Oil & Natural Gas: News & Discussion

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Post by Gerard »

ON THE RECORD: VINOD KHOSLA
Enter Vinod Khosla, one of green tech's most prominent investors. He has funded entrepreneurs building solar power plants that will dwarf football fields and companies that will make ethanol from wood chips.
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Post by Nayak »

India eyes underwater pipeline
NEW DELHI: For a government struggling to make sense of an Iran-Pakistan-India gas pipeline that is more loaded with political baggage than it is comfortable with, there now appears an attractive alternative.

For the past couple of months, a project for a deepwater pipeline has been presented to key ministries in the government which has been greeted with relief and excitement. Senior officials of MEA, ministry of oil and gas, power and fertiliser have been introduced to this private sector project that goes something like this.

It’s a deepwater pipeline from the Middle East (which has the greatest concentration of gas) to India (the closest and biggest market) at over 3,000 metres under the sea, coming from a point in Oman to a point in western India. Deepwater technology, which was first tried out in Blue Stream, has now become cheaper and easily available, particularly after the success of the Mardi Gras pipeline in the Gulf of Mexico.

The pipeline will be like an "energy corridor" or a "gas bridge" rather like a toll highway where India can get gas from a number of suppliers (Iran, Oman, Qatar, maybe Iraq at some later date) and merely use the pipeline as a piece of infrastructure. It can be used by governments, or private sector.

Most important, the pipeline, which is slated to be built by 2012, will cost much less than the overland pipeline.

This project is generating interest in the government because the Iran pipeline is now too laden with politics for it to make any economic sense. Labelled a "peace pipeline", it’s now looked at more for its potential to bring peace between Iran, Pakistan and India than to get gas for an energy-hungry India.

Of course, the government has even let the communists dabble in this — Left leaders have made this a litmus test for India’s foreign policy.

Indian officials and experts are not asking genuine questions or raising legitimate concerns on the land pipeline — questions like supply assurances, coverage of political risk, pricing, transit security etc — without being made to sound as if they were putting India’s foreign policy at risk or that India was being "pressured" by the US.

It was after a lot of effort that the government articulated to Iranian president Mahmoud Ahmedinejad one of its core concerns — assured gas supplies. Similarly, if the deepwater option is now being projected at $4 billion, why should the land pipeline cost $7 billion?

Consequently, an alternative like a deepwater pipeline project is a huge relief. For one, it’s politically neutral, and to be built by an international consortium. There are few issues of the risks of travelling over unsafe territory.

By diversifying sources, it mitigates the risk of one supplier holding India hostage over prices and supplies. Third, sabotage risks to deepwater pipelines are almost non-existent. Fourth, the technology is available, cheaper and more amenable to gathering international finance and international insurance, which is proving to be an issue for the overland pipeline.

Pakistan can also become an independent stakeholder by drawing a tertiary pipeline, and India will be freed from the security issues of running a pipeline through Pakistan.
indrani.bagchi@timesgroup.com
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Post by Neshant »

> Similarly, if the deepwater option is now being projected at $4 billion,
> why should the land pipeline cost $7 billion?

are they low balling 4 billion dollar the cost?
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Post by VikramS »

Land on the sea-bed is free; that is why the under sea pipeline will be cheaper. Also a pipe-laying ship can reach any point on the sea without a problem unlike land where road access to inhospitable parts is likely limited.

There are now massive under sea pipelines in the Norway/North Sea region and the experience gathered there can be applied here.
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Post by SSridhar »

Various sea routes and their feasibility were discussed here 5 or 6 years back. IIRC.

India has wasted a lot of time going in for the landline option. There is nothing new in the objections being raised, supply assurance, political risk, transit fee, security etc. When these questions were raised, there was no answer and they have remained answerless so far. The Oman-India pipeline is also an old one. In fact, extensive planning and design had been done by the time it was put in the backburner opting for the landline. Of course Bluestream is ~2200 m and Oman-India would be ~3200 m, IIRC but such depths are/were achievable. The other option that was talked about was a direct Iran-India undersea pipeline off the Makran coast. A lot of India's offshore fields is deep-sea anyway and Indian companies are investing in laying deep-sea pipelines and the earlier project would have come handy.
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Post by VikramS »

Over the past decade the deep undersea model has been proven to work. The ventures in Europe and Gulf of Mexico allowed the technology to be refined and matured. It is now proven to work.

Apart from some pressure related adjustment (thicker pipes, stronger joints, stronger robots), it should not be that difficult to scale from 2000m to 3000m. The technology developed for 2000m could be adapted for 3000m without dramatic changes.
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Post by Nayak »

Sorghum touted as 'smart' biofuel
Washington - A corn-like plant that can grow as high as an elephant's eye on some of Earth's driest farmland shows promise as a "smart" biofuel that won't cut into world food supplies, an agriculture expert has said.

Sweet sorghum, used in the United States mostly as animal feed, offers a three-metre stalk that can be turned into ethanol without damaging the food grain that grows at its top, Mark Winslow said in an interview.

Unlike corn-based ethanol, which uses one and a half times as much energy in its production as it offers as an end product, sweet sorghum produces eight units of fuel for every unit of fuel used to make it in developing countries, Winslow said.

Even in the United States, where mechanised production uses more fuel, sweet sorghum ethanol should still have four times the energy yield of corn-based ethanol, said Winslow of the International Crops Research Institute for the Semi-Arid Tropics.

Use of corn-based ethanol also pushes up demand for this crop on international markets, cutting the supply of food grain, and that would not happen with sweet sorghum, he said.

"Sorghum isn't traded internationally, it's grown and consumed locally in dry areas," Winslow said. "Since you're producing the grain on this plant, it's not a trade-off as it is with corn."

The institute is a non-profit, non-political organisation that does agricultural research focusing on "smart crops" and production systems aimed at helping poor dry-land farmers without hurting the environment.

Teaming up with Tata

The research institute has teamed up with the Tata conglomerate in India for a distillery that produces more than 40 kilolitres of ethanol daily from locally-grown sweet sorghum.

The farmers who grow it can still use the grain to feed themselves, turning it into traditional porridge and flatbread, and their livestock, while selling the fuel-producing sugary liquid contained in the stalks to the distillery.

The crop can survive without irrigation, but also tolerate flooding and even some salinity, Winslow said. Because it grows in arid areas, it does not threaten sensitive rainforest as palm oil biofuel does in Southeast Asia and sugarcane biofuel can in Brazil, Winslow said.

Like other biofuels, ethanol made from sweet sorghum does not produce the emissions of climate-warming carbon dioxide that fossil fuels do.

Because it grows in some of the poorest places on Earth in Asia and Africa, it has the potential to keep limited resources from these parts of the world at home, rather than sending them to oil-producing countries, Winslow said.

Sweet sorghum differs from the so-called grain sorghum grown on some 43 million hectares of agricultural land worldwide, the institute said in a statement. Sweet sorghum could be grown on about half of this land.

