Rangarajan Committee Report-I: Petroleum ministry sticks to the Committee's formula

May 20: The petroleum ministry`s final note to the Cabinet Committee on Economic Affairs (CCEA) on a new gas price based on the Rangarajan Committee Report is now ready. The inter-ministerial consultations are over and while some ministries have suggested their own pricing formulas, the petroleum ministry sticking to the Rangarajan Committee's suggestions in letter and spirit. The note is now headed to the Cabinet Secretariat for placement before the cabinet.
 The following conditionalities will apply
 8The price will be applicable to all gas produced domestically, irrespective of the source, whether conventional, shale, CBM etc.
 8The new price will not be applicable where prices have been fixed contractually for certain period of time.
 8These prices shall also not be applicable where the contract provides a definite formula for natural gas price indexation / fixation.
 8Further, it is clarified that the proposed pricing formula would only apply prospectively and is not proposed for application to gas prices already approved.
 8The prices determined under these guidelines shall be applicable to all consuming sectors uniformly.
 8These guidelines are also applicable to natural gas produced by ONGC/OIL from their nominated fields.   Details

Rangarajan Committee Report-II: Details of assumptions made to arrive at netback FOB price

May 20: The petroleum ministry has taken the average of the weighted netback price of all Indian imports at the wellhead of the exporting countries and the average of prices prevailing at trading points of transactions to arrive at the price of gas in India.
 8The net back FOB price is to be calculated based on daily spot LNG vessel chartering rates and accompanied and accompanying shipping related costs. These additional costs include:
 --Daily spot LNG vessel chartering rates for east and west of Suez voyages based on 138,000 - 155,000 cu m standard size vessel.
 a daily boil off rate of 0.15 % / day based on 98 % vessel capacity utilization rate
 --An average 50 pc of fuel consumption based on daily bunker consumption of 150 t based on local rates
 --An average of 50 pc of LNG fuel consumption based on the boil-off rate.
 --Voyage timing based on a laden leg speed of 19.5 knots.
 8It is proposed to adopt Netback FOB prices reported in standard industry sources like Platts, Argus etc.
 8The average price of liquefaction costs for the older plants is of the order of $ 2.5/mmbtu. For plants which started deliveries in 2010 or after, the liquefaction cost is of the order of $ 3.5 to 4.0/mmbtu. A recent contract signed by GAIL with the Sabine Pass facility in United States of America for supplies to commence in the year 2016 from a brownfield project envisages liquefaction cost of around $ 3.0/mmbtu. Hence, it is recommended that an average of $ 2.5/mmbtu may be adopted as the liquefaction cost for older plants, and $ 3.5/mmbtu for exports from plants starting deliveries after 2010. These figures may be reviewed after five years.
 8The trend of liquefaction costs can be ascertained from the data available from the reports of Facts Global LNG and Wood Mackenzie.
 8Where it is not possible by any means (through customs or through industry sources etc.) to ascertain whether a particular shipment is from pre-2010 or post 2010 LPG Train, an average of $ 3.0/mmbtu may be assumed as the liquefaction cost.
 8The transportation cost from the well-head to the liquefaction plant may be considered as around $ 0.5/mmbtu. This includes handling charges and sweetening costs of gas.   Details

Rangarajan Committee Report-III: Details of the second leg of the pricing formula

May 20: For the average of prices prevailing at international trading points of transactions -- the second leg of the pricing equation -- the following parameters are taken into account:
 8PWAV = (A1 PHH+A2*PNBP+ A3*PJAV)/(A1+A2+A3), where PWAV= Weighted average price to producers in the global markets, and A1 = Total volume consumed in North America at average Henry Hub prices on yearly basis i.e. 12 months or four quarters with a lag of one quarter. PHH = Annual average of daily prices on Henry Hub for the relevant year arrived from the four quarters with a lag of one quarter. A2 = Volume consumed in EU and FSU in the relevant year i.e. 12 months or four quarters with a lag of one quarter. PNBP = Annual average of daily prices on National Balancing Point (NBP) in the UK for the relevant year arrived from the four quarters with a lag of one quarter. (NBP is a good proxy for the prices in .Europe as this is the oldest and most liquid exchange in Europe). A3 = Volume imported by Japan in the relevant year or four quarters with a lag of one quarter. PJAV= Yearly weighted average producers netback price of gas in Japan for the relevant year (weighted by the total volume of long term and spot imports) or four quarters with a lag of one quarter.
 8It is proposed that PWAV be calculated every quarter from the formula. Henry Hub, Netback consumptions will be obtained from authoritative industry sources like IEA, Argus etc, EIA etc.
 8The netback price of LNG to be delivered in Japan from various potential sources across the globe can be determined from the FOB price at the loading country.
 8The netback FOB prices and volumes at those prices from various exporting countries are available from LNG Daily and World Energy Intelligence, Argus, Platts etc.
 8The FOB price includes liquefaction costs of gas at the plant in the producing country at the loading port, plus the transportation, including handling and sweetening charges of the gas from the producing asset to the liquefaction plant.   Details

