Oil & Natural Gas: News & Discussion

govardhanks · Post by **govardhanks** » 22 Jan 2014 17:57

http://www.popularmechanics.com/science ... 93#slide-1
Fracking safety issues and controversial claims

Prem · Post by **Prem** » 30 Jan 2014 23:09

Shale boom brings LatAm oil bonus for Indian refiners
http://www.moneycontrol.com/news/curren ... ef_article

India's state-run refiners are snapping up Latin American oil after upgrading their plants, reaping the benefit of cheap prices for crudes that have lost their market in the United States to shale oil. Decades-old crude trading routes are being redrawn as the United States cuts its dependence on imports through a boom in shale oil, forcing Latin American exporters to tap buyers as far away as China and India - markets growing enough to soak up their surplus supplies. These Latin American crudes are often heavy grades, which, without elaborate refining, tend to produce higher quantities of low-value products such as fuel oil, used to run ships' engines. For Indian buyers, these crudes offer the chance to earn a return on the billions of dollars spent in improving their plants, enabling profits to be boosted in a regime which makes them sell products at state-capped prices. India is the world's fourth-biggest buyer of crude and 80 percent of its needs are met by imports, making cheap supplies crucial as its economy gropes with power shortages and it spends billions subsidising fuel for millions of its poor. In the last few years, India has already had to find replacement crude for barrels lost when sanctions on nuclear operations hit Iran, once its second-largest supplier. Up to now, much of the switching by state refiners has been to other Middle East sources, such as Saudi Arabia and Iraq, which are now the top two suppliers as Iran slips to number six. Clear signs of a change, though, emerged earlier this month when Mangalore Refinery and Petrochemicals ( MRPL ) became the first Indian refiner to buy Argentina's medium-sweet Escalante grade. "In 2007, we first thought of buying Latin American oil but we were not prepared," said MRPL Managing Director PP Upadhya. "I visited Venezuela. A team of officials visited some Latin American countries in 2011. They did not have spare oil," he added. "Now, the market dynamics have changed and I got my first high acid oil cargo from the region in a tender." And more complex facilities are coming up in the country that will further the trend. Indian Oil Corp 's ( IOC ) 300,000 barrels per day (bpd) Paradip refinery will start operations in June. By 2016, Chennai Petroleum's coker unit will be commissioned and a 120,000 bpd expansion of Bharat Petroleum Corp 's ( BPCL ) Kochi refinery is set to be completed. CHANGING CRUDE BASKET The United States has reined in buying from Latin America as its own shale oil output takes off. North America added 1 million bpd to global supply in 2013 alone, the Energy Information Agency says, and crossed the threshold to be a net exporter late last year, putting more supplies on the market. In 2005/06, Latin American oil accounted for a scant 2.3 percent, or 46,200 bpd, of India's crude imports but by 2012/13 that had jumped to about a fifth, or 672,400 bpd. Just under half of that - 300,000 bpd - was under a long-term deal between Venezuela and privately-owned Reliance Industries , that has a huge, world-class refinery on India's west coast. Over the same seven-year period, Middle East imports slipped to some 62 percent of India's basket from 73.5 percent while West African grades dipped to 16 percent from 20 percent. That shift will continue, as state-run refiners join private players Reliance and Essar Oil in the race to improve refining margins. "Like private (ones), state-run refiners will widen their crude slate to leverage the discount on Latin American grades versus West African and Middle East grades because of a surge in U.S. output," said Praveen Kumar at consultancy FACTS. The state refiners - IOC , MRPL , BPCL and Hindustan Petroleum Corp - own about 55 percent of India's 4.3 million bpd capacity. "India has some of the most competitive refineries capable of capturing ... cheaper crudes from far-flung places like Latin America," said Mike Muller, vice-president for crude oil trading at Shell. Freight rates are also low at the moment - and in some cases, being included in the deal. "In many supply contracts (for example, with Colombia's Ecopetrol and Mexico's PEMEX), freights are being shared (with the seller)," said a trader involved in India purchases. IOC plans to buy 10,000 bpd from Colombia in 2014/15 and wants to buy oil from Venezuela, its executive director, GK Satish, said. It has been buying Mexican oil since 2012 and aims to get a trial cargo of Brazilian crude next month. MRPL targets as much as 40,000 bpd - about 15 percent of its overall needs - from Latin America in the next fiscal year beginning April 1 as it is in the process of starting a 3-million-tonne-a-year coker unit, Managing Director Upadhya said.

Varoon Shekhar · Post by **Varoon Shekhar** » 31 Jan 2014 08:30

^
Somewhat related- many people, including myself when I first learned about it, would be quite surprised to know that one of India's largest exports by value, is oil! Over US$50 billion worth is exported. But it is refined oil, the crude is imported from the Gulf, refined in India, then re-exported to those countries or other countries. It brings in a large amount of foreign exchange.

Suraj · Post by **Suraj** » 31 Jan 2014 08:46

Export oriented refineries like Reliance Jamnagar - the world's largest integrated refinery complex - have been the basis of this, for the past several years. In fact, when Jamnagar shuts down for repairs, it materially affects our export figures, like it did last month: India's exports slow for 2nd month

While speaking to reporters to announce the data, Trade Secretary S.R. Rao said exports of petroleum products fell 16% to $4.8 billion. That was mainly due to an unexpected maintenance shutdown by energy giant Reliance Industries, India's biggest exporter of petroleum products and second-biggest company by market value.