The United States, the world's largest sorghum producer, is organising a conference this year on using sorghum as biofuel.

Other countries exploring this possibility include Mexico, Kenya, Nigeria, Mali, Mozambique, Uganda, China, the Philippines, Indonesia and Brazil.
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Post by Nayak »

Researchers make biofuel with sorghum rather than corn
The World Today - Tuesday, 13 May , 2008 12:46:00
Reporter: Michael Rowland
ELEANOR HALL: Agricultural researchers in the United States claim to have found a way of producing biofuel that doesn't damage the global food supply - by using sorghum rather than corn.

This could be good news for Australia, which is on track to produce a record sorghum crop this year.

Mark Winslow from The Consultative Group on International Agricultural Research has been telling our North America correspondent Michael Rowland, about the research:

MARK WINSLOW: Well sorghum is a crop which is traditionally from Africa but spread all over the world. Grown for basically two purposes. One is for grain which people eat in the dry areas in the poorest countries in the world.

The other purpose is to feed to livestock and so now we are trying to see what is the opportunity for adding a third valuable component to this crop which is the ability to produce ethanol to fuel automobiles.

MICHAEL ROWLAND: How easy is it to produce ethanol from sorghum?

MARK WINSLOW: It is very much a process like sugar cane. As you know the sugar cane is now supplying about half of the transportation fuel for Brazil but basically in the stem of the plant which is about maybe eight feet tall or three metres tall, a very huge bulky crop, there is a juice in the middle.

About half of the weight is made of the juice which is very sweet in these sweet varieties. There are special varieties. The normal sorghum is not sweet but in the sweet varieties, you can crush the stalk, get the juice out and then it becomes a process just like making wine.

You have this sugar rich juice, it is about 18 per cent sugar. You ferment it by adding yeast and then you distil it to get pure alcohol out of that which is what is blended with gasoline to make the different types of ethanol.

MICHAEL ROWLAND: What is the benefits of using sorghum for ethanol production compared to corm which of course, is the most popular way of generating ethanol at the moment?

MARK WINSLOW: With sorghum you can produce both the fuel and the food and as I mentioned the feed also. Actually the three products whereas with corn, you are making ethanol from the grain so if you use it for ethanol then you don't have it available for food and this is what caused big increases in prices world wide so it is a way to basically get around that.

We are not suggesting that it will replace corn because corn is enormously widely-grown crop but there is urgent need I think everyone is recognising, to get away from using food crops and food products to make fuel.

MICHAEL ROWLAND: How do we know this works? I mean, have there been trials around the world to show that sorghum can be produced effectively and economically into ethanol?

MARK WINSLOW: Yeah, there have been studies in different parts of the world. Brazil did a lot of work on this in the 1970s. It is now in commercial production in India. There is research in China on this and there is research in the United States on this so it is definitely a proven technology that works and it is, the economics will depend on the country because the price of biofuel, of ethanol are controlled in different countries and subsidy policies are different in different countries so the economic analysis has to be per country.

ELEANOR HALL: That is agricultural researcher Mark Winslow speaking to Michael Rowland in Washington.
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Post by Nayak »

Sweet sorghum, clean miracle crop for feed and fuel
WASHINGTON (AFP) — The hardy sweet sorghum plant could be the miracle crop that provides cheap animal feed and fuel without straining the world's food supply or harming the environment, said scientists working on a pilot farming project in India.

"We consider sweet sorghum an ideal 'smart crop' because it produces food as well as fuel," William Dar, Director General of the non-profit International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) said in a statement.

Sweet sorghum (Sorghum bicolor) is the world's fifth largest grain crop after rice, corn, wheat and barley.

It grows in dry conditions, tolerates heat, salt and waterlogging, making it an ideal crop for semi-arid areas where many of the world's poor live, ICRISAT agronomist Mark Winslow said in an interview with AFP.

The plant grows to a height of 2.6-4.0 meters (8-12 feet) and looks like corn. Its stalks are crushed yielding sweet juice that is fermented and distilled to obtain bioethanol, a clean burning fuel with a high octane rating.

It has high positive energy balance, producing about eight units of energy for every unit of energy invested in its cultivation and production, roughly equivalent to sugarcane and about four times greater than the energy produced by corn.

Sweet sorghum requires little or no irrigation, limiting the use of fuel-burning water pumps that emit carbon dioxide, the main greenhouse gas contributing to climate change, Winslow said.

"With proper management, smallholder farmers can improve their incomes by 20 percent compared to alternative crops in dry areas in India," said Dar.

In partnership with Rusni Distilleries and some 791 farmers in Andhra Pradesh, India, ICRISAT helped to build and operate the world's first commercial bioethanol plant, which began operations in June 2007.

Sweet sorghum in India costs 1.74 dollars to produce a gallon (3.78 liters) of ethanol, compared with 2.19 dollars for sugarcane and 2.12 dollars for corn, the research institute said.

Similar public-private-farmer partnership projects are also underway in the Philippines, Mexico, Mozambique and Kenya, as countries search for alternative fuels, India-based ICRISAT added.

The United States and European Union are also very interested in making biofuel from sweet sorghum, Winslow said.

The US Department of Agriculture is sponsoring an international conference in Houston, Texas, in August to examine the plant's potential in ethanol production.

In addition to ethanol, "I think (sorghum) is going to be one of the two big crops in the tropics" that supply biofuel such as ethanol, the demand for which "far exceeds the supply" on the world market, Winslow said.

"It's a win-win situation" for developing nations since it allows them to save money they now spend on oil imports and invest it in sweet sorghum-ethanol production in dry areas.

He said India could meet its entire fuel needs with 100 bioethanol plants like the the one in Andhra Pradesh, which produces 40,000 liters (10,568 gallons) of ethanol every day.

Unlike corn, sweet sorghum is not in high demand in the global food market, so its use in biofuel production would have little impact on food prices and food security, ICRISAT said.

Sweet sorghum is grown on more than 42 million hectares (107 million acres) in 99 countries, with United States, Nigeria, India, China, Mexico, Sudan and Argentina its leading producers.
:shock: :shock: :shock:
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Post by Vipul »

Cals Refineries buys Petro Canada`s units for $110 mn.

Cals Refineries, owned by the privately held Spice Group, has bought two distillation units and a delayed coker plant of Petro Canada for $110 million to enhance its capacity of processing complex crude oil that has high sulphur content and is heavy with density.

The company is in the process of setting up about 5 million tonnes per annum (mtpa) capacity refinery at an investment of $1 billion in Haldia by relocating an existing refinery of Bayernoil in Ingolstad, Germany.

Cals is buying a crude distillation, vacuum distillation and delayed coker unit from Canada's second largest petroleum downstream company from its facility in Edmonton. "The deal with Petro Canada has been signed for these units recently and is worth about $110 million freight on board," said Arun Ramachandra, president (commercial), Cals Refineries.

