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Saudi Aramco, the world's largest producer and exporter of crude, may invest about Rs 3,000 crore to pick up 10 percent stake in Indian Oil Corporation (IOC) upcoming refinery at Paradip. The Saudi Aramco-IOC deal may be clinched later this week during prime minister Manmohan Sing¬h's three-day visit to Saudi Arabia beginning this Saturday. Petroleum minister Murli Deora and top honchos from country's upstream and oil marketing companies will be part of prime minister's delegation.India will offer up to 10 per cent equity stake, amounting close to Rs 3,000 crore in the Paradip project to Saudi Arabia's national oil company, said a petroleum ministry official.
"We have already sent our proposal to them. The deal is likely to be sealed when petroleum minister visits the country next week," the official said. Saudi Aramco is interested in both refining and distribution of petroleum products. But India's offer would be limited to participation in refining sector, he added.Saudi Aramco did not respond to an e-mail query sent by Financial Chronicle seeking timelines for concluding the deal with IOC. S V Narasimhan, director (finance) of IOC did not respond to repeated calls made by FC.Sarthak Behuria, chairman at IOC had earlier said the Paradip refinery would be commissioned in March 2012. "Unless we commission it by March 2012, we will not be eligible for the tax holiday under government rules," Behuria added.
Saudi Aramco's participation in IOC project will be good for both not only from financing perspective, but it will enhance perspective for sourcing of products and equipment range, said Arvind Mahajan, executive director of KPMG.In addition, Aramco Overseas Company (AOC), the subsidiary of Saudi Aramco, has recently opened its office in Gurgaon. "It is primarily a regional sourcing office, with possible transformation into a full procurement office in future," said Sultan N Al-Ghadery, manager of purchasing, logistics & contracting for Europe and Far East at AOC."Saudi Aramco is conducting business with major Indian manufacturers for several years, mainly handled by our headquarters in Dhahran, Saudi Arabia," Al-Ghadery said.In addition, India will also offer participation in the proposed ONGC's petrochemical projects in Mangalore and Dahej.
Siddhartha P Saikia, New Delhi.....
Financial Chronicle | Mint | Hindustan Times |
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Human Resource Conclave-2010  

A one-day Human Resource Conclave-2010 was organised by Pipelines Division of IndianOil in Noida on February 20, 2010. The Conference was inaugurated by Mr. K.K. Jha, Director (Pipelines). Eminent HR practitioners of leading organisations in and around Noida participated in the Conclave. Delivering the inaugural address Mr. Jha, said that the Human Resource (HR) function around the world continues to change as it shifts its focus from enhancing internal operations to maximizing contribution to the organisation's business performance. IndianOil has been implementing some of the best HR practices disseminating it across the length and breadth of the nation.

Business Standard, Kolkata, February 24, 2010

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Green Railway Budget  

Budget takes on greenish hue
...The Railway Budget had a greenish hue as the Railway Minister, Ms Mamata Banerjee, announced a slew of measures to reduce the carbon footprint.The Railways proposes to install a GPS-based optimised driver guidance system on diesel locomotives, which will reduce fuel consumption by 8-10 per cent. "We will work closely with the Prime Minister's National Action Plan on Climate Change and the Bureau of Energy Efficiency," said Ms Banerjee.
Transportation is one of key areas that India will focus on, as the recently established expert committee under former Planning Commission member Mr Kirit Parikh charts a road map to lower the country's carbon emissions.There was a proposal to set up 10 Rail Eco-parks to conserve, protect and promote Railways' wetland and forest areas, Ms Banerjee said. An eco-park in Naopara, West Bengal, was recently inaugurated. Ms Banerjee said that the Railways also proposed to introduce at least 10 rakes with green toilets.It has already distributed 2.6 million compact fluorescent lamps as part of its initiatives to tackle climate change.

HINDU BUSINESS line NEWSPAPER. Bureau...New Delhi, Feb. 24

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Cairn India's 670 km-long crude carrier pipeline  

Cairn's Barmer-Jamnagar pipeline to be commissioned in March

Cairn India's 670 km-long crude carrier pipeline, the longest in its category anywhere in the world, is nearing completion and will be commissioned next month, company sources said.

The pipeline will carry crude oil for refining from Banner in Rajasthan to Jamnagar in Gujarat, and beyond. Until now, Cairn India has been evacuating the Rajasthan crude using tankers.

