Bharat Rakshak

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Asjylyn Loder
Bloomberg News

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


1. Coal production remains key to energy mix

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

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

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

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

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

3. Relies on imports to meet growing demand for gas

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

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

4. Electricity shortages hurt industrial output

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

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

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

5. Energy poverty and inequality spreads

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

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

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

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

By Sean Durns

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

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

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

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

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

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

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

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

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

Oil - 155 bln BOE
Gas - 120 bln BOE

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

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