"It will help in increasing the proportion of high-yield products such as gasoline and diesel," said Dikshit Mittal, an analyst at Religare Securiites, a Mumbai-based brokerage. "Eventually, it will help in increasing the refining margin," he added.

In 2006-07, the Paris-based International Energy Agency (IEA) estimated an additional global crude oil distillation capacity requirement of 580 mtpa by 2011. IEA is a governmental organisation that provides statistics about the international oil market.

India has moved from the position of 19th largest refining country in the world in 1995 to the fifth largest now with a share of 3 per cent of the global capacity.

Cals Refineries had signed a memorandum of understanding with the world's third largest energy company, BP, for a crude oil supply and product offtake deal a few months ago. Cals Refineries raised $200 million through a global depository receipt (GDR) issue on the Luxembourg Stock Exchange in November, attracting investments from the Dubai Investment Group, a part of Dubai Holding and London's RP Capital. It is now hoping to raise a further $100-200 million from a strategic investor.

"We are evaluating offers from global investors, but nothing has been finalised yet," said a company spokesperson.

The existing plant in Germany is expected to be shut down by June and after its relocation to Haldia, production is expected to start in 2010.

On Tuesday, Cals Refineries stock closed 2.80 per cent down to Rs 53.35 on the Bombay Stock Exchange. The benchmark index of the exchange was down by 0.64 per cent to 16,752.86.
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Post by SSridhar »

X-posting from the TSP thread

Facts & Fiction about Iran-TSP-India Pipeline - G.Parthasarathy
In 1996, the then Pakistan President, Farooq Leghari, told Indian High Commissioner Satish Chandra that it was entirely conceivable that Pakistan could cut off supplies at times of tensions, nonchalantly adding that as conflicts between India and Pakistan seldom lasted more than a few weeks, India should not be unduly concerned about temporary dislocations in gas supplies!
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Post by Paul »

SSridhar wrote:Various sea routes and their feasibility were discussed here 5 or 6 years back. IIRC.

India has wasted a lot of time going in for the landline option. There is nothing new in the objections being raised, supply assurance, political risk, transit fee, security etc. When these questions were raised, there was no answer and they have remained answerless so far. The Oman-India pipeline is also an old one. In fact, extensive planning and design had been done by the time it was put in the backburner opting for the landline. Of course Bluestream is ~2200 m and Oman-India would be ~3200 m, IIRC but such depths are/were achievable. The other option that was talked about was a direct Iran-India undersea pipeline off the Makran coast. A lot of India's offshore fields is deep-sea anyway and Indian companies are investing in laying deep-sea pipelines and the earlier project would have come handy.
Err.......Iran had pretty made it obvious that the LNG option was not on the table for quite some time.
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Post by SSridhar »

Paul wrote:Err.......Iran had pretty made it obvious that the LNG option was not on the table for quite some time.
India did sign an LNG deal with Iran in 2005 which Iran rejected later on. I am not even talking about that. There were a lot of discussions and project planning for a deep-sea pipeline between Iran and India off the TSP coastline. These discussions started in 1999 timeframe and by 2002 had reached a significant stage. It was then dropped favouring the landline through Pakistan. Simultaneously, there was an Oman-India pipeline as well with a spur going to Iran if the TSP coastline were to be totally avoided.
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Post by Stan_Savljevic »

SSridhar wrote: India did sign an LNG deal with Iran in 2005 which Iran rejected later on. I am not even talking about that. There were a lot of discussions and project planning for a deep-sea pipeline between Iran and India off the TSP coastline. These discussions started in 1999 timeframe and by 2002 had reached a significant stage. It was then dropped favouring the landline through Pakistan. Simultaneously, there was an Oman-India pipeline as well with a spur going to Iran if the TSP coastline were to be totally avoided.


Sorry for being late. Was it the UPA government that ditched the under-sea option in the 2002 period? Any reading up material, TIA.
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Post by Vipul »

RIL's new refinery to change market dynamics.

When Reliance Industries (RIL) opens its second huge refinery in Jamnagar this summer, world oil consumers may heave a sigh of relief at the injection of extra fuel into a market that has been short of capacity for years.

But the issue for physical oil traders is less about global fundamentals than regional arbitrage, as the surge in gasoline, diesel and jet fuel exports — the biggest one-off rise in world supply since Reliance launched its first plant in 1999 — will open up new trading opportunities while closing some old ones.

The 5,80,000 barrels per day (bpd) export-oriented refinery, now 90% complete and expected to be inaugurated in July, nine years after the first plant was finished, will have the edge over its peers as it can process cheap, low-grade crude into gasoline and diesel that meets strict Western standards.

A low-cost base and high complexity will offer unrivalled global reach for its fuel, allowing it to shift exports to the highest-priced market when full production starts in January. It will play a swing supply role that will redraw traditional trade flows, and has already embarked on a robust marketing campaign in Europe, Mexico and East Africa, capitalising on delays and cost overruns faced by other big refinery projects.

“Reliance is being extremely aggressive in its marketing strategy. They are all over Europe marketing what will come up this year,â€
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Post by Suraj »

What are Reliance's margins for petrol/gasoline and diesel ? I'm assuming that the price of gasoline by volume corresponding to a 'barrel' (which is traditionally a crude oil measure) will be more than the crude oil $/barrel figure. Assuming about $150/barrel for petrol (I've no idea of the exact figure), then since Jamnagar generates 230000 bpd of petrol, that corresponds to potential exports of $34.5 million/day or $12.6 billion per year of exports of just refined petrol from Jamnagar, plus additional income from diesel and other fractional crude outputs.
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Post by SSridhar »

Stan_Savljevic wrote:Sorry for being late. Was it the UPA government that ditched the under-sea option in the 2002 period? Any reading up material, TIA.
Stan_Savljevic, I have to dig up and I will post here as soon as I do it. Here is one I found readily. This talks about a shallow water pipeline hugging the Pakistani coast to be built by Gazprom of Russia. While it still involves transit fees and right of way etc, the pipeline would have been more secure than the land based. TSP cannot so easily sabotage it.

A far more secure option for India would have been through the Continental Shelf of Pakistan which does not need permission for laying pipelines (the report below talks of TSP's territorial waters necessitating TSP's permission). In any case, TSP is unable to claim its share of Continental Shelf as it has not completed its survey for filing before UN Convention on the Laws of Seas (UNCLOS) before circa 2009. Even if it does, claim on continental shelf is not the same as territorial waters as other countries do not need to take permission for laying pipelines, shipping etc. However, there are certain deep points and trenches that need to be traversed but they were not insurmountable challenges. We would have had a pipeline by this time.