Prem · Post by **Prem** » 31 Jan 2014 09:47

Good news is the dependency on ME oil being reduced by 2% a year. With East Africa and Brazil coming on line ,it will be easy for India to make this strategic shift for not to be dependent on ME Sheikh Whims. Plus this will get Latin American economies integrated with Indian economy with huge export potential on both sides. Ideally,30% from ME, 20 % from Russia,20% from Africa and rest from Latin Am and other sources provide good war cushion and autonomy .

vic · Post by **vic** » 31 Jan 2014 09:59

India is very big oil importer now. If ME tries to ban oil supplies to India, the prices of crude will crater.

hanumadu · Post by **hanumadu** » 11 Feb 2014 13:11

Can anybody tell me how is revenue shared between the govt. and private oil companies?

TIA

Aditya_V · Post by **Aditya_V** » 11 Feb 2014 15:44

I dont if this OT, but over the last 2 months I havee noticed that both performance and milage from car in Chennai has improved dramtically. I am pretty certain this has do with the quality of fuel- Petrol.

Have referines in the Chennai areaa changed thier source of ccrude??

Austin · Post by **Austin** » 11 Feb 2014 21:01

Rosneft offers stake in 10 offshore blocks to ONGC Videsh Ltd

arun · Post by **arun** » 12 Feb 2014 08:11

Is Kejriwal overstepping his brief seeking probe into gas pricing? :

On Tuesday, Delhi Chief Minister Arvind Kejriwal asked the state government's Anti-Corruption Bureau (ACB) to file criminal cases against Union Petroleum Minister M. Veerappa Moily, former minister Murli Deora, industrialist Mukesh Ambani, and former director general for hydrocarbons (DGH) V.K. Sibal along with Reliance Industries. .................

If the FIRs are filed, it would be the first time that a state government agency would attempt to investigate a decision by the Union Cabinet. ...........................

Oil and gas is not a state subject, and the Krishna-Godavari Basin is an offshore site. For these reasons, matters relating to the KG-D6 block are in the Union government's ambit.

The office of the DGH is in Noida, Uttar Pradesh, and the Delhi government has nothing to do with it.

Is the CM exceeding his brief? His defence is that if gas prices increase, the people of Delhi would have to pay more. ..............

Delhi is not a principal consumer of gas from KG D6. Delhi uses only compressed and piped natural gas (CNG and PNG), and the city's requirement is no more than six to seven million metric standard cubic metres per day (MMSCMD). This may or may not come from KG D6. The major consumers of gas are states such as Andhra Pradesh, Gujarat, Karnataka, Maharashtra, and Tamil Nadu. ....................

From here:

India Today

Austin · Post by **Austin** » 16 Feb 2014 09:17

If GOI logic in Supporting Reliance is that Gas should be based on International Prices .. then we might well have every thing from Tea , Milk , Gold etc etc we sell in India based on International Prices or the average formula of how they arrived.

And in many place around the world Gas prices are linked to Henry Hub or Spot Prices which are almost half or less compared to Brent prices, the prices linked to Oil is not standard these days.

GOI is hell bent on Making Reliance rich at the cost of tax payers money ......and neither Congress or BJP is even raising a whisper over it as they have been bought out by Reliance..What a Shame

GOI is just making a flaw argument that ONGC etc are treated to same price .........GOI knows any money from PSU they will get a cut in it and they are also Enriching Reliance .....so its a win win for GOI.

So much for reducing the burden of common man and giving a corruption free government.

Austin · Post by **Austin** » 18 Feb 2014 21:50

Some notes on Saudi Oil , supports Wikileaks figures

Dealing with the Saudis is still challenging

Austin · Post by **Austin** » 27 Feb 2014 09:19

Rogozin says Russia-India oil pipeline project is possible
Russia's Deputy Prime Minister Dmitry Rogozin said Thursday the project of a pipeline betwee India and Russia has the right to exist

NEW DELHI, February 26. /ITAR-TASS/. Russia and India can build an oil pipeline between the two countries.

“This is one of the major infrastructure projects that can be implemented. I think it has a right to exist, but we should make calculations to see how profitable it can be,” Deputy Prime Minister Dmitry Rogozin said on Wednesday, February 26.

The proposal to build an oil pipeline from Russia to India was put forth by India’s Oil and Natural Gas Corporation (ONGC). Its Vice President M.K. Nair told ITAR-TASS that the pipeline could run through Afghanistan and Pakistan.

In a joint statement issued by Russian President Vladimir Putin and Indian Prime Minister Manmohan Singh in Moscow in October 2013 agreed to study the possibility of direct onshore transportation of hydrocarbons from Russia to India and agreed to set up a joint research group to this end.

“We are ready to discuss the details with the Russians,” Nair told ITAR-TASS. “The project is economically beneficial to both India and the Russian Federation. Moreover, it will benefit Afghanistan and Pakistan, and when economic prosperity is on the table, differences tend to be forgotten.”

India’s former Union Minister for Petroleum and Natural Gas Mani Shankar Aiyar told ITAR-TASS late last year that Russia and India should consider a project for a direct ground route to deliver oil and gas from Russia. Such a move would open up bright prospects for both sides, he said.