Rangarajan Committee Report-IV: Price to be fixed every quarter

May 20: The petroleum ministry has proposed a Gas Pricing Committee with the following members to determine the correct price of gas according to the formula it has proposed
 8Director PPAC
 8Advisor (Finance) in the petroleum ministry
 8Director (Marketing) of GAIL
 8Director (Commercial) of PLL
 8An oficer of Customs department of the rank of Commissioner Customs (to be nominated by the Ministry of Finance)
 8This Committee will meet every quarter to compute and finalize the gas price calculations, which will be applicable for the coming quarter.
 8The gas price would be notified in advance on a quarterly basis using the data for four quarters, with a lag of one quarter.   Details

Rangarajan Committee Report-V: Other ministries come out with their own formulas

May 20: When the petroleum ministry note on gas pricing was circulated for inter-ministerial comments, the Planning Commission, the ministry of finance and the DOF suggested their own formulas. The petroleum ministry calculated the corresponding prices arrived at against each of these formulations. The following are the details:
 8The petroleum ministry: Uses the Rangarajan Report formula to arrive at an indicative gas price of $6.7775/mmbtu
 8The Planning Commission formula calls for market based pricing regime based on Import Price Parity, arriving at a value of $10.80/mmbtu
 The finance ministry has proposed two scenarios:
 8Rangarajan Methodology excluding the second leg of the formula that takes into account prices in international hubs and Japanese imports. The price comes to $6.77/mmbtu but the price is likely to be much higher at $8.5 to $10.0 / mmbtu in 2013-14 and 2014-15.
 8Rangarajan methodology but only taking the netback from long term contracts:  The price for January 2011 was $2.90/ mmbtu. The netback value at the wellhead based on only long term contract would be $4.31 / mmbtu for 2011-12 and $6.79  /  mmbtu  for  2012-13. The price projected is $8.93 / mmbtu in 2013-14, $10.29 / mmbtu in 2014-15 and $10.92 / mmbtu in 2015-16, assuming JCC price of USD 110/ barrel.
 8The DOF has called for a weighted average of the two legs of the pricing formula instead of a simple average. The price comes to $6.78/mmbtu.
 8The power ministry's cost plus regime allows for a price of only $4.14 /mmbtu.   Details

Rangarajan Committee Report-VI: Power and fertilizer sectors to end up paying a heavy price

May 20: There will be a heavy price to pay if the gas price is increased according to the formula recommended by the Rangarajan Committee and adopted by the petroleum ministry.
 8There will be substantial additional outgo on fertilizer subsidy.
 8Overall impact of increase in gas price by  $1/ mmbtu will be Rs 3155 crore per annum from 2013-14 onwards for 23 MMT urea production.
 8This will increase to Rs 4144 crore per annum per $1/ mmbtu increase of gas price, for 32 MMT urea production from 2017-18 onwards.
 8The impact of every US dollar increase in gas price would be about Rs 10,040 crore per annum on the power sector, at 70 % Plant Load Factor (PLF) for 28,000 MW capacity.
 8On the other hand, it is argued that the increase in price of gas will raise overnment revenues through royalty and profit Ppetroleum to be paid by producing companies. Such increase will depend on actual production, profit share of government and the actual price to be paid. The petroleum ministry however found it difficult to quantify the increase. The exercise could be undertaken on the basis of assumptions, but this would be hypothetical at best, the ministry felt.
 8The increase in gas price will raise revenues of E & P contractors both in public and private sector. Such increase will depend on actual E & P costs, profit share as per PSC, gas prices etc. Various scenarios can be built up on the basis of assumptions, but these would be hypothetical again, the ministry claimed.   Details

