• GAIL CMD apprises Kerala Chief Minister about satisfactory progress on 91 km section
  • India’s gas leader could see stock rise by 30%
  • GSPL commissions pipeline to supply gas to Maruti and Honda plants in Gujarat
  • ONGC’s 2.5 billion Mozambique deal under Oil Ministry scanner


GAIL CMD apprises Kerala Chief Minister about satisfactory progress on 91 km section

Shri B C Tripathi, CMD,  GAIL (India) Limited met Hon’ble Chief Minister of Kerala ShriPinarayiVijayan  to apprise  him about the progress of work on the 440 km Kochi – Koottanad – Mangaluru Natural Gas pipeline project. GAIL Chairman also met Additional Chief Secretary and Director General of Police in separate meetings. He discussed the progress made in the project with the continuous support of the State Government, Administration, Police and the public at large and thanked them for their active engagement which  has started yielding result at the ground level.CMD , GAIL also  intimated about the satisfactory laying activities on the 91 km Kochi – Koottanad section and Panchanama activities across the state wherein a substantial headway has been made during the last six to seven months which was possible due to the active support of the State Government.Carrying forward the momentum, GAIL today awarded contract for pipeline laying work for another 105 km section from Perole-Kodalamuguru- Mangaluru section. As a result  project will progress simultaneously from both the ends, i.e., Kochi and the Mangaluru side, so that the completion of the project is expeditiously completed.ShriTripathi informed that work on the 91 km Kochi – Koottanad section, which was awarded in September 2016, has been received positively by all stakeholders. He said that the pipeline would serve as a “Green Energy Corridor” for decades to come and enable City Gas Distribution companies and Gas based industries to come up in the state. As a result, environment friendly Piped Natural Gas (PNG) and Compressed Natural Gas (CNG) would be supplied to households and vehicles.GAIL is targeting to complete the Kochi – Koottanad – Mangaluru Pipeline by December 2018 as per directives of the Ministry of Petroleum & Natural Gas, Government of India. It is likely to give a major economic boost to the state by way of generating employment and various socio economic benefits.

Source: GAIL Blog



India’s gas leader could see stock rise by 30%

Shares of India’s top natural gas company have gained 30% over the past nine months. They could rise another 30% in a year, according to a recent report by investment bank Nomura. GAIL operates three-quarters of India’s natural gas pipelines, markets more than two-thirds of gas sold in the country and is a major producer of chemicals made from gas. While that sounds like a lot, it is a bit akin to being the top snowmobile dealer in Havana. India’s per-capita gas consumption is well below that of rich countries like the U.S. as well as developing countries like Brazil. That’s because of constrained supply; although India has significant gas reserves, it produces relatively little, falling short of local demand and making up the difference with pricier LNG. A global crash in oil and gas prices from mid-2014 through early 2016 gave little incentive for boosting local gas production. Long term, however, India must deal with its energy deficit and find something cleaner than coal to burn for power and cheaper than oil to turn into chemicals and fertilizer. India has 18% of the world’s population but uses only 6% of its energy, implying fierce growth in energy demand to come. Brent crude recently fetched $55 a barrel, up by about $20 in a year. That’s helping push prices for propane, polyethylene and other key petroleum products higher, and reversing a collapse in GAIL’s profit margins. Its gas transmission volumes are rising, too. Perhaps the biggest benefit of a global commodity rebound for GAIL is the easing of a key investor fear. GAIL has large U.S. supply contracts for liquid natural gas made back when oil fetched more than $100 a barrel. At an oil price in the $30s a year ago, delivery under those contracts, set to begin in 2018, was expected to sink earnings. The outlook is brighter now. Investors could gain even more comfort if GAIL announced a deal to off-load some of that coming supply.This fiscal year, which runs through March, GAIL’s earnings per share are projected to jump to 30.28 Indian rupees, from INR18.10 last year. That puts shares at 15 times the current-year forecast. Nomura analyst Anil Sharma sees upside to the consensus estimate, with earnings topping INR32. Two years from now, Sharma predicts earnings of over INR50 per share. If he’s right, shares of the key gas supplier to one of the world’s most promising economies can be had now for a scant nine times that year’s earnings. Sharma calls GAIL a top pick with a price target of INR620. That’s 33% above the stock’s recent price. 
Source: Barrons/ Indian Oil & Gas


