India Inc calls for revising gas pricing formula

Indian industry has called for the government to revise the formula for setting domestic natural gas prices to adequately remunerate exploration and production activity in the country, the Federation of Indian Chambers of Commerce and Industry (FICCI) said on Friday.
In October 2014, the government announced an upward revision of the price for gas to $5.61 per unit against the industry's demand for at least doubling it to a little over $8 per unit, as per the Rangarajan Committee recommendations.

"FICCI strongly advocates a gas pricing mechanism which adequately remunerates domestic exploration and production) (E&P) activity. Not only is this imperative for the development of domestic hydrocarbon industry, but is vital towards ensuring India's energy security," the industry chamber said in a statement here.

"A pricing regime should be reflective of the enormous geological risks and production uncertainties which are inherent in geography such as India," it said.
In a letter written earlier this week to Petroleum Secretary Kapil Dev Tripathi, FICCI said the gas price formula benchmarked on prices prevailing in "gas surplus/exporting geographies" like Russia Canada and the US, "will only make the Indian market less attractive in a world where other markets are more remunerative."

"Government should revise the formulae based on prices of gas importing/gas deficit countries, that is sustainable in the long run," FICCI Secretary General A. Didar Singh wrote.
"Continuing with the current gas pricing regime will severely affect India's larger goal of reducing oil import dependency and building the domestic hydrocarbon capacity," he said.
Domestic gas prices are calculated by taking the weighted average prices at the Henry Hub of the US, the National Balancing Point of Britain and the rates in Alberta of Canada and Russia with a lag of one quarter.

American ratings services Standard & Poor's said earlier this month that the revised price of domestic natural gas at $3.82 per unit for six months from October 1 will "discourage oil exploration and production companies from committing new capital expenditure".
The ratings agency said India should benchmark its natural gas prices to similar gas-deficient nations instead of using rates prevalent in gas-surplus areas like the US and Canada.
"Given India's gas production deficit and emerging gas transport infrastructure, comparing prices in similar geographies will be more relevant," it said.

Noting gas prices in India are lower than in other regional economies, S&P said this was likely to discourage capital expenditure in exploration.

Another global ratings agency Moody's said on Monday: "The gas price reduction is credit negative for upstream producers ONGC and Oil India Ltd. because it will lower their revenues and cash flows, which are already declining from low oil prices."

"The gas price reduction will have its greatest effect, in absolute terms, on ONGC, the country's largest producer of natural gas," it said, adding that it expected ONGC's revenues to decline by around $300 million and for Oil India Ltd by only around $33 million", an article by Moody's Credit Outlook said.

"The government needs to immediately implement its decision to announce higher premium for deepwater, ultra-deep water as well as high-temperature and high-pressure fields," Didar Singh said.
While approving a new gas pricing formula in October last year, the government had decided that new gas discoveries in deep-water, ultra-deep sea as well as high-temperature and high-pressure areas will be given a premium over and above the approved price.

While shallow-water blocks are at a depth of up to 100-500 metres, deep-water blocks descend to around 1,000 metres. Those at depths beyond 1,500 metres are classified as ultra-deep-water blocks.
These are the areas where the Reliance Industries-led consortium has maximum discoveries on the eastern offshore.

Source: Yahoo News

New gas price will discourage exploration: S&P

The revised price of domestic natural gas at $3.82 per unit for six months from October 1 will "discourage oil exploration and production companies from committing new capital expenditure", American ratings services Standard & Poor's said on Sunday.

"We believe the government's plan to stimulate private sector participation and bring in transparency in gas pricing by introducing formula-driven gas pricing is well intended," S&P said in a statement.

"However falling, hydrocarbon prices over the past one year have brought in uncertainty over the viability of exploration projects," it said.

The ratings agency said India should benchmark its natural gas prices to similar gas-deficient nations instead of using rates prevalent in gas-surplus areas like the US and Canada.

"The formula for pricing domestic gas considers prices in gas-surplus geographies such as the US and Canada, which have developed gas transportation infrastructure," the statement said.

"Given India's gas production deficit and emerging gas transport infrastructure, comparing prices in similar geographies will be more relevant," it added.

Domestic gas prices are calculated by taking the weighted average prices at the Henry Hub of the US, the National Balancing Point of Britain and the rates in Alberta of Canada and Russia with a lag of one quarter.

Noting gas prices in India are lower than in other regional economies, S&P said this was likely to discourage capital expenditure in exploration.

"Globally, several E&P companies have scaled back spending and put new exploration projects on hold amid low hydrocarbon prices," S&P said.

"Investment by private sector oil and gas companies in India has been small and their capex commitments are likely to be uncertain because of the price revision," it added.

This reduction will impact producers like state-run Oil and Natural Gas Corp, which stands to lose Rs.1,059 crore from profits, ONGC director (Finance) A.K. Srinivasan told reporters here.

The new price is a sharp 18 percent cut over the current $4.66 per million British thermal unit (mBtu) on gross calorific value (GCV) basis.

On net calorific value (NCV) basis, the new gas price for October 1 to March 31, 2016 would be $4.24 per mBtu as compared to $5.18 currently.

India Ratings and Research (Ind-Ra) said domestic gas producers state-run Oil India and ONGC could face a revenue decline of Rs.120-130 crore and Rs.1,080-1,150 crore respectively on gas sales during the second half of 2015-16 fiscal.

ICRA said the cut "reduces the profitability of the gas produced from the existing fields and adversely impacts the viability of new exploration and development projects".

Source: Business Standard

BP Pledges More Accountability For Its Role in Climate Change

BP plc plans to acknowledge more about its role in how its operations may impact the climate after shareholders -- with full board support -- overwhelming passed a resolution at the company’s annual meeting urging more disclosure.

Special Resolution 25 received 98% of shareholder support, according to a tally of the vote. The resolution needed 75% of the votes to make it binding. BP management had urged its passage.

"Climate change is a clear challenge for the world," Chairman Carl-Henric Svanberg told shareholders on Thursday. He noted that BP's energy outlook to 2035 is forecasting global demand for energy over the period to increase by 37%, with greenhouse gases increasing by 25% (seeDaily GPI, April 2; Feb. 17). "The world has made encouraging headway in disconnecting these historic trends through energy efficiency and low carbon initiatives. But the increase is still in excess of what scientists and governments say is needed to keep the temperature rise within 2 degrees."

BP wants an "orderly transition to a low carbon economy." Svanberg said. "First and foremost, we want to put a price on carbon as we believe is the most efficient way to steer toward lower carbon alternatives. Second, we want to push for a transition from coal to gas. This reduces emissions to half and will buy critical time over the next decades as renewables mature."

BP, like many of its peers, for years has applied a carbon price in making investment decisions (see Daily GPI, Dec. 5, 2013). Although many U.S. legislators have fought against imposing carbon taxes, BP, ExxonMobil Corp. and Shell executives have argued that taxing carbon dioxide (CO2) emissions actually creates incentives to invest in research and development (R&D) to implement new technologies (see Daily GPI, Feb. 13; April 16, 2010; Feb. 14, 2007).

Group CEO Bob Dudley said BP executives had "consistently advocated for stronger government action and have been open and transparent about our environmental impact. The challenge ahead is to make the case for the necessary role of fossil fuels, and further transparency supports that case. BP's portfolio is already 50% natural gas. We are working on a number of major projects that will add more gas," including Shah Deniz 2 in Azerbaijan, the Southern Gas Corridor to Europe, Khazzan in Oman and a $12 billion investment in Egypt.

The shareholder resolution followed announcements by high-profile investors that include the Church of England, which have pressured BP and Royal Dutch Shell plc to disclose climate risks. Last December the Church of England became the first mainstream religious organization in the UK to raise the prospect of divesting its fossil fuel investments unless the oil majors took more action to tackle climate change.

The Church of England's announcement was followed with action in January by a coalition of about 150 churches and pension funds that together represent about 1% of BP's and Shell's total shares. The groups, led by ClientEarth and ShareAction, urged the oil giants to assess, announce and tackle issues posed by changes in the climate. Shell, which is holding its shareholder meeting in May, already has voiced support for a similar resolution.

The coalition praised the resolution's passage by BP shareholders.

"As a result of the vote, annual reporting at BP will now be significantly expanded with additional transparency around operational emissions management, asset portfolio resilience, low carbon energy R&D and investment, executive incentivization during the low carbon transition and public policy activity relating to climate change," the coalition said.

The resolution also calls on BP to commit investments toward renewable energy, a business in which the oil major at one time was a global leader. BP today invests in energy efficiency technologies and alternative energies for operations and products, which include R&D investments through proprietary research, corporate venturing investment and university programs.

In fact, BP, which years ago advertised that the company’s business went "Beyond Petroleum," in 2006 received a score of 90 points out of 100 from investor coalition Ceres for working to develop climate-friendly technologies (see Daily GPI, March 22, 2006). However, in 2009 BP downsized the alternative energy unit in part because of the recession (see Daily GPI, July 2, 2009).

"Based on mixed investment outcomes in alternative energies, where we invested $8.7 billion since 2005, we are now focused on scalable Brazilian biofuels, which do not require a subsidy or regulatory regime to be cost effective," the board said in its support for the resolution. "Brazilian biofuels will now compete for capital with other business opportunities in our portfolio. Other alternative energies businesses have been divested or disbanded, with the exception of U.S. wind, which is currently retained as an operational asset, with no further growth investment planned."