Mani Shankar Aiyar has been a proponent of greater cooperation between Russia and India in the oil and gas industry. In 2004, when he held the petroleum and natural gas portfolio in Manmohan Singh’s cabinet, he visited Sakhalin Island, where ONGC is a partner in the Sakhalin-1 project with Exxon and Rosneft.

ONGC’s proposal to run a pipeline from Russia is “one of several prospective projects that can significantly increase the volume of bilateral trade,” the head of the Eurasian Department of the Indian Ministry of External Affairs, Ajay Bisaria, said.

India’s largest natural gas company, GAIL, proposed that Russia extend its mooted gas pipeline through China to Indian soil. “The idea is being discussed,” said the director of the GAIL Department for Quality Management, Siddhartha Sarkar.

“There aren’t too many viable options for running an oil pipeline to India. The route through China is mountainous. If it goes through the Himalayas, it will turn into a diamond pipe. The route through Iran is more circuitous. If oil is shipped by tanker through the Black Sea, it will still be several times further. India's proposed alternative route from Russia through Afghanistan and Pakistan is the shortest,” Sergei Pikin, director of the Energy Development Fund, told the newspaper Vzglyad, which was quoted by Russia and India Report.

The main risks are political. The war in Afghanistan is still ongoing, plus the high risk of the Taliban returning to power. “But in this part of the world political risk comes with the territory. It’s simply a case of carefully selecting the regions where the government is more or less in control of the situation. Plus, there must be a top-level security system in place,” Pikin noted.

“Given the current level of safety, the pipeline project is certainly doable. But what happens after that, no one is sure. In any case, such projects are always insured: the policy will cover terrorist incidents,” he said. But India has vast potential. “It is one of the fastest growing regions in terms of energy consumption. The Indian market is potentially huge and yet to be courted,” he adds.

As for running a gas pipeline to India through China (instead of Afghanistan), the two countries have a complex relationship involving border disputes and mutual suspicion. “If a significant portion of the pipeline passes through the Middle Kingdom, there is a risk that it could be used to exert pressure on India,” Dmitry Abzalov, a leading expert at the Russian Centre for Current Politics, said.

The new pipeline would not necessarily be a part of the planned TAPI (Turkmenistan-Afghanistan-Pakistan-India) project, although it might run parallel to it. India has long advocated the politically forward-looking TAPI project. The project has been actively discussed since the 1990s. If built, it would stretch 1700 km with a capacity of 30 billion cubic metres of gas a year. Russia has been invited to take part in the projects, with Gazprom keen to construct the entire stretch of the pipeline.

Austin · Post by **Austin** » 27 Feb 2014 09:22

I am not sure why any one in sane mind would even run a water pipeline through Afghanistan not to mention Oil Pipeline , The chances of Taliban coming to power post 2014 exist and its high.

The best bet is to extend oil pipeline though china as both countries have economic interest in maintaining it not to mention high trade. Any thing though Papistan or Afghanistan must be a strict no no

panduranghari · Post by **panduranghari** » 27 Feb 2014 20:16

India has 10 day strategic oil reserves, China is moving from 150 day reserve to 220 day reserve. Even if we choke of Mallacca strait, China will run without problem.

Having a direct pipeline from Iran and/or Russia will be essential for India.

Rishirishi · Post by **Rishirishi** » 28 Feb 2014 00:23

Running a pipeline via China (where China is a partner and also get some of the oil) would be preferred to Afganistan and TSP.

If China stops supply, Russia can stop supply to China. Best is if China is made to invest all the cost of the pipeline.

Peregrine · Post by **Peregrine** » 02 Mar 2014 01:28

Cross Posted on the Terrorist Islamic Republic of Pakistan Thread :

India, Iran and Oman go under sea to build pipelines, change geopolitics

NEW DELHI : India is contemplating energy pipelines from the Gulf again — this time running under the sea, rather than traversing Pakistan. With international sanctions on Iran fading as a result of a nuclear agreement, an energy pipeline may be the most positive regional consequence.

The new plan proposes to transport oil and natural gas through deep sea pipelines via Oman in a process where Iran, and even Turkmenistan and Azerbaijan energy can feed the pipeline for an ever-growing Indian market. Yusuf bin Alawi bin Abdullah, Oman's foreign minister, raised the possibility with Salman Khurshid during their meeting on Friday.

Oman had invested $90 million on this project over a decade ago, but it got no traction then. But now, the technology has come of age, with pipelines being built under the Mediterranean Sea from Algeria to Itali, and under the Black Sea from Russia to Germany. Abdullah suggested the pipeline could transport gas from Iran, even Qatar, as well as Central Asian states.

Khurshid floated the prospect with Javad Zarif, Iranian foreign minister, who he met later in the day. The Iranians have revived talk of deep-sea pipelines to India after the failure of the IPI pipeline. Iran cancelled a $500 million loan to Pakistan in December. India had pulled out of the IPI several years ago citing price and security issues.

Those issues remain. In fact, as the US withdraws from Afghanistan, the TAPI pipeline from Turkmenistan through Afghanistan and Pakistan is fast losing its attractiveness.

