2007 Marked by a slew of important initiatives across hydrocarbon value chain
YEAR-END REVIEW 2007 – MINISTRY
OF P&NG
The year
2007 witnessed a number of significant
initiatives by the Government across the entire value chain of hydrocarbon sector
to accelerate domestic production of oil and gas, putting in place an investor-friendly
policy regime for the rapid growth of investment and oil sector infrastructure, promoting biggest FDI in refinery
sector, protecting consumers of sensitive petroleum products against global price
rise, encouraging technological capacity building by setting up an institute of
national importance, etc. Describing
the year as momentous, Shri Murli Deora, Minister of Petroleum & Natural Gas
said, “2007 has been a significant year in terms of accelerating exploration efforts
in India, new oil & gas finds, acquiring E&P assets abroad, building oil
sector infrastructure, ensuring sale of quality products, etc.”
HIGHLIGHTS
- YEAR
ENDS WITH BIGGEST OFFER OF 57 BLOCKS(NELP-VII);
A RECORD NUMBER OF 52 AWARDED IN MARCH(NELP-VI)
- MAJOR
STEP FORWARD TO SPEED UP GAS PRODUCTION
FROM BIGGEST GAS DISCOVERY IN K-G BASIN
- NUMBER
OF OVERSEAS INITIATIVES FOR SECURING
E&P ASSETS
- FIRST
EVER MINISTERIAL INDO-AFRO HYDROCARBON CONFERENCE IN NOVEMBER
- GAS
PIPELINE ACCORDED INFRASTRACTURE STATUS
- LARGEST FDI TO BOOST IMPLEMENTAITON OF
BHATINDA REFINERY BY MITTAL-HPCL JV
- PETROL
DIESEL PRICES CUT IN FEBRUARY 2007 TO PASS ON BENEFIT OF FALL
IN GLOBAL PRICES TO CONSUMERS
- CONSUMERS
INSULATED FROM FURTHER HIKE DESPITE SUBSEQUENT SPURT IN GLOBAL CRUDE OIL PRICES
- ETHANOL
BLENDED PETROL PROGRAMME KICKSTARTS
- SOUTH ASIA’S FIRST UNDERGROUND LPG CAVERN COMMISSIONED
- GO AHEAD
TO OIL INDIA FOR MAKING INITIAL PUBLIC
OFFER
- IMPLEMENTATION
OF ASSAM GAS CRACKER PROJECT - PM LAID FOUNDATION STONE IN APRIL 2007
- RAJIV
GANDHI INSTITUTE OF PETROLEUM TECHNOLOGY BILL PASSED
- DOWNSTREAM
REGULATORY BOARD IN PLACE
- VIGOROUS
DRIVE AGAINST FUELS ADULTERATION
ACCELERATING E&P IN INDIA &
ACQUISITIONS ABROAD
In exploration & production sector the year has been remarkable for
as many as 52 blocks were awarded under Sixth Round of New Exploration Licensing
Policy (NELP-VI) in March 2007, the highest ever.
This was capped with a record number
of 57 exploration blocks being offered
for bidding under Seventh Round of New Exploration Licensing Policy (NELP-VII)
giving a big boost to the domestic exploration & production(E&P).
Oil PSUs and private & Joint Venture
companies made more than 40 new hydrocarbon discoveries/new prospects/new
pools during the year (ONGC-21, OIL-4 and Pvt./JV
companies-16).
To enhance
energy security of the country, a major thrust was given to acquiring E&P
assets abroad besides oil discovery in one block. Oil PSUs acquired participating
interests in various countries- ONGC-Mittal
JV Company (2 blocks in Nigeria and one in Turkmenistan-30% share),
OVL (2 blocks in Brazil and 3 blocks
in Myanmar), OIL-IOC Consortium (
4 blocks in Libya) and BPCL( one block
in Australia). In addition, Gail India Limited (GAIL) and Hindustan Petroleum
Corporation Ltd. (HPCL) and Indian private companies such as RIL, Essar are actively
engaged in overseas E&P business. As part of this initiative, ONGC Videsh
Limited (OVL) and its partner IPR Red Sea made a significant new oil discovery
in their first exploration well North Ramadan-1A in the North Ramadan Concession
in Egypt,
India joined
a select group of countries, viz., US, Australia to commence commercial production
and sale of `Coal Bed Methane(CBM) gas w.e.f. 14.7.2007 from the block Raniganj South in West Bengal operated
by Great Eastern Energy Corporation Limited.
