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ONGC VIDESH TO ACQUIRE STAKE IN TWO VIETNAMESE BLOCKS

ogNEW DELHI: ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp, on Tuesday signed an agreement to pick an up to 50 per cent stake in PetroVietnam’s two exploration blocks in the South China Sea.

 

OVL will take a 40 per cent stake in Block 102/10 and 50 per cent in 106/10 that lie outside the sea territory claimed by China. PetroVietnam, the national oil company of Vietnam, will take half of OVL’s 100 per cent stake in Block 128 in South China Sea which the Indian firm had earlier planned to exit.

 

“OVL signed a Heads of Agreement (HOA) with PetroVietnam Exploration Production Corp (PVEP), a wholly owned subsidy of Vietnam Oil and Gas Group (PetroVietnam), for mutual cooperation for exploration in Blocks 102/10 & 106/10 of PVEP and Block 128 of OVL in offshore Vietnam, subject to due diligence and negotiations on terms of participation,” the Indian firm said in a statement here.

 

The agreement was signed by OVL managing director Narendra K Verma and PVEP president and CEO Dr Do Van Khanh.

 

Also, ONGC signed a memorandum of understanding (MoU) with PVEP for “mutual cooperation for exploration in the NELP Blocks of ONGC in Andaman and Cauvery Basins, subject to due diligence and negotiations on terms of participation”.

 

The MoU was signed by ONGC chairman and managing director Dinesh K Sarraf and Khanh.

 

Both the MoU and the HOA were exchanged in presence of visiting Vietnamese Prime Minister Nguyen Tan Dung and Indian Prime Minister Narendra Modi at Hyderabad House here.

 

OVL forayed into Vietnam as early as 1988, when it was awarded the exploration license for Block 06.1. At present, the block is producing natural gas.

 

The company also got exploration Blocks 127 and 128 in 2006. Block 127 was relinquished after completing the work programme. Block 128 is currently under exploration. The blocks where OVL is picking up stake are from the five that Vietnam had offered in November last year to India to counter growing Chinese influence in the region.

 

OVL offering PetroVietnam equity in Block 128 is to de-risk exploration in the block over which China had claimed territorial rights.

 

The Indian firm had in June 2012 decided to return the block as exploration there wasn’t commercially viable but did a volte-face at the insistence of Ministry of External Affairs, which wanted India to continue its presence in South China Sea.

(Source: The Financial Express, October 29, 2014)

 

 

INDIA KEEN TO DIVERSIFY OIL EXPORTS, BUY CRUDE FROM US

 

NEW DELHI: Hit by uncertainly over oil supplies from West Asia, India is keen to diversify its imports and wants to buy crude from the US, Oil Minister Dharmendra Pradhan has said.

 

The new strategy is being planned to guard against disruption in supplies from its biggest sources in the Middle East – Iraq and Syria – as they are caught in problems relating to Islamic State movement.

 

Asia’s second-biggest energy user, which spends $143 billion on import of crude oil in 2013-14, wants the US to extend its policy of allowing gas exports to crude oil as well.

 

“I met officials from the US recently and asked them to allow oil exports to India. We are keen to import oil from the US, which currently does not allow oil exports,” Pradhan said.

 

India wants to reduce its reliance on the Middle East nations for meeting its oil needs and instead wants to tap Latin American countries including Mexico and Russia.

 

“We will look at Russia and Latin America too (for oil imports),” he said.

 

Violence in Iraq and Syria has posed serious challenges to oil supplies. In 2013-14, Iraq supplied 24.63 million tonnes of oil or about 13.02 per cent of India’s total oil purchases of 189.24 million tonnes.

 

India bought 31.73 million tonnes of oil from South America with Venezuela being the principal supplier at 21.58 million tonnes, followed by Columbia at 6.31 million tonnes. It now wants to raise these imports.

 

Also, it wants to raise imports from Russia which are at a minuscule 0.08 million tonnes. Purchases from Mexico, which were 4.94 million tonnes in 2013-14, are planned to be raised.

 

“Procurement has to be diversified, taking into account the changing geopolitics in the world,” Pradhan said.