Gas supply to power sector-I: EGoM to review existing gas utilization policy

May 20: Pressure from various quarters and active lobbying by the distressed power sector in the country have forced the government to reexamine the existing gas utilization utilization policy.
8Criticism is mounting against the fact that fertilizer and LPG units have grabbed almost the entire supply of gas from the D-6 block while the gas based power sector has been left stranded for gas.
8The government faces an obvious dilemma: On one hand, fertilizer and LPG are highly subsidized and any cut in their allocations may lead to a domino effect, both impacting the exchequer directly, as lower gas availability for them will translate into higher imports at higher prices. Since these sectors are subsidized, the differential will go directly from the government's coffers.
8The power lobby has launched a strong campaign, lead by the well connected power minister Jyotiraditya Scindhia and backed by Planning commission member B.K. Chaturverdi. The entire power fraternity has been up in arms against the perceived injustice being meted out to the sector. After all, they claim, Rs 36,000 crore of gas based power generation assets are now lying idle for want of gas.
8Beginning first week of March 2013, KG D-6 gas allocation to the sector has come to a grinding halt. This event as acted as a catalyst for equal priority for fertilizer and power sectors. The power sector's argument is that pro-rata cuts resulting out of dwindling KG D-6 gas supply be applied uniformly across all sectors.
8The Empowered Group of Minsiters (EGOM) will have to soon take a decision on how the handle this crisis. A note is being prepared for deliberation by the committee and a decision is expected to be taken on gas utilization policy. Whether or not any change in status quo will occur consequent to these deliberations remains to be seen.
  Details

Gas supply to power sector-II: Planning Commission's bats for power sector on PM's intervention

May 20: After receiving continuous representations from the power ministry and the industry lobby, along with Andhra CM, Reddy`s relentless solicitations for gas (the state has the largest volume of stranded gas based power capacity), in March 2013, Prime Minister Manmohan Singh had asked B.K.Chaturvedi, Member (Energy) of the Planning Commission to come up with workable solution to get over the crisis. Chaturverdi had proposed the following policy interventions:
8Shortagein gas must be shared by both power and fertiliser sectors equitably. What is more, no distinction should be made between private and public sector plants.
8To ensure optimal utilization of power sector assets, 35% of the gas requirement must be met from domestic sources and 15% from LNG over a period of two years. To begin with, this could be 30% and 15% respectively.
8Domestic gas should be available only to those units that make power available to consumers at regulated rates. It should not be made available for merchant power plants. The merchant power plants should use LNG for generating power and selling in the open market and earn profits.
8The overall allocation for the power and fertilizer sectors should be 75% of the total domestic gas production. Of this, 45% must be given to the power sector and 30% to fertilizer sector. In 2010-11, it was 69.5%. This will mean about 15% cut in other sector`s use.
8No gas-based power plants will be sanctioned or permitted till domestic gas meets 60% of requirement.
8If there is no pipeline capacity for transport of LNG, domestic gas will be given to GAIL for supply to power plants at pooled prices. These pooled prices will be based on pooled cost of gas, including LNG and domestic gas.   Details

Gas supply to power sector-III: Rs 4000 crore additional fertilizer subsidy vs. use of Rs 36,000 crore of stranded capacity

May 20: The proposal put forward by Chaturvedi is expected to bring in a much need relief for the gas-strapped power sector but the cost of the fertilizer sector.
A consensus seems to be emerging that Chaturvedi`s suggestions will be beneficial to the national exchequer, even if the increased subsidy outgo on the fertilizers after redrawing the supply matrix is factored in.
8Increase in availability of gas to theh power ower sector: In case the Chaturvedi recommendations are accepted, the availability for power sector will increase to 52 MMSCMD (37 mmscmd of domestic gas from 30 mmscmd plus import of 15 mmscmd ) and Plant Load Factor (PLF) will go up to 43%.
--The average power tariff based on this availability is estimated to be around Rs. 5-5.50, which though high, will be absorbed in the southern and western regions where there is severe shortage of power.
8Reduction in availability of domestic gas to fertilizer sector: Means additional import of fertilizers to the extent of shortfall in production at use of LNG at an average price of $15-18 / MMBTU against $4.20/MMBTU at present, though this figure may get revised to $6-$8 under new policy regime proposed by Dr. C. Rangarajan led committee.
Implication: What is sought to be juxtaposed is the additional subsidy outgo of Rs. 3,000-4,000 crore on fertilizer subsidy against the economic gain of utilization of stranded gas based genenration assets worth Rs. 36,000 crore.
(Click on Details for more information)   Details