In another major development Government recorded approval for the formula and mechanism of Government approval
for the price of gas discoveries under
NELP. Empowered Group of Ministers (EGOM) decided
that price discovered on arms-length basis through bidding will be adopted under
NELP and upheld the sanctity of legally binding contracts.
This provides a boost to investor confidence and would facilitate expediting
production of natural gas from India’s biggest gas discovery in Krishna-Godavari
basin next year leading to domestic production soon more than doubling from about
95 million standard cubic metres per day (MMSCMD) now.
RGIPT TO COME UP AS OIL TECHNOLOGY EXCELLENCE CENTRE
The Rajiv Gandhi Institute of Petroleum
Technology (RGIPT) Bill 2007 was passed
by the Parliament on December 3 for declaring RGIPT as an Institute of National
importance. To be set up at cost of over
Rs 600 crore, the Institute is aimed at serving as fountainhead of world
class petroleum technologists. Coming up at Jais in UP, it will also cater in
big way to the growing need of trained oil personnel in India following accelerated
E&P activities under NELP and a number of refinery and other downstream projects
underway. This need is expected to touch 36,000 by 2019.
FIRST INDO-AFRICA HYDROCARBON CONFERENCE
– A PARTNERSHIP FOR ENERGY SECURITY
India organized the first ever India-Africa Hydrocarbon Conference & Exhibition to reach out to African
nations and promote investments and partnerships in the hydrocarbon rich African
countries. As many as 26 countries’ delegations including 10 represented
at Ministers’ level attended
to mark the significance of the event.
Bilateral meetings on the sidelines of the Meet with Ministers from Chad,
Ethiopia, Ghana, Comoros, Malawi and Mauritius
have laid a strong foundation for further cooperation. Besides offering Indian investment and expertise
for developing oil & gas sector of African nations, India would provide training
to their hydrocarbon personnel in its world class training facilities with
Oil PSUs across entire value chain.
INTERNAL
FORAYS IN DOWNSTREAM ACTIVITIES
Engineers India Ltd. bagged the contract to
prepare a feasibility report for a bitumen plant in Oman in August to make the
paving grade bitumen in the proposed unit, which would require an investment of
around $80-100 million. IOC in consortium with Calik early this month won
a license to build a 15 million ton oil refinery in Turkey costing $4.9 billion
at Ceyhan, where the Baku-Tbilisi-Ceyhan pipeline and a pipeline from Iraq terminate.
The refinery would cater to the export markets.
Calik Enerji and IOC are also building a $1.5 billion pipeline that is
designed to carry Russian and Kazakh oil from the Black Sea port of Samsun to
the Mediterranean bypassing the congested and bad weather-prone Turkish straits.
ETHANOL BLENDED PETROL(EBP) PROGRAMME
The Government announced the National launch of
5 per cent ethanol blended petrol programme (EBP) at Hyderabad in April
2007. The EBP Programme is spread countrywide,
except North East, J&K, Lakshadweep and Andaman & Nicobar Islands.
At present, Oil Manufacturing Companies (OMCs) are procuring ethanol at
a basic price of Rs. 21.500 per litre. Against a requirement of 1.80 million KL of
ethanol for 3 years, OMCs have already
contracted for 1.32 million KL. So far,
0.17 million KL has been procured. The
Government also decided to expand the ethanol content to 10%.
INSULATING CONSUMERS
FROM VOLATILE GLOBAL OIL PRICES
Global prices of crude oil and petroleum products remained high and volatile
during the most part of the year which started with Government reducing petrol
and diesel prices on 16th February 2007 passing on benefit of the lower
global prices to consumers. Subsequent
months have witnessed a phenomenal increase in global prices of crude oil with
Indian Basket crude oil touching an all time high of $ 92.13 per barrel on 26/11/2007,
Despite such highly volatile prices Government has
insulated common man from price rise of sensitive products, Petrol, Diesel, PDS
Kerosene and Domestic LPG in domestic market.
A package to share this burden was evolved in October envisaging Central
Government to issue Oil Bonds to the tune of 42.7% and 33% by way of price discounts
by upstream PSUs (ONGC, GAIL and OIL) to absorb the maximum impact.