(Source: The Financial Express, October 29, 2014)

 

SUBSIDISED LPG TO BE COSTLIER BY RS 3 AS GOVERNMENT HIKES DEALER’S COMMISSION

 

NEW DELHI: Cooking gas supplied to kitchens at subsidised rate is costlier by Rs 3 a cylinder as the government raised the dealer’s commission on the day of Diwali.

 

Kerosene will also be costlier by less than a rupee soon as the government has decided to raise kerosene dealers’ commission. The oil ministry has not disclosed the quantum of the hike.

 

Kerosene, which is called the fuel of the poor, is currently sold at Rs 14.96 a litre in Delhi. The recent decision to raise cooking gas distributors’ commission would help 13,896 dealers in the country who serve cooking gas to 16.62 crore customers. “In fact, this hike was long pending and it will only cover the increase in labour and fuel costs in delivering cylinders to customers,” said a dealer of Indian Oil Corporation ( IOC).

 

An executive of Bharat Petroleum Corporation Ltd (BPCL) said the company has raised dealer commission for liquefied petroleum gas ( LPG) from Rs 40.71 per cylinder to Rs 44.06 per cylinder. The dealer’s commission has two components, establishment charges and delivery charges. While establishment charges have risen from Rs 24.24 per cylinder to Rs 26.06, delivery charger have been increased fromRs 16.47 per cylinder to Rs 18. State oil marketing companies have absorbed about 35 paise per cylinder of the hike and passed on onlyRs 3 per cylinder increase to the customer.

(Source: The Economic Times, October 29, 2014)

 

CENTRE NOTIFIES GCV-BASED GAS PRICE OF $5.05 MMBTU FOR FIVE MONTHS

 

New Delhi: The petroleum ministry has notified the new base price for domestically produced gas as $5.05 per million British thermal units (mBtu), based on the gross calorific value (GCV) that takes into account the heat value of the fuel, including impurities.

 

The new price will replace the existing price of $4.2 per mBtu and will be in effect for five months from November 1, 2014, to March 31, 2015. “In accordance with the New Domestic Natural Gas Pricing Guidelines 2014 issued by the ministry, the price of domestic natural gas would be $5.05 per mBtu on GCV basis,” the oil ministry said.

 

The Union Cabinet had on October 18 approved increasing the gas price from the current $4.2 per mBtu based on net calorific value (NCV) to $5.61 per mBtu. In GCV terms, the price was seen increasing from $3.79 to $5.05 per mBtu.

 

Heat produced from natural gas is measured in calorific value. Gas producers prefer GCV because it translates into higher price realisation for them whereas net payment is made after discounting for fuel impurities. For state-run Oil and Natural Gas Corporation, every $1 increase in gas price translates into Rs 4,000 crore of revenue and Rs 2,300 crore of profit after tax, according to its chairman and managing director D K Sarraf.

 

Overall, the gas price rise will raise the rate of gas-based power by 63 paise a unit, fertiliser costs by Rs 1,370 a tonne, compressed natural gas rates by Rs 4.25 a kg while piped natural gas prices will rise by Rs 2.60 a standard cubic metre.

 

The new gas price will be reviewed every six months and would be applicable to all gas produced from nomination fields of ONGC and OIL India, NELP blocks, a few Pre-NELP blocks and CBM blocks.

 

India’s gas production fell 13% from 111 mmscmd in 2012-13 to 97 mmscmd last fiscal (2013-14). Output is expected to pick up marginally to 100 mmscmd (or 36 bcm) in the current fiscal including 24 bcm from ONGC, 2.8 bcm from Oil India (OIL) and 9.7 bcm from PSC regime blocks.

 

A bulk of the additional gas would come from ONGC’s ramp up in output from the 24 bcm in current fiscal to 35 bcm by 2019 on the back of development of C-26 cluster next fiscal and Daman offshore block.

 

OIL is also expected to increase production from existing 2.8 bcm to 4 bcm by 2018-19 with production kicking off from Baghjan field in Assam next fiscal and incremental gas output from its Nelp blocks.