Iran has reportedly jumped at the idea. Oman is India's most trusted partner in the Gulf, therefore comfort levels are high between New Delhi and Muscat, more than even with Iran. Zarif added to the Omani proposal - Iran was negotiating separately with Turkmenistan for an overland pipeline to carry its gas to an Iranian terminal and thence to markets like India. If these negotiations succeed, Iran could be a beachhead for gas not only from its fields but from other Gulf suppliers, even Qatar, which is India's largest supplier of LNG.

"An undersea pipeline from Iran to India could be completed as quickly as 3-4 years. Our feasibility studies show they would cost in the region of $5 billion," said Subodh Jain, whose company, Sage is the best known Indian entity to acquire technology for such pipelines. Jain has proposed building an under-sea energy infrastructure corridor, which could be used by major gas suppliers to connect to terminals in India's west coast. Any such pipeline could transport about 31 million cubic meters of gas a day.

"India relies on LNG, but it's the equivalent of relying on champagne. If we stick to LNG, we will become addicted to expensive energy imports. Therefore, a gas pipeline particularly for the power sector, makes eminent sense," said a senior official. "Very soon, almost 20,000MW of gas-fueled power plants will go idle in India due to gas shortage. Pipelines are overdue here."

If energy trade is to resume between Iran and India, the Chahbahar port acquires greater important. Zarif and Khurshid agreed to get the final agreement on investment. India is putting in an affordable $100 million before the Nauroz holidays. The shipping ministry has already completed its studies and price estimates, so officials working on the project said this should not be a stretch.

The Iranian government has been flipping back and forth on this project, so officials reckon a deadline would focus attention in New Delhi and Tehran.

Once complete, Chahbahar would also be the entry point for Indian goods travelling to Central Asia and beyond through the international north-south transport corridor. In their conversation, Zarif made a determined pitch for the INSTC, though it has been Iranian tardiness that has delayed a project like this. In 2012, Turkey officially offered to join the north-south corridor, though with their recent troubles with Iran, no one is quite sure whether that still holds true.

In a related decision, India will conduct a dry run study in March on the INSTC, through Nhava Sheva (Mumbai)- Bandar Abbas (Iran)- Tehran-Bandar Anzali (Iran)-Astrakhan(Russia). This was agreed between India and Azerbaijan during the recent visit of Huseyngulu Baghirov, natural resources minister. Iran and Azerbaijan have to build Gazvin-Rasht-Astara (Iran)-Astara (Azerbaijan) railway route for connecting the railway lines of the INSTC.

What is clear is that Iran is returning to the geostrategic table in the region. It needs to have a credible nuclear agreement with the west before that happens.

Cheers

Austin · Post by **Austin** » 02 Mar 2014 11:00

panduranghari wrote:India has 10 day strategic oil reserves, China is moving from 150 day reserve to 220 day reserve. Even if we choke of Mallacca strait, China will run without problem.

Having a direct pipeline from Iran and/or Russia will be essential for India.

With China you can reason out and we have economic interdependence with them , The pipeline through china also is a source of revenue for them ....not to mention source of revenue for Russia too.

With Pakistan and Afghanistan you never know and with these jihadist mindset people you cant rationally argue. Its far more risky to have any sort of pipeline least of all an Oil Pipeline.

Also the chances of random terrorist attack on pipeline passing through Afghanistan or Pakistan are high.

Theo_Fidel · Post by **Theo_Fidel** » 02 Mar 2014 22:39

Peregrine wrote:Cross Posted on the Terrorist Islamic Republic of Pakistan Thread :

India, Iran and Oman go under sea to build pipelines, change geopolitics

NEW DELHI : India is contemplating energy pipelines from the Gulf again — this time running under the sea, rather than traversing Pakistan. With international sanctions on Iran fading as a result of a nuclear agreement, an energy pipeline may be the most positive regional consequence.

This is wonderful news. The technology is very new and has been maturing for a short time now. The Sea bed off Indian west coast is about 8000 feet to 10,000 feet deep. Compare that to the Gulf of Mexico, where the technology was pioneered and is 12,000 feet deep, and it is clear the technology is very feasible. Reliance laid a short 40 km section in 12,000 feet of water off the Kakinada coast recently. Still this will possibly be the longest deep water pipeline.

The fights will come over the price of gas. EU pays ~ $10 per MMBTU for its pipeline gas. India should offer $8 at maximum. This is what Reliance is getting paid right now.

The other point to note is that @ $8 per MMBTU the price of electricity from this gas will be on the order of Rs5-Rs8. A bit more expensive.

Austin · Post by **Austin** » 06 Mar 2014 13:25

Shale oil may not be the magic pill for U.S. energy independence

It’s more expensive to produce it, experts say, and oil prices have to stay high to support operations.

By Asjylyn Loder
Bloomberg News

NEW YORK — The path toward U.S. energy independence, made possible by a boom in shale oil, will be much harder than it seems.

Just a few of the roadblocks: Independent producers will spend $1.50 drilling this year for every dollar they get back. Shale output drops faster than production from conventional methods. It will take 2,500 new wells a year just to sustain output of 1 million barrels a day in North Dakota’s Bakken shale, according to the Paris-based International Energy Agency. Iraq could do the same with 60.

Consider Sanchez Energy Corp. The Houston-based company plans to spend as much as $600 million this year, almost double its estimated 2013 revenue, on the Eagle Ford shale formation in south Texas, which along with North Dakota is one of the hotbeds of a drilling frenzy that’s pushed U.S. crude output to the highest in almost 26 years. Its Sante North 1H oil well pumped five times more water than crude, Sanchez Energy said in a Feb. 17 regulatory filing.