In the first year, Reliance Industries Ltd (RIL) is expected to refine 1.4 million barrels of the Rajasthan crude received from Cairn, which is likely to increase daily production from 20,000 to 50,000 barrels. Earlier, Cairn India had sent nearly two lakh barrels to Mangalore Refinery and Petrochemicals Ltd (MRPL), via the sea route from Kandla Port.

New Deals

Having concluded commercial terms with RIL, MRPL and IndianOil, Cairn is likely to tie up with other refiners for additional off-take. Construction on the pipeline project, which envisaged evacuation of crude oil to refiners including RIL, MRPL and IndianOil, had commenced in July 2008. Of the total 670-km length of the pipeline from Mangala Processing Terminal (MPT) to Bhogat (Jamnagar), the 590-km stretch of the pipeline, up to Salaya, was completed in December 2009 and work on the remaining 80 km is expected to be completed in March, company sources told Business Line here on Tuesday.

Hydro-testing is in progress to facilitate completion and commissioning of the pipeline, sources added. The crude oil pipeline section from MPT to Radhanpur (Gujarat) is in advanced stages of commissioning.

Construction activity is also nearing completion at the Viramgam Terminal location, on all the 33, above - ground installation stations, and the Salaya distribution hub.

Unique Feature

The pipeline is capable of transporting the entire produce of Mangala oilfield, the largest onshore oil find in 20 years, discovered in January 2004, where Cairn now has around 50 wells. Together, the Mangala, Bhagyam and Aishwarya oilfields have recoverable oil reserves and resources of nearly one billion barrels.

The Rajasthan Government is set to earn a royalty of Rs 36,000.crore ($7.6.billion), over the life of the project. The unique feature of Cairn India's pipeline is that it is the world's longest, continuously heated and insulated pipeline to evacuate crude from the Mangala field. The export pipeline route from source at the MPT to Bhogat, passes through eight districts and more than 250 villages in Rajasthan and Gujarat. At present, the longest pipelines using this technology are in Russia (160 km) and Indonesia (115 km).

In order to ensure the flow of the Rajasthan crude, which is waxy in nature, temperature will have to be continuously maintained above 65 degrees centigrade.

This resulted in customising the existing heating technology into the Skin Effect Heat Management System (SEHMS), an innovative system by far the longest of its kind in the world today.

By Virendra Pandit , Business Line, New Delhi, February 24, 2010

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Government to divest stake in PSUs  

All profitable PSUs to be listed on bourses: Prez

The Government on Monday expressed its resolve to divest stake in PSUs and said that all profitable Public Sector Enterprises would be listed on the stock exchanges with at least 10 per cent public holding.

"For providing the common man an opportunity to share in the growth of the central public sector enterprises, the government has decided to list profitable companies on the stock exchanges through a public offer of at least 10 per cent of the equity," President Mrs. Pratibha Patil said in her address to the joint sitting of both the Houses of Parliament.

Until now, the UPA Government in its second term has listed two energy PSUs-NHPC and Oil India-on the stock exchanges. Along with listing profitable public sector companies, the Government has also decided to increase public holding in listed profitable companies to at least 10 per cent.

At present, the public holdings in these companies range from 0.67 per cent in MMTC to about 9.6 per cent in Engineers India.  The decision makes around 60 PSUs eligible for disinvestment.
Pioneer, New Delhi, February 23, 2010

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India offers oil-rich countries facilities for storage of crude and petroleum products  

India will offer Saudi Arabia and other oil-rich countries such as Kuwait, Sudan and Oman facilities for strategic storage of crude and petroleum products in the country.

The proposal will figure prominently between India and Arab nations during the three-day visit of the Prime Minister, Mr. Manmohan Singh to Saudi Arabia beginning Saturday. Petroleum Minister, Mr. Murli Deora and honchos of the country's upstream and Oil Marketing Companies will be part of the Prime Minister's delegation. India will offer land in Rajasthan for the gulf nations to set up their storage stations, said a petroleum ministry official.

The volume and products to be stored can be at their discretion. Engineers India Limited (EIL) will help with required consultancy needs, he added. The countries can use India as a transit point to supply oil to South Asian nations. These projects will help India to build strong bilateral relationship with the countries along with securing an emergency backup of crude and petroleum products. The facilities in Rajasthan will be connected through Kandla port.

India, which imports close to 80 per cent of its crude oil, is building storage terminals similar to those in countries such as the US, Japan and China. Petroleum Secretary, Mr. S. Sundareshan had earlier said that the first storage terminal would be completed by mid-2011 and two others will be operational in the following year.

