Oil & Natural Gas: News & Discussion

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svinayak
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Post by svinayak »

U.S. urges subsidy cuts, not regulation, to tame oil
Sat Jun 7, 2008 11:18am IST

By Osamu Tsukimori

AOMORI, Japan (Reuters) - U.S. Energy Secretary Sam Bodman called on Saturday for more countries to scrap fuel price subsidies that stoke oil demand, adding that more regulation of energy markets was not the solution to record prices.

Bodman's comments came just ahead of his meeting with top energy officials of Japan, South Korea, India and China, the latter two of which have failed to raise domestic gasoline and diesel prices fast enough to keep up with roaring global markets.

It is part of a broader Group of Eight energy gathering that comes one day after oil's over $10 surge to an all-time high above $139 a barrel, the biggest one-day gain on record.

"It's a shock, but if you look at the rate of oil production globally, it has been 85 million barrels a day for three years in a row," Bodman told a group of reporters.

"We know demand is increasing because a lot of nations are still subsidising oil, which ought to stop," he said.

But he steered away from greater regulation, despite pressure from U.S. lawmakers to step up oversight of energy markets in the hopes of detering the flood of new investors and speculators that some blame for inflating food and fuel prices.

"We've looked at it and have concluded unfortunately that this is not a matter where there needs to be more regulation of markets," he said.

The U.S. Commodity Futures Trading Commission will meet with international regulators in Washington next week, just weeks after it announced a slew of measures to increase surveillance of energy and other commodity markets. Continued...

Bodman also stopped short of calling on OPEC to pump more crude, but said producers should allow for greater investment, while consumer countries need to help rein in demand by passing on the full burden of world prices that have doubled in a year.

India raised domestic fuel prices by about 10 percent this week, provoking a muted public backlash and threatening to stoke inflation to a 13-year high with only its second increase in two years. China has raised pump rates only once since mid-2006 due to inflation worries, increasing them by 10 percent in November.

But both measures leave prices lagging well behind oil's rally, and analysts say the measures will do little to slow demand from two of the world's fastest-growing major consumers until they allow rates to rise more quickly.
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Re: Oil & Natural Gas: News & Discussion

Post by Vipul »

Arjun Narayan Murti of Goldman says oil prices may dip to $75.

WASHINGTON: A Goldman Sachs analyst of Indian-origin who has roiled the world by predicting oil prices as high as $200 a barrel says those levels are unsustainable and prices maybe driven back to $75 or lower in the long term. Arjun Narayan Murti, author of the so-called ''super-spike'' theory has told the journal Barrons that the $150-$200 levels will be a temporary feature, and once high prices start to reduce demand (a more likely scenario than increased supply), the price will start to come down.

''Our view has been that the price will keep going up to the level where it meaningfully reduces demand. This is Economics 101; we need more supply or less demand. And because there are various political and geologic constraints on growing supply, we're left with looking for the price at which demand is reduced,'' Murti, told the Dow Jones' journal.

"Our long-term oil forecast looking out 20 years is for crude to fall back to $75 a barrel, or some lower number. The questions are: How long do prices stay high? How sharply do they rise? And do people truly change their behaviour or are they just temporarily driving less? It's an unknown at this point,'' he added. Murti has been pilloried for what some see as alarmist projections that have helped speculators make a killing in the market.

The low-key analyst, who typically declines to be interviewed, much less photographed (probably as a security measure), has stuck to his super-spike theory for years before it came to wide-spread public attention. Murti's rare interview to Barrons under the headline ''What Mr Crude Oil Sees Ahead,'' came even as retail gas prices at the pump touched a record nationwide average of $4 in the United States this weekend, sparking off a nationwide anguish.

A survey issued last week found that 74% of Americans would change their driving habits if gasoline were to top $4 per gallon. If gasoline prices hit $5 a gallon, 85% of Americans would cut out nonessential driving, consolidate errands, carpool, walk or bike, according to the survey by Ipsos Public Affairs. Even as $4 a gallon (about 3.78 liters), Americans are still paying roughly half of what most Europeans pay and a little less than what Indians pay at the pump. But this gap is narrowing quickly. Experts are predicting gas in the US will hit $ 4.50 a gallon by July 4, and if Murti's dire forecast of $200 a barrel comes through, price at the pump would be $5.75 per gallon.

Murti said he is already starting to see a drop in demand in the US, but the demand growth in the non-OECD countries, including China, the Middle East and Asia continues unabated. He is also not sure at what point will there be a sustained change in American consumer behavior. ''So if the price temporarily goes to $4 a gallon but immediately falls back to $3, it's likely that people will keep driving cars with poor gasoline mileage. But if people believe the increase in oil prices is more sustainable, they might shift to taking mass transportation, if available, driving hybrids or taking the other kind of actions that are necessary to reduce demand on a sustained basis,'' Murti, who is said to own two hybrid cars, said.