Source: naturalgasintel.com

Gas Pricing Reform in India – Implications for the Indian gas landscape

Most discussion on the future of the market for internationally traded gas focuses on the ‘swing towards Asia’. Specifically, China and India, the world’s two most populous nations, are frequently highlighted as major drivers of future demand. Yet, there is considerable ambiguity over the assumptions underpinning this observation, particularly with regards to India. In fact, despite several years of relatively high economic growth in the last decade, it is difficult to make a confident and accurate assessment of India’s potential as a major Asian gas market. Official government forecasts carried out within a central planning framework tend to be overly optimistic, whereas projections by multilateral organisations tend to be cautious but confused. The reason for this lack of clarity is that the Indian gas sector is broadly characterised by two moving parts: one which has prices and quantities set by the Indian government, and another which utilises gas at market (LNG import) prices. Additionally, there is some overlap between the two, further complicating attempts to assess these as separate markets. The lack of a clear pricing signal therefore makes it difficult to determine future levels of demand.

This paper analyses whether or not recent reforms to the pricing of domestic gas could potentially change the Indian gas landscape by making price signals clearer. It investigates three important questions: First, could gas pricing reforms reverse the recent decline in domestic production? Second, could they lead to new upstream investments in gas? Finally, what is the impact of the reforms on downstream consuming sectors? The paper begins with an analysis of the 2014 gas pricing reform, followed by an overview of demand, supply and consumption. It then delves into the three broad questions posed above, and concludes with observations on whether reforms to gas ‘price formation’ (as opposed to ‘price level’) in India are in fact achievable, or whether they will continue to elude successive governments, and on whether India can ever be Asia’s next gas market ‘Goliath’.

Source: http://www.oxfordenergy.org/2015/04/gas-pricing-reform-in-india-implications-for-the-indian-gas-landscape-2/

International Energy Agency chief economist Fatih Birol says India needs $100 bln investment

India must spend $100 billion every year to meet the ballooning energy demand of its expanding economy, the chief economist of International Energy Agency told a conference on Monday.

"India needs three things for its energy sector: investment, investment and investment," Fatih Birol said, laying emphasis on India's need to attract investment in the energy sector.

The country's energy needs have rocketed in the past decade, when its economy grew at an average pace of more than 7 percent despite global hiccups. Many of India's power plants are lying idle, while coal, oil and gas production have struggled to rise for years.

Meanwhile, a growing prosperity has pushed up energy needs of households, offices and factories, leaving a wide gap between the demand and supply in an economy, which is one of the world's fastest growing today. At least a fourth of its citizens are not connected to the grid power.

Birol said the investment of $100 billion every year should be split with one-fourth going to coal, oil and gas sectors and the rest to develop power generation and transmission capacity. He didn't offer details on how he had arrived at the $100 billion a year figure.

For an investment of this scale, India needs to attract international capital, he said. International investors are ready to invest but are waiting for the "right conditions" of price and legal framework, Birol said.

"When I look at the last six months of the government, they seem to be moving in the right direction," Birol said, referring to the gas prices and other policy pronouncements. He expects the government to resolve the legal issues in a year, which will enhance the confidence of the private investor.

Retrospective tax legislation has rattled international firms in India. India's demand from oil and gas explorer Cairn India and former UK parent Cairn Energy Plc to pay about Rs 20,000 crore in tax and interest for an eight-year-old transaction has induced uncertainty in the investment climate.

Late last year, the government introduced a formula for domestic gas price. The formula is based on international gas prices and revised every six months.

Source: Economic Times

RIL's MJ-1 discovery may hold 1.4 Tcf of gas resources

Reliance Industries’ (RIL) most significant recent gas discovery, MJ-1, in KG-D6 block may hold 1.4 trillion cubic feet (tcf) of gas resources, roughly half of these in the block’s main gas fields.

Located about 2,000 metres below the producing D1-D3 field in the eastern offshore KG-D6 block, MJ-1 might hold contingent resource of between 0.988 tcf (low estimate) and 2 tcf (high estimate) of gas and condensate, according to the firm’s minority partner, Niko Resources of Canada. Niko cited an “independent resources evaluation report for the MJ discovery in the D6 block from Deloitte LLP” to state that the find could hold a best case estimate of 1.4 Tcf of gas and condensate.

The estimate is a comparison to the downgraded reserves of 3.10 tcf in the main Dhirubhai-1 and 3 gas fields, which have been on production for six years. If proved correct, MJ-1 would be the third biggest gas field in KG-D6 after D1&D3 and R-Series, which hold about 2 Tcf of recoverable reserves.

RIL, the operator of the Krishna-Godavari basin KG-D6 block with 60-per cent interest, has so far made 19 gas discoveries, of which D1&D3 were put on production in April 2009. MA oil and gas field was put on production in September 2008.

The Canadian firm holds 10 per cent interest, while the remaining 30 per cent is with BP plc of UK. Niko, which had earlier this year put up its stake in the KG-D6 block for sale, got the resource estimation done on its own. RIL and BP were not party to the exercise.

“Deloitte’s best case estimate of gross unrisked contingent resources of 1.4 tcf of equivalent relates to the Central (North), Northern and Central (South) fault blocks that were drilled by the MJ-1, MJ-A1, and MJ-A3 wells, based on an estimated a real extent of approximately 24 square kilometres, approximately twice the real extent of the analogous MA field that is currently producing,” it said.

Regulatory approval from the Indian government will be required to bring this field on-stream, it said, adding block operator RIL was currently doing appraisal work, and development planning work is underway.

NIKO RESOURCES ON THE DISCOVERY

MJ-1 might hold contingent resource of between 0.988 tcf (low estimate) & 2 tcf  (high estimate) of gas & condensate, according to Niko Resources

Niko cited an “independent resources evaluation report for the MJ discovery in the D6 block from Deloitte LLP” to state that the find might hold a best case estimate of 1.4 tcf of gas & condensate

Niko, which had earlier this year put up its stake in the KG-D6 block for sale, got resource estimation done on its own, and RIL and BP were not part of the exercise

Source: Business Standard

Oil Min submits proposal on premium for risky gas fields

The Oil Ministry has submitted a proposal to the Finance Ministry for paying a premium to natural gas producers for difficult fields, a top official said. "We will very soon decide" on the premium to be paid for gas discoveries in deepwater, ultra-deep sea or high- temperature and high-pressure fields, Oil Secretary Saurabh Chandra said on Wednesday.

A formula, based on recommendation of the Directorate General of Hydrocarbons, has been approved by Oil Minister Dharmendra Pradhan and it has now been forwarded to the Finance Ministry for vetting. The government, while approving a new gas pricing formula based on international hub rates in October last year, had decided that new gas discoveries in deepwater, ultra-deep sea or high-temperature and high-pressure fields will be given a premium over and above the approved price. Gas price, according to the formula, was USD 5.05 per million British thermal unit till March 31 and has subsequently been cut to USD 4.66 in line with international movements.

The premium to gas from difficult fields will be over and above this rate. An official said that a graded formula for the premium based on difficulty of the field is on the anvil. DGH had in January submitted a formula for calculating the premium on such projects. The Cabinet headed by Prime Minister Narendra Modi had in October approved a revised natural gas price and stated that discoveries made after this announcement in difficult regions would be given a premium as exploration and drilling is costly and challenging. The official said DGH had suggest different rates of premium based on a formula for deepwater, ultra-deep sea and high-pressure and high-temperature (HPHT) fields.

Source: Moneycontrol

5 Largest Markets for Natural Gas

Natural gas used to be an unwanted byproduct of oil production. Many oil companies simply burned it off because there wasn't a market for the gas. That has changed in recent years as the world has realized just how valuable this fuel is to modern society. Today the cleaner-burning, versatile fuel is used as a home heating fuel, a vehicle fuel, and a petrochemical feedstock, and for generating electricity. In 2013 alone, 3,346.6 billion cubic meters of natural gas were consumed globally, according to BP's  latest Statistical Review of World Energy. Here are the top five natural gas-consuming countries in the world.

No. 5: Japan
Japan consumed 116.9 billion cubic meters of gas in 2013. That was up 0.2% from its consumption in 2012 and represented 3.5% of the global total. Japan's numbers are up substantially since 2010 when it consumed just 94.5 billion cubic meters of gas. Virtually all of the country's natural gas was imported as Japan produces little of its own gas supplies. In fact, it's the world's No. 1 LNG importer and since 2012 has accounted for 37% of the global that market.

One reason Japan's natural gas consumption has increased so much over the past few years is because of the Fukushima Daiichi nuclear power plant accident in 2011. The country has shifted away from nuclear and is now using natural gas as a primary fuel for electricity generation.

No. 4: China
China consumed 161.6 billion cubic meters of gas in 2013, which was roughly 4.8% of global consumption and up 10.8% from 2012. Given its rapid demand growth rate the nation is expected to climb up this list in future years.

China, like Japan, is a big importer of natural gas. In 2013 it produced just 117.1 billion cubic meters of gas and imported the rest. While China is working to increase domestic gas supplies by unlocking its vast shale gas reserves, it isn't having much luck yet. This is why it is also increasing its access to imports, by pipeline from Russia and via LNG. One reason China wants to use more gas is because its heavy use of coal to generate electricity has made it the world's top emitter of carbon dioxide. It is looking to switch more of its power generation to cleaner-burning natural gas.

No. 3: Iran
Iran just beat China in 2013 as it used 162.2 billion cubic meters of natural gas. That was up 0.7% from 2012 and equated to about 4.8% of total global consumption. As with the U.S. and Russia, the primary reason Iran uses so much natural gas is because it's one of the world's top gas producers. In 2013 it produced 149.9 billion cubic meters of gas, which ranked it third globally at 4.9% of output. It also holds the world's second-largest proved natural gas reserves, at 17% of the global total.