Gas supply to power sector-IV: Andhra CM comes up with a radical proposal

May 20: Andhra Pradesh has been the worst affected state in the country due to decline in KG-D6 output. A vast majority of the gas based power plants were planned in the state keeping in mind the expected increase in KG-D6 output, but failure by RIL to ramp up production and the subsequent decline in output have thrown the local power sector completely out of gear.
8In a letter written to the petroleum minister, Veerappa Moily, Andhra Pradesh Chief Minister, N Kiran Kumar Reddy said that while power demand had gone up to 286 MU/day, the state government was able to source only 225 MU/day, even after purchasing power from energy deficient southern region at exorbitant rates.
8This has forced the authorities to impose a power cut of up to 40% in the state.
Reddy has suggested the following two options to tide over the existing power crunch in his state:
8The first option would be that RLNG available on the west coast of the country be allotted to the western and northern regions of the country while their share of KG-D6 gas be transferred to the state of Andhra Pradesh. This essentially means swapping of gas. The CM has assured that his state is ready to bear the extra cost differential.
8The second option put forward envisages that the domestic gas being supplied to western and northern region be allotted to Andhra Pradesh. This would mean idling generation capacities in states such as Maharashtra and Gujarat while the states make up  the deficit by purchasing power power from the New Grid at an average price of Rs.3 to 3.50/unit.
8Since it costs about Rs.7/unit for AP to buy power from the Southern grid, Reddy is ready to pay the extra cost for procuring the power from new grid by the these states.
(Click on Details for more information)   Details

Gas supply to power sector-V: Scindia turns on pressure

May 20: Power minister Jyotiraditya Scindia, in his letter addressed to Moily, had argued according priority to the power sector, at par with the fertilizers sector in allocation of KG-D6 gas. He had said that the power plants cannot source RLNG due to commercial considerations and it has no option but to wait for resumption of domestic gas supplies in order to start operating again.
 8Scindia said that the plants are unable to source RLNG available in the open market as the cost of power generated is overpriced as compared to power from alternative sources available in the market.
 8In view of this limitation, he had demanded an equitable distribution of gas to both sectors saying that it is essential for the plant to begin operating again.
 8In another correspondence, asking for urgent intervention of the EGoM, Scindhia had said that for gas based power plants with a total capacity of 18,000 MW to operate at 70-75% Plant Load Factor (PLF) an amount of 67 mmscmd was needed.
 8But as of now, the sector is able to source less than half of the requirement or about 32.57 mmscmd for its operations which has put a great strain on the financials and dented the economics of running a power station.
 8In view of these considerations, Scindhia wants equal priority with fertilizer for the power sector in allocation of domestic gas.
 (Click on Details for more information)   Details

Gas supply to power sector-VI: A multiplier benefit of Rs.265,000 crore, claims power sector

May 20: Perhaps the strongest economic case for moving the power sector higher up in the priority order has been made by the Association of Power Producers (APPs). In its letter to the petroleum ministry, the APP had presented an economic analysis of prioritizing the power sector over fertilizer sector. The APP claimed that by doing so, the GDP would see an enhancement of 3% or a multiplier effect of a colossal Rs.265,000 crore.
8In the above letter APP attached a note in support of economic rationale of diverting 15 mmscmd of domestic natural gas to power sector from the fertilizer sector.
8As per the cost benefit analysis, the APP submitted that despite an additional burden of Rs.6,300 crores to the government on account of higher fertilizer subsidy, the multiplier benefit on the economy of allowing stranded gas capacity to go back on stream will have an impact which will be 40 times larger.
8Other than presenting the economic rationale for higher gas allocation to the power sector, the a group of Independent Power Producers (IPPs) have also approached the Hyderabad High Court, filing a writ petition alleging unfair treatment in allocation of gas to the power sector in the state of Andhra Pradesh.
8The IPPs want the petroleum ministry to make good its promise of allocating enough gas for the power plants in the state to run at 75% PLF.
8Clearly, pressure is being mounted on the government from every possible direction.
(Click on Details for more information)
  Details