There have been wide-spread reports of Americans cutting back on their driving, shifting to mass transport for their daily commute, and dumping their SUVs for smaller cars or hybrids, but whether it is a sustained trend is still hard to say. Murti cited several reasons for the sustained run-up in oil prices. In the short term, these include further declines in US oil inventories announced on June 4, the announcement of a decline in Russian oil production in May, and recent comments that Mexico expects further meaningful declines in oil production over the rest of this year. Longer term spare capacity throughout the energy complex also seems very limited, whether for Opec crude oil, natural gas or refining, he added.
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Re: Oil & Natural Gas: News & Discussion

Post by Raj »

Oil prices overvalued by at least 40%: EU
The price of oil is overvalued by at least 40 percent and should fall to around $80 to $90 per barrel over the longer term, a top European Union economic adviser was quoted as saying on Wednesday.

Klaus Gretschmann, director general for internal market issues at the EU's Council of Ministers, told German daily Die Welt that a speculative bubble had formed around oil prices which would burst, lowering the cost of crude.

"In my view, the price of oil is at least 40 percent overvalued. Twenty percent of the current price is attributable to foreign exchange effects and the weakness of the dollar, another 25 percent are down to speculation," he said.
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Post by Raj »

Oil may peak at $150-170 soon: Commerzbank
FRANKFURT: The oil price could peak at $150-170 in the next three months and then retreat quickly by the end of the year, a Commerzbank analyst said on Wednesday.

Oil should come back down to under $100 in 2009 but the days of $40 or $50 a barrel are long gone, senior commodity analyst Eugen Weinberg told journalists in Frankfurt.

"I think we are seeing an exaggeration in markets right now and the peak can possibly be reached in the next three months," Weinberg said, estimating a peak price of around $150-$170.
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Post by Raj »

Reliance Jamnagar refinery will cost half that of others
AHMEDABAD: The export-oriented Rs.270 bn (over $6.3 bn) refinery that Reliance Petroleum Ltd (RPL) is setting up in Jamnagar will incur half the cost of a similar Greenfield plant anywhere in the world, the company said in its 2007-08 annual report.

The report said the Paris-based International Energy Agency estimated the capital cost for new refinery projects to be "well in excess of $20,000 (per barrel) per day".

In contrast, the Mukesh Ambani-headed RPL noted, the Jamnagar plant would incur a capital cost of less than $10,000 per barrel per day, or about half of what's being spent to set up new refineries globally.

RPL said the refinery would be "one of most complex in the world", implying it would be able to process almost all varieties of crude. To put it simply, the plant can process cheap, low-grade crude into petrol and diesel.

When adjusted for this complexity, RPL adds, the refinery "fares ever better"."Its capital cost of $665 per complexity barrel per day is much lower than the average capital cost of $2,600 per complexity barrel per day for new refinery projects globally," the report said.

"This is a significant competitive advantage in the current industry landscape of increasingly heavy and sour new crude finds, which have led to wide light heavy differentials," the report adds.

The greenfield refinery, with a daily production capacity of 580,000 barrels, is coming up adjacent to the existing refinery and petrochemicals complex of Reliance Industries Ltd. Full production will begin in December, ahead of schedule, RPL chairman Ambani has said in a letter to shareholders.
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Re: Oil & Natural Gas: News & Discussion

Post by SwamyG »

U.S. urges subsidy cuts, not regulation, to tame oil
Sat Jun 7, 2008 11:18am IST

By Osamu Tsukimori

AOMORI, Japan (Reuters) - U.S. Energy Secretary Sam Bodman called on Saturday for more countries to scrap fuel price subsidies that stoke oil demand, adding that more regulation of energy markets was not the solution to record prices.
Oh is he talking about US :-)

http://media.cleantech.com/node/554
http://www.ucsusa.org/clean_vehicles/fu ... g-oil.html
http://www.triplepundit.com/pages/us-oi ... 003140.php
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Post by Vipul »

Reliance to sell gas in India at an 80-per cent discount to global prices news.

Reliance Industries Ltd will start selling natural gas in the country this year at $25.20 per barrel equivalent of oil - an 80-per cent discount to global prices of over $135 - helping the country reduce imports at record prices.The Krishna-Godaveri basin gas field will produce 80 million cubic metres of gas a day, saving the country over Rs1,14,000 crore ($27 billion) in annual import bill, chairman Mukesh Ambani told shareholders today.