(Source: Business Standard October 29, 2014)

 

 

ONGC PLANS TO ENERGISE OIL OUTPUT BY 23% BY FY20

 

NEW DELHI: After scripting a turnaround at its mainstay western offshore fields, state-run ONGC plans to ramp up oil output by 23 per cent to 28-29 million tonnes by 2019-20 as it brings newer fields into production.

 

Oil and Natural Gas Corp (ONGC), which has been under scrutiny of the Petroleum Ministry for falling output in past years, had in 2013-14 produced 22.24 million tonnes of crude oil from its fields. This year it is targeting 23.51 million tonnes.

 

‘We are almost on track to meeting this year targets. Till September, 94 per cent of the targeted daily output was achieved,’ ONGC Chairman Dinesh K Sarraf said.

 

Next fiscal, the production is projected to rise to 24 million tonnes and will reach 28-29 million tonnes by 2019-20. Natural gas production, which was 23.2 billion cubic metres (63.5 million cubic metres per day) in 2013-14, will touch 24 bcm this year and 90-100 bcm in 2019-20, he said.

 

ONGC Director (Offshore) Tapas Kumar Sengupta said the company has this year successfully reversed the flagging output at its western offshore fields as it strategically struck ‘low-hanging fruits’. This included completing three sub-sea wells at the Mumbai High field and using innovative technology to produce more oil B-193 satellite and D1 or NBP fields, he said. ‘In April, western offshore produced 285,642 barrels of oil per day. This month it produced 311,360 bpd, the highest in five years,’ he said. While Mumbai High field and Neelam-Heera fields have been almost flat at 206,000 bpd, Bassein Satellite fields have seen output rise from 30,700 bpd to about 53,000 bpd.

 

‘Last year, our oil production from offshore fields was 15.541 million tonnes. This year we are targeting 16.915 million tonnes,’ he said.

 

ONGC will use a floating production system to ramp up output from the Cluster-7 fields by 50 per cent to 12,000 bpd. Also, another 10,000 bpd is expected from D1 while improved oil recovery and enhanced oil recovery drilling at Mumbai High and Heera fields will help arrest the natural decline that has set in these ageing fields. WO-16 and B-127 fields also will add 15,000 bpd of production.

 

‘The big push will come when we start producing oil from a very significant discovery in the KG-D5 block,’ he said, adding that oil production will start from the discovery in 2019 and quickly reach peak of 4.5 million tonnes.

 

KG-DWN-98/2 (KG-D5) is predominantly a gas rich block and sits next to Reliance Industries’ KG-D6 in Bay of Bengal. ‘I can tell you very emphatically that the picture is not as bleak as it is being projected. We will see production increasing going forward,’ he said.

 

On gas, ONGC’s C-26 cluster project off the Mumbai coast will begin giving 203 mmscmd from 2015-16 while Daman/C-Series fields in western offshore will start producing 2 mmscmd in 2016-17 and go up to 8.5 mmscmd by 2019, he said.

 

A substantial 20 mmscmd of gas will come from KG-D6 by 2018-19, he said, adding that discoveries in Kutch fields will give 2 mmscmd by 2021-22.

(Source: Millennium Post, October 29, 2014)

 

ARUN SHARMA TAKES CHARGE AS INDIANOIL DIRECTOR (FINANCE)

 

NEW DELHI: Arun Kumar Sharma has taken charge as Indian Oil Corporation Ltd Director (Finance). A more than three-decade veteran of IndianOil, he has handled the gamut of activities related to finance. These include project appraisal, project finance and financial accounting activities related to refining and marketing.

 

Sharma has also served as head of IndianOil’s treasury, where he was credited with successfully issuing the company’s first ever foreign currency bonds ($500 million bonds REG-S) in the International markets in 2010. Before becoming Director (Finance), he served as Executive Director (Finance) of the Refineries Division.

 

A chartered accountant, Sharma holds a bachelor’s degree in Commerce and LLB from Allahabad University. With a seasoned and mature approach to issues and excellent domain knowledge, he has actively participated and represented IndianOil in various conferences and seminars across the globe.