It was Dr, V.S. Arunachalam and R.K.Pachauri who, IMHO, put a spoke in the wheel. I had some email discussion with Dr. Pachauri in 2003/2004 timeframe on this. His reply was in the least convincing. I suspect it was US behind spiking this project.
India-Iran Pipeline- An Economic and Political Pipeline

By Hooman Peimani
Asia Times
November 20, 2002

On November 12, Russia's Gazprom announced its plan to construct an undersea gas pipeline between Iran and India for exporting Iranian natural gas to India via Pakistan.

According to the announcement, the Russian company has reached an agreement in principle with Iran for the project. By signing a note of understanding, it has also received Pakistan's consent for the passage of the pipeline through its territorial waters. In addition to transit fees, the Pakistanis will receive gas from the pipeline. If construction actually begins, the US$3.2-billion pipeline project will be a major political and economic achievement for Iran, India and Russia.

For the first time, a major gas company has actually gone beyond the expression of interest. It is also important as Gazprom is one of the three companies developing Iran's South Pars gas field, along with French Total and Malaysian Petronas, from which India will receive Iranian gas.

The announcement is also important for its inclusion of Pakistani consent, without which the construction of the shortest possible pipeline to India would be simply impossible. The deal inked in Islamabad allows Gazprom to start exploration and preparations for drafting a feasibility report on the construction of the gas pipeline, Russian news agency Itar-Tass reported. As envisaged, the pipeline will be laid at the depth of 150 meters within Pakistan's Arabian Sea territorial waters to reach India through the neighboring Indian Ocean. For its domestic consumption, Pakistan will receive gas through a branch pipeline connecting the main pipeline to Pakistan.
The following is from a 2001 report in the industry newsletter "Pipeline Report":
ITALY’S state-owned energy corporation ENI is reported to be
working on a feasibility study for the construction of the offshore
gas pipeline from Iran via Pakistan to India. Iran’s gas reserves,
amongthe world’s largest, could find a ready and enthusiastic market
in India, but political tensions with Pakistan make transporting the
gas through its territory highly politically sensitive – but see the
story above for the onshore option being discussed by BHP.
ENI’s engineering subsidiary Snam is examining costs and the
technical feasibility of a project, which would call on expertise
similar to that being used to construct the Russia to Turkey pipeline
via the Black Sea, known as Blue Stream (see below). A deepwater
Iran-India pipeline would entail massive investment and pose major
technical challenges
{The most major technical challenge was the greater than 3000m depth at a few places. At that time Bluestream was the deepest at 2000m.}.
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Post by SSridhar »

Sir Creek nearing a resolution

If it were true, India should complete the survey of the Sir Creek sediment into the Arabian Sea and file its claims on the Continetal Shelf asap.
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Post by ShauryaT »

Pipeline of uncertainty
: G. Parthasarathy

The debate on the Iran-Pakistan-India (IPI) gas pipeline has generated more heat than light. There has been a wide chasm between rhetoric and reality, with little informed public debate. It is indisputable that the booming, but energy starved, Indian economy needs to tap every possible source of energy that is economically viable, with its security and continuity suitably guaranteed. By 2020, India's demand for natural gas is expected to rise three-fold to 270 million cubic metres daily, with 200 million cubic metres coming from existing sources -- domestic and foreign. India currently has only one significant contract with Qatar, for import of Liquefied Natural Gas (LNG), which is presently for five million tonnes per year, with an additional two million tonnes annually being available from 2009.



In June 2005, India signed a $22 billion deal with Iran for the supply of five million tonnes of LNG annually, with Iran agreeing to consider supply of an additional 2.5 million tonnes annually. Iran unilaterally repudiated this agreement and demanded higher prices, calling into question its credibility as a reliable energy supplier. Talks are on to renegotiate this agreement. But India should be under no doubt that despite sentimental rhetoric about "civilisational ties" with Iran, the Iranians are not given to sentimentalism, merely because our officials claim that we have a large population of Shias in India.



In today's global scenario, three countries -- Russia, Iran and Qatar -- account for 58 per cent of global gas reserves. Japan imports LNG primarily from Australia and its neighbours. With natural gas meeting 20 per cent of its power needs, the growing US demand is being met largely from Canada and to a lesser extent from West Asia. Russian strategic analysts would like to use their energy resources to make Europe extensively dependent on Russia, to counter NATO's inroads into Russian strategic space in former Soviet Republics like Ukraine and Georgia. Russia would, therefore, support Iran's quest for markets towards its east in countries like China and India.



China's state-owned Sinopec signed a $60 billion agreement in 2004 to buy 250 million tonnes of LNG over 30 years from Iran and develop the giant Yadavaran gas field. Iran is also committed to export 150,000 barrels per day of oil to China for 25 years. Given Russian strategic interest in dominating the energy markets of the European Union, Russia has a substantial interest in Iranian gas being sold increasingly to Asian economies, rather than European markets.



Should India worry about US pressures over the IPI pipeline? In August 2006, the US Congress unanimously passed the 'Iran, Libya Sanctions Act' (ILSA), which provides for imposition of US sanctions on companies, irrespective of their "corporate nationality" that invest more than $20 million annually in the Iranian oil and gas sector. Despite this legislation, Iran has attracted more than $30 billion of foreign investment in its energy sector since the sanctions were imposed. The European Union has opposed the ILSA sanctions and passed a resolution on November 22, 1996, directing its companies not to comply with the sanctions.



A number of European Companies, including TOTAL of France and Italy's ENI, have ignored the sanctions, as have Petronas from Malaysia and Russian energy giant GAZPROM. In these circumstances, there is no reason for India to hesitate to proceed with the IPI pipeline, merely because of apprehensions of the adverse impact of possible American sanctions. If Washington expresses displeasure, it can be politely told that given our need for eco-friendly sources of energy we have no option but to seek access to natural gas to meet our energy needs.



According to Russian estimates, the 2,700-km IPI pipeline will have a capacity of 54 billion cubic metres of gas per annum, with 32 billion cubic metres supplied to India and 22 billion cubic metres to Pakistan. The project is estimated to cost $7.6 billion. China has not yet expressed an interest in extending the IPI pipeline to its Xingjian province. Despite Pakistan's advocacy, the economic viability of such a pipeline through the high Himalayas is questionable. Iranian President Mahmoud Ahmadinejad has exuded optimism that negotiations on the ISI pipeline can be finalised in a matter of months. Foreign Secretary Shivshankar Menon, however, noted that much work needed to be done to ensure that the IPI project was commercially viable, financially acceptable and India's security concerns were addressed.



In 1996, then Pakistan's President Farooq Leghari told Indian High Commissioner Satish Chandra that it was entirely conceivable that Pakistan could cut off supplies at times of tensions, nonchalantly adding that as conflicts between India and Pakistan seldom lasted more than a few weeks India should not be unduly concerned about temporary dislocations in gas supplies! Moreover, the pipeline will traverse through both Iranian and Pakistan Baluchistan. Over the past three years, Pakistan's pipelines have been systematically blown up by Baluch separatists. In Iranian Baluchistan, a shadowy Sunni organisation (believed to be American-backed) called Jundullah has been attacking Iranian Government targets.