Reliance will also commission a transmission system for natural gas from the KG basin, off the eastern coast. The soaring cost of exploration and a cap on gas prices may, however, cut Reliance's profit margins.The government has ordered Reliance to sell natural gas from the KG field for $4.2 per million British thermal units, less than the $4.5 it had sought.

Reliance aims to produce 240-350 million cubic feet of gas a day from the MA-1 field from the second half of the 2008-09 fiscal year, when gas production from two other fields in the block, D1 and D3, will also begin.Reliance Gas Transportation Infrastructure Limited is setting up an East-West gas pipeline system to connect the country's cities for distribution of gas from the KG basin.

Reliance Industries, which is investing $5.2 billion to develop the KG basin oil and gas fields, the nation's largest, expects to more than double gas output in the country.Reliance is also aiming to start oil production from its D-6 block in the KG basin in July-August, by the time it commissions its second refinery in Jamnagar, Gujarat.

Commissioning of the 580,000-barrel-a-day refinery will increase Reliance's crude processing capacity to 1.24 million barrels per day, equivalent to about 2 per cent of global capacity, Ambani said. The new refinery is being built adjacent to Reliance's 660,000-barrel-a-day plant at Jamnagar and the combined facility will be the world's biggest.

Reliance would produce sweet oil with an API density of 43 degrees from two or three wells to meet initial targeted output of 20,000 bpd and has already started inviting bids for sale of the crude.The country currently imports 70 per cent of its crude oil requirements and doesn't produce enough gas to meet local demand.

Reliance, meanwhile, reported over Rs15,000 crore in net profit for the year-ended March 2008.
Reliance, which enjoys a global market share of seven per cent in the polyester fibre and yarn business, plans to further consolidate its global leadership in polyester with the new 2.5 million tonnes per year Paraxylene manufacturing facility at Jamnagar.
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Re: Oil & Natural Gas: News & Discussion

Post by hanumadu »

Shouldn't they be comparing the prices of Reliance natural gas with the international price of natural gas and not that of oil? Natural gas is selling at 10-12$ in the international market. So how is 4.2 an 80% discount to 12?

The author is also wrong in assuming we will be importing as much less oil as the amount of oil equivalent of natural gas produced. Some of the oil usage may be replaced by natural gas, but not all. But it's a welcome development anyway. Anything that will reduce our import bill and dependence on foreign oil is good.

--hanumadu.
svinayak
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Post by svinayak »

Every time you fill up the car, you can avoid putting more money
into the coffers of Saudi Arabia . Just buy from gas companies that
don't import their oil from the Saudis.

Nothing is more frustrating than the feeling that every time I
fill-up the tank, I am sending my money to people who are trying to
kill me, my family, and my friends.

I thought it might be interesting for you to know which oil
companies are the best to buy gas from and which major companies
import Middle Eastern oil.
These companies import Middle Eastern oil:

Shell..................... ....... 205,7 42,000 barrels

Chevron/Texaco......... 144,332,000 barrels

Exxon/Mobil...... . 130,082,000 barrels

Marathon/Speedway... 117,740,000 barrels

Amoco............................62,231,000 barrels

Citgo gas is from South America , from a Dictator who hates
Americans. If you do the math at $30/barrel, these imports amount to
over $18 BILLION! (oil is now $90 - $100 a barrel).

Here are some large companies that do not import Middle Eastern oil:

Sunoco..................0 barrels

Conoco..................0 barrels

Sinclair..................0 barrels

BP/Phillips.............0 barrels

Hess................ ..0 barrels

ARC0.....................0 barrels

All of this information is available from the Department of Energy
and each is required to state where t hey get their oil and how much
they are importing.
darshan
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Re: Oil & Natural Gas: News & Discussion

Post by darshan »

Does anyone know which company Sam's Club and Costco get their gas from?
Kakkaji
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Re: Oil & Natural Gas: News & Discussion

Post by Kakkaji »

It doesn't matter which company imports oil from which country. It is all a global market. Even if company x does not directly import from Saudi Arabia but from, say, Mexico, its import from Mexico takes that much Mexican oil away from the market, so some other company somewhere else ends up importing from Saudi Arabia because the Mexican oil is no longer on the market.

Econ gurus on the forum can explain it better, but boycotting one company and buying from another is not going to bring down Saudi Arabia's revenues. The only way to do that will be to bring down the overall demand by reducing consumption, or by increasing production elsewhere, or by doing both.
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Re: Oil & Natural Gas: News & Discussion

Post by bala »

I fail to understand how oil prices are driven strictly by demand / supply. If this were the case the recent hike in crude prices is inexplicable, demand did not go up that much. Supply is purposely kept below demand by the oligarchs - OPEC/Russia. The US consumes 22 million barrels a day (25% of worldwide demand of 86 million barrels a day) and imports 16 million. Europe and Japan clobber the other 25+% worldwide supply. Indian consumptions is roughly 3 million out of which 2 million is imported, but India gets blamed for the rise in crude oil price. A classic case of making the victim the villain. Most of the oil crude price is speculation pure and simple and as long as Bush remains in office, the rip-off will continue.