(Source: Millennium Post, October 29, 2014)

 

ONGC SCRIPTS TURNAROUND, PLANS TO RAMP UP OIL OUTPUT BY 23%

 

NEW DELHI: After scripting a turnaround at its mainstay western offshore fields, state-run ONGC plans to ramp up oil output by 23 per cent to 28-29 million tonnes by 2019/20 as it brings newer fields into production.

 

Oil and Natural Gas Corp (ONGC), which has been under scrutiny of the Petroleum Ministry for falling output in past years, had in 2013-14 produced 22.24 million tonnes of crude oil from its fields. This year it is targeting 23.51 million tonnes.

 

“We are almost on track to meeting this year targets. Till September, 94 per cent of the targeted daily output was achieved,” ONGC Chairman Dinesh K Sarraf told PTI here.

 

Next fiscal, the production is projected to rise to 24 million tonnes and will reach 28-29 million tonnes by 2019-20.

 

Natural gas production, which was 23.2 billion cubic metres (63.5 million cubic metres per day) in 2013-14, will touch 24 bcm this year and 90-100 bcm in 2019-20, he said.

 

ONGC Director (Offshore) Tapas Kumar Sengupta said the company has this year successfully reversed the flagging output at its western offshore fields as it strategically struck ‘low-hanging fruits’. This included completing three sub-sea wells at the Mumbai High field and using innovative technology to produce more oil B-193 satellite and D1 or NBP fields, he said.

 

“In April, western offshore produced 285,642 barrels of oil per day. This month it produced 311,360 bpd, the highest in five years,” he said.

 

While Mumbai High field and Neelam-Heera fields have been almost flat at 206,000 bpd, Bassein Satellite fields have seen output rise from 30,700 bpd to about 53,000 bpd.

 

“Last year, our oil production from offshore fields was 15.541 million tonnes. This year we are targeting 16.915 million tonnes,” he said.

 

ONGC will use a floating production system to ramp up output from the Cluster-7 fields by 50 per cent to 12,000 bpd.

 

Also, another 10,000 bpd is expected from D1 while improved oil recovery and enhanced oil recovery drilling at Mumbai High and Heera fields will help arrest the natural decline that has set in these ageing fields. WO-16 and B-127 fields also will add 15,000 bpd of production.

 

“The big push will come when we start producing oil from a very significant discovery in the KG-D5 block,” he said, adding that oil production will start from the discovery in 2019 and quickly reach peak of 4.5 million tonnes.

 

KG-DWN-98/2 (KG-D5) is predominantly a gas rich block and sits next to Reliance Industries’ KG-D6 in Bay of Bengal.

 

“I can tell you very emphatically that the picture is not as bleak as it is being projected. We will see production increasing going forward,” he said.

 

On gas, ONGC’s C-26 cluster project off the Mumbai coast will begin giving 203 mmscmd from 2015-16 while Daman/C-Series fields in western offshore will start producing 2 mmscmd in 2016-17 and go up to 8.5 mmscmd by 2019, he said.

 

A substantial 20 mmscmd of gas will come from KG-D6 by 2018-19, he said, adding that discoveries in Kutch fields will give 2 mmscmd by 2021-22.

(Source: The Economic Times, October 29, 2014)

 

 

MARKET HOPEFUL OF A RALLY ON BACKDROP OF FALL IN CRUDE OIL PRICES

 

MUMBAI: With crude oil prices having corrected by 25% since June to $86/bbl, Dalal Street is sniffing at a rally. In the eight out of 11 occasions since 1991, when Brent crude has corrected by more than 20%, the Indian stock markets have given an average return of nearly 17% in the subsequent three months, data compiled by BofAML since 1991 show.