The new Government in Pakistan appears to be more realistic in dealing with Baluch aspirations than Gen Pervez Musharraf. But will it be prudent for New Delhi to become heavily dependent on a pipeline through Baluchistan till it is clear that issues like royalty payable to the province are sorted out and Baluch aspirations addressed? Financially, given the spiralling costs of oil and given that gas prices are linked to prices of oil, at what stage will gas-based energy plants become uneconomical for India? Finally, any agreement has to provide penalty clauses for non-delivery and for gas reserves to cater for disruptions in supply.



These are issues that need to be sorted out in discussions with Iran and Pakistan. At the same time, India's interests require that a major power like Russia is involved in investment in and construction of the pipeline, as a guarantor of continuity of supplies. GAZPROM would be an ideal partner to play such a role. GAZPROM could agree to undertake an undersea pipeline bypassing Pakistan, which would substantially meet concerns of energy security. Moreover, New Delhi should show caution in proceeding with the proposed pipeline from Turkmenistan, through Afghanistan and Pakistan for the supply of gas to India. The situation in Southern Afghanistan, where the Taliban controls vast tracts of the countryside, is far too turbulent for requirements of energy security to be met.



The Manmohan Singh Government has been less than transparent and forthcoming in explaining such issues to the people. In the absence of informed public debate, demagogues voicing the empty rhetoric of the Cold War inevitably dominate the public discourse.
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Post by svinayak »

Suraj wrote:What are Reliance's margins for petrol/gasoline and diesel ? I'm assuming that the price of gasoline by volume corresponding to a 'barrel' (which is traditionally a crude oil measure) will be more than the crude oil $/barrel figure. Assuming about $150/barrel for petrol (I've no idea of the exact figure), then since Jamnagar generates 230000 bpd of petrol, that corresponds to potential exports of $34.5 million/day or $12.6 billion per year of exports of just refined petrol from Jamnagar, plus additional income from diesel and other fractional crude outputs.
usually margins were in the range of 4-5 dollars when the crude was in the $25-50 range.
Now the margins are higher assuming the cost of operation is the same with a smaller increase. Low quality crudes may be having futures of $100 pb.
Not many refineries are setup to process low quality crudes. Hence RPL gets lower crudes and its margins must be atleast 30% higher than comparable refineries.- singapore
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Post by Rishirishi »

usually margins were in the range of 4-5 dollars when the crude was in the $25-50 range.
Now the margins are higher assuming the cost of operation is the same with a smaller increase. Low quality crudes may be having futures of $100 pb.
Not many refineries are setup to process low quality crudes. Hence RPL gets lower crudes and its margins must be atleast 30% higher than comparable refineries.- singapore
Do the 4-5 dollars include cost refining or is it the net profit.

Any way, it is one more great achevement that India can thank the Ambanis for.
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Oil price - speculation

Post by adiank »

Check this article. It says

60% of current oil price is due to speculation. OPEC not controlling oil prices, Wall Street is.

http://www.financialsense.com/editorial ... /0502.html
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Post by SSridhar »

GAIL may have a stake in Pakistan sector of IPI Pipeline
[quote]A senior official said, “In the portion of the pipeline being constructed from Pakistan to the Indian border, it has been proposed that an Indian company would be a stakeholder.â€
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Post by SSridhar »

US concerns on IPI pipeline
[quote]The US government continues to oppose the proposed Iran-Pakistan-India gas pipeline while US experts argue that the project is infeasible in the foreseeable future.

“We have longstanding points on doing business with Iran. Our stance is that we are concerned about the project,â€
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Post by bala »

This technique is used in Europe for diesel..

Chennai firm's new technology brings down fuel cost
"Our technology burns 25 percent water in 75 percent diesel as against the maximum 20 percent water in the diesel emulsion achieved by existing producers," said Gopalakrishnan, a mechanical engineer with a management degree who set up Hydrodrive in 1981.

"If we use emulsified fuels with 20-25 percent water in all middle distillates and heavy distillates, which account for over 70 percent of the imported crude consumption, this will result in a saving of Rs.34,048 crore (Rs.340.48 billion or approximately $8 billion)," he said.

An emulsified fuel, used in internal combustion engines and for combustion in boilers, furnaces and external combustion equipment, is a mixture of water in fuels. A known technology since 1900, it is considered eco-friendly because it reduces emission.

As oil and water generally do not mix, costly special additives or surfactants are used for surface tension modifications to manufacture emulsified fuels by mixing them and to retain stability for a longer period without oil and water getting separated.

Emulsified fuels currently sold by five European manufacturers are costlier than the conventional diesel fuel due to the use of costlier surfactants or additives.
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Post by Katare »

IIRC, Reliance reported a world beating margin of $13/Bbl last quarter. Which puts net value addition (or export) to $2.7billion/year from new plant or $5.5Billion/year from both refinaries.
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Post by Vipul »

Which puts it in a position of being able to invest $27.5 Billion in new projects every year , even if a very conservative Debt Equity ration of 4:1 is taken in calculations.
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Post by Vipul »

India Essar ramps up refinery runs from May.

India's Essar Oil Ltd has raised the output of its 210,000 barrels per day Vadinar refinery in western India by 19 percent in May, an oil ministry official said on Wednesday.

Essar has offered state-run oil retailers, its biggest customers, all of the additional output of kerosene, diesel, petrol and liquefied petroleum gas, the official, who did not want to be named, told Reuters.

"Earlier this month, Essar informed us that it has raised output from 10.5 million tonnes a year (210,000 bpd) to about 12.5 million tonnes a year," the official said.
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Post by Prem »

http://seekingalpha.com/article/78287-i ... e-enormous

even there are the sort of Iraqi reserves now claimed, the time needed to exploit them might be long. It could take five years - to 2013 - before large new quantities of Iraqi oil could be brought to market. This is because the great global competition for experienced workers and for appropriate machinery is lengthening the time required to bring any new fields to markets
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Post by putnanja »

[url=http://www.hindu.com/2008/05/22/stories ... 031200.htm] “Centre will have to step in and save OMCs from collapseâ€
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Post by Katare »

[quote="RaviBg"][url=http://www.hindu.com/2008/05/22/stories ... 031200.htm] “Centre will have to step in and save OMCs from collapseâ€
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Post by SaiK »

Newer researches have found to source cellulose based bio fuel is the best alternative. Bio fuels have not matured to a level to equate oil w.r.t energy content., hence these bio fuels have in one side positve and on the economic side negative.

There are enzymes that let algae produce hydrogen (berkeley)., bu their issue is the oxygen that should be absent.