Gas supply to power sector-VII: Existing priority order of gas allocation

May 20: The gas being allocated at present to different consuming sectors is based on the decision of the Empowered Group of Ministers (EGoM) taken in May 2008. The chief premise while setting the order of priority was that domestic production would commensurate with time and all consuming sectors would be adequately satiated. But dwindling supplies from KG-D6 has upset all calculations which has led to a mad scramble for the little gas that is available. 8The website carries here the EGoM mandated priority order for APM and Non-APM gas, in descending order of priority.
 --Existing gas based urea plants, which are now getting gas below their full requirement, would be supplied gas so as to enable full capacity utilization.
 --A maximum quantity of 3 mmscmd would be supplied to existing gas based LPG plants
 --Upto 18 mmscmd natural gas, being the partial requirement of gas based power plants lying idle and under-utilized and likely to be commissioned during 2008-09, and liquid fuel plants, which are now running on liquid fuel and could switch over to natural gas, would be supplied to power plants.
 --A maximum of 5 mmscmd would be made available to City Gas Distribution (CGD) projects for supply of Piped Natural Gas (PNG) to households and Compressed Natural Gas (CNG) in transport sector.
 --Any additional gas available beyond categories aforementioned, would be supplied to existing gas-based power plants, as their cumulative requirement is more than 18 mmscmd.
 8Priority order for Non-APM Gas
 In case of Non-APM gas from new fields of the nominated blocks and is allocated by the Government in the following order of priority:-
 --Gas-based fertilizers plants
 --LPG plants
 --Power plants supplying to the grid which have long term PPA with public utilities at regulated tariffs.
 --City Gas Distribution projects for domestic transport sectors
 --Steel, refineries & petrochemicals plants for feedstock purposes
 --City Gas Distribution projects for industrial & commercial customers
 --Any other customers for captive & merchant power, feedstock or fuel purposes.
 (Click on Details for more information)   Details

Defence ministry verbal directive stops exploration work in Block MB-DWN-2010/1: BG miffed

May 20: BG Exploration and Production India Limited (BGEPIL), operator of the block block MB-DWN-2010/1 has cried foul over verbal orders given by the navy to stop carrying out seismic surveys for a period  of 48 hours beginning 25th April 2013 without any written notification.
8The company is miffed with these orders claiming that this sudden and unexpected step was not in conformity with assurances and approvals provided by government and its agencies to the contracting parties.
8BGEPIL said that  it had started the operations after obtaining  all necessary clearances from defense ministry.  It had even informed the defense ministry that the seismic acquisition programme would have to be a continuous process but despite this the company was forced to stop its survey.
8Though the the verbal orders in April had allowed restricted activities in a small south-east corner of the block , BGEPIL said that this allowance was of no consequence as it was not feasible to acquire seismic lines as planned. As a consequence, the seismic acquisition schedule has been adversely impacted, leading to added cost implications for the company.
8It has claimed that the contractual cost and time schedule implications due to suspension of activities in the middle of the acquisition programme would be further compounded by the approaching monsoons on the west coast of India when work comes to a halt due to rough weather. It would  also have an effect on the commitments made by CGG Veritas, which was tasked with the seismic survey of the block
8In view of these, BGEPIL has demanded the petroleum ministry's intervention into the matter, so as to avoid any further delay on account of arbitrary stoppage of work by defence authorities or any other agency, in order to achieve its target of survey work completion by 3rd May.
8As per Minimum Work Programme (MWP) commitment for the block, 2D seismic survey of 2000 LKM has to be completed during the initial exploration period. CGG Vertias was selected as the contractor for conducting the exercise by the BGEPIL led consortium.
(Click on Details for more information)

Private sector oil refining companies to outperform public sector peers in capacity utilization during 2013-14

May 20: According to the data furnished by Petroleum Planning and Analysis Cell (PPAC) under the petroleum ministry pertaining to the targeted refining capacity for refineries in India for 2013-14, private sector refining companies are expected to outperform their public sector counterparts as far as capacity utilizatio is concerned.
8The private players, with a cumulative refining capacity of 80 MMTPA are expected to process about 88.2 MMT of crude by the end of the 2013-14, marking a capacity utilization of over 110%.
8The bulk of crude processing in the private sector will be done by RIL, with a cumulative crude processing of 68.54 MMT against a capacity of 60 MMT, marking a capacity utilization of over 114%.
8Another refining major, Essar Oil Limited (EOL) is expected to show a capacity utilization of about about 98.68%. The refining capacity of EOL's refinery at Vadinar was ramped up to 20 MMTPA from 18 MMTPA in June 2012.
8The targeted refining capacity for public sectors players is expected to around 120 MMT, which would make for a little over 100% capacity utilization. However HPCL is expected to over perform, processing 1.6 MMT more than capacity of 14.8 MMTPA followed by IOCL, which would process 0.8 MMT more than capacity of 54.2 MMTPA.
8Public companies such as CPCL and NRL are expected to experience less than flattering refining capacity utilization of 93% and 86% respectively while targeted capacity of  ONGC's mini refinery at Tatipaka is expected to be only 0.058 MMT as compared to a capacity of 0.066 MMT .
8In the JV category, BORL, a joint venture of BPCL and Oman Oil Company together with HMEL, a joint venture of HPCL and Mittal Energy Investments, are cumulatively expected to process only about 12.9 MMT of crude against the refining capacity of 15 MMT.
8The website carries here details of projected refining capacities of all domestic refineries and their month wise refining targets in the public, private and the joint sector for 2013-14.
(Click on Details for more information)   Details