 

The Indian benchmark index, Sensex, has also outperformed the MSCI Emerging Market Index seven out of 11 times, with an average outperformance of nearly 13%, indicating there’s a 93% correlation between the Indian stock markets and crude prices. “We expect markets to extend its rally, as falling crude oil and other commodity prices are most likely to boost the country’s economic growth,” said Gautam Trivedi, managing director at Religare Capital Markets. Market hopeful of a rally on backdrop of fall in crude oil prices Declining crude prices have also raised hopes of interest rate cuts. The NSE Bank Nifty hit a lifetime high of 16,702 points, before closing at 16,667 points on Tuesday, while the BSE Sensex rose 128 points, or 0.48%, to close the day at 26,880. Analysts say the recent cuts in domestic petrol and diesel prices may ease inflation by 50 basis points, while the diesel price deregulation leading to a 5% reduction in prices strengthens the case for a rate cut.

 

“Declining crude oil prices, macro indicators, and government’s economic policies are encouraging for the markets. This makes the case for rates to come down, which could act as a trigger for the Indian markets,” said Motilal Oswal, CMD at Motilal Oswal Financial Services. Oil marketing companies (OMCs) have gained the most from falling crude prices. Shares of HPCL have rallied by over 62%, BPCL has surged 50%, and IOC has gained 33% over the past six months.

 

“Direct gainers from lower crude prices are likely to be oil market ing companies such as BPCL, HPCL, IOC, and crude byproduct users like Asian Paints, Dabur, HUL,” said Jyotivardhan Jaipuria, head of research, Bank of America Merrill Lynch.

 

“Lower crude prices also strengthen the case for rate cuts, which are likely to benefit leveraged sectors such as industrials, real estate, banks, and consumer discretionary rate-sensitives such as auto,” Jaipuria said. Goldman Sachs has slashed its price forecast for Brent crude to $85 a barrel from $100 for the first quarter of 2015, and has said Brent crude could fall further to $80 a barrel in the second quarter, with the US crude dipping to as low as $70 a barrel, citing abundant supply and lacklustre demand.

 

“Every $1/bbl decline in crude price reduces under-recoveries estimate by Rs 4,600 crore. The decline in under-recoveries would increase upstream PSUs’ net crude realisation. Hence, we reiterate our buy stance on upstream PSUs such as ONGC and Oil India,” said Dayanand Mittal, analyst at Ambit Capital.

(Source: Economic Times October 29, 2014)

 

IOC GROSS REFINERY MARGINS UNDER PRESSURE

 

New Delhi: The gross refinery margin of Indian Oil Corporation (IOC) continues to be very low compared to private refiners.

 

“The GRMs for the last month has not been very good. It is hovering around $2 a barrel. We are working on measures to increase our GRMs including focusing on value added products and integration with petrochemical units,” said Sanjiv Singh, Director (Refineries), IOC.

 

The GRM is the difference between the selling price of the finished products and raw material cost. It is believed that private sector players calculate their GRMs on actual price, while public sector players like IOC base their GRMs on price at which the crude has been sourced.

 

Singh told BusinessLine that IOC’s GRMs are not directly comparable with private players “as we do not take into account the marketing margins.”

 

Reliance Industries, which announced its financial results for the second quarter of the 2014-15 fiscal on October 13, reported a GRM of $8.3 per barrel. Essar Oil in its first quarter numbers had reported a GRM of $9.04 a barrel. Essar’s second quarter numbers are yet to be released.

 

The Petroleum & Natural Gas Minister Dharmendra Pradhan had told BusinssLine that “each refinery will have its own benefits no matter how old it is. When market dynamics are in play, the refiners have to see how they can deliver the product at competitive rates. The GRM of PSUs are low and they need to improve it. The efficiency needs to go up and the way to do that is to bring technology and a smart economically viable procurement model for crude.”

 

While agreeing with what the Minister said Singh pointed out that “approach has to be different for smaller refineries vis-a-vis larger ones. Smaller refineries need to focus on value added products. Integration with petrochemicals is another good option for improving GRMs. But upgrading the refinery to give it a greater complexity – ability to process cheaper varieties of crude oil – may not be viable at every refinery.”

 

Arun Kumar Sharma has taken charge as Director (Finance) of IOC. Sharma has over three decades of experience in Indian Oil and has handled the finance division. He has served as the head of the company’s treasury, besides financial accounting activities related to refining and marketing.