“We are beginning to live in a different world where getting more oil takes more energy, more effort and will be more expensive,” said Tad Patzek, chairman of the Department of Petroleum and Geosystems Engineering at the University of Texas at Austin.

Drillers are pushing to maintain the pace of the unprecedented 39 percent gain in U.S. oil production since the end of 2011. Yet achieving U.S. energy self-sufficiency depends on easy credit and oil prices high enough to cover well costs. Even with crude above $100 a barrel, shale producers are spending money faster than they make it.

The U.S. oil industry must sprint simply to stay in place. U.S. drillers are expected to spend more than $2.8 trillion by 2035 even though production will peak a decade earlier, the IEA said. The Middle East will spend less than a third of that for three times more crude.

Shale wells can vary in price. Chesapeake Energy Corp. will spend an average of $6.4 million each this year, according an investor presentation. Houston-based Goodrich Petroleum Corp. will spend up to $13 million on some of its wells, Robert Turnham, president and chief operating officer, said in a Feb. 20 earnings call.

Bullish analysts and oil executives have reason to crow. While drilling in Iraq could break even at about $20 a barrel, output will be limited by political risks, Ed Morse, global head of commodities research at Citigroup in New York, said in a January report. By contrast, the break-even price in U.S. shale is estimated at $60 to $80 a barrel, according to the IEA. The price of a barrel hasn’t dipped below $80 since 2012 and has stayed above $90 since May. Costs in the United States will continue to fall as drillers get faster and improve results, Morse said.

“The U.S. oil and natural gas renaissance is receiving significant investment because return on investment is good and competitive with other opportunities,” Rick Bott, president and chief operating officer of Oklahoma City-based Continental Resources Inc., a pioneer of shale drilling, said in an email. “We’re confident that continued technological advancements will keep the Bakken and other plays at the forefront of investment for the foreseeable future.”

The boom’s boosters have given rise to the misconception that wringing oil and gas from shale can be easily replicated throughout the country, Patzek said. That isn’t the case, he said. Every rock is different.

“To sustain in the short term, the U.S. needs prices at $65 a barrel,” said Leonardo Maugeri, who’s researching the geopolitics of energy at Harvard’s Belfer Center for Science and International Affairs. . “That’s a critical level. Below that level, many opportunities will vanish.”

vishvak · Post by **vishvak** » 06 Mar 2014 19:01

We shouldn't fall into arbitrary calculations for gas pricing as done for oil pricing.

Per this paper the-asian-premium-and-oil-and-gas-supply-from-russia,
∅ Petroleum products market in USA and Europe is kept competitive by multiple source pipelines
∅ Asian crude prices are not linked to European/USA pricing but costs are added based on 'global' pricing and Asian premium.
∅ Asian premium is actually Japan premium made generic for all including India. For Japan, transportation costs are from middle east to Japan i.e. perhaps highest in Asia.
∅ Notice words like 'traditional' etc for pricing applied from 1990.

Prem · Post by **Prem** » 07 Mar 2014 08:31

Indian refiners eye better oil deal terms
http://www.arabnews.com/news/535821

NEW DELHI: India, Asia's second-biggest energy user, is in talks with Saudi Arabia and Kuwait for better terms on oil contracts as surging US output frees up supplies.
Hindustan Petroleum, India's third-largest state refiner, is seeking to at least double the interest-free credit period for crude purchases from Saudi Arabia and Kuwait to 60 days, B.K. Namdeo, the company's refineries director, said in Mumbai. Mangalore Refinery & Petrochemicals wants price discounts for agreeing to contracts that are more than 10 years long, according to Managing Director P.P. Upadhya."Discussions are going on, and we expect the extended credit period to be reflected in the new contracts rom April 1," Namdeo said. "There is a surplus in the market, and India should take full advantage of the situation."A shale-oil boom in the US, the world's biggest consumer, has pushed crude production to the highest in almost 26 years, leading the country to cut imports. In response, some of the biggest Middle East producers are turning to Asian nations to lock in buyers as the easing of sanctions on Iran brings more oil into the market."Deals between Indian refiners and countries in the Middle East are best viewed as a security of supply effort," said Abhishek Kumar, a London-based energy and modeling analyst at Interfax Europe's Global Gas Analytics. "Countries like Saudi Arabia and Kuwait are as much concerned about competition from Iran as from the US."
Indian Oil Corp., the nation's biggest refiner, is in talks with some Middle East suppliers, including Saudi Arabia and Kuwait, to increase the credit period for crude purchases to 60 days, its Finance Director P. K. Goyal said in an interview in New Delhi. Iraq, the company's biggest crude supplier, started offering 60-day credit from January, he said.Iran currently gives Mangalore Refinery and Mumbai-based Essar Oil Ltd. 90-day credit."Until some years back, Saudi Arabia used to give us better payment terms, which was later stopped," said B.K. Datta, Mumbai-based director of refineries at Bharat Petroleum Corp., the nation's second-biggest state refiner. "It will be good if payment terms are relaxed once again."Kuwait Petroleum officials couldn't immediately be reached to comment on potential changes to payment terms. Saudi Aramco declined to comment.
Indian state-run refiners sell fuels below their production cost to help the government curb inflation. While they are partly compensated by the government, subsidies are often delayed, forcing the oil processors to borrow money."Longer credit periods from the biggest crude suppliers will help the refiners reduce their working capital loans, which in turn will bring down interest charges," said Dhaval Joshi, a Mumbai-based analyst at Emkay Global Financial Services. "This is crucial, especially because the compensation provided by the government is not regular and takes time to come."Imports of Iranian crude by countries including China, Japan and India rose by 100,000 barrels a day in January to 1.32 million barrels as a deal easing sanctions over Iran's nuclear program took effect, the International Energy Agency said in its monthly oil market report released Feb. 13. Six world powers including the US agreed to ease sanctions on Iran in November in return for curbs on the country's nuclear program."Negotiations between Iran and P5+1 may result in the lifting of the ban on petroleum products from Iran, which is certainly not ideal for countries like Saudi and Kuwait," Kumar said. "Therefore, they are keen on long-term contracts with Asian buyers prior to the lifting of sanctions on Iran."India, which imported about 185 million metric tons (3.7 million barrels a day) of crude in the year ended March 2013, gets about 63 percent of its requirement from Middle East suppliers including Saudi Arabia, Kuwait, Iraq, Iran, the UAE, Qatar, Oman and Yemen, according to data from India's Ministry of Oil.Saudi Arabia is the biggest supplier, followed by Iraq and Kuwait, together making up 43 percent of the South Asian economy's total oil imports, according to the oil ministry

