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Government constitutes committee to review existing production sharing contracts with oil companies  

Rangarajan team to review oil firm-govt contracts

The government on Wednesday announced constitution of a committee under C Rangarajan, chairman, PM’s Economic Advisory Council, to review the existing production sharing contracts signed between the oil and gas companies and the government for developing exploration blocks. “The committee will review the existing PSCs, including in respect of the current profit-sharing mechanism... and recommend necessary modification for the future PSCs,” said an official statement.

Officials said the committee has been constituted after intervention of the Prime Minister’s Office (PMO), following increasing disputes between the developers of the oil and gas blocks and the government. The Committee has been asked to submit its report by August 31.The trigger for this review is clearly seen as the ongoing spat between Mukesh Ambani-led Reliance Industries Ltd (RIL) and the oil ministry over declining gas production and the cost recovery from the block.RIL has already dragged the government into arbitration for disallowing a recovery of $1 billion (R5,500 crore) from the producing KG-D6 gas field. Besides, RIL has also sought an increase in the price of gas that is being produced from the KG-D6 field from the existing government fixed price of $4.2 a unit.

The petroleum ministry has recently issued a R5,500 crore penalty notice to the company earlier this month for not fulfilling obligations and failing repeatedly to meet targets, factors, which it said caused considerable losses to the government. Besides, the Committee shall also be exploring various contract models with a view to minimise expenditure monitoring of the contractor without compromising, firstly, on the hydrocarbons output across time and secondly, on the government’s take. The Committe would be “a suitable mechanism for managing the contract implementation of PSCs,” the statement said.“Suitable governmental mechanisms to monitor and to audit Government of India (GOI) share of profit petroleum,” have been listed as another term for the Committee.

…from the pages …Hindustan Times…New Delhi, May 30, 2012

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After the hike petrol price in Mumbai  

After the hike petrol price in Mumbai Rs. 78.57

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Petrol price in Delhi  

After the hike petrol price in Delhi Rs. 73.18

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Another Petrol, Diesel, Price hike on the card?  

Fuel price hike draws closer

HT Correspondent, Hindustan Times…New Delhi, May 08, 2012

There seems to be no further escape for the consumers of auto and cooking fuels. An across-the-board hike in the prices of petrol, diesel and cooking gas seems to be just round the corner. The only good news is that to reduce the burden of this fuel price hike on the consumers - necessitated in the wake of high global oil prices and growing losses of state-owned oil companies - the Centre has asked state governments to pitch in and reduce taxes on fuel in the manner done in Goa recently.

Sending out a strong message to all political parties including United Progressive Alliance (UPA) allies and the opposition, finance minister Pranab Mukherjee made it clear on Tuesday that the Central government alone cannot address the burgeoning fuel subsidy.Replying to the debate on the Finance Bill, Mukherjee hinted that the time has come for all parties to bite the bullet and share the burden."Coalition consensus is necessary for reforms and all stake holders should come together for development," he said. States need to cut ad valorem taxes on fuels, the minister said. BJP-ruled Goa is the first state to have done so on its own. The companies reacted with scepticism. "We have been hearing this intention of the government for a long time," said a senior official at Indian Oil Corporation. "We are awaiting concrete action on states pitching in by reducing taxes."

Mukherjee hinted that oil imports will become difficult if crude touches $150 per barrel. The government controls the prices of diesel, domestic LPG and kerosene. Oil companies lose Rs. 14 a litre on diesel, Rs. 32.59 per litre on kerosene and Rs. 480 per cylinder of LPG.

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The diesel pricing dilemma and use of Furnace oil as replacement  

The diesel pricing dilemma

(Courtesy: The Hindu Business Line , New Delhi, May 07, 2012)

Everyone knows it is heavily subsidised. Yet, any talk of a price increase in diesel raises the hackles of political parties. And amidst this chaos, expensive cars and SUVs are making the most of a hugely cheap fuel.

Oil companies are losing Rs 15/litre on diesel and are terribly concerned because it is already accounting for over 50 per cent of their projected losses of over Rs 2,00,000 crore this fiscal. Kerosene and cooking gas take up the balance but diesel continues to be the biggest area of concern because its use extends to a host of applications.

The transport sector is only a part of the actual problem. Thanks to the severe power crisis in many States, generator sets have become inevitable and need to be powered by diesel. Furnace oil, used in a variety of industrial applications, has given way to diesel which is a less expensive option.

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Nepal Oil Corporation and IndianOil signed new petroleum supply agreement  

NOC, IndianOil seal new fuel supply

(Courtesy: The Kathmandu Post, Nepal, April 30, 2012)

The Nepal Oil Corporation (NOC) and IndianOil on Friday signed a new petroleum supply agreement.

As per the new pact that will be effective until March 31, 2017, the IndianOil will be the sole exporter of refined petroleum products to Nepal for the next five years.

NOC acting Managing Director Suresh Kumar Agrawal and IndianOil General Manager (commercial) R Karandikar signed the bi-lateral pact.

According to NOC, the agreement has scrapped the existing price adjustment factor (PAF), under which IndianOil had been charging 5 percent on LPG, diesel and petrol and 2.5 percent on other petroleum products.

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