(Source: Business Line October 29, 2014)

 

DOUBTS PERSIST OVER LPG-AADHAAR LINK

 

HYDERABAD: The proposed re-launch of Direct Benefit Transfer scheme (DBT) for LPG subsidy in three Telangana districts seems to have raised more concern and confusion than relief among the public as well as LPG dealers.

 

The LPG dealers are concerned that de-linking the scheme with Aadhaar and paying subsidised amount based on only the bank account number may not be a very smooth affair. As the LPG dealers or civil supplies department are yet to receive any formal instructions on the subject, it is unclear on what methods the officials will use to weed out dubious accounts.

 

“About 85 per cent Aadhaar card holders in Telangana have linked their bank accounts for the scheme but our concern is regarding the remaining 15 per cent population,” pointed out Madhukar Ingole, Telangana state LPG coordinator.

 

“Previously, when there were multiple Aadhaar cards we were able to weed it out but in case of bank accounts, we do not know how to validate them. In a couple of days, we will receive the modality and guidelines and depending on that we can comment further.”

 

The DBT scheme for LPG is being revived in 54 districts in the country in the first phase which includes Hyderabad, Rangareddy and Adilabad. Aadhaar officials, expecting that the re-launch of the scheme or re-linkage with Aadhaar, may set off another round of scramble are prepared for the situation.

 

“We are well prepared in case LPG subsidy is linked with Aadhaar card. We have already seeded 90 per cent of the data and will soon cover the rest of the population. As of now, we haven’t received any written instructions from the Centre on this issue,” said M.V.S. Rami Reddy, Deputy Director-General, UIDAI, Hyderabad.

(Source: Hindu October 29, 2014)

 

 

BRITISH PETROLEUM PLC WRITES DOWN KG-D6 VALUE BY $770 MILLION

 

NEW DELHI: BP plc has written down the value of its shareholding in the eastern offshore KG-D6 block by $ 770 million dollar following a lower-than-expected gas price hike which it saw as a transition to market-based pricing.

 

Announcing its third quarter results, BP announced a $ 770 million write down in value of KG-D6 although it said the new gas pricing formula, as a transition to market-based pricing, was a step in the right direction.

 

BP in 2011 bought 30 per cent interest in Reliance Industries’ eastern offshore KG-D6 as well as 20 other oil and gas exploration blocks for $ 7.2 billion. Bulk of this was for the producing block of KG-D6 and gas discovery area of NEC-25.

 

“The third-quarter result included a $ 770-million charge (which we classify as a non-operating item) to write down the value ascribed to Block KG-D6 in India,” BP said in a statement.

 

The charge, it said, “arises as a result of uncertainty in the future long-term gas price outlook, following the introduction of a new formula for Indian gas prices, although we do see the commencement of a transition to market-based pricing as a step in the right direction.”

 

The government had on October 18 approved a new formula for pricing of all domestic gas. The rate, when the formula comes into effect from November 1, would be $ 5.61 per million British thermal unit as against current $ 4.2.

 

The price is lower than $ 8.4 approved by the previous UPA government and general expectation of a rate around $ 6.5 after some deductions from that price.

 

A BP India spokesperson said, “The gas price decision increases the gas price applicable for existing production and is a first step towards creating the more competitive economic landscape required to encourage the development of India’s gas resources.”

“The timing of this gas price decision just prior to our Q3 stock exchange announcement and the requirement to understand the long term price-outlook to support future developments has led to the write down. This is in compliance with standard accounting policies and Securities Exchange requirements,” the spokesperson said.

 

Both BP and RIL have been advocating market-linked gas pricing and had initiated an arbitration against the government for not revising rates from the due date of April 1, 2014.

 

The $ 4.2 per mmBtu rate, fixed in 2007, was for the first five years of production from KG-D6 fields. KG-d6 fields started gas output from April 1, 2009.

 

BP said it expects further clarity on the new pricing policy and the premium that the government has promised to pay for future deepsea and complex gas discoveries.

 

“We expect further clarity on the new pricing policy and the premiums for future developments to emerge in due course,” the statement said.

