ONGC: 3 new oil and gas discoveries

The public sector Oil and Natural GasCorp (ONGC) on Saturday announced that there have been three new oil and gas discoveries in one each of the Krishan-Godavari Basin, Cauvery basin andMumbai offshore, which allows an interim dividend of 100 per cent to its shareholders.

The ONGC board in its meeting on Friday approved an interim dividend of 100 per cent, paying Rs 5 per equity share of Rs 5 each, the company said in a statement on Saturday. “The total payout on this account will be Rs 4,277.75 crore out of which the Government of India will receive Rs 2948.08 crore on its shareholding. In addition, dividend distribution tax of Rs 855.55 crore would also be paid,” it said.

ONGC said it has made three discoveries — one in deepwater KG Basin off the east coast, second in Mumbai offshore basin off the west coast and the third in Cauvery basin in the southern onland part of the country.

In KG Basin offshore, ONGC has made a significant gas discovery in its nomination deep water block, KG-OS-DW-III.The new discovery well GD-11-1, located about 43 km to the South of the nearest coastal town of Odalarevu in Andhra Pradesh, was drilled down to a depth of 2,810 metres in water depth of 812 metre to explore the hydrocarbon potential of Pliocene sands.The Pliocene sequence has indicated the presence of about 36 metres of gas pay which, on conventional testing, has flowed gas at the rate of around 6.5 lakh cubic metres a day.

ONGC has already made five hydrocarbon bearing discoveries from the northward contiguous NELP-VI shallow water block of KG-OSN-2004/1 from a similar play and this discovery has opened up a large opportunity for further assessment of the prospectivity. “The new discovery would enhance production of gas and crude in the KG basin considerably and also add to revenues,” says an ONGC spokesman .

In Mumbai offshore ONGC madey, a new pool discovery in the well WO-5-11 (WO-5-G), situated around 160 kms west from the nearest coastline in Maharashtra. On testing, the well flowed oil at the rate of around 1,500 barrels per day and gas at the rate of around 10,000 cubic metres per day through half inch bean.

In Cauvery Basin, ONGC has made a significant gas discovery in the well MD-5 in the NELP-IV block CY-ONN-2002/2. This is the second hydrocarbon discovery in the block. The first discovery in this block was in October 2012, when oil was discovered in the well Madanam-3. The well MD-5 is located about 9 km towards east of Sirkhazi town in Nagapatinam district.

“The discovery is named as ‘Thirunagari Gas Discovery’ after the name of the nearby village,” the statement said, adding the well flowed gas at the rate of 61,800 cubic metres per day along with condensate at the rate of 9.6 cubic metres per day during testing.”This discovery is envisaged to enhance the commercial viability of this block,” it added.


Saudi Arabia to keep January crude supply to Asia steady

Saudi Arabia, the world’s top crude exporter, will keep supplies at full contracted volumes for Asian term buyers in January, industry sources said, the latest sign the kingdom is holding firm against falling prices caused by oversupply.
Coming less than a week after Saudi Arabia slashed January prices to Asia and within two weeks of blocking an Opec output cut, the kingdom is maintaining pressure on non-Opec producers to cut production.
Oil fell to a five-year low and is down more than 40 per cent since June as a weakening global economy saps demand for crude amid surging output from US shale formations.
“There was no change in supplies … It was as expected,” an industry source said, who added that he has not seen any sign that Middle East producers are planning cuts in contracted volumes.
Another industry source said Saudi Arabia had notified his company of its intention to hold contracted volumes steady from December.
Saudi Arabia blocked calls last month from poorer members of the Opec oil exporter group for production cuts to arrest a slide in global prices, sending benchmark crude plunging to multiple year lows.
The Opec producer has supplied full contractual volumes to most Asian buyers since late 2009.
“The new reality is that Opec on its own will no longer be able to rebalance oversupplied oil markets,” Macquarie said in a research note. “Although production growth should slow in key non-Opec regions, including the US, Russia, the North Sea and Latin America, the timing is less clear.”

Oil Ministry may dip into RIL incremental gas price hike revenue account

Government may dip into Reliance Industries’ incremental gas price hike revenue, accruing in a pool account, to recover its dues in the wake of the contractor failing to meet certain KG-D6 output targets.

While announcing a 33 per cent hike in natural gas price to USD 5.61, the government had on October 17 said that RIL will continue to get the old rate of USD 4.2 for the main D1&D3 gas field in KG-D6 block. The incremental USD 1.41/unit will go into a gas pool account, managed by GAIL India, till the dispute over fall in output is settled.

In its gas price hike proposal, the Oil Ministry however also proposed to the Cabinet to use the revenue accruing into this account to recoup USD 195.341 million of additional ‘profit petroleum’, informed sources said.