The US has shale oil reserves in the Trillion gallon range, in colorado and adjoining states. Shale oil has not been exploited and it is time technology was created to extract crude from these reserves.
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Post by SSridhar »

45-day deadline on IPI pipeline ends
However, there have been no talks with Iran on the safety and security of the pipeline raised by India during Mr. Ahmadinejad’s visit. Nor has the transit fee issue with Pakistan been resolved.

Informed sources said India handed over “some points” to Mr. Ahmadinejad. It wanted Tehran to hand over the custody of gas at the India-Pakistan border and not at the Iran-Pakistan border, as suggested by Iran, to cut down the risk of transit through Pakistan.

India also opposed a price revision clause that Iran is seeking to insert in the Gas Sales Agreement. New Delhi wanted Tehran to dedicate a particular gas field like South Pars for the gas pipeline and sought third party certification of its reserves. It sought to know the alternative supply sources in the event of depletion of reserves.

India has been boycotting the pipeline talks since August 2007 over Pakistan’s transit fee demand. Talks between New Delhi and Islamabad are stalled, with India offering to pay 15 cents per million British Thermal Units (mmBtu) against Pakistan’s demand of 42 cents per mmBtu.
Vipul
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Re: Oil & Natural Gas: News & Discussion

Post by Vipul »

It costs Cairn India just $4.50 to produce a barrel of oil.

Do you know that it takes as little as $4.50 in India to produce a barrel of oil which costs $138 in the international market? Cairn India, which operates the Ravva (offshore Andhra Pradesh) and Cambay (offshore Gujarat) oilfields, spends just that much to produce a barrel of oil equivalent (The term “oil equivalent” includes gas output, which in the case of Cairn, is minor).

The price inches up to $7.50 a barrel if you include royalty and cess that are statutory levies payable to the government. In fact, the field cost (salaries of all the production staff plus consumables) for a barrel of oil equivalent is just $1.5 for Cairn as revealed in its Annual Report for 2007. It builds up as you add other administrative, finance and general expenses.

These numbers have to be read in the context of three observations. First, Cairn is one of the lowest cost producers in India today given that the Ravva field is just a few kilometres off the coast; the cost of oil produced by ONGC, the biggest producer in the country, may be higher than this.

Second, the Ravva field contributed just 48,000 barrels of oil a day to the country’s total consumption of 2.7 million barrels a day. So, the benefit of production efficiencies will not be felt at the overall level.

Finally, oil companies continuously spend on field redevelopment to enhance output. Cairn was no exception as it invested in redevelopment of the Ravva field to maintain plateau output at around 50,000 barrels a day. This expenditure will also have to be considered for determining the final cost of production. For instance, Cairn’s average cost of production was $10.50 a barrel in the fourth quarter of 2007 and this included a work-over cost of $ 4.25 a barrel.

Cairn’s Annual Report for 2007 also reveals that the company realised an average price of $74.50 a barrel last year with the fourth quarter seeing an average realisation of $90.20 a barrel.
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Re: Oil & Natural Gas: News & Discussion

Post by svinayak »

Reliance to Raise Crude Oil Imports From Saudi Arabia (Update1)

By Nesa Subrahmaniyan
Enlarge Image/Details

June 17 (Bloomberg) -- Reliance Industries Ltd., India's biggest company, is increasing crude oil imports from Saudi Arabia because of rising demand for fuels in India and the rest of Asia.

The refiner is boosting purchases by at least 90,000 barrels a day, accounting for 30 percent of Saudi Arabia's output increase this month, P.M.S. Prasad, president of the Mumbai-based company's oil and gas business, said in a telephone interview.

Reliance, which by this year will operate the world's largest refinery, stepped up imports at a time when Saudi Arabia has pledged to boost production. The Middle East nation's state oil company Saudi Aramco will raise output by about 300,000 barrels a day in June in response to demand from customers, Oil Minister Ali al-Naimi said last month when U.S. President George W. Bush visited the kingdom.

``We have been discussing our needs,'' Prasad said yesterday. ``We have been assured of the additional barrels.''

Reliance operates a 660,000 barrel-a-day refinery at Jamnagar in Gujarat, and would start operations at a 580,000 barrel-a-day plant under unit Reliance Petroleum Ltd. later this year. The combined facility will be the world's biggest refinery, according to Reliance.