Further, Government decided to extend Central Subsidy on PDS kerosene and
domestic LPG 2009-10.
PILOT PROJECT LAUNCHED FOR SALE OF PACKAGED KEROSENE
In order to make available a reasonably-priced alternative to PDS kerosene
to those who wish to buy from open market, IOC launched a Pilot Project in Faridabad
and Gurgaon district for the sale of non-PDS kerosene in one-litre bottles.
Packaging plant was commissioned at Rewari(Haryana) in October 07.
Presently sales have touched 2000 bottles per day through 500 retailers.
LARGEST FDI IN PSU REFINERY
Government
approved Mittal Energy as JV partner of HPCL
for Bhatinda Refinery Project to speed up implementation of 9 million metric
tonne per annum (MMTPA) refinery project. This marks Mittal Investments
bringing Rs. 3506 crore (about 5%
of total FDI in 2006-07) as the largest
Foreign Direct Investment (FDI) into the
petroleum refining sector in collaboration with a PSU. The investment is the second
largest FDI in the energy sector and the third largest ever that the country has
received.
Along with other grassroots refinery and
expansion projects, the country would remain self sufficient in undertaking domestic
value addition to crude oil and earn foreign exchange by exports of surplus products.
Petroleum Minister
also laid foundation stone of Kochi Refinery’s expansion project on 24th
June to enhance its capacity from 7.5 (MMTPA) to 9.5 MMTPA at a cost of Rs.2600
crore. In addition, Panipat Refinery Expansion Project was dedicated to
the nation in January 2007 increasing its capacity from 6 MMTPA to 12 MMTPA at
a cost of Rs. 4,300 crore.
OIL SECTOR TOPS MERCANTILE EXPORT CHART
Oil sector continued its impressive performance with exports worth about $ 18.6 billion in 2006-07 ($10.5 billion in 2005-06) and about
$ 12.2 billion in April-September 2007 to various markets including the most sophisticated
markets like US. A total of 32.39 MMT exports in 2006-07 against 21.51 MMT in
2005-06.
EMPOWERING OIL PSUs IN MATTERS OF IMPORT
In March 2007, the Government approved the continuance by Indian Oil Corporation
Ltd.(IOCL) of the system of direct chartering of ships without going through TRANSCHART.
Similar dispensation was provided to Bharat Petroleum Corporation Ltd (BPCL)
and HPCL oil direct
imports. Also, effective 2007-08, on a pilot basis for one year, the Boards
of the oil PSUs have been empowered to approve the strategy paper for import of
crude oil subject to guidelines issued by the Ministry of Petroleum and Natural
Gas from time to time, instead of the earlier practice of prior approval of the
strategy paper for import by the Ministry.
SOUTH ASIA’S FIRST UNDERGROUND LPG CAVERN COMMISSIONED
South Asia’s first of its kind 60,000 MT capacity Liquefied Petroleum
Gas (LPG) underground cavern storage facility in Visakhapatnam, Andhra Pradesh
was commenced on 26 December 2007 with in-take from 40000 MT capacity VLGC (Very Large Gas Carrier).
This is the first time such a very large vessel has entered the country with full
LPG cargo entailing freight savings. Set up by the South Asia LPG Company Limited
(SALPG), a 50:50 joint venture between
the Hindustan Petroleum Corporation Limited (HPCL) and TOTAL, a French Oil major,
the project came up at a cost of Rs. 333 crore at Lova Garden near Dolphin’s nose hill in
Visakhapatnam. The Cavern is expected
to ease the LPG storage constraints on
the eastern coast and will enable the Oil Industry meet ever growing demand of LPG in the country.
REVIVING DABHOL POWER PLANT BY COMMISSIONING DAHEJ - PANVEL – DABHOL PIPELINE
Dahej – Panvel – Dabhol pipeline was commissioned during the year enabling
supply of Regasified Liquefied Natural Gas (RLNG) from Petronet LNG’s Dahej Plant
to Dabhol power plant. This helped the
process of much awaited revival of Dabhol power plant in Maharashtra which has been facing serious power shortages.