In 2013 Iran's natural gas consumption was spread between residential and commercial at 34%, electric power at 28%, industrial consumption at 25%, transportation at 5%, and all others at 8%. In addition, Iran uses a lot of natural gas for enhanced oil recovery to increase its petroleum production. In 2012, for example, it reinjected more than 28 billion cubic meters of gas into its oil fields to boost production.

No. 2: Russian Federation
Russia is the second-largest consumer of natural gas. In 2013 it used 413.5 billion cubic meters, which was 12.3% of the world's total. That's actually down 0.4% from its consumption in 2012. Russia has abundant domestic production, which it heavily subsidizes, encouraging residential and industrial consumers to use more gas. Furthermore, as one of the world's coldest countries, demand for gas used for heating and electricity is high.

Russia is also the world's No. 2 natural gas producer, in 2013 producing 544.3 billion cubic meters, or 17.9% of the global total. Gas that is not consumed domestically is exported primarily to Europe. The nation also exports liquefied natural gas, primarily to Japan and South Korea.

No. 1: United States of America
The U.S. is by far the world's largest market for natural gas. In 2013 it used 737.2 billion cubic meters of natural gas, or 22.2% of the global total, according to BP's review. Natural gas consumption in the U.S. has steadily grown over the years, rising 2.4% in 2013 from the prior year. Of the four primary consumption markets for natural gas -- residential, commercial, industrial, and electric power -- usage increased in three, with consumption declining only for electric power.

One reason for the nation's high consumption level is because it is by far the world's largest natural gas producer and what gas isn't produced domestically can be easily imported from Canada. In 2013 the U.S. produced 687.6 billion cubic meters of gas, or 20.6% of the world's total. While the U.S. wasn't yet self-sufficient on natural gas in 2013, production has surged in recent years thanks to the discovery of massive shale gas reserves. This is leading to a significant decrease in imports from Canada and build out of export facilities to ship the expected excess American natural gas to foreign markets.

Investor takeaway
What was once an afterthought is quickly becoming an important fuel for the global economy. One of the biggest trends over the next few years will be China's growing demand for gas, which will provide an export outlet to top gas producers such as the U.S. and Russia. Meanwhile, changes in energy consumption, such as Japan's shift from nuclear to gas, will provide even more fuel for what appears to be a robust LNG export market over the next decade.

Source: fool.com

India makes first crude oil purchase for strategic reserve

India has bought the first oil for its strategic petroleum reserve (SPR), trade sources said on Monday, marking the start of a round of purchases by the world's fourth-biggest oil consumer to build up emergency stockpiles.

Oil prices have almost halved in the past year due to excess global production, leaving traders looking for any signs of new demand to help absorb the surplus.

The sources said state-refiner Indian Oil Corp bought a 2 million barrel cargo of Iraqi crude from Chinese trader Unipec, which will load in May for shipping to the first stage of India's SPR on the country's east coast.

In addition, state-refiners IOC and Hindustan Petroleum Corp Ltd will buy another three Very Large Crude Carriers between them for the Vizag SPR storage site in Andhra Pradesh.

While the first 8 million barrels for Vizag are relatively small compared with the global market, totaling less than 10 percent of daily demand, India's purchases could ramp up later this year as the country completes construction of the next phase.

Two SPR sites, at Padur and Mangalore on India's west coast, will have a capacity of 29.3 million barrels and are expected to be ready by October.

India is heavily reliant on fuel imports, producing less than a third of the nearly 3.7 million barrels per day it consumed in 2013, data from the U.S. Energy Information Administration shows.

Its fast-growing economy has become the world's fourth-largest oil consumer after the United States, China and Japan.

China's own SPR purchases, which have helped support oil prices during the global supply glut, are expected to slow this year with commercial and strategic storage space almost full.

China's strategic stocks were estimated in January at more than 30 days' worth of crude imports. It plans to eventually build reserves of around 600 million barrels, or about 90 days of import cover.

India's SPR should cover approximately 13 days of imports when it is completed by the end of this year.

The east coast Vizag facility has two compartments of 7.55 million barrels and 2.20 million barrels, with the smaller to be used by HPCL for its 166,000 bpd refinery at the site.

The VLCC cargo Basrah IOC bought from Unipec, the trading arm of China's state-backed oil producer Sinopec, was purchased at a premium of 50-60 cents to the official selling price of the Iraqi grade, the sources said.

Separate from the SPR purchases, IOC has re-floated a tender seeking a million barrels of heavy grades for April first half loading, traders said. This tender will close on Tuesday with bids remaining valid till Wednesday.

Brent crude oil prices were down by around $1 a barrel on Monday near $55 a barrel, having fallen from above $110 a barrel in June.

Source: Times Of  India

It’s time for a ‘Drill in India’ campaign: Hind Oil Exploration

India must recognise its strength as a buyer of oil and become a price maker and not a price taker, according to P Elango, Managing Director, Hindustan Oil Exploration Company Ltd.

Unexplored basins
The country needs to transform into a gas-based economy, he said, adding that “we need a ‘Drill in India’ campaign under the umbrella of ‘Make in India’ as two thirds of India’s sedimentary basins are unexplored”.

Elango was speaking at the 16th Energy Summit of Indian oil and gas sector on the theme ‘Towards (a) favourable investment regime’. Mrinal Vohra, Managing Director, Quippo Oil and Gas Infrastructure, called for a friendly policy regime for people to invest in exploration and production (E&P) activity in the domestic market.

“Investments in oil and gas E&P are capital intensive and, therefore, there is long-term requirement for paybacks. We need to categorise this as infrastructure sector so that there is long-term access to capital. Requirements for re-exports of capital assets also need to be amended,” Vohra said.

For development of city gas distribution (CGD), only transparent bidding is acceptable for regulator as the board fixes only transportation tariff and not the final price, said S Krishnan, Chairperson, Petroleum and Natural Gas Regulatory Board.

Bigger role
A longer-term vision keeping in view environmental concerns, desire to graduate to a low carbon economy and volatility of oil in geopolitical context, indicates an increasing role for natural gas, till renewable and nuclear power start playing a significant role, he added.

TNR Rao, Former Petroleum Secretary and Chairman, SAGE, said: “Energy, its price and its efficiency are critical for the success of Make in India campaign.”

Source: The Hindu Business Line

IEA sees India, China filling strategic reserves with cheap oil

India and China are set to fill up their strategic petroleum reserves this year, taking advantage of lower oil prices, according to the International Energy Agency. The two nations are building emergency stockpiles with millions of barrels of crude that mirror the reserves of oil and refined products that the US and its western allies amassed after the first oil crisis of 1973 to 1974. “Cheaper oil facilitates the building of strategic reserves,” the Paris-based IEA said on Friday in its monthly oil market report. The purchases, if confirmed, will add to global oil consumption growth, the IEA said, offsetting “current weak fundamentals” of supply and demand and potentially boosting prices. Brent crude, a global oil benchmark, has fallen 47% over the past year to trade at $57.03 a barrel at 8:53 am in London. “Since oil prices began their rapid retreat last June, the import bills of oil-importing economies have declined,” the IEA said.

“This has assisted governments in many of these countries in either adding to their strategic reserves or putting in place firm budgetary provisions to increase oil holdings.” The energy watchdog said China was “expected to again stockpile crude in 2015” as it completes new tanking capacity. Beijing in November for the first time revealed details of its oil stockpiling programme, saying it held about 91 million barrels in four different locations. The US holds 696 millions barrels of oil in its emergency reserve, the largest in the world. Indian storage India has yet to start storing crude oil, but the IEA said the government has approved a $338 million budget to cover the filling of its first emergency tanks this year.

At current prices, that would amount to 6.5 million to 7 million barrels of crude. The Indian Strategic Petroleum Reserves Ltd., the company in charge of the stockpile, has already built a tank farm in eastern India capable of holding 10 million barrels of crude. Another two facilities in western India are expected to be completed by the end of the year, adding a combined 28 million barrels of capacity.

The IEA, adviser to 29 oil-consuming nations, said Vietnam has also used lower oil prices to boost its commercial stockpiles held at refineries. China and India have said in the past they need to build strategic reserves to offset the risk of a disruption in supplies, mostly from the Middle East and North Africa. Western countries have used their strategic reserves only three times over the past 35 years, during the first Gulf War in Iraq in 1991, after hurricane Katrina in 2005 and in 2011, after the start of the war in Libya.

Source: Livemint

Oil Ministry to give CNG marketing licence

Oil Ministry is looking to wrest powers to give CNG retailing licence from sectoral regulator PNGRB as it has issued draft guidelines detailing eligibility for rights to sell fuel to automobiles.

The Ministry on March 5 issued 'Draft Guidelines for granting Marketing Rights for CNG as Transportation Fuel, including setting up CNG Stations' wherein any entity that has invested Rs 500 crore in oil and gas infrastructure can get rights/license to retail the fuel to automobiles by setting up CNG stations.

While the Union government had authorised entities like Indraprastha Gas Ltd and Mahanagar Gas Ltd for retailing CNG to automobiles in Delhi and Mumbai respectively in early 2000, the Petroleum and Natural Gas Regulatory Board (PNGRB) has been doing so through bid rounds since its establishment in 2006.

In the draft guidelines, the ministry stated that like the companies which invested a minimum of Rs 2,000 crore in oil and gas infrastructure were granted marketing rights for petrol, diesel and ATF through the March 2002 notification, entities investing a minimum of Rs 500 crore will be eligible for marketing rights for CNG.

Also, entities authorised by PNGRB or Central Government would also be eligible.

"The eligible entities under these guidelines shall apply to the Government for issuance of 'Grant of Marketing Rights for CNG as transportation fuel'," the guideline says.