Refiners in Japan and South Korea are poised to increase crude oil imports in the coming months after annual plant maintenance peaked this month.

``There's an abundant supply of heavy crude but the Saudis are more savvy than others in marketing their crude,'' said Harry Tchilinguirian, senior oil market analyst at BNP Paribas SA. ``There's also a seasonal element to this as refiners return from maintenance.''

Heavy Crudes

Saudi Arabia, the world's biggest oil producer, and the most influential member of the Organization of Petroleum Exporting Countries, pumps a variety of light and heavy crudes. OPEC, which supplies about 40 percent of the world's oil, hasn't been able to rein in prices, which rose to a record $139.89 a barrel in New York yesterday.

Reliance Chairman Mukesh Ambani earns more compared with overseas rivals by processing cheaper, dirtier crude with high- sulfur content. His plant is located two days away by ship from the Middle East.

Reliance earned $15.50 from processing a barrel of oil into fuels in the quarter ended March 31, compared with $7 for a plant in Singapore, the company said April 21.


China, the world's biggest energy user after the U.S., has increased crude oil imports from Saudi Arabia 17 percent this year to almost 10 million tons as new refineries start operations, according to customs data.

To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net
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Re: Oil & Natural Gas: News & Discussion

Post by shyam »

Market full of oil and price trend "fake": Ahmadinejad

"At a time when the growth of consumption is lower than the growth of production and the market is full of oil, prices are rising and this trend is completely fake and imposed," Ahmadinejad said in a televised speech.
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Post by arun »

X Post.

Not a smart thing for the Sri Lankan Government to contemplate :

Sri Lanka threatens to nationalise Indian Oil over price spat
Neshant
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Re: Oil & Natural Gas: News & Discussion

Post by Neshant »

> and the market is full of oil,

exactly where is this oil in that case?

it does not exist because everything that is being produced is being consumed. this at a time when even the US has stopped adding to its strategic reserves to keep prices low.
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Post by Katare »

Neshant wrote:> and the market is full of oil,

exactly where is this oil in that case?

it does not exist because everything that is being produced is being consumed. this at a time when even the US has stopped adding to its strategic reserves to keep prices low.
The markets are fully supplied and no one has experienced disruptions or large deplition in inventories in last two years.
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Re: Oil & Natural Gas: News & Discussion

Post by vishwakarmaa »

Oil prises are rising not because of OPEC, but its something else.

Its clear that world economy doesn't work ideally(as per text-book formulas). Its more than that.But few people know it. Now with BRF, few more know it. :)
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Re: Oil & Natural Gas: News & Discussion

Post by Prem »

The peak oil theory is a money making scam put out by the speculators looking for high commodity returns in a challenging market environment. Most of the above mentioned finds have occurred in the last two years alone. I didn't even mention the untapped Alaskan oil fields or the recent Danish and Australian finds. In the long term, crude prices will find stability at historic norms because there is no supply problem. How much longer will investors ignore these new oil finds? Probably until they can find other investment alternatives which won't happen in the broad market until financials (XLF) stop hemorrhaging. Respect the trend but understand that this is a bubble preparing to burst. When oil hit it's high of $139 it represented more than a 600% increase in crude since the bull market began, returns eerily similar to the dot.com craze.

The latest absurdity had Goldman Sachs telling investors that China's 18% price increase will actually increase demand! That's a new one. Just like global warming, the rationale for peak oil sounds great, it makes sense, but there is just one small problem, the facts don't support it.
http://seekingalpha.com/article/82236-t ... -plentiful
Prem
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Re: Oil & Natural Gas: News & Discussion

Post by Prem »

vishwakarmaa wrote:Oil prises are rising not because of OPEC, but its something else.

Its clear that world economy doesn't work ideally(as per text-book formulas). Its more than that.But few people know it. Now with BRF, few more know it. :)
Institutional Investors or Wall street Shylocks love sucking blood and demanding tons of flesh.Any increase in the supply will be sucked up by these greedy gentlemen by putting 5% down.
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Re: Oil & Natural Gas: News & Discussion

Post by Suraj »

ONGC scraps $5.1 billion Kakinada Refinery, to add 15MT capacity in Mangalore
Oil & Natural Gas Corp., India's biggest explorer, scrapped a plan to build a refinery and a petrochemicals unit in southern India, a 220 billion-rupee ($5.1 billion) project for which it was seeking overseas investors.

The company and unit Mangalore Refinery & Petrochemicals Ltd. ``decided to withdraw'' from the two projects at Kakinada, in the southern state of Andhra Pradesh, New Delhi-based Oil & Natural Gas said in an e-mailed statement today, without giving details.