The first terminal will be built at Visakhapatnam with a capacity of 1.33 million tonnes. The other two terminals will be constructed at Mangalore that will take India's total storage capacity close to 5 million tonnes. India is planning for emergency oil storage capacity up to 15 million tonnes. This will be achieved in phases.

Recently, India offered world's third-largest oil rich country, Iraq, to use some of the space in these terminals. This will help India secure long-term energy contracts. India's crude oil import in the first nine months of this financial year rose by 12 per cent to 109.32 million tonnes.
Siddhanta P Saikia , Financial Chronicle, New Delhi, February 23, 2010

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Expectations of oil & gas sector from Budget  


Although the last year witnessed the global economic meltdown impacting major economies of the world, the Indian economy largely withstood it. The oil & gas industry has been instrumental in sustaining the growth rate of the Indian economy. The petroleum & natural gas sector, which includes transportation, refining and marketing of petroleum products and gas-constitutes over 15% of the country's GDP.

Other than this, it also acted as a critical element in propelling other sectors of the economy. Financial year 2009-10 has been a landmark one for additional production of oil& gas in India.

Commencement of crude oil production by Cairn Energy in Rajasthan, large oil discoveries by Reliance in the Krishna-Godavari basin and improved oil recovery projects by oil companies have supported the growth to a larger extent. The increased production will help reduce the country's oil imports, saving foreign exchange and leading to higher economic development and an increase in the GDP growth rate. India's domestic demand for oil & gas is on the rise. According to the petroleum ministry, demand for oil & gas is likely to in-crease from 186.54 million tonnes of oil equivalent (mmtoe) in 2009-10 to 233.58 mmtoe in 2011-12. With Nelp-VIII, the overall number of blocks brought under exploration has exceeded 200, enhancing the oil production.

The development of the oil & gas sector leads to energy security, employment and welfare of the community. With the Budget around the corner, the sector looks forward to fiscal incentives that would boost the sector's capital outlay this can extend to the hitherto untapped areas and also to those areas that have a lower probability of striking oil reserves.

In addition to the optimisation of tax holiday by providing flexibility to claim it in a block of 10-15 years, a weighted deduction of say, 150% of the actual expenses incurred in, respect of exploratory cost should be provided. Further, the tax holiday available for profits from the production of natural gas from Nelp-VIII blocks should be extended to pre-Nelp and CBM blocks.

The industry hopes that the application of MAT provisions would be suspended during the tax holiday period.

The long-standing demand for the removal of the service tax on the services utilised by E&P Companies, needs to be addressed. The service tax is imposed on the input used by E&P companies, but since there is no output service tax or excise duty liability against which they can claim credit, this increases the cost burden. The industry looks forward to the declared goods status for natural gas. It would apply a lower sales tax rate on industrial goods, as against the present prevalent rate that varies from state to state between 12.5% and 20%, except in Rajasthan where 4% taxis levied.

Looking at the volatile trend of crude oil prices and under-recoveries made by Oil Marketing Companies (OMCs), the time is ripe for the government to take the right move in the sector. More so in light of the Parikh Committee report that has recommended deregulation in the pricing of transport fuel. Given the impact on inflation deregulation might have, it would have to be blunted by the right set of monetary policies.

Taranpreet Singh, senior tax professional-Oil & Gas, EY has also contributed to this article.

Financial Express, New Delhi, February 22, 2010

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Green activist Subhas Dutta filed a counter-affidavit on Monday in the high court to the petroleum ministry's claim over the sole "responsibility of storage, distribution and marketing of bio-fuel has been assigned to the Oil Marketing Companies (OMCs)". Dutta said that OMCs have not done anything to market the environment-friendly fuel.

"In Kolkata or in the rest of Bengal, there is hardly any bio-diesel purchase centre. Across the nation, there are only 20 purchase centres, which is nothing compared to the demand. So I have prayed to the court for a directive to the ministry of new and renewable energy and national coordination committee on bio-fuel to come before the court and declare a time-bound programme for its promotion and use," said Dutta.

The government has prepared a national policy on biofuel, which says that the bio-fuel reduces pollution. "Biodiesel is such eco-friendly alternative fuel and can be mixed with diesel up to 20 percent at the depot level. But the ministry of petroleum and natural gas (MPNG) has miserably failed to do the needful and that is why it is not available for the end users. We have prayed that the marketing of bio-fuel should not rest only in the hands of OMCs," Dutta said.