Exploration of gas hydrates: Standing Committee expresses displeasure at slow progress

May 20: The National Gas Hydrate Programme (NGHP) was initiated way back in 1997 to explore the presence of gas hydrates in the country and while good progress was made much more needs to be done. In this context, the Standing Committee on petroleum  while taking stock of the petroleum operations in the country under the aegis of the petroleum ministry has expressed dissatifaction with the progress made by the country's gas hydrate programme.
8The committee has noted that India is known to have massive deposits of gas hydrates in numerous complex geological settings.
8The programme has indeed established the presence of gas hydrates in the East Coast as well as in the  Bay of Bengal and the Andaman Islands and had collected number of gas hydrate cores from 21 sites and 39 holes.
8Further, the total prognosticated gas resource from the gas hydrates in the country is placed at a massive 1894 TCM but  for exploitation to take place the slow pace of by the NGPH has to be expedited. There is also the need to achieve some break through in R&D activities as gas hydrates are still to be evacuated in commercial quantities anywhere in the world.
8The committee has also expressed its dissatisfaction with the programme, claiming that the government has been unable to provide a clear-cut road map with a stipulated time frame to achieve progress in development of this unconventional resource.
8In view of sluggish work under the NGHP, the Standing Committee has recommended stepping up R&D activities by setting up a national gas hydrate research centre. The Committee has also recommended training of human resources and signing up international collaborations to gain technical know-how to boost exploratory efforts in the country.
(Click on Details for more information)   Details

Fuel loss in PSU refineries-I: Ministry lists a slew of remedial measures taken to curtail losses

May 20: In its Action Taken Note (ATN) submitted to the Standing Committee of Petroleum and Natural Gas, the petroleum minsitry has claimed that it is trying its best to bring down fuel loss figures in public sector refineries.
 8The fuel loss in a refinery is the difference between crude processed and the total products produced by a refinery.
 8The petroleum ministry has said that PSU refineries are of varying complexities. Refinery configuration and complexity, product slate and specifications, severity of operation, operational flexibility, state of process technology employed, steam & power balance and captive power plant configuration are major contributing factors towards energy consumption.
 8Earlier, the Standing Committee, while examining the performance of PSU refineries had expressed displeasure at high fuel losses incurred by them. It had pointed out that in some of the refineries fuel losses up to 10% of the total crude throughput was observed. At IOCL`s Guwahati refinery the situation was even worse, with fuel losses up to 12.9%.
 8The Committee had said that such losses are avoidable to a large extent and had asked the ministry to study the global practices and techniques to stem those losses.
 8The ministry in its reply, has said that owing to various remedial measures taken by the industry and the Centre of High Technology (CHT), which is the technical arm of the government, the overall PSU refineries average specific energy consumption has come down from 81 in 2004-05 to 63 in 2011-12, in terms of MBN (MBTU/Barrels/NGRF)
 8While elaborating on the efforts made by the PSUs for increasing the efficiency of refineries, the petroleum ministry gave a series of steps taken in following broad areas:
 --Efficiency improvement of heaters
 --Heat exchanger performance improvement
 --Distillation column performance improvement
 --Air Fan coolers performance efficiency improvement
 --Captive power plant efficiency improvement
 (Click on Details for more information)

Fuel loss in PSU refineries-II: Details of general approach followed by the refineries to improve energy efficiency