Since 2006, entities apply to PNGRB and not the government for rights to retail CNG alongside selling natural gas as fuel within city limits.

While PNGRB has been issuing the licence to retail CNG as well as piped cooking gas (PNG), the ministry guidelines pertain only to rights to sell CNG.

"The entities which have already been granted marketing rights for petrol, diesel and ATF as transportation fuel, under Resolution dated March 8, 2002 will be deemed to have such grants of marketing rights for CNG as transportation fuel," it said.

In 2002, state-owned Oil and Natural Gas Corp (ONGC) besides Reliance Industries, Essar Oil, Royal Dutch Shell and Numaligarh Refineries had won authorisation to set up petrol pumps to sell petrol and diesel.

Besides these firms, fuel retailers Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) as well as gas utility GAIL India Ltd will be eligible for CNG marketing rights.

Firms who get CNG marketing rights will get natural gas allocation and can book capacities in existing pipelines to transport the fuel, the guidelines said.

PNGRB recently opened fifth round of bidding for city gas distribution (CGD) licences even though it had issued license to entities for only first two rounds. Licences for the remainder are stuck over disputes.

Source: Business Standard

Private oil companies cut capital expenditure and cost on weak crude demand outlook for 2015-16

 Indian energy majors are slashing their capital expenditure and have initiated cost cutting measures, responding to the weak crude prices and dismal price recovery outlook for 2015-16.

Crude oil prices have plummeted almost 45% since June due to oversupply in the market. Benchmark Brent crude touched lows of $45 per barrel in January as against a high of $115 last summer.

Oil has seen gains recently and reached $60 a barrel again for the first time this year but the outlook remains muted as demand is unlikely to see a pick-up.

Global energy majors have cut capex, trimmed human resource and are taking severe cost saving measures, something that Indian companies have now started doing. Cairn India has reduced its capex by less than half to $500 million from $ 1.2 billion for 2015-16 and has also laid off 250 of its 1,800 staff. Reliance Industries continues with its capex plans across its businesses, but is implementing "austerity measures" in its exploration and production business, given the challenging times. Essar Energy is holding back capex plans and is also believed to be exploring cost saving steps. While state-run ONGC bucks the trend by increasing capex, it is trying to negotiate lower rates for new tenders to keep costs low. "Energy E&P business has been hit globally due to the fall in crude prices and Indian companies would be affected too. While ONGC would continue investment backed by government's push, companies like Cairn have no option but to cut capex.

RIL and Essar are diversified and may be able to manage with severe cost cuts," said Dhaval Joshi, research analyst, Emkay Global Financial Services. Cairn India has said it will undertake only economically viable projects, and has the board's approval for Raag Deep Gas Project, but will defer rest of the plans. It is also working on reengineering projects and re-negotiating contracts to reduce costs.

While a detailed query sent to RIL remained unanswered, ET is in possession of an email from PMS Prasad, executive director of the company, dated February 17, in which he urges his colleagues in the E&P business to cut down on costs, given the "turbulent time" for the industry. "Considering the current business scenario, as an austerity measure, we at E&P are required to curtail business costs, wherever possible, without compromising on the smooth continuity of the business," Prasad said.

"As a first step towards achieving this, we are seeking your cooperation to cut down on our business travel cost wherever possible." Essar Oil told ET that as a refiner, the company was "agnostic" to crude oil prices, adding "we have no major capex plans lined up and hence the fall in crude oil prices has not impacted our plans". The company said it was working on an energy efficiency programme, which includes conversion of vacuum gas oil into more valuable middle distillates in an attempt to improve its gross refining margins by $1 a barrel. The Union Budget 2015-16 stated that state-run oil firms would invest over Rs 76,565 crore on capex in 2015-16, up 5% on year. Of this, ONGC alone would invest Rs 36,250 crore, as against target of Rs 34,813 crore in the current fiscal. "All development projects in ONGC are evaluated, considering post discount prices available to ONGC and there is no issue of viability at existing prices. We are also going for exploration as per our approved work programmes. We envisage this as an opportunity of getting more competitive rates for oilfield services.

This is also an opportunity of new acquisitions at competitive prices for which ONGC Videsh is working out options to meet longterm energy needs of the country," ONGC said in a response to ET's query. Global oil and gas companies have already announced cut in capex to the extent of over $85 billion from their 2015 budgets to protect themselves from low oil prices, according to industry estimates. RBC Capital Markets said in a note that the 122 global companies in its coverage could see a 20% decline in capital expenditure in 2015 to $349.2 billion.

Source: Economic Times

Offshore Pursuits Gain Speed In India

As energy demand continues to outpace production, it’s no wonder that India is aggressively pursuing the country’s more than 50 Bbbl and 1.3 Tcm (47 Tcf) of proven oil and gas reserves both onshore and offshore.

Companies such as state-run Oil and Natural Gas Corp. (ONGC) and Gujarat State Petroleum Corp. Ltd. (GSPC) along with Reliance Industries Ltd. and BP are planning to spend billions in offshore hydrocarbon pursuits, tackling deepwater prospects, while others such as Cairn India are tapping EOR technology to improve recovery rates at existing fields onshore.

But there is much ground to cover.

For the most part, India’s sedimentary basins are largely unexplored. Yet not even the government’s launch of a new exploration licensing policy about 15 years ago, which established the auction framework to award licenses under production-sharing contracts, has sparked a worldwide bidding frenzy despite the potential for commercial discoveries.

“Participation by international players remains low, with only 12% of the total acreage and about 7% of total contracts awarded to foreign players to date,” Dilip Khanna, oil and gas partner for EY India, told E&P. “This is due to the following challenges faced in the past few years by international E&P players: comparison of prospects in India relative to other countries, perception of slow and bureaucratic decision-making, and disputes arising between the government and operating companies on matters of cost recovery and obtaining environmental and land clearances from various government departments.”

The drop in crude oil prices could further slow investment from the private sector, while the blow to ONGC and Oil India is softened by the government’s decision to exempt the upstream companies from paying the fuel subsidy with crude prices below $60/bbl.

“The new government in India is [aware] of these issues and is taking positive steps to encourage foreign investments in India’s E&P sector,” Khanna added. “Some significant changes include the new market-linked gas pricing formula currently in force, the new revenue-sharing model for upstream projects being considered, creation of the National Data Repository for all upstream blocks and upcoming bidding rounds for marginal fields and E&P blocks.”

In the meantime, the Indian government pushes a Made in India initiative, which brought together ONGC and Pan-IIT—a research consortium of seven premier Indian Institutes of Technology—in search of technologies to enhance not only hydrocarbons but also alternative energy sources. Research areas identified include geoscience, reservoir characterization, enhanced oil and gas production, and unconventional hydrocarbon exploration as well as software development, engineering solutions and alternate energy resources.

This comes as oil and gas companies advance their E&P plans.

On The Fast Track

ONGC Ltd. is moving ahead to develop the northern part of the KG-DWN-98/2 deepwater block in the Bay of Bengal using a cluster method.

“Considering the vast area for development, ONGC is using [a] cluster approach to bring oil and gas finds in the Block KG-DWN-98/2, or KG-D5, which sits next to Reliance Industries' KG-D6, to production," said Dharmendra Pradhan, India’s petroleum and natural gas minister.

So far, the explorer has made 11 oil and gas discoveries in the KG-DWN-98/2 Block, which spans 7,295 sq km (2,817 sq miles) and is divided into the Northern Discovery Area (NDA) and Southern Discovery Area (SDA).

The company will initially take on the development of 11 fields in the NDA of KG-D5 along with a gas field in the adjacent Block-IG (PEL) under a three-cluster plan, the minister said. The prospects, identified after two exploration phases, are located in water depths ranging from 594 m to 1,283 m (1,949 ft to 4,209 ft).

Pradhan also said the developer is aiming to produce first gas from NDA fields by mid-2018 and first oil by mid-2019.

“Parallel execution of a number of project activities are in progress to ensure fast-track development of these fields,” Pradhan added.

Development of the UD-1 gas discovery in SDA will be taken up in the later stage. “Considering the water depth [2,400 m to 3,200 m, or 7,874 ft to 10,499 ft] and the constrained techno-economic solutions, execution of this [SDA] is presently not being pursued for development,” he said. “Scouting for [a] suitable technology/solution for field development is in progress.”

Closer Look At Clusters

Considering many discoveries in the NDA are not independently viable, ONGC is tying up the prospects in clusters for development. It will develop 11 fields in NDA and one in the adjacent Block IG in three clusters by drilling 43 development and injection wells.

·         Cluster 1, a gas cluster, is comprised of the D and E fields of KG-DWN-98/2 and the G-4 Field in the adjacent IG Block. The plan involves drilling eight wells in the G4 Field, two wells in the D Field and one well in the E Field.
The development wells will target hydrocarbon prospects identified after the two-phase exploration work in these three fields. As per the declaration of commerciality (DoC) report, a peak production rate of 14.5 MMcm/d (512 MMcf/d) is expected from this cluster with a 15-year field life.

·         Cluster 2A focuses on the A2, G2-P1, M3, M1 and G-2-2 fields in the NDA of KG-D5. The operator plans to drill 14 oil wells and 10 water injectors in this cluster, which is considered be a major oil prospect. According to the DoC, this cluster is expected to produce about 31.5 MMmt of oil in 15 years with a peak production rate of 91,000 bbl/d.

·         Cluster 2B, a gas cluster, is a group of four fields—R, U3, U1 and A1—in the NDA. The plan envisages drilling eight free gas wells in these four fields. This cluster is likely to produce 32.5 Bcm (1.1 Tcf) of gas in 14 years with a peak production rate of 12.5 MMcm/d (441 MMcf/d), according to the DoC.