``This is our final decision,'' A.K. Balyan, director for business development, said in a telephone interview from New Delhi today, without giving reasons for abandoning the project. Oil & Natural was in discussions with the provincial Andhra Pradesh government to set up the units since 2005, Balyan said.

The company will build 15 million tons of new refining capacity near its existing 9.69 million-ton refinery in Mangalore, Balyan said today, reiterating plans announced earlier.

Oil & Natural would have owned 46 percent in the Kakinada Refinery & Petrochemicals Ltd. and 26 percent in the Kakinada Special Economic Zone through its unit Mangalore Refinery, the statement said.
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Re: Oil & Natural Gas: News & Discussion

Post by Stan_Savljevic »

India seeks exploration blocks in Nigeria

India has sought support from Nigeria to help Indian companies find more exploration blocks in the African nation's hydrocarbon sector. Minister for Oil and Natural Gas Murli Deora made this request in the course of a meeting with Nigeria's Energy Minister Odein Ajumogobia on the sidelines of the conference of oil producing and consuming countries convened by Saudi Arabia, according to an Indian government statement.

Ajumogobia reciprocated by saying that his government would give positive consideration for this.

The Iran-Pakistan-India (IPI) oil pipeline issue came up for discussion during the course of a meeting Deora had with Iran's Oil Minister Gholam Hossein Nozari.
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Re: Oil & Natural Gas: News & Discussion

Post by pradeepe »

Btw, news today is that Reliance is picking this up from ONGC.
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Re: Oil & Natural Gas: News & Discussion

Post by Vipul »

pradeepe
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Re: Oil & Natural Gas: News & Discussion

Post by pradeepe »

Yep, my mistake. Its GMR. Thanks.
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Re: Oil & Natural Gas: News & Discussion

Post by jahaju »

EGoM decision on gas utilisation-I: Allocation priority would not impact the process of price discovery

June 24: The Empowered Group of Ministers (EGoM) considered the "Concept Paper on Gas Utilisation Policy" circulated by the petroleum ministry and took the following decisions on sale of natural gas by NELP contractors:
*Contractors would sell gas from NELP to consumers m accordance with the marketing priorities determined by the Government. The sale would be on the basis of formula for determining the price as approved by the Government.
*Consumers belonging to any of the priority sectors should be in a position to actually consume gas as and when it becomes available. So the marketing priority does not entail any 'reservation' of gas. It implies that in case consumers m a particular sector, which is higher in priority, are not in a position to take gas when it becomes available, it would go to the sector which is next in order of priority.
*In case of default by a consumer under a particular priority sector and further in the event of alternative consumers not being available in the same sector, the gas will be offered by Contractor to other consumers in the next order of priority.
*The priority for supply of gas from a particular source would be applicable only amongst those customers who are connected to existing and available pipeline network connected to the source. So if there is a marginal or small field that is not connected to a big pipeline network, then the Contractor would be allowed to sell the gas to customers who are connected or can be connected to the field in a relatively short period (of say three to six months).
*The priority would not impact the process of price discovery whenever it is undertaken, as all the customers would participate in the price discovery process (as already decided by the EGoM) and would be eligible for utilizing natural gas subject to priority.
*Since the supply situation is expected to increase substantially in the near future in view of increased availability from domestic sources and imported gas (LNG/ transnational pipelines), these guidelines would be applicable for the next 5 years after which they would be reviewed.
The EGoM also said that as a matter of general policy, natural gas produced/imported in the country should be stripped of its higher fractions subject to availability, to ensure maximum value addition before supply to consumers.

-------------------------------
EGoM decision on gas utilisation-II: Allocation priorities fixed for KG D6 field

June 24: The production of natural gas from RIL's KG D6 field is expected to commence from September 2008 and will initially be about 25 mmscmd. It is further expected that the production would gradually increase to 40 mmscmd by March 2009. The EGoM decided that this gas should be supplied in the following order of priority:
*Existing gas based urea plants, which are now getting gas below their full requirement, would be supplied gas so as to enable full capacity utilization.
*A maximum quantity of 3 mmscmd would be supplied to existing gas based LPG plants.
*Up to 18 mmscmd natural gas, being the partial requirement of gas-based power plants lying idle/under-utilized and likely to be commissioned during 2008-09, and liquid fuel plants, which are now running on liquid fuel and could switch over to natural gas, would be supplied to power plants.
*A maximum quantity of 5 mmscmd would be made available to City Gas Distribution projects for supply of Piped Natural Gas (PNG) to households and Compressed Natural Gas (CNG) in transport sector.
*Any additional gas available, beyond categories (i) to (iv) above, would be supplied to existing gas-based power plants, as their requirement is more than 18 mmscmd.
The marketing freedom given to Contractors under NELP would be subject to the above order of priority and the guidelines framed in this regard.