GSPL commissions pipeline to supply gas to Maruti and Honda plants in Gujarat

Gujarat State Petronet Ltd (GSPL), a subsidiary of the state-promoted GSPC Group, has commissioned the Mandali-Becharaji pipeline to supply natural gas for manufacturing in the North Gujarat plants of automobile majors Maruti Suzuki India Ltd (MSIL) and Honda Motors Scooters India (HMSI). Piped natural gas supply to the two plants would ensure cheaper fuel for manufacturing. The Honda project was commissioned in June 2016, while Suzuki is expected to begin production for Maruti in March 2017, trials for which are in progress. The pipeline is equipped with valve stations for emergency shutdown in case of any contingency and a Supervisory Control and Data Acquisition (SCADA) system to monitor the pipeline round-the-clock. The entire pipeline has been subject to high-pressure tests by hydro-testing and pneumatic testing to assure the quality of material and workmanship.Ace Pipelines, which has so far laid 2,500-km-long pipelines for the oil and gas sector across India, is currently replacing a stretch of nearly 70 km for Indian Oil Corporation Ltd (IOCL) in Haryana. Last year, its turnover was around Rs 1.80 billion, he said.
Source: Hindu Business Line [Edited]


ONGC’s $2.5 billion Mozambique deal under Oil Ministry scanner

ONGC’s USD 2.475 billion purchase of Videocon Group’s 10% stake in a giant Mozambique gas field has come under the Oil Ministry’s scanner following allegations that the PSU may have overpaid about USD 200 million, charges that the company vehemently denied. ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), had in June 2013 bought 10% stake in the Offshore Area 1 from Videocon Group for USD 2.475 billion. This stake was later divided between OVL and Oil India Ltd in 60:40 ratio. The deal has now come under Oil Ministry’s scanner following allegations that OVL might have overpaid Videocon.Sources said Videocon was in 2012 willing to sell its stake to OVL at a small premium to the price Thailand’s PTT Exploration and Production paid for acquiring an 8.5% stake in the same block from Cove Energy for 1.22 billion British pounds (USD 1.9 billion that time).The 10% stake, they said, was available to OVL for about USD 2.3 billion or so but thecompany a year later paid USD 2.475 billion to Videocon. An e-mail sent to ONGC Chairman Dinesh K Sarraf, who was Managing Director of OVL at the time of the deal, for comments received a response from the company stating: “There is no basis to this allegation and ONGC Videsh strongly refutes it.” OVL had followed up the Videocon purchase by buying another 10% stake in the same Offshore Area 1 of Mozambique from US energy major Anadarko Corp for USD 2.64 billion in 2014.A year later, Anadarko in its annual filings with the US Securities and Exchange Commission said it made a “gain” of USD 1.5 billion or over 62% of the purchase price, from the sale of 10% interest in Offshore Area 1. Woodlands, Texas-based energy exploration company Anadarko continues to be the operator of the block, with its stake reduced to 26.5% from 36.5% after the deal. Presently, OVL has 16% stake in Offshore Area 1, which holds as much as 75 trillion cubic feet of gas reserves. OIL has 4% and a unit of Bharat Petroleum Corp Ltd (BPCL) another 10% stake. Other partners in Area 1 include Mitsui with 20% stake, ENH (15%) and PTTEP (8.5%). Gas from the block is to be converted into liquefied natural gas (LNG) for transportation by ships to markets like India.

Source: Hindu Business Line/Indian Oil & Gas

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