Klaus · Post by **Klaus** » 20 Mar 2014 13:31

Russia buys German Oil production utility

Increasingly looks like the continental Europeans are fully hooked onto Russian exports, perhaps eventually outsourcing the entire gambit from exploration to production onto the Russians. Its only the Brits, Dutch & the Scandinavians who will have a continued presence in this sector. It does not portend well for the rise of Germany as a Eurasian power, if ever it decides on power projection as an objective. The staus quo in Europe will not last if new states starting from Scotland start forming in Germany's periphery.

Austin · Post by **Austin** » 20 Mar 2014 16:53

Tenth of Rosneft’s offshore resources to yield $2.5 trillion

March 19, 17:01 UTC+4

According to the presentation, Rosneft’s offshore prospective resources reach 24.2 billion tonnes of oil and 23.8 trillion cubic meters of gas.

“Mining of a tenth of these resources means yielding about $2.5 trillion, if estimated under the current prices. This will require no less than $400 billion of investments,” Sechin told the sixth Russian-Japanese Investment Forum that opened in Tokyo on Wednesday. This, he added, would surely necessitate “joint efforts and qualified partners”.

The potential of further expansion of Russian-Japanese energy cooperation was huge and reached dozens and hundreds of billions of dollars in Rosneft’s case alone, Sechin told the forum’s opening; Japan can count on a considerable increase of hydrocarbon and electricity supplies.

“In order to provide energy security of Japan and the entire Asia-Pacific region in the future Rosneft is ready to offer a wide range of opportunities to satisfy oil and gas needs,” he added.

Russia was interested not only in cooperation with certain partners but also joint work along the entire production line — production, infrastructure, processing, and transportation of resources.

“Asset swap as well as a clearer contract system is crucially important to achieve a long-term economic effect. This will help avoid any political and contract risks,” Sechin said.

Rosneft’s president highly evaluated the work of the Japanese partners. “Some of them are working in Iraq with a 7% breakeven level. The inflation level as it is, they are making truly heroic efforts,” said Sechin.

Russia’s breakeven level “considerably exceeds these figures”, Sechin said and invited Japanese partners to partake in petrochemical and ship-building projects in Russia’s Far East.

http://en.itar-tass.com/economy/724367

Austin · Post by **Austin** » 20 Mar 2014 16:55

What does he mean by mining 1/10 will give $2.5 Trillion ....what happens to the remaining resources ?

Klaus · Post by **Klaus** » 22 Mar 2014 11:33

Austin wrote:What does he mean by mining 1/10 will give $2.5 Trillion ....what happens to the remaining resources ?

IMO, 10% is the reserve which can be produced by primary drive methods, the rest of the OOIP will involve artificial lift & gas (or water) injection methods. Russia is an interesting test-bed for implementing new Enhanced Recovery systems.

Austin · Post by **Austin** » 22 Mar 2014 22:32

That could be the case need to check how much of off-shore reserves are generally recoverable.

Nice Article with Stastics on US Shale Gas Production

What is the real cost of shale gas?

symontk · Post by **symontk** » 23 Mar 2014 19:54

There has been significant Oil discoveries in Rajasthan in this century. Did the Pokhran tests helped in that? If so why the first test in 1974 didn't help much?

Austin · Post by **Austin** » 23 Mar 2014 20:51

symontk wrote:There has been significant Oil discoveries in Rajasthan in this century. Did the Pokhran tests helped in that? If so why the first test in 1974 didn't help much?

What has P-1 and P-2 any thing to do with Oil Discoveries ?

We are discovering new reserves because there is more investment , better technology to find Oil/Gas and more advanced technology to extract it.

Austin · Post by **Austin** » 23 Mar 2014 21:02

Klaus wrote:IMO, 10% is the reserve which can be produced by primary drive methods, the rest of the OOIP will involve artificial lift & gas (or water) injection methods. Russia is an interesting test-bed for implementing new Enhanced Recovery systems.