----------------------------------

EGoM decision on gas utilisation-III: Urea de-bottlenecking and conversion of naphtha/FO based units to get priority

June 24: As far as the fertilizer sector is concerned, the EGoM took the following decision:
*The demand emanating beyond 2008-09 from de-bottlenecking of and expansion of fertilizer plants, conversion of naphtha-based and fuel oil-based fertilizer plants, and revival of closed fertilizer plants would be given the highest priority at that stage and will be met from production in subsequent years.
*It was directed that the petroleum ministry will facilitate/take necessary steps for expeditious construction of pipelines by agencies concerned for connecting the priority consumers to sources of natural gas.
It was decided that the petroleum ministry would resolve issues, if any, in the implementation of the above decisions.

-----------------------------
EGoM decision on gas utilisation-IV: Data

June 24: The website carries here the following data based on which the EGoM took its decisions:
*Plants Pending Commissioning due to shortage of Gas
*Plants Commissioned but unable to generate power due to shortage of Gas
*Gas requirement and supply position in 2007-08 for attaining 90% PLF in existing gas-based power plants
Details

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The decisions are more or less on scientifi linies with all the major hydro carbons being stripped off from the gas and the left over "lean" gas is then pumped to fertilizer units for conversion into ammonia/urea.

The Gas price of D6 was initially $6 at import parity pricing with compression and transportation costs etc. whereas ongc was selling gas at lower rates on cost+10% profit basis. This resulted in a scenario where a natural resource was being milked for everthing it was worth.

hindustan aaj bhi sone ki chidya hai, sirf lootne walla chai

Now it has been brought down to $4.2 with god knows how much profit margin?
Katare
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Re: Oil & Natural Gas: News & Discussion

Post by Katare »

By and large I liked the policy, it takes care of national interests, would reduce subsidies, reduce fertilizer imports, improve electricity availability and help troubled power plants in becoming profitable again. Reliance and GoI both would benefit handsomely. Govt's benefits would mostly come from substantial reduction in fertilizer, LPG and diesel subsidies. IIRC, there are some 4000MW of power plant capacity which is lying idle/underutilized.

This is Mukesh Ambani's trump card to leave out Anil Ambani high and dry. No gas for his yet to be started power plants at Dadri.
Vipul
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Re: Oil & Natural Gas: News & Discussion

Post by Vipul »

96 oil companies bid for blocks under NELP-VII.

Ninety six Indian and foreign oil majors, including ONGC, RIL, Essar, BP Plc and BHP Billiton, placed 181 bids for 45 exploration blocks in India, but a dozen oil and gas areas that were also on offer did not receive any response.

Of the 57 blocks that were put up for auction, the largest ever offering of exploration blocks by the government, 19 received just single bids and it was not clear if global giants like Exxon Mobil and Chevron had evinced interest in the seventh round of National Exploration Licensing Policy.NELP-VII is expected to bring in investments to the tune of of USD 4.5 billion, and is part of the government's efforts to boost domestic crude production and cut dependence on imports, which meets 70 per cent of the country's oil needs.

"In order to enhance the country's energy security, the government had offered 57 exploration blocks," Minister of State for Petroleum and Natural Gas Dinshaw Patel said here, while calling the latest round a tremendous success.The minister said a total of 21 foreign players and 75 Indian companies placed bids. Forty two new players have bid for nine small blocks either on their own or as part of a consortium, Patel pointed out.

BP and BHP Billiton have placed their bids in consortium with Indian companies like RIL and GVK, respectively, he added. GVK and BHP Billiton are first time bidders.The government said the blocks are expected to be awarded by August 31, 2008 and the contracts signed by September 30.

Earlier, Petroleum Ministry had postponed NELP-VII bid dates three times in an effort to convince Finance Ministry to extend tax breaks offered to crude oil production to gas production as well.
Sanjay M
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Re: Oil & Natural Gas: News & Discussion

Post by Sanjay M »

Energy Politics
India's Iranian Pipeline Deal
Maha Atal 07.01.08, 7:20 PM ET
Neshant
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Re: Oil & Natural Gas: News & Discussion

Post by Neshant »

> The markets are fully supplied and no one has experienced disruptions or large deplition in
> inventories in last two years.

Every market is "fully supplied". Its a question of can the people afford it.

The gold market is fully supplied, the diamond market is fully supplied..etc at all times. That does not mean everyone can afford a 7 carat diamond even with supplies available.

Even if oil hits $300 a barrel, the market will be fully supplied. A good number of those who are being supplied at today's prices will just drop off the list as demand drops to meet the price of being supplied.

