The international price of crude oil has plummeted from a high of US$ 110 per barrel in June 2014 to a low of US$ 36 per barrel [lowest in 11 years] at present. In the back drop of the decision of OPEC [it accounts for 40% of world supplies and 85% of India’s import] not to take recourse to any output cut [a normal tactics employed by it in the past to prevent price from sliding], substantial pumping of oil by Iran, high production of shale gas in US and continuing slowdown in global demand, the price will continue to slide. Goldman Sachs predicts this to touch US$ 20 per barrel. Considering India’s heavy dependence on import of crude for...
More
No comments
Category: Oil & Gas
It’s wrong to deny gas to the fertiliser sector
And worse still, to favour urea producers over decontrolled fertiliser units in gas allocation, exacerbating the nutrient imbalance The manner in which gas is allocated within the fertiliser sector smacks of arbitrariness. The Centre gives a uniform subsidy to all manufacturers, including those of decontrolled complex fertilisers, under the Nutrient Based Scheme (NBS) . Why, then, does it use a different yardstick for allocation of gas to manufacturers of urea on the one hand and decontrolled fertiliser on the other? A two-judge bench of the Delhi High Court has ordered the government to resume supply of natural gas to Deepak Fertiliser and Petrochemicals Corporation (DFPCL), a manufacturer of decontrolled phosphatic fertilisers, which was arbitrarily suspended last year. The bench has...
More
No comments
Direct LPG subsidy transfer – a ‘torch-bearer’
The Guinness Book of World Records has recognized India’s direct LPG subsidy transfer as the world’s largest direct benefit transfer [DBT] program. The program nick-named PAHAL [Pratyaksha Hastaantarit Laabh] has within its ambit 146.2 million households [as on December 3, 2015]. While, the recognition is for it gigantic coverage and unprecedented success in reaching out the benefit through the length and breadth of the country, it is symptomatic of metaphorical changes that could come about in the way subsidies are administered and the big push that it could give to Modi’s reform agenda. For decades, Union government gave subsidy on LPG, diesel, kerosene etc by directing oil PSUs viz., Indian Oil Corporation Limited [IOCL], Bharat Petroleum Corporation Limited [BPCL] and...
More
No comments
New gas policy – attractive even without pricing freedom
A consultation paper floated by ministry of petroleum and natural gas [MPNG] for stakeholders comments has proposed granting freedom of pricing and marketing to producers of natural gas. This has led exploration and production [E&P] companies to believe that this will enable them to get much higher price than what they are getting under the present dispensation of administered pricing. Ever since a high power committee under Dr C Rangarajan submitted its report in December, 2012 [based on the formula recommended by it, price of domestic gas was US$ 8.4 per mBtu], E&P companies have been clamouring for market-based pricing. But, Modi – government which took charge in May, 2014 neither accepted Rangarajan formula nor their demand for market determined...
More
No comments
Why falling imported gas price brings no relief
As per reports, Petronet LNG Limited, a consortium of four PSUs (ONGC, GAIL, IOCL and BPCL) is shelling out Rs 400 crore every quarter in demurrage charges for ships idling because of its PSU buyers are refusing to purchase expensive imported gas. This is just the tip of iceberg. At the outset, let us capture a few facts. Petronet had entered in to a long-term 25 year contract with RasGas of Qatar for import of 7.5 million tonnes a year LNG or around 30 million standard cubic metre per day (mmscmd). For transportation to its terminal at Dahej, it had entered in to a time-charter agreement with Mitsui OSK Lines et al. The PSUs (sans ONGC) had committed to buy...
More
No comments
Gas allocation must be ‘policy’ driven
A 2-judge bench of the Delhi High Court [DHC] in an interim order, has ordered the department of fertilizers [DOF], ministry of chemicals and fertilisers to resume supply of natural gas to Deepak Fertilizer and Petrochemicals Corporation Limited [DFPCL] – a company manufacturing complex phosphate fertilizers – which was suspended last year. The order is on an appeal by Government of India [GOI] seeking stay on an earlier order of a single-judge [July 7, 2015] which had directed resumption of gas supply. The bench has stated that gas supply to DFPCL will continue till such time government finalizes the guidelines on supply of gas to fertilizer companies and implements the policy decision against two other manufacturers of complex phosphate fertilizers...
More
No comments
Why falling imported gas price brings no relief?
Petronet LNG Limited, a consortium of 4 public sector undertakings [PSUs] viz., Oil and Natural Gas Corporation [ONGC], Gas Authority of India Limited [GAIL], Indian Oil Corporation Limited [IOCL] and Bharat Petroleum Corporation Limited [BPCL] – India’s leading LNG [liquefied natural gas] importer – is shelling out Rs 400 crores every quarter in demurrage charges for ships idling because of its PSU buyers refusing to buy expensive imported gas. At a time when Modi – government is imparting momentum to economic reforms and an important component is to make the PSUs cost competitive and improve their profitability, a loss of Rs 1600 crores annually by a joint venture [JV] of 4 PSUs is a matter of grave concern. This requires...
More
No comments
ONGC harping on higher gas/oil price – untenable
The declining international prices of crude oil and gas [since last year] has brought huge relief to critical sectors like fertilizers, power, transport, households etc besides helping the government in reining in subsidies [fertilizers] in turn, helping fiscal consolidation and reducing losses of state electricity boards [SEBs]. However, international rating agencies [Moody & Standards and Poor] as well as domestic rating agencies viz., CRISIL feel that this will have deleterious impact on Oil and Natural Gas Corporation [ONGC] and Oil India Limited [OIL] – both central public sector undertakings [PSUs] which supply indigenous crude to oil refineries. This would be an overly simplistic way of looking at an otherwise complex situation on the ground. They argue that price paid to...
More
No comments
Gas policy: Don’t drag courts into executive domain
The Union government has received a notice from the Supreme Court (SC) on a petition filed by Independent Gas-based Power Producers Association (IGPPA) seeking priority in allocation of gas produced from the Reliance Industries Limited (RIL) operated Krishna – Godavari (KG) basin. The IGPPA has contended that the gas allocated from the KG basin was not allotted to them on priority basis but was given to fertilizer units. The Federation of Farmers Associations (FFA) has also filed a PIL in SC backing the IGPPA demand. Earlier, in its order delivered in January, 2015, the Andhra Pradesh High Court (APHC) had refused to interfere with the government policy decision on the issue, saying the Centre has powers to fix priorities as...
More
No comments
Gas policy – judiciary must not enter executive domain
Union government has received a notice from Supreme Court [SC] on a petition filed by Independent Gas-based Power Producers Association [IGPPA] seeking priority in allocation of gas produced from the Reliance Industries Limited [RIL] operated Krishna – Godavari [K-G] basin. IGPPA has contended that the gas allocated from KG basin was not allotted to them on priority basis but was given to fertilizer units. Besides, they wanted a direction to the Central government to frame a policy for country’s energy security. Federation of Farmers Associations [FFA] has also filed a public interest litigation [PIL] demanding more allocation to power sector so as ensure “adequate” electricity supply to farmers. Major companies in steel sector viz., Essar Steel, Welspun Maxsteel and others...
More
No comments