Dynamic modeling results suggest total gas production from gas fields in the NDA along with the G-4 Field of 84.41 Bcm (3 Tcf) with a peak gas rate of 33 MMcm/d (1.2 Bcf/d) over a period of 15 years.

The NDA is estimated to have reserves of 121 million tons of oil in place and 78 Bcm (2.8 Tcf) of initial gas in place, while the SDA holds 80.9 Bcm (2.9 Tcf) of initial gas in place. Based on the geological and geophysical analysis, the KG-D5 Block holds substantial upside potential of about 265 MMmt.

ONGC is looking at hiring the spare gas transportation facilities of the adjacent KG-OSN-2001/3 Block being developed by GSPC to bring the production from Cluster-I. The cluster’s three fields are near the 23-km (14-mile), 20-in. subsea pipeline planned by GSPC to transport oil and gas from its Deen Dayal Field in KG-OSN-2001/3 to an onshore terminal at Mallavaram on Andhra coast.

Production from Cluster-2A and 2B, however, will be transported through facilities that ONGC plans to develop. The targeted 90,000 bbl/d of oil from Cluster-2A will be transported to an FPSO vessel, and 12.5 MMcm/d of gas from Cluster-2B will be piped to an onshore terminal at Odalarevu on Andhra coast via a subsea pipeline. ONGC has awarded Technip a contract to develop the onshore terminal at Odalarevu to source oil and gas from KG-D5 and the neighboring shallow-water VA and S1 fields.

Offshore Push Grows

With 56% of India’s proven reserves in offshore basins, Khanna said that Indian companies have made substantial investments offshore, pointing out gas exploration in proven Mumbai Offshore and Krishna Godavari (KG) offshore basins.

“ONGC announced plans to invest about $1 billion by 2017 in the redevelopment of Mumbai High, an offshore oil and gas field on the West Coast. Further, RIL-BP, ONGC and GSPC are slated to make major investments (more than $5 billion) in the next three years in the KG Basin,” Khanna added. “Given the proven prospectivity of these regions, investments and further exploration are expected to continue at a steady rate.”

The government also is encouraging investment in the offshore Cauvery, Mahanadi and Kerela-Konkan basins, Khanna continued, noting “prospectivity has been identified in these regions; however, foreign and private investment are required to drive further exploration and proving up of reserves.”

ONGC and GSPC aren’t the only ones making strides offshore.

Cairn India Ltd. highlighted offshore production growth Jan. 22, 2015, during a conference call on the third-quarter financial results for the period ended Dec. 31, 2014. The company said it posted a 24% sequential production growth, reaching 39,000 boe/d. Building on the success of finds in the Ravva Basin, quarter notables also included a new discovery in Block RE-6 that is estimated to have between 10 MMbbl and 15 MMbbl of hydrocarbons in place. The company aims to produce about 4,000 boe/d.

“Ravva continues to be an excellent example of good reservoir management too, with a world-class recovery rate of 48% achieved this quarter. Gross daily production of about 28,000 barrels equivalent in the third quarter has been aided by eight infill wells drilled this fiscal [quarter],” Cairn CEO Mayank Ashar said in Cairn’s online transcript of the call.

In addition, optimization initiatives in Cambay helped lead to production growth of 10% year-on-year on a nine-month basis.

“Gross daily production of over 11,000 barrels equivalent was higher this quarter largely on account of successful ramp-up post well surveys. For the next quarter, a coil tubing campaign has been planned,” Ashar said. “This could impact volumes in the period but would aid production growth in subsequent quarters. Our recent success in Ravva and Cambay both point toward our constant endeavor to maximize value for shareholders through continued efforts.”

EOR Efforts Continue

While developments move forward offshore, operators also are progressing with the development of onshore fields. Cairn said it continues to focus on its core Mangala, Bhagyam and Aishwariya (MBA) reservoirs, which have 2.2 Bbbl of discovered hydrocarbons in place, concentrating on “infrastructure creation and prudent reservoir management in both waterflood and EOR implementation.”

“Over 90% of our production volumes are from core fields of MBA, Ravva and Cambay. These fields are resilient to volatility in oil prices due to their low operating cost and high margin,” Ashar said. “In addition, we have a rich set of optionalities for growth in the areas of exploration, satellite fields, Barmer Hill and the gas business.”

Ashar later spoke of the combination of good geology, technology adoption skills and growth options that uniquely position the company. The Mangala EOR project is among the examples of how the company is using technology to grow production. At the end of October 2014, Cairn marked the tie-up of three major projects—the first polymer injection at Mangala, which the company said is one of the largest polymer floods in the world.

“The Mangala EOR full ramp-up is progressing well; the commissioning of critical packages is in advanced stages of completion. High-performance rigs continue to drill additional EOR wells,” the company said in a statement. “After positive water cut and oil trends observed in the Mangala ASP pilot, we have progressed to testing of potential oilfield chemicals. We would be concluding the pilot within fourth-quarter fiscal year 2015 as planned.

“First injection of polymer at the field and full field ramp-up is underway to enhance recovery rates by 7% to 10%,” the company added. “We expect it would take about six months for the production to see the impact.”

The Mangala EOR project is one of several in which Cairn is using technology to improve its understanding of geology and improve capital efficiency as the industry continues to endure a downturn marked by low oil prices, too much supply and too little demand.

Reflecting on previous downturns and companies’ resilience in capital allocation, cost control and using employees’ creative capability, Ashar said, “My learning has been that there are always opportunities for good companies with good assets, and Cairn is no different.”

Ravi Prasad is an India-based contributor to E&P. Velda Addison is the associate online editor for E&P.

Source: http://www.epmag.com/offshore-pursuits-gain-speed-india-785196#p=full

Natural gas could save up to $27 million annually, new study says

Bringing natural gas to Kincardine, Arran-Elderslie and Huron-Kinloss could save up to $27 million per year, according to a new report from Elenchus Research Associates Inc.

“The report concludes that annual energy savings in the residential, commercial, agricultural, industrial and municipal sectors could total $27 million per year once the new gas utility is fully up and running,” the media release from the Municipality of Kincardine reads.

The Elenchus report, released Feb. 25, 2015, examines the potential economic gain from bringing natural gas to the area, chief administrative officer Murray Clarke said.

"Or looking at it from the inverse, the annual economic loss being experienced in not having the utility," he added.

It comes on the heels of last fall's natural gas business case, which examined anticipated demand and expected capital cost to bring the utility to the region.

“The natural gas business case we released to the public last fall shows that a new gas utility could be viable for our area,” said Arran-Elderslie mayor Paul Eagleson. “This latest report underscores the conclusions and recommendations in the business case.”

The report assessed potential benefits from bringing natural gas to the area in three categories: direct energy cost savings for potential customers; the environmental benefit for Ontario from reduced carbon footprint; and indirect benefits to the communities.

Areas without natural gas are at an economic disadvantage compared to their neighbours, the report states. It says southern Bruce County is lagging behind the growth of other nearby communities, which are more attractive to potential industry and homeowners who “expect natural gas to be available wherever they locate.”

“By finally having access to natural gas, we will remove and impediment to development in our area by leveling the playing field with neighbouring municipalities who already have gas,” Huron-Kinloss mayor Mitch Twolan said. “Having no access to natural gas is clearly an impediment to new investment and jobs in our communities.”

In terms of environmental benefit, the report states that switching to natural gas could reduce annual carbon dioxide emissions by 20,356 kilograms per year.

The report concludes that natural gas is a “more attractive” option than propane, heating oil and electricity based on economic, environmental, financial and operational reasons.

Municipality of Kincardine mayor Anne Eadie said the next step for the three municipalities is to canvas the marketplace for potential partners and operators.

“We expect to receive information proposals from multiple potential partners by late spring,” she said.

Source: http://www.lucknowsentinel.com/2015/03/03/natural-gas-could-save-up-to-27-million-annually-new-study-says

A new plan for gas

The continuing controversies surrounding the oil and gas sector will only be solved through stronger, independent regulation. That, in a nutshell, should be the takeaway from reading the report of the committee set up by the last government, and headed by a former finance secretary, Vijay Kelkar, to investigate reform of the sector so as to enhance energy independence. The committee insists the only fair price for gas is "the best price a gas molecule can command, or the price that is market-determined in a transparent way on an arms-length basis". This is true in general, but questions remain as to how to determine this price when there is no such thing as a genuine global market for natural gas, a commodity that is difficult to transport. While the committee insists that "at the end of the new gas pricing period, producer prices for natural gas should be unfettered", the government must temper this recommendation with the basic economic understanding that government-granted monopolies are something to be avoided. Yes, of course, the Kelkar committee is right to argue that monopolistic price-setting will incentivise private exploration of natural gas. But that will also, obviously, impose other costs on the economy, and the incentives for private exploration of natural gas are better evaluated by comparison of profit margins from other similar wells.

Certainly, if the government moves towards such a "market-linked" approach in the gas sector, reasonable questions will be asked as to why it has not done so in the coal sector, especially given that coal can indeed be transported in a way that gas cannot, and so the idea of a "world coal price" has meaning. In other words, the recommendations of the committee could more fruitfully be applied to other energy sectors. After all, why should coal prices domestically not reflect the highest prevailing world price? Similar points can and should be made about the committee's sensible recommendation to dismantle end-user rules that privilege sectors like power and fertiliser. These must end, certainly, for they distort the supply of natural gas. However, the equivalent must apply to other energy sectors, too. Thus, coal prices should reflect the highest prevailing world price (which is what is recommended for gas) and all end-use restriction as through coal "linkages" to specific factories or power stations should go.