Surely if supplies of oil were plentiful, it would have hammered down the prices unless there is a lot of price fixing going on. Where is that oil being horded and by whom.
Raju

Re: Oil & Natural Gas: News & Discussion

Post by Raju »

>> Surely if supplies of oil were plentiful, it would have hammered down the prices unless there is a lot of price fixing going on. Where is that oil being horded and by whom.

think in the opposite direction. Supply of oil was always adequate, both now as well as 40 years ago.

what has changed is exceeding liquidity of dollars each successive year, created by american business interests and their influence on its banking system every succeeding year. So much so that if it all parks itself in commodities via speculation and future trading then oil will even reach $300 or $400 or wherever it goes with the only limit being American ability to print dollar notes and permission given by a favorable govt to speculate those excess dollars on oil.

Either the US govt stops convenient speculation on oil through Over The Counter exchanges in Europe and US. And also stops a third party apart from buyer and seller from speculating on oil. Current situation is that Goldman Sachs or Morgan Stanley is the largest holder of oil futures contracts. Err .. but they are not direct consumers, they are in this just to make some quick money. Else the other option is that the world through some consensus discontinues dollar as its reserve currency for purposes of oil trade. Only either of these two moves can solve this problem. Else it is like a business interests of a single country holding entire world to ransom under shadow of their military might.
Tanaji
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Re: Oil & Natural Gas: News & Discussion

Post by Tanaji »

I am not sure the US Govt can stop futures trading and speculation on other exchanges?
For oil to reach $300 there have to be massive supply problems, which havent been so far. Wanna bet that oil will crash short term next year, wiping some people out before rising slowly year after year after that?
vijyeta
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Re: Oil & Natural Gas: News & Discussion

Post by vijyeta »

Is it possible that the percentage of increase in oil consumption in developing countries will come down as a result of the increase in prices?

What do the 'think tanks' say about that?
svinayak
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Re: Oil & Natural Gas: News & Discussion

Post by svinayak »

Demand destruction will take time.
Most decline will come from developed countries
Raju

Re: Oil & Natural Gas: News & Discussion

Post by Raju »

Tanaji wrote:I am not sure the US Govt can stop futures trading and speculation on other exchanges?
arrey, they have allowed their own people and institutions with excess dollars to go and speculate in other exchanges on oil futures.
The report pointed out that the Commodity Futures Trading Trading Commission (CFTC), a financial futures regulator, had been mandated by Congress to ensure that prices on the futures market reflect the laws of supply and demand rather than manipulative practices or excessive speculation.
"Until recently, US energy futures were traded exclusively on regulated exchanges within the United States, like the NYMEX, which are subject to extensive oversight by the CFTC, including ongoing monitoring to detect and prevent price manipulation or fraud. In recent years, however, there has been a tremendous growth in the trading of contracts that look and are structured just like futures contracts, but which are traded on unregulated OTC electronic markets. Because of their similarity to futures contracts they are often called "futures look-alikes."

The only practical difference between futures look-alike contracts and futures contracts is that the look-alikes are traded in unregulated markets whereas futures are traded on regulated exchanges. The trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron and other large energy traders into the Commodity Futures Modernization Act of 2000 in the waning hours of the 106th Congress.
In contrast to trades conducted on the NYMEX, traders on unregulated OTC electronic exchanges are not required to keep records or file Large Trader Reports with the CFTC, and these trades are exempt from routine CFTC oversight. In contrast to trades conducted on regulated futures exchanges, there is no limit on the number of contracts a speculator may hold on an unregulated OTC electronic exchange, no monitoring of trading by the exchange itself, and no reporting of the amount of outstanding contracts ("open interest") at the end of each day."
Then, apparently to make sure the way was opened really wide to potential market oil price manipulation, in January 2006, the Bush Administration's CFTC permitted the Intercontinental Exchange (ICE), the leading operator of electronic energy exchanges, to use its trading terminals in the United States for the trading of US crude oil futures on the ICE futures exchange in London ­ called "ICE Futures."

Previously, the ICE Futures exchange in London had traded only in European energy commodities ­ Brent crude oil and United Kingdom natural gas. As a United Kingdom futures market, the ICE Futures exchange is regulated solely by the UK Financial Services Authority. In 1999, the London exchange obtained the CFTC's permission to install computer terminals in the United States to permit traders in New York and other US cities to trade European energy commodities through the ICE exchange.

Persons within the United States seeking to trade key US energy commodities ­ US crude oil, gasoline, and heating oil futures ­ are able to avoid all US market oversight or reporting requirements by routing their trades through the ICE Futures exchange in London instead of the NYMEX in New York
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