The Ministry says this is the additional profit petroleum that the contractor is liable to pay to government, after USD 2.376 billion out of USD 10.441 billion cost incurred on KG-D6 fields was disallowed because of output from D1 and D3 fields not meeting the targets in past four years.

RIL and its partners disputed the cost disallowance, saying the output falling to less than a tenth of planned 80 million standard cubic meters per day was because of geological complexities and the signed contract does not provide for such cost disallowance. An arbitration was subsequently initiated in the matter.

Oil Minister Dharmendra Pradhan told Parliament in July that his Ministry has instructed GAIL and Chennai Petroleum Corp Ltd (CPCL) to deduct the profit petroleum due to government from the money they pay to RIL for buying gas and crude oil from KG-D6 block respectively.

They, however, expressed inability to do so because GAIL had not been buying gas since June 2013 and CPCL lost on a tender to buy oil in April this year, sources said.

Pradhan last week told Rajya Sabha that the possible alternatives for effecting the recovery of additional profit petroleum from the contractor were being worked out.

The Ministry now plans to recover the dues from the gas pool account, sources said.

The gas pool account, where about USD 4 million accrues every fortnight, started functioning last month when first bill at revised gas price was raised.

Sources said the Ministry may wait for the account to swell to at least USD 20-25 million before dipping into it.

No operational details of the gas pool account have so far been announced.

RIL and its partners –UK-based BP plc and Canada’s Niko Resources — want the money accruing to them in the account to be paid with market interest rate if and when they win the arbitration.

However, with the accruals being used to settle profit dues, it remains to be seen if the government will dip into its budget to pay for the due sum along with interest, they said.


Somalia invites energy companies to explore for oil

The price of oil may have fallen off a cliff recently, but that has not deterred energy giants like Exxon Mobil, Royal Dutch Shell, BP and Chevron from reactivating plans to drill in Somalia.

The Horn of Africa country could be the next focus for the energy industry, as the government claims the nation will be producing oil within six years.

London-based Soma Oil and Gas, which is backed by Russian billionaire Alexander Djaparidze, has completed an onshore and offshore seismic survey and it is encouraged by the results. Details are expected to be published by the end of the year.

Security remains a concern for foreign investors, but Somalia says with the help of troops from the African Union, it is making progress against the Islamist insurgents al-Shabab.

Nevertheless attacks continue in the region, with ones in the capital, Mogadishu, the south-central town of Baidoa and north-eastern Kenya, near the Somali border, in the last week alone.


Indian refiners pay $400m to Iran under interim deal

Indian refiners paid $400 million to Iran ahead of a November 24 deadline of the interim deal with six world powers that allows Tehran to recover part of its overseas frozen oil revenues, two industry source privy to the development said.
Essar Oil paid about $201 million, Mangalore Refinery and Petrochemicals Ltd about $154 million, Indian Oil Corp about $42 million and Hindustan Petroleum about $3 million, said the sources, who declined to be named due to the sensitivity of the issue.
With this, India has paid $1.3 billion to Iran in three installments under the interim deal, which allowed Tehran access to $2.8 billion of its funds held in foreign banks in addition to $4.2 billion paid between January and July.
The Indian refiners – Essar, MRPL, Indian Oil and Hindustan Petroleum – could not be immediately reached for a comment.
Western powers and Iran are in talks this week to hammer out a final deal to ease sanctions against Tehran in exchange for curbs to its nuclear programme.
Iran has said it would resist Western pressure to make what it considered to be excessive concessions in nuclear talks, highlighting obstacles that could prevent a historic deal being reached by November 24.
US Deputy National Security Adviser Tony Blinken said it appears difficult to reach a comprehensive nuclear deal with Iran by a November 24 deadline but it is not impossible.
The latest payments would be made using an existing mechanism of a series of back-to-back transactions in different currencies that are initially channeled through the Reserve Bank of India. Iran will eventually get paid in dirhams from the central bank of the United Arab Emirates.
India, Iran’s top oil client after China, has imported 40.3 per cent more oil from Tehran in the first 10 months of this year than in the same period last year, data obtained from trade sources show.

Worker killed, 3 others injured in Gulf of Mexico oil platform blast

One person was killed and three others hurt in an explosion Thursday on an offshore oil and gas platform in the Gulf of Mexico.

A spokeswoman for Houston-based Fieldwood Energy said the explosion happened just before 3 p.m. at the West Delta 105 “E” facility, located about 12 miles off Louisiana’s coast.

“One employee of a contractor was fatally injured and a second contractor employee was seriously injured,” Shannon Savoy said in a statement. “We have accounted for all other personnel who were working at the facility.”

The conditions of the other two people who were hurt was not immediately known.