May 20: The petroleum ministry in its Action Taken Note (ATN) has apprised the Standing Committee that over the years, the refineries under its jurisdiction have taken a slew of remedial measures to curtail fuel losses including:
 --Modeling & optimization of steam systems
 --Proper insulation of Steam Network & Minimizing Steam ventings
 --Efficient use of Steam-traps & Condensate Recovery Systems
 --Proper selection & maintenance of steam users
 --Installation of temperature controllers on tank heating coils
 --Optimizing hydrogen management through the pinch approach
 --Balance Pressure Thermostatic (BPT) traps on open-ended copper tube tracings, Steam line to pump seal quench, etc.
 --Overall site-pinch analysis for optimizing utility systems, tapping low-level heat recovery potential and achieving better inter-unit heat integration and better energy optimization
 --Installation of proper desalting facilities in CDUs for knocking out water
 --Hot feed maximization with proper coordination with other units
 --Provision of flare meters in major units for better management of flare loss
 --Provision of double seals in floating roof tanks for reducing fugitive emissions   Details

Fuel loss in PSU refineries-III: Other measures taken to curtail losses

May 20: While elaborating on the efforts made by itself and the industry, the petroleum ministry has listed down other administrative and systematic initiatives which have improved refinery performance over the years. Among the important ones are:
 8Quarterly Performance Review: Centre for High Technology (CHT), regularly monitors the energy performance of the refineries in terms of Fuel & Loss and Specific Energy Consumption (MBN) and this is also reviewed by the petroleum ministry in the Quarterly Performance Review of PSU refineries.
 8Institution of Awards: In order to encourage energy conservation and motivate the refineries to enhance their performance, the petroleum ministry has said that it has instituted following two annual awards:
 --Jawaharlal Nehru Centenary Awards for Energy Performance of Refineries - CHT monitors and evaluates the annual energy performance of refineries for finalizing these awards.
 --Oil & Gas Conservation Fortnight (OGCF) Awards in the areas of "Furnace/Boiler Insulation Effectiveness and Furnace/Boiler Efficiency" and "Steam Leak": The awards are based on surveys conducted by CHT during the OGCF in January every year to high performing refineries.
 8Joint Energy Audit (JEA) of refineries: Joint Energy Audits (JEAs), were initiated in 1991-92 and thereafter conducted regularly at refineries by CHT-led teams. JEAs are conducted in the spirit of self-audit, leveraging the knowledge base of all participating refineries. The main purpose of JEA is to utilize the operating and design expertise available with refineries and institutions such as Engineers India Ltd and the CHT through design and operating data analysis, lateral interactions and subsequent adoption of practical schemes that include both short, medium and long term solutions.   Details

War of words over tariff rates-I: RGTIL accuses GAIL of double standards

May 19: Reliance Gas Transport Infrastructure Ltd (RGTIL). -- the pipeline company that ferries gas from the KG D-6 Basin in the western parts of India through the East West Pipeline (EWPL) -- has raised objections to GAIL`s allegation that it was overcharging transportation tariff for for gas swapped with RLNG (available in the west coast of India) for supply to Andhra Pradesh.
 8The swaps are being done to meet the demand of GAIL subsidiary Bhagyanagar Gas Ltd at Shamirpet and of gas starved Andhra IPPs.
 8The problem arose when the original tariff agreement approved by the petroleum ministry for the swaps was rescinded by the PNGRB and a new "contractual path" concept was adopted for determining transportation tariff with the end result that PNGRB has allowed RGTIL to charge the full EWPL (East West Pipeline) tariff of Rs 60.94 /MMBTU for virtually flowing RLNG in reverse direction (Ankot to Oduru), even though there is no physical entry of RLNG in EWPL.
 8This reverse "contractual path", GAIL alleges has been considered as the basis for allowing recovery of multiple tariffs for the same volume of gas by RGTIL for such swapping transactions.
 8RGTIL, in turn, has explained that GAIL is supplying RLNG from Dahej to customers in the East Coast such as BGL and AP IPPs using the public sector gas major`s own Dahej Vijaipur pipeline (DVPL) and RGRIL`s EWPL. The contractual flow path for this gas is Dahej to Ankot (interconnection between DVPL and EWPL is at Ankot) and Ankot to Oduru or Shamirpet (where the EWPL interconnects with the GAIL network in the East Coast).
 8RGTIL alleges that GAIL is following the "contractual path" tariff principle along the DVPL but is objecting to using the same set of tariff rules for the EWPL leg of the transportation circuit. 
 8RGTIL is of the view that GAIL was wrongfully accusing EWPL of charging higher tariff while concealing the fact that it is doing exactly the same thing on DVPL leg of the transportation matrix.
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