MUMBAI: Natural gas reserves in Mozambique’s oil-rich Rovuma Basin, where Indian companies hold stakes, are expected to rise dramatically with a giant new discovery, catapulting the African nation to the league of the world’s top gas exporters and boosting India’s energy security.
Texas-based Anadarko Petroleum, the operator of the Rovuma Offshore Area 1 in southernAfrica, is expected to shortly announce a significant upgrade in estimated reserves in the basin, sources familiar with the development said. The new discovery would make the basin’s reserves 20 times the size ofIndia’s KG-D6 and makeMozambiquea major exporter of liquefied natural gas (LNG). This can sharply raise supplies and calm LNG prices at a timeUSgas prices have crashed after supplies surged with shale gas.
“It will be the world’s biggest gas field.Mozambiquecan become a gas major likeQatar,” said a source involved in the development, who refused to be identified before the formal announcement.
Videocon and Bharat Petroleum (BPCL) hold 10% each in six blocks in the deep-waterRovumaBasin, off theMozambiquecoast. The stakes are held by their wholly owned subsidiaries – Videocon Hydrocarbon Holdings and Bharat Petro Resources Ltd.
Industry officials say the discovery will strengthenIndia’s energy security as Indian firms’ share in hydrocarbon reserves inMozambiqueis much higher than in petroleum assets elsewhere. “It is like 20 KG-D6 basins combined in one area. It is massive,” the source said.
Anadarko had announced that its existing gas discovery may hold reserves of 7-20 tcf. The company had earlier estimated the basin may hold up to 30 tcf. In May, shares of BPCL and Videocon rallied as their stakes inMozambiqueare valued at more than $2 billion on the basis of the value of Cove Energy’s stake, for which Shell andThailand’s PTT Exploration and Production submitted aggressive bids.
Experts said BPCL’s foray into exploration inMozambiquehad made it the best-performing energy stock on the MSCI AC Asia Pacific Index, and the top performer on the National Stock Exchange’s 50-share Nifty index.
ET had earlier reported that the block’s operator Anadarko had held preliminary discussions with gas utilities Gail India and Gujarat State Petroleum Corp to understand the modalities of joint investments in setting up downstream infrastructure to transport and market the gas produced in theRovumaBasininIndia.
GAS BURNS A BIGGER HOLE THAN COAL
NEW DELHI: Electricity produced using imported gas is more expensive than using imported coal.
Tariff figures would be typically around Rs 4.5 a unit for generation of power using imported coal as compared to a level of Rs 7.5 to 8 a unit in case of using liquefied natural gas (LNG).
The power sector, which is suffering because of high fuel costs and supply constraints, says that it would prefer to fire plants using coal fromIndonesiaorAustraliafor another decade, at least till natural gas prices drop.
On the face of it, the high costs of gas may be a damper for several companies, but subsequent to the duty exemption on gas imports by the power developers for projects, some have decided to source it themselves.
Power industry experts say that the anticipated trend in the next three years would perhaps retain the balance in favour of imported coal-based generation when compared with LNG.
This is because coal reserves are plenty inIndonesia. At the same time, coal fromSouth AfricaandAustraliacompetes with Indonesian coal; hence, the volatility in coal prices is less as compared to LNG which is linked with more volatile crude prices. LNG is sourced either from West Asia or from far-away places such asSouth Americaand competition in LNG market is not as predominant as coal.
“We see imported coal as a more prominent fuel for power generation in the country for the next five years as compared to LNG both due to pricing and availability,” Mr Anil Sardana, Managing Director of Tata Power, told Business Line.
“Current trend will prevail in the next 5 to 10 years unless there are significant new discoveries in LNG sources,” said an industry official. “New coal mining which is under progress inMongoliaandMozambiqueis expected to help maintain the present trend. However, prices are expected not to remain at current low levels. It will become cyclic but without any steep curves,” he added.
According to the coal price indices published by the Indonesian Government, the average price in May for coal of 6,150 kcal a kg stood at $97.67 a tonne. The prices have seen a downward movement since the beginning of 2012. The average price for the same quality in January was $104.21 for each tonne.
On the other hand, price of spot imported LNG is rallying northwards and current prices hover around $16/mmBtu. After the Fukushima Daiichi nuclear disaster, demand fromJapanhas shot up, pushing LNG prices even higher.
The Government has directed the power sector to go slow on gas-based projects in the 12 {+t} {+h} Plan, till domestic gas supplies improve.
Today, gas-based capacity is around 20,000 MW against the total capacity of 1,92,792 MW as on March 27, 2012, which now stands at 2 lakh MW.
Projects of over 50,000 MW capacity are at present under construction by private developers. Private sector is likely to add about 52 per cent of the total capacity in the 12 {+t} {+h} Plan.
PETROL HIKE SHOULD HAVE BEEN DONE IN SPREAD OUT MANNER: SHARAD PAWAR
MUMBAI: Agriculture minister Sharad Pawar has said that the UPA government could have managed the petroleum price hike in a better manner, to spread out the burden over a longer period of time.
On NCP’s 13th anniversary, Pawar spoke on a range of issues, including Team Anna’s allegations of corruption against him. He challenged his detractors to take him to court over corruption charges if they have proof.
Pawar attended various events in his home town ofBaramati, and later in Mumbai, over the weekend, as part of party’s anniversary celebrations.
Speaking to a group of media persons, Pawar said: “I had suggested to the government several times earlier in various meetings that prices of petrol should be increased by a little bit every time oil companies want a hike, otherwise we would reach a point where the prices will have to be hiked steeply and there will be an uproar over it.