I did some digging on the reserve part and came across a 2013 official silde from Rosneft on Offshore reserves

http://rosneft.com/attach/0/02/99/cera_week_en.pdf

On page 9 of slide the total recoverable Offshore reserves is put at 275 bln BOE

Oil - 155 bln BOE
Gas - 120 bln BOE

Rough approximation in billion Tons , 1 billion Ton Oil Equivalent = 7 bln BOE , Oil is 22 Billion Ton and Gas 17 Billion Ton , that roughly matches what he said , which is 24.2 billion ton for Oil and 23.8 Trillion Cubic Meter for Gas ....perhaps additional reserves accounted for in years time.

Since they are recoverable reserves and a tenth of it cost $2.5 Trillion at today rate then the total value is ~ $25 Trilliion and thats just for Offshore near the borders !

Austin · Post by **Austin** » 26 Mar 2014 16:49

5 Energy Challenges Confronting India

On March 12, 2014, India and the United States renewed talks regarding cooperation on clean energy. The talks concluded positively with memorandums of understanding for the two countries to cooperate on research and development, more extensive use of environmentally friendly technologies, and greater coordination on scientific development.

The dialogue between the two countries included six working groups on areas such as coal, oil and gas, sustainable development, new technologies and renewable energies, and power and energy efficiency. The objective goal of the talks is to increase business-to-business cooperation, expand trade, and create a better regulatory framework. The talks follow the Partnership to Advance Clean Energy (PACE) established in 2009.

It is a positive development that the United States (and many others) is paying attention to India’s energy needs. With a growing middle class and a population of 1.27 billion people, 50 percent of whom are under age 25, India is expected to have some of the fastest growing energy needs that are certain to dramatically impact the global economy and its energy market. With this in mind, here are 5 key things to know about energy in India.

1. Coal production remains key to energy mix

India produced 557 million tonnes (metric tons) of coal in 2012-13, and India’s rapidly growing power industry consumed the majority of it. Coal production has steadily increased since the industry was nationalized in the 1970s. The trend is likely to continue, with production goals aiming for an increase to 795 million tonnes by 2016-2017.

Owing to summer heat, frequent labor strikes, and natural disasters, India has had a harder time meeting growing market demands and faces the likelihood of growing coal imports. Coal remains an essential staple to India’s energy needs and will remain so for the foreseeable future.

2. Fourth largest consumer of oil and petroleum in the world

A trend almost certain to accelerate as the country faces growing urbanization and an expanding middle class, India has a high dependence on imports for its petroleum needs and is the world’s fourth largest importer of crude oil. Most imports come from the Middle East, but growing investments in South America, the Caspian Sea, and elsewhere look to diversify and potentially increase oil to India.

The oil industry has slowly but steadily opened up since major reforms were enacted in 1991. Subsequent reforms are ongoing. Two state-owned companies, Oil India Limited (OIL) and Oil and Natural Gas Corporation (ONGC), have long dominated the production and refining in the sector. However, reforms in the last decade have increased competition and exhibit potential signs of growing foreign investment in a sector long dominated by domestic players.

3. Relies on imports to meet growing demand for gas

Perhaps more so than other areas in the energy sector, attempts to meet demand with gas have been greatly influenced by geopolitical issues. Various plans for pipelines with Myanmar, Iran and Pakistan, and Turkmenistan and Afghanistan have fallen apart over border disputes and other issues.

Domestic natural gas production has fallen in recent years, with further drop-offs expected in 2014-15. Given the growing demand and reliance on natural gas for power, issues with obtaining natural gas from other countries, and its own falling production, satisfying natural gas needs is one of India’s the most urgent challenges.

4. Electricity shortages hurt industrial output

India meets its electricity demands with 65 percent use of non-renewables, 19 percent of that demand is met with hydropower, 12 percent from renewables, and 2 percent from nuclear power.

Demand is far outpacing supply in meeting the rapidly growing electricity needs of the country. Electricity shortages have resulted in loss of profits for many companies, loss in productivity as plants and businesses have been forced to shut down for a few days a month or slow down manufacturing, and added operational costs as some businesses have been forced to pay for power back up units.

While growing demand is part of the problem, poor infrastructure equally contributes to electricity shortfalls that have hindered recovery in India’s industrial sector and hurt its overall economic growth.

5. Energy poverty and inequality spreads

Access to energy is a tremendous problem in India and major inequalities of access plague the subcontinent. According to one census, 77 million households in India still use kerosene for lighting. The problem is even more acute in rural India where up to 44 percent of households lack access to electricity.

While India has undertaken various programs and initiatives to address energy poverty, they have been faced with logistical problems and inadequate implementation locally. In the case of rural villages, access issues and geographical hindrances make addressing the issue extremely costly and difficult.

India faces exploding demand and insufficient supply. As the country’s population and needs continue to grow rapidly, it will also need major reforms in infrastructure and efficiency.

While many analysts point to developing solar and nuclear capabilities as essential, India will need greater capacity and efficiency in all sectors to meet India’s energy needs. How and if India chooses to confront this pressing problem will have ramifications for the country and the world. Starting a dialogue and drawing greater attention are a good start.