I am seeing a bright future in hydrogen fuel cells. GMO-Algae will be the future for energy production & oil substitute.
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Post by Neshant »

electric powered (hybrid) vehicle technology is far more advanced than hydrogen fuel cell technology.
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Post by svinayak »

http://www.gasbuddy.com/gb_gastemperaturemap.aspx

High gas prices hit consumers worldwide

By ANGELA CHARLTON, Associated Press Writer Sat May 31, 2:12 AM ET

PARIS - Feeling woozy about the fortune you've just pumped into your gas tank? Drivers around the world share the sensation.
ADVERTISEMENT

Consumers, gas retailers and governments are wrestling with a new energy order, where rising oil prices play a larger role than ever in the daily lives of increasingly mobile people. But as the cost of crude mounts, the effect on the price at the pump varies startlingly — from Venezuela, where gas is cheaper than water, to Turkey, where a full tank can cost more than a domestic plane ticket.

Taxes and subsidies are the main reasons for the differences, along with lesser factors such as limited oil refining capacity and hard-to-reach geography that push up prices.

"I don't know why it is but... it hurts," says Marie Penucci, a violinist filling up her Volkswagen at an Esso station on the bypass that rings Paris.

As she pumped gas worth $9.66 a gallon she looked wistfully at a commuter climbing onto one of the city's cheap rent-a-bikes, an option not open to her since she travels long distances to perform.

High taxes in Europe and Japan have long accustomed consumers to staggering pump prices, which now are testing new pain thresholds — and it could have been even worse, if a strong euro hadn't cushioned some of the blow. As a result, plenty of European adults never even bother to learn to drive, preferring cheap mass transit to cumbersome cars.

Subsidies in emerging economies such as China and India, meanwhile, shield consumers but hurt governments, which must find a way to afford rising market prices for oil.

Increasingly, they can't. Indonesians are staging protests against shrinking gasoline subsidies in a nation where nearly half the population of 235 million lives on less than $2 a day. And there are now 887 million vehicles in the world, up from 553 million vehicles just 15 years ago, and on track to nearly double to a billion by 2012, according to London-based consultancy Global Insight.

In Europe, taxes are often the focus, since the high tax burden means crude itself is a smaller part of the burden.

"The pain of a rise in prices is much less in Europe, because we may be paying a lot more here, but the rise in a percentage sense is a lot smaller," said Julius Walker, oil analyst at the Paris-based International Energy Agency.

The United States, with its relatively low taxes, is considered to have retail prices closer to what energy data charts call the "real cost" of gasoline — which is closely linked to the price of oil.

So as oil prices have soared, average U.S. prices have gone up 144 percent in the past five years — from $1.67 in May 2003 to $4.02 a gallon this month, according to the U.S. Energy Information Administration. Over the same period, gas prices in France went up 117 percent to $9.66 a gallon.

Proposals by U.S. presidential candidates John McCain and Hillary Clinton to suspend federal gas taxes this summer would lower the price tag — but have little effect on the underlying oil price. French President Nicholas Sarkozy has urged the EU to cut value-added tax on fuel.

French fishermen and farmers, who need fuel for their trawlers and tractors, say their livelihoods are threatened by soaring prices and have blocked oil terminals around France and shipping traffic on the English Channel to demand government help. Italian, Portuguese and Spanish fisherman joined them and went on strike Friday. British and Bulgarian truckers are staging fuel protests, too.

Russia is proof that big oil-producing nations are not in any better shape when it comes to gasoline prices. Gas in the world's No. 2 oil producer runs about $3.68 a gallon — nearly that in the United States, where the average wage is about six times higher.

Much of the Russian cost comes from taxes, which run between 60 and 70 percent. Limited refining capacity and the costs of transporting gasoline across the country's vast expanse also push up prices.

Turkey faces similar problems — and even higher prices — $11.29 a gallon, which for a full tank in a midsize car can reach nearly $200, enough for a domestic plane ticket.

In China, government-mandated low retail gasoline prices have helped farmers and China's urban poor but also have hurt conservation. In the first four months of 2008, gasoline consumption was up 5.5 percent from the same period last year.

Venezuela, too, is a gas-guzzler's wonderland. A gallon costs just 12 cents and consumers are snapping up SUVs even as Americans are shunning them. Thanks to long-held government subsidies and plenty of oil, Venezuelans see cheap fuel as a birthright.

Some policymakers in less oil-flush nations look to Brazil's use of ethanol as a potential solution. Ethanol from sugarcane is widely available in the world's No. 1 sugar producer and its 190 million people. Eight out of every 10 new cars sold are flex-fuel models that run on pure ethanol, gas or any combination of the two. The price for ethanol in Sao Paulo is currently running about half the price of gas, which runs $5.67 per gallon.

In Japan, gas station owners say some customers aren't filling up their tanks all the way.

"It's been tough. I had to switch to regular gasoline from premium class," said Hiroyuki Kashiwabara, a company employee in his 50s whose monthly spending on gasoline has increased by nearly 10,000 yen ($96) over the last couple of months. "My salary doesn't change and I can't cut back on my spending on food or anything else."

Americans, too, are beginning to trim their hearty gas appetites.

"We're beginning to see a slowdown in the U.S. in gasoline demand in particular. That's not so visible in other parts of the world," the IEA's Walker said.

Jean-Marc Jancovici, a French engineer and co-author of a philosophical treatise called "Fill It Up, Please!" despairs rising thirst in the developing world for shrinking oil resources.

"The real question is ... how to save peace and democracy in this context," he asks.

His answer? To rich-country consumers, at least, he says: Pick up your bike and "stop being petroleum slaves."
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Post by Rahul M »

very interesting page !!

http://www.kshitij.com/research/petrol.shtml

comparison of global petrol prices with India.
Raju

Post by Raju »

The real reason why oil prices are rising

M R Venkatesh


June 02, 2008

By now it is becoming too obvious that the United States is playing the oil game all over again. And this is the desperate gamble of a country whose economy is neck deep in trouble.

Given this scenario, managing prices of oil is central to the US economic architecture. Expectedly, this gamble has been played in a great alliance between the US government, US financial sector and the media.

I have earlier written about:

The impending collapse of the US dollar on account of the inherent weakness in the US economy caused by its structural weakness as reflected in the sub-prime crisis;
The repeated softening of the interest rates in the US that has the potency to kill the US dollar; and
How the fall in the US dollar suits the US corporate sector, especially its omnipotent financial sector.
Naturally, since the past few years, the US financial sector has begun to turn its attention from currency and stock markets to commodity markets. According to The Economist, about $260 billion has been invested into the commodity market -- up nearly 20 times from what it was in 2003.

Coinciding with a weak dollar and this speculative interest of the US financial sector, prices of commodities have soared globally.

And most of these investments are bets placed by hedge and pension funds, always on the lookout for risky but high-yielding investments. What is indeed interesting to note here is that unlike margin requirements for stocks which are as high as 50 per cent in many markets, the margin requirements for commodities is a mere 5-7 per cent.