In general, the government should see the report as the first step in working out the exact costs to various stakeholders of different policies of energy pricing. How much do consumers lose or gain? How much does the exchequer lose or gain? And what would be the loss or gain of individual companies - whether producers or users of energy? The absence of such examination in the coal sector has led to much spin and confusion about the economic consequence of the ongoing auctions. The public should be more properly informed about such issues, and it would have been useful if the committee itself had done such an exercise.

Source: B.S

Budget 2015: Make natural gas "declared good", exempt customs duty

The new government has pursued pro-growth initiatives and we expect the 2015 budget to continue in this vein to further boost the economy and restore investor confidence.
We await the passage of the GST Bill and its implementation to include all petroleum products viz. Crude Oil, Motor Spirit, Aviation Turbine Fuel, High Speed Diesel, Natural Gas, LNG (including LNG regasification Services) which will go a long way in streamlining the economy and introduce efficiencies which will contribute to GDP growth. As in the case of petrol, the inclusion of Excise duty on branded diesel would help reduce the cascading effect on the economy and reduce the burden on the consumers

The proliferation of Natural Gas (including LNG) is limited due to the current taxes structure that adds costs and tests the affordability limits of the customer. Despite being a primary fuel source like coal and crude oil, Gas does not get the benefit of customs duty exemption (as does crude oil) or status of a "declared good" as enjoyed by crude oil and coal, consequently attracting VAT along the supply chain. A selective exemption of customs duty applicable only to the power sector disables customers from others sectors to leverage the benefits of Gas as their fuel source. To ensure parity, this anomaly needs correction by waiving customs duty on LNG for all users and for gas to be accorded the status of a "declared good".

By doing so, this will expand the scope of Gas which is the cleanest burning fossil fuel and also enable reduction in the Government's subsidy bill (e.g. replacing household LNG). We would welcome the Government to also further augment the initiative of supporting 15,000 km of gas pipelines announced in the previous budget through encouragement of additional pipelines including city gas networks that should provide larger number of potential users' access to gas. Customers would not only benefit from financially but a move towards this will also be environmentally beneficial.

In addition, development of petroleum carrying, storage and handling infrastructure alongside encouragement to private investment in the retail fuel business would help improve utilisation and efficiencies while reducing waste that will benefit the consumers.

Continued focus of the government's reform agenda would help bring in more capital, employment and opportunities to India that would greatly benefit all sections of society.

Source: ET

Natural gas fuel: the “Green” colour of development

Green development is reinforced by environmental policies at both a national and international level. These policies include pollution limits, tradable pollution permits, environmental taxes, subsidies for investments in green production methods, the ecological footprint etc.
Transportations are strongly linked to environmental protection and fuel saving as nowadays a significant number of economic, social and cultural activities creates for both citizens and businesses needs and desires for mobility or transport of goods which are mainly served by the use of private or public motorized transport systems. According to Mr. George Chatzopoulos, Director of Strategy and Corporate Development of DEPA, the diverse needs in the transportation sector bring on various effects such as:

– the 10% of the European road network operate under heavy traffic conditions on a daily basis

– EU citizens make an average of 1000 movements a year (half of which are shorter than 5 km)

– transportations account for approximately 28% of carbon dioxide emissions (40% of which is produced by urban transport) and hold a large share of responsibility in noise-pollution, the contamination and destruction of the environment (eg. polycyclic aromatic hydrocarbons, benzol, depletion of the ozone layer)

– the rise in the prices of motor fuels bear a significant impact the cost of transportations and create serious barriers for entrepreneurship and development.

Sustainable development with natural gas

According to Mr. Chatzopoulos, “a policy of sustainable development in the transport sector must be able to support the constantly improving modern way of living, it must also be able to save energy, reduce air pollution, protect citizens’ health, generate economic development and ensure an affordable, safe and flexible transportation for all. A key element of a sustainable policy in the transport sector should be the use of new, environmentally friendly, alternative fuels. The use of natural gas for the propulsion of vehicles is now an effective solution to the acute problem of air pollution and an important means for the achievement of all the objectives of a sustainable policy in the transport sector globally and in Greece of course.

The EU’s aim is to develop common technical specifications and the definition of clear objectives regarding infrastructure development for alternative fuels, among which the CNG[1] and LNG [2](which play a leading role). More specifically, concerning the CNG and the LNG the creation of a pan-European network of stations for the refueling of vehicles powered by natural gas (either running on CNG or LNG) is suggested. For this reason, it is suggested to set the minimum allowed distances between gas stations at a national level, and 150 km as the maximum distance between two CNG stations and 400 km between two LNG stations”.

The alternative fuel for individuals, companies and in public transport

Natural gas is an alternative fuel currently used by individual drivers, professional vehicle fleets and in the broader field of Transportations. For many companies, one of the most significant burdens on their budgets concerns their vehicle fleet. The transportation of goods they produce, the services they offer, the transport of personnel, are all carried out with the help of professional fleets (passenger, light / heavy weight trucks etc.). Transportation, consumer products, and vehicle rental companies, are all nowadays based on the use of natural gas and indeed achieve, according to recent studies, a fuel consumption lower by 66% compared to gasoline.

Operating gas stations and future infrastructure

In Greece, in order to liberate the gas fueled transportation, DEPA with FISIKON (the brand name of natural gas for refueling of vehicules) creates infrastructures and implements strategic partnerships, targeting to make the presence of this affordable, safe and environmentally friendly fuel felt even stronger on the Greek roads.

Today there are seven operating stations in various cities of Greece (which are expected to increase as 6 more are awaiting licenses to operate), while stations are under construction in Larissa and Lamia. More specifically the operating stations are located:

In Athens:
- EKO – 264 Kifissias Av., Kifissia
– EKO – 8th km Athens – Lamia National Road, N. Philadelphia
– Fisikon Gas Station, in Anthousa, on side road of the Attiki Odos Highway
– Fisikon Gas Station, in Ano Liosia

In Thessaloniki:
EKO – 128 Agricultural School Av. 128, Pilea, and
BP – 36. K. Karamanli Av., Nea Magnisia

In Volos:
BP – 202 Larissis Street.

At this point we would like to call to mind the fact that the number of gas stations has reached 25,300 worldwide in order to meet constantly increasing demand of 19 million vehicles circulating in Europe and America. More specifically, in Europe, a total of 4,720 stations are operating in order to refuel the 1.8 million vehicles circulating on the European roads. Our neighboring country of Italy, presently has 984 refueling stations, 165 of which being installed in the last two years. Germany finds itself approximately at the same level, with a slight downward difference with 844 natural gas filling stations.

Source: energyworldmag.com

Natural gas to become most important source of power in next decade, says BP

Natural gas is set to emerge as the fastest growing single source of power over the next decade as rising demand across emerging economies alters the energy sector, according to BP.

Ongoing economic expansion throughout Asia will drive rising world demand for energy over the next two decades at an average rate of 1.4 per cent a year, BP stated in its Energy Outlook 2035 report. Natural gas is poised to be the fastest-growing fossil fuel, as well as the cleanest, it added.

The BP chief executive Bob Dudley said in the report that renewables and unconventional fossil fuels such as shale oil and gas would gain a larger slice of the energy mix as the gas market becomes more global, leading “to greater congruence in global price movements” for liquefied natural gas.

“Fossil fuels are projected to provide the majority of the world’s energy needs, meeting two-thirds of the increase in energy demand out to 2035. However, the mix will shift. Renewables and unconventional fossil fuels will take a larger share, along with gas, which is set to be the fastest-growing fossil fuel,” he said.

“[Gas] will meet as much of the increase in demand as coal and oil combined,” Mr Dudley said.

Natural gas consumption is projected to increase 1.9 per cent a year, mainly as a result of an increase in demand from Asia. This will be met by rising conventional gas production, mostly from the Middle East and Russia, as well as about half from shale gas – of which the US will account for three-quarters of the world’s total supply.

Mark Reno, refining solutions director at UOP, a division of the US firm Honeywell specialising in processing solutions, said that the increase in natural gas consumption was expected as a result of more natural gas reserves globally.

“There’s no question that natural gas is going to play a big part in the future, whether it comes from the Middle East, US or Russia,” he said.

Last month, the UAE energy minister Suhail Al Mazrouei said that the country plans to boost imports of liquefied natural gas and develop its own deposits of high-sulphur, or sour, gas, including projects at Shah and Bab fields.

The share of global power generation of non-fossil fuels including nuclear, renewables and biofuels, is expected to increase to 38 per cent by 2035 from 32 per cent in 2013. BP also said that despite the market size of fossil fuels decreasing, traditional energy will remain dominant in 2035 at 81 per cent, down from 86 per cent in 2013.

“The world is built on the energy from oil, whether it’s petroleum, crude or gas – it’s a hydrocarbon-based economy,” Mr Reno said.

What will change is that all fossil fuel sources will contribute an almost equal share for the first time since the Industrial Revolution in the 19th century. And part of that can be attributed to a shift in the power generation sector.

According to the International Energy Agency, coal is the primary source of power generation, providing 40 per cent of the world’s electricity needs. The commodity was previously the fastest-growing fossil fuel between 2000 and 2013, but BP forecasts it to be the slowest growing over the next two decades.

The US is set to decrease its coal consumption by 220 million tonnes of oil equivalent because of its shale production.

Yet large economies, such as India, will continue to rely heavily on coal to generate power. Despite India’s government looking to curb its coal consumption by taxing every tonne of it mined or imported, BP said the subcontinent would continue to be a major contributor to the coal market.

According to the Indian government, coal contributes to more than half of the country’s primary commercial power generation. The feedstock has been considered the best option because it was abundant. BP forecasts coal consumption will increase by 360 million tonnes of oil equivalent in India by 2035 as a result of the increased demand for electricity.