Considering the importance and urgency of this environment friendly fuel, National Bio-Fuel Coordination Committee, headed by the Prime Minister and seven other Ministers was set up to promote the manufacturing and use of biofuel.

"They just impose their whim on us by imposing a ban on the sale of the product we manufacture," said Aditya Agarwal, director of Emami Group, the biggest bio-diesel producer in the eastern India.
 ....from the Kolkata newspaper of The Times of India (Kolkata edition)

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Stir against the proposed oil refinery  

Thousands of land losers under the banner of four different organizations have intensified their stir against the proposed oil refinery project of Indian Oil Corporation (IOC), reiterating the fulfillment of their longstanding demands.

They have threatened to start an indefinite stir and paralyze the project if their demands are not fulfilled within two days. Local MP Bibhuprasad Tarai, who is leading the movement, stated that IOC has not yet implemented the rehabilitation policy for the land losers. "The main demands of the agitating land losers are to declare the rehabilitation package, to provide job to land losers, engage local contractors in construction work and to take stern action against the anti socials who are creating law and order problems at the plant site", he said.

IOC has acquired 3,300 hectares of private land for its oil refinery project and the company has paid Rs 49 crore as compensation to the affected families in 17 villages under Kujang tehsil. About 2200 families have been affected by the project and 143 families among them have been declared as displaced families as they have lost all their land.

Locals pointed out that in 1998-99, IOC had declared to provide rehabilitation facilities to displaced families.
"IOC had acquired 12.1 acres of land for providing two room houses at Dhinkia village but till now not a single family got any house from the company. Moreover, IOC has not taken any step to start afforestation programme even though it has acquired 3300 hectares of land", the locals alleged.
.................Kolkata/Bhubaneswar .....................Business Standard

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Oil at $200 a barrel?  

Start preparing for oil at $200 a barrel


The Kirit Parikh Committee is the third such committee to suggest decontrolling petroleum product prices. Probably politicians will again refuse to do so, and instead decree a modest increase in petrol and diesel prices.

Yet the key issue is not whether petrol and diesel prices should reflect today's oil price of $75/barrel. It is that booming Asia will, in decade push oil to $200/barrel and maybe $300/barrel. India must prepare for a world of scarce, expensive oil instead of pretending that astronomical subsidies can ensure price stability.

Today, the "under-recoveries", implicit subsidy, of oil companies is Rs 60,000 crore. The immediate price increases suggested by the Committee may cut this to Rs 30,000 crore. But if oil goes up to $200/barrel, the subsidy will rise astronomically up to Rs 500,000 crore, eroding funds for all other anti-poverty and development initiatives.

In the 1990s, oil cost $16-17/barrel. When it doubled to $35 by 2004, politicians refused to believe it was permanent, and decreed piecemeal price increases instead of price decontrol. When oil doubled again to $70/barrel by 2006, they cut excise and import duties and provided huge subsidies rather than raise prices proportionally. And when oil shot up to $147/barrel in mid-2008, they just closed their eyes and crossed their thumbs.

Luckily for them, the global financial crisis and Great Recession then sent oil crashing down to $40/barrel, saving them from facing up immediately to a future of scarce oil. But the global economy is now recovering, so that challenge must be faced.

The global recovery looks weak in Europe and North America, but is gathering steam in Asia. China and India look like powering ahead at 12% and 9% respectively in 2010-11. Other Asian countries are also buoyant. These developing countries are at a very energy-intensive stage of development.

Booming Asia is sucking in commodity imports from Africa and Latin America, fuelling booms there too. Slackness in rich countries has kept a lid on commodity prices, but the long-term trend is unambiguously upward.

China has already overtaken the US as the world biggest consumer of cars and emitter of carbon. India is following in China's footsteps, one decade removed. So, even if oil consumption is muted in the West, even if rich countries drastically reduce carbon emissions (which are doubtful), oil consumption will rise stridently in developing countries.

The world's old oilfields are in steep decline, and large new oil discoveries offshore in Brazil, Mexico and Africa are in deep waters that will take time to exploit.

Indian politicians say it is politically impossible to decontrol oil prices. They fear that freeing oil prices will stoke inflation, because of the impact on transport costs. But in countries with free oil pricing, like the US, inflation excluding food and energy has been less than 1% although oil prices have doubled in the last 12 months.

By Swaminathan S Anklesaria Aiyar, Times of India, New Delhi, 7 February 2010

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