This implies that with an outlay of a mere $260 billion these speculators would be able to take positions of approximately $5 trillion -- yes, $5 trillion! -- in the futures markets. It is estimated that half of these are bets placed on oil.

Oil price hike: Govt can't save you: PM
Readers may note that oil is internationally traded in New York and London and denominated in US dollar only. Naturally, it has been opined by experts that since the advent of oil futures, oil prices are no longer controlled by OPEC (Organization of Petroleum Exporting Countries). Rather, it is now done by Wall Street.

This tectonic shift in the determination of international oil prices from the hands of producers to the hands of speculators is crucial to understanding the oil price rise.

Today's oil prices are believed to be determined by the four Anglo-American financial companies-turned-oil traders, viz., Goldman Sachs, Citigroup, J P Morgan Chase, and Morgan Stanley. It is only they who have any idea about who is entering into oil futures or derivative contracts. It is also they who are placing bets on oil prices and in the process ensuring that the prices of oil futures go up by the day.

But how does the increase in the price of this oil in the futures market determine the prices of oil in the spot markets? Crucially, does speculation in oil influence and determine the prices of oil in the spot markets?

Answering these questions as to whether speculation has supercharged the demand for oil The Economist, in its recent issue, states: 'But that is plain wrong. Such speculators do not own real oil. Every barrel they buy in the futures markets they sell back again before the contract ends. That may raise the price of 'paper barrels,' but not of the black stuff refiners turn into petrol. It is true that high futures prices could lead someone to hoard oil today in the hope of a higher price tomorrow. But inventories are not especially full just now and there are few signs of hoarding.'

On both counts -- that speculation in oil is not pushing up oil prices, as well as on the issue of the build-up of inventories -- the venerable Economist is wrong.

The finding of US Senate Committee in 2006

In June 2006, when the oil price in the futures markets was about $60 a barrel, a Senate Committee in the US probed the role of market speculation in oil and gas prices. The report points out that large purchase of crude oil futures contracts by speculators has, in effect, created additional demand for oil and in the process driven up the future prices of oil.

The report further stated that it was 'difficult to quantify the effect of speculation on prices,' but concluded that 'there is substantial evidence that the large amount of speculation in the current market has significantly increased prices.'

The report further estimated that speculative purchases of oil futures had added as much as $20-25 per barrel to the then prevailing price of $60 per barrel. In today's prices of approximately $130 per barrel, this means that approximately $100 per barrel could be attributed to speculation!

But the report found a serious loophole in the US regulation of oil derivatives trading, which according to experts could allow even a 'herd of elephants to walk to through it.' The report pointed out that US energy futures were traded on regulated exchanges within the US and subjected to extensive oversight by the Commodities Future Trading Commission (CFTC) -- the US regulator for commodity futures market.

In recent years, the report however pointed out to the tremendous growth in the trading of contracts which were traded on unregulated OTC (over-the-counter) electronic markets. Interestingly, the report pointed out that 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 into the Commodity Futures Modernization Act in 2000.

The report concludes that consequential impact on account of lack of market oversight has been 'substantial.'

NYMEX (New York Mercantile Exchange) traders are required to keep records of all trades and report large trades to the CFTC enabling it to gauge the extent of speculation in the markets and to detect, prevent, and prosecute price manipulation. In contrast, however, traders on unregulated OTC electronic exchanges are not required to keep records or file any information with the CFTC as these trades are exempt from its oversight.

Consequently, as there is no monitoring of such trading by the oversight body, the committee believes that it allows speculators to indulge in price manipulation.

Finally, the report concludes that to a certain extent, whether or not any level of speculation is 'excessive' lies entirely in the eye of the beholder. In the absence of data, however, it is impossible to begin the analysis or engage in an informed debate over whether our energy markets are functioning properly or are in the midst of a speculative bubble.

That was two years back. And much water has flown in the Mississippi since then.

The link to the spot markets

Now to answer the second leg of the question: how speculators are able to translate the future prices into spot prices.

The answer to this question is fairly simple. After all, oil price is highly inelastic -- i.e. even a substantial increase in price does not alter the consumption pattern. No wonder, a mere 3-4 per cent annual global growth has translated into more than a 40 per cent annual increase in prices for the past three or four years.

But there is more to it. One may note that the world supply and demand is evenly matched at about 85 million barrels every day. Only if supplies exceed demand by a substantial margin can any downward pressure on oil prices be created. In contrast, if someone with deep pockets picks up even a small quantity of oil, it dramatically alters the delicate global demand-supply gap, creating enormous upward pressure on prices.

What is interesting to note is that the US strategic oil reserves were at approximately 350 million barrels for a decade till 2006. However, for the past year and a half these reserves have doubled to more than 700 million barrels. Naturally, this build-up of strategic oil reserves by the US (of 350 million barrels) is adding enormous pressure on the oil demand and consequently its prices.

Do the oil speculators know of this reserves build-up by the US and are indulging in rampant speculation? Are they acting in tandem with the US government? Worse still, are they bordering on recklessness knowing fully well that if the oil prices fall the US government will be forced to a 'Bears Stearns' on them and bail them out? One is not sure.

But who foots bill at such high prices? At an average price of even $100 per barrel, the entire cost for the purchase of this additional 350 million barrels by the US works out to a mere $35 billion. Needless to emphasise, this can be funded by the US by allowing it currency printing presses to work overtime. After all, it has a currency that is acceptable globally and people worldwide are willing to exchange it for precious oil.

No wonder Goldman Sachs predicts that oil will touch $200 to a barrel shortly, knowing fully well that the US government will back its prediction.

And, in the past three years alone the world has paid an estimated additional $3 trillion for its oil purchases. Oil speculators (and not oil producers) are the biggest beneficiaries of this price increase.

In the process, the US has been able to keep the value of the US dollar afloat -- perhaps at an extra cost of a mere $35 billion to its exchequer!

The global crude oil price rise is complex, sinister and beyond innocent economic theories of demand and supply. It is speculation, geopolitics and much more. Obviously, there is a symbiotic link between the US, the US dollar and the oil prices. And unless this truth is understood and the link broken, oil prices cannot be controlled.

The author is a Chennai-based chartered accountant. He can be contacted at mrv1000@rediffmail.com
http://www.rediff.com/money/2008/jun/02mrv.htm
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Post by putnanja »

A dilemma called oil - Vikram S Mehta
The government does little or nothing to stem the losses being racked up by the public sector oil marketing companies and sooner than later these companies start rationing petrol and diesel. The consequent consumer backlash, particularly from the farmers whose sowing season will have been disrupted, heralds the beginning of the end of this administration. Or, the government does indeed raise prices, rejigs tax rates and whatever else required to pull the oil companies back from the brink of financial collapse. But then in the aftermath, the Left parties withdraw support; the government loses its majority in Parliament and the Congress party is pushed into elections under unpropitious circumstances.