“After three years of high and deceptively steady oil prices, the fall of recent months is a stark reminder that the norm in energy markets is one of continuous change,” said Spencer Dale, BP’s chief economist.

Source: thenational.ae

Oil Ministry clears development of discoveries worth Rs 150,000 crore

Ending months of logjam over discoveries mired in contractual disputes, the Oil Ministry has used the recently granted freedom to clear development of oil and gas discoveries worth about Rs 150,000 crore.

The ministry has used the flexibility granted by the Cabinet in October 2014 in deciding on timelines for development of oil and gas discoveries to clear as many as 30 pending cases.

This would enable early monetisation of oil and gas discoveries in two blocks each of Gujarat State Petroleum Corp ( GPSC) and Oil and Natural Gas Corp ( ONGC) and one of Focus Energy, according to a note by upstream regulator DGH.

This is expected to result in exploitation of about 34.06 million barrels of oil and about 0.731 trillion cubic feet of gas reserves valued at about Rs 35,000 crore considering oil price of USD 50 per barrel and gas price of USD 5.61 per million British thermal unit.

"This will also help in probing additional reservoir and submission of robust field development plans. The estimated reserves of the discoveries where additional probing has been allowed is to the tune of about 172.34 million barrel of oil and 1.934 Tcf of gas reserves as assessed by the operators valued at more than Rs 116,000 crore," it said.

The Cabinet had provided operational flexibility in enforcing contracts by way of relaxing some of timelines prescribed for discoveries so that exploration and production (E&P) activities do not suffer on account of excessive rigidity in decision making.

The Production Sharing Contract (PSC) between the government and the explorer has rigid timelines for each stage of exploration and actions have been initiated against firms even if deadlines are missed by a day.

Three-to-six month extension in the current 18-60 month timeframe for submission of declaration of commerciality (DoC) of discoveries, a prerequisite before investment plans can be finalised, has been approved, the note said.

Also, the deadline for submission of investment plan for the discoveries too would be extended by up to six months.

The PSC provides for time period for submission of field development plan (FDP) for hydrocarbon discovery after DOC. There is no provision in the PSC for extension of this time period and non-acceptance of FDP due to late submission results in non-monetisation of discoveries.

Also, upstream regulator DGH has been given flexibility to accept discoveries for which operators had failed to provide prior notification to the government.

"There were 12 blocks where clearances were not accorded in entire block area or in part of block area because of overlapping with special economic zone, reserve forest, naval exercise area, DRDO danger zone, national parks and firing range of Defence. The cases in 11 blocks have been resolved and the case in one block is under consideration," the note said.

Source: ET

India could lead the world in clean energy

The UN Secretary-General's special envoy for cities and climate change Michael R Bloomberg Monday sought to strengthen US-India economic partnership through relaxed US immigration measures for Indian students and businessmen, and said India was poised to become a "leader" in clean energy the world could learn from.

Addressing the "Renewable energy-invest 2015: First renewable energy global investors meet and expo" here, Bloomberg said: "If it were up to me, our federal government would fix our immigration system so that Indians who study in the US could stay in the US and give back to our economy... Indians who want to do business in the US should easily be able to get visas."

"I have been urging our leaders in Washington, D.C. to take those steps, and I will continue doing that. The closer the economic partnership between the two countries, the stronger we both will be," he said.

Union Minister of State for Power, Coal, and New and Renewable Energy Piyush Goyal sought to project India as a new destination of investment for renewable energy in view of its ambitious alternate energy programme with a target of 15 percent of total generation capacity by 2020.

He said the pre-requisite to achieving the target was to "make it easier to do business (in India), have consistent policies, ensure our investors that this country is a good place to do business, have bankable contracts, and rule of law in this country".

In view of India's potential as the world's fastest-growing economy, Bloomberg said the US is confident of the country's future, adding that President Barack Obama's January visit to India was of special interest to business leaders back home.

Drawing upon the importance of India's growth imperative along with the urgency to confront climate change, the three-time New York City mayor lauded Prime Minister Narendra Modi's commitment to balance clean energy goals with "smart economic growth".

Bloomberg recognised that early industrialisers with longest history of development had the "biggest burdens to bear in confronting climate change".

However, he was quick to add that "all of us, in every country, have an equal stake in this fight, because our citizens' health and economic well-being are at risk, regardless of our history, and so all of us must do our part".

He said that while big cities were large contributors to climate change due to their high emission rate, low-carbon transportation like the Delhi Metro was a potential solution to reduce congestion and air pollution while also generating employment.

Bloomberg said the large buildings in Delhi require to have rooftop solar water heaters to help clean the air and "so will the rickshaws powered by compressed natural gas".

"I took one (CNG autorickshaw) to get here (the summit venue at Ashoka Hotel) and it remind me of New York taxi - yellow and green, and fast. Sometimes too fast," he said, sharing his experience of the ride.

"The more India invests in sustainable cities, the stronger its economy will grow, and there is a great deal that cities can learn from one another," he said.

Underscoring the importance of powering cities with clean energy, Bloomberg lauded the government's target of generating 100 gigawatt of solar power across the country by 2020, adding that the initiative could poise India as "a success story told - and copied - around the world" if successful.

He said Indian business leaders were also cognizant of the opportunity in the country like Mahindra that sought to triple its investment in domestic solar power as well as Adani Enterprises's plan to build a $4-billion-dollar solar equipment manufacturing plant in partnership with US-based Sun Edison.

"All of that investment can help India keep growing without polluting the air... and it can serve as a model of sustainable development for other countries," he said.

"India's leadership is helping to show other countries how much is possible by showing that clean-energy, climate-resilient growth is the path to a brighter future," he said.

Source: Zee News

Investments worth over Rs 1 lakh crore in gas sector remain stranded: ASSOCHAM

Apex industry body ASSOCHAM has urged the Centre to implement universal gas pooling based allocation and pricing policy from April 1, 2015 and appoint a pool operator responsible for importing additional gas required based on a transparent tendering processing.

"Limited domestic gas availability together with bottlenecks in import facilities and high cost of imported gas have resulted in huge stranded investments worth over Rs 1 lakh crore together with differential and constantly changing allocation to various customer segments," said The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a communication addressed to union finance minister, Mr Arun Jaitley.

"Despite availability of large gas import capacity, India continues to face gas shortages because of high cost of imported gas through spot and short-term markets and limited access to import capacity," said Mr D.S. Rawat, secretary general of ASSOCHAM.

"Frequently changing gas allocation policy resulted in large investments made on the basis of domestic gas allocation becoming infructuous and stranded thereby adversely affecting private sector enterprises and leading to poor interest in investment in gas sector industries dependent upon gas supply," said Mr Rawat.

"Recent reduction in spot and short term import gas prices offers an opportunity to the Government to eliminate the shortage faced in the gas sector and also introduce transparency in gas allocation and pricing through universal gas pooling," he added.

In its letter to the oil minister, ASSOCHAM has suggested the government to pool domestic gas, long term imported re-gasified liquefied natural gas (RLNG) and short-term/spot gas imported using available import capacity to create a total supply base of 164 million metric standard cubic meter per day (MMSCMD) to supply gas to all the gas based installed facilities.

"This is considering the decline in crude prices having resulted in fall in spot/short-term gas price from $15 per million British thermal units (MMBtu)," noted the letter.

The pool price envisaged is as follows:

2015-16 2016-17Source Quantity Price Quantity Price MMSCMD US$/mmbtu MMSCMD US$/mmbtuDomestic Gas 71 4.70 78 4.70 Long Term Gas 27 14.30 27 14.30 Short Term / Spot 45 8.00 60 8.00 Total 143 7.55 165 7.47
The aforesaid pooling arrangement would result in following advantages:

1. Gas supply to all gas based facilities wherein investments have been made pursuant to gas allocation by Gas Linkage Committee (GLC) and Empowered Group of Ministers (EGoM) and also facilities without allocation and stranded due to gas non availability/high gas cost.

2. Gas availability at affordable price for all sectors and Elimination of stranded investments in sectors like fertiliser, power, steel, petrochemical and others.

3. No additional subsidy: Average gas price in Fertiliser sector currently at more than US$ 7.50 per mmbtu and under pooling the price shall remain same so as to have no additional subsidy burden.

4. The cost of power using the above pool price shall work out to be lower than Rs 5.50 per kwh without any subsidy requirement. The average price of gas on sector basis for the power sector shall remain unchanged.

5. All allocation related issues and discriminative supply issues shall be settled in one go.

6. Additional revenue to government from custom, excise, VAT etc due to start up of the stranded gas based facilities in Steel, petrochemicals, refinery and power is envisaged at more than Rs 8000 crore.

7. Resolution of issues in gas sector shall give a huge boost to the Government's ambitious 'Make in India' campaign.

Source: B.S

India, Thailand seek LNG through tenders: sources

State-owned buyers in India and Thailand have issued two separate LNG buy tenders for deliveries starting in 2015, several sources said this week.

Indian oil and gas company Gail issued a buy tender Wednesday for six cargoes, two for delivery in the period May-December 2015 and four for delivery in the period January-October 2016, market sources said Thursday.

The tender will close Wednesday February 18 with validity until February 25, a source said.

Elsewhere, Thail oil and gas company PTT has closed a four-cargo buy tender for delivery through the end of 2015, according to a source familiar with the company Thursday.

The tender is yet to be awarded, but the validity of bids could not be immediately confirmed, the source said.

PTT's tender is aimed at meeting part of the buyer's additional demand requirements for this year, estimated at more than 500,000 mt on growing demand and decreased pipeline imports.