(Source: The Economic Times, October 29, 2014)

 

RELIANCE, ESSAR OIL SAY CYCLONE NILOFAR WILL NOT DISRUPT OUTPUT

 

MUMBAI: Top private oil refiners are taking precautions but do not anticipate any impact on their operations from cyclone Nilofar, which is expected to hit the country’s west coast on Saturday, officials said.

 

Nilofar, classified as a ‘very severe cyclonic storm’, is expected to weaken to a ‘cyclonic storm’ when it makes landfall on the northern Gujarat coast, according to the Indian Meteorological Department.

 

Reliance Industries operates the world’s biggest refining complex in Gujarat, where its two adjacent plants can process about 1.4 million barrels per day (bpd) of oil.

 

But that complex and Essar Oil Ltd’s 400,000-barrel-per-day Vadinar refinery do not lie directly in the expected path of the cyclone, officials from both companies said.

 

“We have operating procedures for any kind of eventuality,” a person with direct knowledge of Reliance’s operations said.

 

Essar Oil said in an emailed statement that it was taking “all due precautions” and did not expect any production outage.

(Source: The Economic Times, October 29, 2014)

 

LN MITTAL’S FRONTLINE MAN SUDHIR MAHESHWARI QUITS

 

NEW DELHI: Sudhir Maheshwari, seen as a close confidante of steel baron Lakshmi N Mittal, has quit ArcelorMittal. Till now a frontline person in the Group, Maheshwari will leave on March 31, 2015.

 

Soft-spoken but firm, Maheshwari was viewed as the perfect link between the two generations at the top. Being 13 years younger to LN Mittal and 13 years older to Aditya Mittal, he was seen by many within the Group as one who helped maintain ‘business continuity’.

 

In an internal communication to Group employees, Mittal, Chairman and CEO, ArcelorMittal, said “I am writing to inform you that Sudhir Maheshwari, member of the Group Management Board and an incredibly loyal and much valued colleague for the past 26 years, has decided to leave us to pursue other opportunities.”

 

In 2008, Maheshwari became a member of the Group Management Board, with responsibility for corporate finance, mergers, acquisition and divestments, risk management and the Group’s operations in India and China.

 

As CEO of China he oversaw the construction and recent inauguration of VAMA joint venture, a plant focussed on high-quality steel for the automotive market. Recounting the role Maheshwari played in the Group, Mittal said, “He has also played a key leading role in various financing and tax structuring activities of the company through his career with us. He has handled and led many challenging projects at the company with a clear mandate and utmost focus.”

 

“Between 2000 and 2006 particularly we completed many acquisitions: Romania, Czech Republic, South Africa, Poland, ISG, Ukraine, Liberia, and, of course the merger to create ArcelorMittal,” Mittal said, adding that “No matter how tough or challenging the situation, he always rose to the challenge, maintained extraordinary energy and commitment and saw things through to a successful completion.”

 

Maheshwari has also played a key role in Mittal’s foray into energy sector. Director on the Board of HPCL-Mittal Energy Ltd, a joint venture between Hindustan Petroleum Corporation Limited (HPCL) and Mittal Energy Investment Pte Ltd, Singapore, a Mittal company, Maheshwari, was seen as a ‘perfect professional’.

 

HMEL operates the Guru Gobind Singh Refinery of 9 million tonne per annum at Bathinda in Punjab. Those who have closely worked with Maheshwari said “if he was critical of you, he was also appreciative of your good work.”

 

“I first met Sudhir in Calcutta in 1988. He was a young graduate, full of energy and looking for an exciting opportunity to leave India for a couple of years and see the world. We were just starting our journey to Trinidad and so I offered him the opportunity to join us there,” Mittal said in his letter.

 

Mittal goes on to say from 1994 to 2000, the journey continued and Maheshwari worked in Hamburg, Dusseldorf and Luxembourg, before moving to London where he reported to Aditya.

(Source: Business Line, October 29, 2014)

 

WILL INDIAN SHIPYARDS MISS THE LNG BUS?