The Webster dictionary defines ‘dilemma’ as a difficult situation; a predicament that compels a choice between two unattractive options; the space between a hard rock and a stone. The government is today wedged tightly in this space. It is struggling to extricate itself but whatever it does now will seem to be too little too late.

How have they got themselves into such a spot? India is not, after all, the only country that is reeling under the twin burdens of historically high oil prices and unprecedented volatility. China, Pakistan, Malaysia and Indonesia have all adopted policies to shield their consumers from the brunt of high prices. They have implemented them without distorting the structure of energy demand or undermining the viability of their domestic industry. Why is it that in India we have not been able to secure a similar balance?

One could, of course, place the blame squarely on the nature of our politics. We have been in an election mode ever since oil prices started their upward march. This has limited the manoeuvrability of the Central government to align domestic prices to international trends. Also, the Left has hardly been cooperative. However, this is in my view too generic a response. It suggests that our political system is fundamentally regressive.

I have a more specific explanation. It has to do with inter ministerial turf battles, lack of leadership and the weakening hold of the Central government over state governments. Let me explain this point through the structure of the price buildup for petrol and diesel.

Indian Oil Corporation (IOC) calculates inter alia the landed import duty paid price of petrol and diesel every fortnight. This calculation is based on a formula that is linked to international prices. IOC’s landed price of petrol in Mumbai for the second fortnight of May was, for instance, Rs 38.1 per litre and for diesel Rs 48.8 per litre. The marketing companies had to, in other words, pay this amount to the refiners to buy the products. Next, the Central government imposes an excise and educational cess on the purchase cost. In May, this was Rs 14.4 per litre and Rs 0.4 per litre for petrol and Rs 4.6 per litre and Rs 0.1 per litre for diesel respectively. The total cash required by the marketing companies to purchase petrol and diesel in May was, therefore, Rs 52.9 per litre for petrol and Rs 53.6 per litre for diesel. The companies then sell these products at the ministry of petroleum mandated price of Rs 49.7 per litre for petrol and Rs 35.6 per litre for diesel (Mumbai prices). As such, they lose Rs 3.2 and Rs 18 for every litre of petrol and diesel sold respectively.

That, however, is not their total loss. They have to also pay sales tax to the state governments. In Mumbai, this tax is Rs 10.6 per litre and Rs 7.1 per litre for petrol and diesel respectively. Thus, the total cash loss suffered on account of the sale of 1 litre in Mumbai is Rs 13.7 and Rs 25.1 for petrol and diesel respectively. This is, in other words, the amount by which prices would have to be increased at the retail outlet for the companies to simply break even on a cash basis. Such a hike is, of course, out of the question.


The logical solution should be a package that combines a price hike with a reduction in the central and state tax rates. After all, central and state taxes account for 32 per cent (diesel) and 50 per cent (petrol) of the price build up. But logic gets tossed aside in the face of turf and power battles. The finance ministry will not forego its windfall gain; the top leadership will not force a compromise between the petroleum ministry and the finance ministry. And the Central government does not have the clout to compel the state governments to countenance a reduction in their revenues.

The consequence of this stalemate is now coming home to roost. The oil companies are, of course, close to bankruptcy. But more egregiously, we are now seeing a distortion in energy consumption patterns. The domestic price of diesel is today less than the price of furnace oil (internationally among the cheapest of products that come out of a refinery). This is encouraging a switch from furnace oil to diesel and in consequence a sharp hike in the consumption of diesel. Its demand growth is now exceeding 20 per cent per annum. The ‘dieselisation’ of the economy is also making a mockery of efforts to secure energy independence.

Everyone will have to bear the implications of adhocism in policy. This must not, however, take away from the urgency of mitigating the longer-term consequences. Even amid the twists and turns of current policy my hope is that the government will look to placing petroleum policy within the bounds of a more sensible economic and pricing framework. What should be the drivers of such a framework?

First, we should accept that high oil prices are here to stay. This does not mean we will not see sharp declines from present levels. What it does mean is that we will not see prices stabilising at levels significantly below a triple digit number. Second, we must create a mechanism that leads to a ‘graduated’ reduction in subsidies, an orderly alignment of domestic prices to international levels and a more efficient disbursement of financial support to the poor. Third, we must reverse ‘dieselisation’. And finally, we must recognise that the sine qua non of energy security is a robust and competitive domestic petroleum and energy sector.
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Post by jahaju »

A very good article by V S Mehta highlighting the follies of this govt.
But logic gets tossed aside in the face of turf and power battles. The finance ministry will not forego its windfall gain; the top leadership will not force a compromise between the petroleum ministry and the finance ministry. And the Central government does not have the clout to compel the state governments to countenance a reduction in their revenues.

The consequence of this stalemate is now coming home to roost.
Rates are for Mumbai/Maharashtra
petrol
(Rs.)
1. Base price/litre 38.1
2. Excise duty 14.4
3. Education cess 0.4
----------------------------------
subtotal Cost Price = 52.9
----------------------------------
4. Sales Tax (Ex. Mah.) 10.6
---------
Total Cost Price = 63.5
less
Actual Selling Price 49.7
--------
Proft/loss (-) 13.8




Rates are for Mumbai/Maharashtra
diesel
(Rs.)
1. Base price/litre 48.8
2. Excise duty 4.6
3. Education cess 0.1
----------------------------------------------------------------
subtotal Cost Price = 53.6
-------------------------------------------------------------------
4. Sales Tax (Ex. Mah.) 7.1
-----------------------------------
Total Cost Price = 60.7
less
Actual Selling Price 35.6
-------------------------------------
Proft/loss (-)25.1
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Post by Nayak »

Panna-Mukta explosion could add to India’s rising oil woes
MUMBAI: An explosion at the Panna-Mukta oil and gas field has cut down India’s crude oil production by 6%, or 40,000 barrels of oil per day, and 20% of India’s gas supplies of five million metric cubic metres per day (mmscmd). If production is not restored within a few days, the country may have to import to make up for the shortfall.

Panna-Mukta oil and gas field was shut on June 3 morning for maintenance work to prepare for the forthcoming monsoon. However, when the facility was being restarted in the evening, an explosion occurred at the Panna process platform, killing one person.

BG and Reliance own 30% each in the fields and ONGC holds the remaining 40% stake. The partners planned to spend about $1 billion to increase gas and oil output from the fields over five years.
upendora
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Post by upendora »

How about the real real reason why oil prices are rising

reuters news
LONDON (Reuters) - Oil's spurt to a record above $135 last month from around $100 at the start of 2008 may have been influenced by a growing feeling that oil supplies might be peaking, the head of oil explorer Cairn Energy said.

Cairn's Chief Executive Bill Gammell told the Reuters Global Energy Summit on Friday that there was growing awareness in the market about "peak oil", a theory which says that global production is near an apex after which it will decline sharply.
Got link from enerygbulletin
Those "evil speculators" are doing a huminatarian job now in readying people for shortages.
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