Buy LNG tenders in Asia Pacific have become increasingly common since late 2014, as buyers seek to take opportunity of ample supply and falling spot values in the region.

In Japan, power utilities Tepco and Chubu Electric awarded a joint-procurement tender, the first of its kind, in January for six cargoes delivered over 12 months from April 2015.

Elsewhere in Japan, power utility Tohoku Electric also awarded a tender in January for a single cargo delivered in mid-March 2015.

In South Korea, Posco and Komipo awarded a joint-procurement single-cargo tender for February delivery on a DES basis to the Gwangyang terminal, where both buyers have capacity.

Source: Platts

INDIA FOR FAST COMPLETION OF TAPI NATURAL GAS PIPELINE PROJECT

he 1800-km-gas pipeline that was signed by TAPI on July 8, 2015, is expected to export up to 33 billion cubic meters of natural gas a year from Turkmenistan to Afghanistan, Pakistan, and India over 30 years.

The Government of India pitched for fast completion of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline project, at a steering committee meeting in Islamabad on Wednesday.

Speaking at the 20th steering committee meet of the project, Dharmendra Pradhan, Indian Minister of State (Independent Charge) for Petroleum, reiterated India’s commitment to source natural gas from Turkmenistan.

The Minister stressed on expedition of the selection of mutually acceptable Consortium Leader in a time bound manner, which is very important step to complete the project.

The Minister further said that the TAPI project would help India in achieving this goal of developing National Gas Grid, a gas infrastructure project that was intended to be built by the Government of India.

According to the Pakistan official News agency, the Pakistan Prime Minister Nawaz Sharif had welcomed the move to expedite the completion of TAPI project saying that the project is very essential for the regional countries and the government of Pakistan will take necessary measures for the early completion of the project.

Any delay in the project would add heavily to the cost, the Pakistan PM added, according to the other news sources.

The Pakistan PM was also quoted to have said that TAPI project would help Pakistan to overcome the ongoing crisis with respect to the gas shortage.

Earlier in a statement on February 6, 2015, Jam Kamal, Minister of State for Petroleum and Natural Resources, Government of Pakistan, was quoted to have told the sources that the countries involved in the TAPI project had already signed the deals regarding gas sales and purchase agreements.

According to a report from the Natural Gas Asia website, the 1800-km-gas pipeline that was signed by TAPI on July 8, 2015, will export up to 33 billion cubic meters of natural gas a year from Turkmenistan to Afghanistan, Pakistan, and India over 30 years.

Earlier reports say that four US companies had dropped out of the race for contract, following the dismissal of their demand for equity stake in the project, say the reports.

The reports also say that Turkmenistan has agreed to sign a service contract with French company ‘Total’, allowing the company to act as a Leader of Consortium.

According to Pakistan Daily Times News, sources from the energy sector say that the gas companies of the four countries involved in the project have already established a company to build, own and operate the  pipeline with a deal of having equal share.

Source: thedollarbusiness.com

China finds natural gas reserve in disputed South China Sea

China today announced the discovery of a huge gas field in the politically charged South China Sea that could yield over 100 billion cubic metres of natural gas, raising its stakes in the waters claimed by several South East Asian nations.

The Lingshui 17-2, approved as a large-scale gas field by Ministry of Land and Resource, was discovered 150 kilometres south of China's southernmost island of Hainan. State-run China National Offshore Oil Corporation (CNOOC) said Lingshui 17-2's average operational depth is 1,500 metres below the sea surface. The company's deepwater drilling rig CNOOC 981 discovered Lingshui 17-2, the country's first self-support deepwater gas field, in September 2014, state-run Xinhua news agency reported.

Xie Yuhong, a manager with CNOOC, said the approved gas reserves of Lingshui 17-2 will help the corporation build a gas trunk line to connect other gas fields in the SCS, so as to meet the huge gas demand of southern provinces, Hong Kong and Macao. The field, however, could meet only about six to seven months of Chinese gas supply currently, experts say.

Observers say the discovery may raise further tensions in the South China Sea (SCS), one of the world's busiest shipping routes but dominated by overlapping claims by several nations including Malaysia, Vietnam, Taiwan, the Philippines, Brunei and China, which virtually claims all of the sea. China-Vietnam ties nose-dived two months ago after Beijing placed a rig in the contested waters that triggered violent protests in Vietnam. Two Chinese workers were killed and 140 injured in the violence. China has also objected to India's ONGC accepting a Vietnamese invite to take-up oil exploration in the SCS.

Source: Moneycontrol

Gazprom mulls increased LNG supplies to India by 2020: official

Gazprom is considering increasing its LNG supplies to India to as much as 5 million mt/year by 2020, according to a company official.

"With a portfolio of 25 million mt/year, we could potentially sell as much as 5 million mt/year to India," Alexander Medvedev, deputy chairman of Gazprom's management board, said in an interview with Platts.

Gazprom recently reached an agreement to potentially raise LNG supplies to India's state-owned buyer GAIL to 3.5 million mt/year from the earlier agreed 2.5 million mt/year.

The duration of the contract may also be increased from 20 years to 25 years, with supplies expected to start from 2019, Medvedev said.

Gazprom is also in discussions with other Indian buyers for the supply of additional long-term volumes.

"We are interested in the Indian market," Medvedev said.

The producer plans to supply its Indian customers with LNG from its offtake position at the 9.6 million mt/year Sakhalin-2 export plant on Russia's east coast, as well as from upcoming LNG projects, including Colombia's 500,000 mt/year Caribbean floating LNG, which is due to commence operations in 2015, Medvedev said.

"We have the fleet and multiple supply sources, so we will deliver the volumes that will be optimal for us and for our clients," he said.

"We can deliver the volumes from both of our new projects, Vladivostok LNG and Baltic LNG, we can deliver them from Sakhalin LNG and also from our portfolio, including Colombia," Medvedev said.

Source: Platts

Oil sector staring at Rs 16,000 crore inventory losses: Crisil

Sinking crude oil prices have resulted in aggregate inventory losses of around Rs 16,000 crore for oil companies in the third quarter of the current fiscal, said Crisil ratings today.

It added that a substantial share of this will be borne by refiners.

Brent has fallen about 50% from its high of $115.71 per barrel on 19 June, 2014. Between the September and December, it fell by a third, and closed out the year at $55 per barrel. Prices of petroleum derivatives such as polymers and chemicals also declined by around 30%.

"This will mean inventory losses for refiners, traders and manufacturers of downstream petroleum products because their raw material purchases would have been at higher prices," said Crisil in a statement today.

Crisil's calculations are based on an analysis of about 250 Crisil-rated companies including refiners, traders, polymer processors, and bulk and specialty chemical manufacturers.

These companies have average total inventory holding of about 45 days. It typically ranges between 30 and 60 days, depending on the location of plant, processing time, and price outlook.

For oil marketing companies, the losses are partly offset by higher profit margins from retail sales of petrol and diesel after deregulation of prices. Current prices reduce both -- dependence on subsidy from the government and inventory costs for these companies. This, in turn, will mean substantially lower working capital requirements, leading to fewer short-term borrowings and ultimately lower interest cost.

"Support from the government, given it's strategic importance, higher profit margins on marketing of petroleum products, lower dependence on subsidy payments, and lesser working capital loans will sustain the credit profiles of oil refiners," said Pawan Agrawal, Chief Analytical Officer, Crisil ratings.

On the other hand, the impact of inventory losses on chemical traders and downstream processors of crude oil, polymers and chemicals will depend on their product profiles, hedging policies, extent of inventory build-up, and strength of balance sheets. These companies have begun to actively reduce inventories to minimise the pain of the sharp fall in crude oil prices. This should help ease potential pressure on credit profiles.

"We expect the impact to be higher on credit profiles of companies that have weak debt protection metrics, elevated gearing levels, and higher inventory holding," said Agrawal.

In the medium to long term, these companies will benefit from lower working capital borrowings and reduced interest costs arising from lower prices of inputs.

Source: B.S

Lower crude prices to boost Asia-Pacific sovereigns: Moody's

Global rating agency Moody's today said lower global crude oil prices since June last will benefit most Asia-Pacific sovereigns, including India, as the region is a net oil importer.

Crude prices more than halved between June 2014 and January 2015, reflecting higher-than-expected oil and shale gas production in the US and lower demand in emerging markets coupled with OPEC's refusal to lower output.

In the December quarter alone crude prices have fell around 60 per cent.

The government and the RBI have said the lower oil prices will help the country save at least USD 50 billion this year in crude imports, which stood at over USD 150 billion last fiscal.

According to RBI the lower import bill help the country contain CAD at 1.3 per cent of GDP this fiscal.

"As long as oil prices remain low, the direct effects will be positive on trade balances and downward on inflation in most Asian countries," Moody's senior vice-president for Asia-Pacific and Middle East Thomas Byrne said.

"Lower inflation and import costs, in turn, will likely support growth by raising consumer purchasing power, lowering investment input costs and increasing monetary policy flexibility," Moody's senior vice president Atsi Seth said.

However, growth acceleration may be checked by lower global growth and international financial uncertainty in 2015, she added.

The rating agency said lower oil prices which led to fuel subsidy reforms supports sovereign ratings of India (Baa3 stable), Malaysia (A3 positive) and Indonesia (Baa3).

However, it said in Indonesia and Malaysia, lower hydrocarbon-related government revenues will erode the impact of these gains on the budget balance.

The rating agency has lowered its price assumptions for Brent crude to USD 55 per barrel through 2015 and USD 65 per barrel in 2016.

While it expects oil prices to eventually rebound as demand increases and low prices create an eventual supply response as producers reduce their capital spending, this supply response will not be meaningful until at least 2016.

Source: ET