FOUNDATION STONE OF ASSAM PETROCHEMICAL
PROJECT LAID
The Prime
Minister, Dr. Manmohan Singh laid the Foundation Stone of the Rs. 5460 crore Petrochemical
Project of Brahmaputra Cracker and Polymers Limited (BCPL) on April 8, 2007 at
Lepetkata , Dibrugarh District. This marks a significant step in the direction of setting up the
petrochemical project in Assam. Expected to be completed in 2011, the project
would herald industrial development of
the region and provide direct & indirect employment generation in the State.
FRESH EQUITY IN OIL
The Government
accorded approval to the proposal of Oil India Limited(OIL) for fresh equity of
10% of its paid up capital through Initial Public Offer(IPO) to enable the Company
to get listed on the Stock Exchanges and additional 1% of its paid up capital to the
employees of OIL. In addition, it has also been decided to divest
10% of OIL’s paid up capital in favour of the three OMCs, viz., IOC, HPCL and
BPCL in the ratio of 2: 1:1.
REVIEW OF PETROLEUM PRODUCT SUPPLY WITH
STATE GOVTs
As part of the initiative to review the marketing and distribution of petroleum
products in various States, a regional meeting of three Northern Hilly States
of Jammu & Kashmir, Himachal Pradesh and Uttarakhand was held in Srinagar
on 18.6.2007. State Governments were
assured that the energy sector needs and requirements of these Hill States will
be given due priority to help development of these States. A series of meetings were taken by the Minister of Petroleum & Natural Gas with a view to be more responsive to the
needs & the requirements of the States and to have a first-hand knowledge
of State specific issues. Such meetings
were also held for the States of Andhra
Pradesh, Maharashtra, West Bengal, Tamil Nadu, Karnataka, Kerala etc.
MEASURES TO CHECK ADULTERATION
The Government/Public
Sector Oil Marketing Companies(OMCs) took initiatives to contain the menace of
adulteration including diversion of PDS kerosene. These include inter alia (a) automation of retail outlets, (b) Information
Technology(IT) solutions like monitoring movement of tank trucks(TT) through Global
Positioning System(GPS) and (c) third party certification of retail outlets.
Under Government’s
direction to complete automation of retail outlets(RO) selling more than 200 KL
per month, OMCs have completed automation of 2720 ROs as on 30.11.2007 out of
5092 such ROs and the balance would be automated by March 2008.
Similarly, for tracking movement of Tank Trucks (TTs) carrying petroleum
products to avoid enroute mal-practices, GPS have been installed on as s many
as 10686 TTs as on 30.11.2007 out of 26,382 TTs. Remaining would be covered by March 2008.
PETROLEUM AND NATURAL GAS REGULATORY BOARD SET UP
The Petroleum and Natural Gas Regulatory Board was
set up during the year under the
PNGRB Act, 2006 which provides for setting up of a Regulatory Board to regulate
the refining, processing, storage, transportation, distribution, marketing and
sale of petroleum, petroleum products and natural gas excluding production of
crude oil and natural gas. This is aimed
at protecting the interests of consumers and entities engaged in specific activities
relating to petroleum, petroleum products and natural gas and to ensure uninterrupted
and adequate supply of these products in all parts of the country and to promote
competitive markets .
PM LAYS FOUNDATION STONE OF RAJIV GANDHI URJA BHAVAN
The Prime
Minister Dr. Manmohan Singh laid the foundation stone of Oil and Natural Gas Corporation’s
(ONGC) new high-tech corporate office cum energy research centre at Vasant Kunj
in South Delhi on the birth anniversary of late Prime Minister Rajiv Gandhi. This Centre
will undertake holistic research in all forms of clean and renewable energy sources.
‘OIDB BHAWAN’ TO
HOUSE SIX DEPARTMENTS
The foundation stone of “Oil & Industry Development Board (OIDB) Bhawan”
was laid at NOIDA on 20th June
2007 to accommodate not only Secretariat of OIDB, but
also of its grantee institutions like Directorate General of Hydrocarbons (DGH),
Centre for High Technology (CHT), Oil Industry Safety Directorate (OISD), Petroleum
Planning and Analysis Cell (PPAC) and Indian Strategic Petroleum Reserves Ltd.
(ISPRL) under one roof. At present, these organizations are housed in different
buildings in Delhi. Bringing them all together would not only result in savings
by way of rentals but would also ensure proper coordination and synergy between
these institutions. It would also make
it less cumbersome for people requiring to visit these departments.
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RCJ/ls-Year
End Review-2007
(Release ID :34255)