 

Indian shipyards are finding it hard to meet GAIL’s eligibility criteria for building LNG ships. It has been two months, but none of the yards that expressed interest in the public sector gas importer’s call to hire three Indian-built ships, have put in the bids as yet. The deadline is two days away.

 

Besides pricing, getting a technology partner seems to be a hurdle. India has never built an LNG vessel and therefore a technology tie-up has been specified by GAIL as a pre-condition to bid. Yards in South Korea and Japan, which have the requisite experience, are reluctant about sharing their technology with India.

 

Whatever may be the reason, it would be suicidal for a country, that recently celebrated its successful mission to Mars, to give up its plans to enter building LNG ships due to technological shortcomings. It was the Prime Minister’s Make in India strategy that forced GAIL to go for three indigenously built vessels out of the nine which it proposes to hire for importing liquefied natural gas from the US.

 

Cochin Shipyard, L&T, Pipavav Defence and Engineering Company have the physical infrastructure to take up the job. However, it appears that they would miss the bus unless the deadline and eligibility norms are relaxed to find a technology partner.

 

For several reasons, it is important to ensure that domestic yards do not miss this opportunity. Given that India will be depending on large volume of imported LNG in the coming years, control over building and operating gas carriers is strategically important. (Currently India is the world’s fifth largest importer of LNG and its rank is poised to improve in future).

 

It is pertinent to note that GAIL has already tied-up with Shipping Corporation of India to operate LNG vessels with an option for the latter to partly own them. SCI is the only Indian shipping line operating LNG vessels. For shipyards with huge idle capacity an LNG order will be a great boon. The slow-down in global shipping in the last six years left shipyards with few orders. It would be crucial for them to tap new avenues like building high-value specialised vessels.

 

An LNG vessel today costs more than $200 million to build. It would be a great loss for domestic yards, if they let go the GAIL offer. It is understandable that foreign yards will not easily part with their technology and create competition for themselves. As pointed out by an official from a shipyard, why should foreign yards share their technology unless they benefit in some way? There are two ways out to ensure domestic yards’ participation. As suggested by an official, GAIL should relax its norms without compromising on the security of the vessel. This would enable local yards to tie-up with smaller foreign yards which have the technology but may not have the experience like Korea or Japan.

 

Two, New Delhi could tap Government channels to get technology tie-up with yards in South Korea, which has a lot of business interest in India and it would benefit both to have a long-term tie-up in shipbuilding. Why not explore an equal-partnership option?

(Source: Business Line October 29, 2014)

 

 

OIL PACTS IRK CHINA

 

Beijing:  China on Tuesday warned it will firmly oppose any exploration activity in South China Sea if it undermines its “sovereignty and interests”, hours after India inked a pact with Vietnam for exploration.

 

“…if such activity (exploration) undermines sovereignty and interests of China we are firmly opposed to this,” Chinese Foreign Ministry spokesman Hong Lei said.

 

China refers to Spartly islands which comprises more than 750 reefs, islets and atolls as Nansha islands.

 

Hong was reacting to reports of India accepting Vietnam’s offer of additional blocks for oil exploration during the current visit by Vietnamese Prime Minister Nguyen Tan Dung to New Delhi.

 

“Currently South China maintains tranquillity in general. I wish all countries do more things that are conducive to the peace and stability of the South China Sea,” Hong said.

 

China’s claims of sovereignty to almost all of the South China Sea put it on collision course with Vietnam, the Philippines, Malaysia, Brunei and Taiwan.

 

The ONGC has explored some wells in the past but did not find significant oil deposits.

 

China had struck a similar posture when Vietnam offered new wells to India during President Pranab Mukherjee’s visit to Hanoi in September.

 

Mukherjee dismissed Chinese objections saying that the ONGC has been exploring in the South China Sea since 1988.

 

The oil exploration in the South China Sea is a sensitive issue as China’s efforts to explore oil in May this year resulted in massive showdown between China and Vietnam with their ships colliding with each other for days.

 

Some Chinese were killed and over a hundred injured in anti-China riots in Vietnam.

 

After that, the two sides are now trying to rebuild their relations.

(Source: Business Standard October 29, 2014)

 

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