By Sean Durns

member_28515 · Post by **member_28515** » 26 Mar 2014 17:45

i dont understand why the hoopla over high oil and gas prices ? this is a global uniform change - such changes are only notional.. and do not affect us in isolation.. and hence have little impact on any economy.. i visualize it as a increase in pool water.. all floating economies will rise or fall the same .. we just need to end the US dollar as a global currency. A internation currency should replace it that is linked to basic commodities and resources.

I cant imagine how we would react if some corporation undertook quant easing with their shares.. print more as and when needed..
And the excess printed is used to buy out companies and assets in India and elsewhere for the US.. and all on a "promissory" note of value.. a smart businessman doesnt extend credit to someone 5 times his size.. with no ability to collect, i wonder how the world runs on the USD with little actual opposition.. lazy acceptance or is it backed by implicit threats of hostile takeover if the OPEC doesnt consent ?

symontk · Post by **symontk** » 27 Mar 2014 22:07

any wave form travelling thru earth's surface gives valuable information on its rock formations

Since nuclear explosion waves travel in strength far and wide, that should be immensely helpful in getting such information

Even if you look at Bombay High, it came into being after 1974 explosion. I have also same doubt on Cauvery and Godavari deposits. There has been several "accidental" explosions in a strategic center which might have helped the discoveries

Theo_Fidel · Post by **Theo_Fidel** » 27 Mar 2014 23:22

symontk wrote:Even if you look at Bombay High, it came into being after 1974 explosion.

chetak · Post by **chetak** » 28 Mar 2014 00:44

symontk wrote:any wave form travelling thru earth's surface gives valuable information on its rock formations

Since nuclear explosion waves travel in strength far and wide, that should be immensely helpful in getting such information

Even if you look at Bombay High, it came into being after 1974 explosion. I have also same doubt on Cauvery and Godavari deposits. There has been several "accidental" explosions in a strategic center which might have helped the discoveries

Mostly foreign companies or foreign JVs seem to have benefited in India.

You may be on to something

Klaus · Post by **Klaus** » 30 Mar 2014 07:02

West Qurna-2 field in Iraq begins production

Fakhr told reporters initial production was about 120,000 barrels per day (bpd) but that output would rise to 420,000 bpd by the end of the year.

Lukoil President Vagit Alekperov said in a statement the target was initially hit on Friday at West Qurna-2, one of the world's biggest undeveloped oil fields with known reserves of 12.9 billion barrels.

The Russian firm had initially partnered with Norway's Statoil on the West Qurna-2 field, signing a 20-year deal in early 2010 under which they were to increase production at the field to 1.8 million bpd, with fees of $1.15 per barrel extracted.

In May 2012, however, the Norwegian company sold its stake to Lukoil, and the production target was later lowered to 1.2 million bpd.

vic · Post by **vic** » 30 Mar 2014 07:22

So the cost of production is only US One Dollar per barrel?

Austin · Post by **Austin** » 30 Mar 2014 09:37

^^ I read its cheapest to extract Oil in the Gulf than any where in the world ....so extraction cost is very cheap if you exclude the infrastructure and transportation cost involved.

One can well imagine the profits Gulf is making today by selling oil at $100 barrel ...... sadly though they are just throwing the money by subsidising the people which Oil revenue accounting to about 80-90 % of Budget revenue since the 50 years they are in this business. Which is to say they couldnt diversify the from Oil Revenue and are very exposed to any oil price fluctuations

Austin · Post by **Austin** » 30 Mar 2014 10:22

I was reading on Oil Extraction cost else where , Came across this chart from Rosneft

http://www.rosneft.ru/attach/0/07/06/pr ... london.pdf

Pg 4 , per bbl average in Russia $5.6

Klaus · Post by **Klaus** » 30 Mar 2014 10:29

Austin wrote: On page 9 of slide the total recoverable Offshore reserves is put at 275 bln BOE

Oil - 155 bln BOE
Gas - 120 bln BOE

Rough approximation in billion Tons , 1 billion Ton Oil Equivalent = 7 bln BOE , Oil is 22 Billion Ton and Gas 17 Billion Ton , that roughly matches what he said , which is 24.2 billion ton for Oil and 23.8 Trillion Cubic Meter for Gas ....perhaps additional reserves accounted for in years time.

Since they are recoverable reserves and a tenth of it cost $2.5 Trillion at today rate then the total value is ~ $25 Trilliion and thats just for Offshore near the borders !

Thanks for the report! In the American & European sense of the word 'reserves', as it was developed in the O&G lexicon has come to mean the Economically Viable & Recoverable portion of the OOIP in the field/reservoir.

The slight discrepancies in reserves between your approximation & those in the report could be owing to the now-traditional practice of gas lift (in place of water injection used elsewhere). Gas lift seems to have become economical in Russia.

Also, I remember reading a report where Russia was apparently taking it slow with the development of shale gas projects as their estimates states that they will not be needing its augmenting impact until the later decades of the 21st century. It is to be noted that shale gas estimates & deep water estimates may not be included in the reserves quoted. One gets the feeling that the Russians are lukewarm towards the prospects of deep water exploration but it could just be an initial impression. The Russian O&G scenario seems to be a 180 degree turn from the North American one, where there are raging debates on almost every form of unconventional reservoir, be it tar sands, shale oil, deep-water or shale gas.

Geopolitically, $2.5 Trillion is significant in the development of a truly Eurasian centered world order.