The government did not want to take unpopular decisions so there was no hike. Unfortunately, my prediction came true and the situation became so bad that prices had to hiked recently by Rs 7.50 per litre. This could have been managed in a much better manner. Sometimes, the government has to take unpopular decisions so that in the long-term such shocks can be avoided.”
ONGC INTERESTED IN HALDIA PETROCHEMICALS
NEW DELHI: State-owned ONGC is interested in acquiringWest Bengalgovernment’s stake in ailing Haldia Petrochemicals Ltd (HPL), a top company official said.
“We have expressed the desire to take controlling stake in Haldia Petrochemical through our subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL),” he said.
The company has sought an audience with West Bengal Chief Minister Mamata Banerjee to make a presentation on its HPL plans.
“MRPL is setting up a petrochemical plant and HPL has great synergy with its plans,” he said.
The company plans to supply naphtha – feedstock for petrochemicals – to HPL, he said.
West Bengalgovernment has expressed intention to offload its 43 per cent stake in the joint sector company.
“MRPL is being expanded to 21 million tons from 15 million tonnes… this will produce naphtha which can be used as feedstock in the petrochemical plant,” the official said.
HPL, whose losses over the past years have eroded nearly half of its networth, currently imports bulk of its naphtha requirements.
The state government and The Chatterjee Group, which is equal promoter in HPL, are locked in dispute over control of the petrochemical giant.
State-owned Indian Oil Corp ( IOC) owns nine per cent stake in HPL.
OIL INDIA TO HOP ON TO GAS BANDWAGON
NEW DELHI: Oil India Ltd (OIL) is the latest to join the fray for getting into the liquefied natural gas (LNG) business. The company is looking at the end of this fiscal to enter the business.
OIL has been holding consultations with companies such as Kakinada Seaports for exploring opportunities to set up an LNG terminal.
“We are focussed on diversifying into the LNG business. OIL shall look at overseas market to source LNG as well as to build a terminal inIndiawith suitable partner,” said Mr T.K. Ananth Kumar, Director (Finance), OIL.
Inadequate domestic natural gas production and growing demand has been pushing the companies into the imports market. The recent one to join the bandwagon is Reliance Power, which has tied up with Shell and Kakinada Seaports.
OIL has not yet firmed up any investment plans. “It would depend on the project,” he said.
The availability of imported oil and gas has been fluctuating from time to time depending upon the demand, price, and tie-ups with the suppliers. The domestic gas production is about 115 mmscmd (which is declining), and the supply is about 165 mmscmd (from all sources). The gap is met through imports.
The country, at present, has two LNG terminals. According to estimates, the country’s re-gasification capacity will reach around 50 million tonnes annually by 2016-17. Today, the re-gasification capacity is 13.6 million tonnes annually — 10 million tonnes at Petronet LNG’s Dahej terminal and 3.6 million tonnes at Shell’s Hazira terminal.
End of this calendar year (December) could see a third facility of 5 million tonnes constructed by Ratnagiri Gas and Power Pvt. Ltd to be commissioned. Attempts to commission the terminal earlier this year had failed.
BRITISH GAS MIGHT LOWER PRICE FOR GUJARAT GAS SALE
MUMBAI: British Gas might have finally blinked on the Gujarat Gas issue. According to sources from the consortium led by Gujarat State Petroleum Corp (GSPC), it has agreed to lower its asking price from Rs 4,500 crore.
“BG has proposed a new price to us but we have to discuss this with members and take a call,” said a senior member of the consortium, requesting anonymity, as the companies were still in discussion. He did not disclose the price BG had quoted, but said this was closer to what GSPC and its consortium members had earlier offered.
Beside GSPC, the consortium has Oil and Natural Gas Corp and Bharat Petroleum. It had offered between Rs 3,800 crore and Rs 3,900 crore for the 65.12 per cent stake in Gujarat Gas.
Gujarat Gas has a market cap of Rs 3,828 crore. This implies BG’s stake of 65.12 per cent is valued at Rs 2,492.7 crore. BG’s asking price so far has been around Rs 4,500 crore for sale of its stake. The member added officials from BG and the GSPC-led consortium were to meet this month to finalise the details. “If the consortium agrees to BG’s new pricing, the deal should be sealed shortly,” the member added. The last meeting between the two companies took place in April, where BG and GSPC could not reach a conclusion on the matter of valuation. BG India’s spokesperson could not be reached for a comment.
Last month, in an emailed response, BG had said: “We confirm that formal and final bids for BG Group’s interest in Gujarat Gas closed on Thursday, March 15. As the process is still under way, it is not appropriate for us to comment further at present. We will inform the market when we have something to announce.”
GSPC spokesperson did not reply to the calls made. GSPC holds 50 per cent stake in the consortium, while ONGC and BPCL hold 25 per cent each. Oil India Ltd, will get five per cent stake from ONGC and BPCL each if the deal goes through.
Though analysts had said theDelhihigh court’s ruling in favour of city gas utility Indraprastha Gas Ltd (IGL), in its case against the Petroleum & Natural Gas Regulatory Board (PNGRB), might benefit the valuation of Gujarat Gas, the company’s scrip did not show much change. Gujarat Gas’ scrip between June 1, when the order was passed, and June 8, had fallen 10.5 per cent. On June 1, it closed at Rs 333.55 and on June 8, it closed at Rs 298.50.
IGL had moved court after the gas regulator asked it in April to cut its network rate by 63 per cent. Also, in a retrospective decision, PNGRB asked the company to refund the difference to its customers for the period from April 1, 2008, until the date of issuance of the order. However, if PNGRB exercises the option to approach the apex court against the verdict, the case may take quite some time to resolve.
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