mahanagar Gas, which supplies natural gas to millions of households and vehicles in Mumbai.

Source: Economic Times

Energy major Reliance Industries has found natural gas in four more areas in its field off the country’s east coast, two sources with knowledge of the matter said on Friday.

The company has informed the Directorate General of Hydrocarbons about the discoveries in the Krishna Godavari (KG) basin, and has sought permission from the regulator to further develop the fields, said the sources, who declined to be named as they were not authorised to speak with the media.

Source: Economic Times

Making a breakthrough in the US, Reliance Industries today said it will invest $1.7 billion in a joint venture with Atlas Energy Inc to produce gas from shale, sedimentary rocks, in Marcellus region. ( Watch )

The investment would be scaled up to $3.5 billion over the next 10 years, RIL CFO Alok Agarwal said.

Reliance will take 40 per cent stake in the about 300,000 acres Marcellus shale gas project, which spans parts of Pennsylvania, West Virginia and New York and could hold enough natural gas to satisfy US demand for a decade.

Nasdaq-listed Atlas will hold the remaining 60 per cent and also the operatorship. RIL had earlier unsuccessfully bid for acquiring controlling stake in bankrupt chemical maker LyondellBassel.

It bid $14.5 billion for Lyondell but the offer was vetoed by creditors who filed a rival revival plan.

Flush with revenues from its eastern offshore KG-D6 gas field back home, the Mukesh Ambani-run firm has been on the lookout of acquisitions in the United States. Separately, its twin refineries at Jamnagar in Gujarat are looking at directly selling fuel into the US.

“Reliance Marcellus LLC (a subsidiary of RIL) has executed definitive agreements to enter into a joint venture with US based Atlas Energy Inc… under which Reliance will acquire a 40 per cent interest in Atlas’ core Marcellus Shale acreage position,” the company said in a statement.

The Indian firm will pay $339 million in cash to close the deal and foot Atlas’ drilling cost of up to $1.36 billion.

“The (300,000 acres) acreage will support the drilling of over 3,000 wells with a net resource potential of about 13.3 trillion cubic feet gas equivalent,” the RIL statement said, adding that the deal is expected to be closed by the month end.

Shale gas is natural gas stored in organic-rich sedimentary rocks. It is considered an unconventional source as the gas may be attached to or “adsorbed” onto organic matter. The gas is contained in difficult-to-produce reservoirs that require special completion, stimulation and/or production techniques to achieve economic production.

In addition to funding its own 40 per cent of drilling obligations, Reliance has agreed to fund 75 per cent of Atlas’ respective portion of drilling and completion costs until the $1.36 billion drilling carry is fully utilized, Atlas said in a separate statement.

“Under the framework of the joint venture, Atlas will continue acquiring leasehold in the Marcellus region and Reliance will have the option to acquire 40 per cent share in all new acreages,” Reliance said. “Reliance also obtains the right of first offer with respect to potential future sales by Atlas of around 280,000 additional Appalachian acres currently controlled by Atlas (not included in the present joint venture).”

ONGC, the country’s largest state-owned oil company, and Hungarian oil major MOL are production opportunities in third countries.“We are exploring the option to expand ONGC’s relationship with MOL for pursuing overseas opportunities,” an ONGC official involved in talks with MOL told ET. If talks fructify, the two companies could consider joint bids for a few oil and gas blocks coming up for grabs in the markets in central and eastern Europe, CIS countries and the Middle East. MOL, Hungary’s largest oil company with a considerable presence in Central Europe, the Middle East and CIS countries, is in the process of picking up a 35% stake in ONGC’s onshore exploration block in Himachal Pradesh.

companies completing all formalities and the Details of expanding the scope of the present discussed during a recent visit of a Ficci-led Indian business delegation to Hungary. A MOL official told ET in Budapest that the company would take a decision to expand its partnership with ONGC after completing its investments in the Himachal Pradesh block. It makes sense for ONGC to partner MOL as it would get it access to certain E&P opportunities in Central and Eastern Europe where the company has limited presence. The markets in CIS, Middle East and North Africa could also be used by ONGC to make its own investments. ONGC could also hope to participate in MOL’s operational ventures in countries like Kazakhstan, Russia, Yemen, Angola, Egypt and Syria. MOL is a fully integrated oil company with presence in oil exploration, refining and retailing activities in domestic and overseas markets. The group’s 2008 revenues were in excess of 13 billion Euros. “ONGC could gain a lot from MOL’s experience as it could supplement its own efforts to get oil and gas acreage in overseas markets,” said the ONGC official.

ONGC Videsh OVL has got 33 oil exploration blocks across the world. It operates 21 of the 38 oil and gas blocks in which it owns a stake. Its recent prized buy has been £1.4 billion acquisition of Imperial Energy.

Item: Essar Oil commissions 2nd jetty @ Vadinar

Essar Oil’s 2nd product jetty for exporting refined petroleum products from its refinery was commissioned in Jamnagar district @ Vadinar.

In Kandla Port Trust (KPT), the second jetty of Essar Oil having capacity of 7 million tonnes has been commissioned and began functioning at Vadinar where its first jetty was commissioned four years ago.

“With commissioning of second jetty, Essar Oil will be able to export 14 million tonnes finished petroleum products to international and domestic ports annually,” a top KPT official said.

Besides two jetties for exporting finished products, Essar Oil has also set up a single point mooring (SPM) to unload large carriers of imported crude at Vadinar off shore oil terminal of KPT.

KPT’s off shore oil terminal, set up in 1978 to import crude oil, is a satellite oil port which handles 30 million tonnes of oil annually, which is one-third of country’s oil requirement.

Petronet LNG to get 10% stake in ONGC Petro additions Ltd (OPaL)

Gas importer Petronet LNG has shown interest in buying up to 10 per cent of a petrochemical project to be set up by ONGC Petro additions
Ltd (OPaL), a senior Oil and Natural Gas Corp official said.

“ONGC’s board will decide on the matter,” A K Balyan, ONGC’s director for human resources said on Wednesday.

Oil India to set up a mini LNG plant