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Assam CM's memo to Modi-I: Seeks parity on royalty

Dec 19: In a detailed memo to Narendra Modi, the Assam Chief Minister, Tarun Gogoi has sought parity with Gujarat, on royalty payments to Assam, and other oil producing states.
Gogoi has requested Modi to take necessary steps, including earmarking appropriate provisions in the Union Budget 2014-15, as required, so that the oil producing states get their royalty on crude oil and VAT as well as other taxes on the actual market price, and not on the basis of the heavily discounted sales price.
The Assam CM has pointed out that in a recent petition filed by the Gujarat government, the Gujarat High Court recently held that royalty would be payable to the state on the market price of crude oil and not on the post-discount price. Pertinently, even the Supreme Court, in its interim order, has directed ONGC to pay crude oil royalty to Gujarat on pre-discounted crude price beginning February 1, 2014.
Gogoi has argued that issues of central sales tax compensation, under payment of Royalty and VAT on crude oil and issues related to goods and services tax have been raised many times. Here, upstream companies like ONGC and OIL, engaged in exploration of crude are liable to pay royalty on production of crude at 20% on well-head price, subject to certain deductions, to the states. ONGC and OIL are also liable to pay VAT at 5% on sale of crude. To help these OMCs recover a part of their under-recoveries, the ministry has been allowing the likes of ONGC and OIL to supply crude to the OMCs at highly discounted rates, as well as allowing them to pay royalty on crude to the sates on the basis of such subsidized price. Notably, the discounted amount has at times been as high as 90% or more, which has resulted in cumulative revenue loss of over Rs.10,000 crore since 2008-09.
With the fall in international crude prices over the last few months, because of which under recoveries by the OMCs have also reduced substantially, as well as diesel deregulation which has resulted in contributing to the under recovery, the situation has become worse.
8The CM has now sought Modi's intervention to seek parity on royalty -- on actual market price, in line with what has been sanctioned for Gujarat.

Assam CM's memo to Modi-II: NRL refinery expansion finds no mention

Dec 19: Chief Minister Tarun Gogoi skipped mention for the Prime Minister`s support -- while he was on a visit to the North East -- for the proposal to expand the capacity of the Numaligarh refinery in Upper Assam from  3 to 9 MMTPA.
 8The astronomical demand for a central government capital subsidy of Rs.8,800 crore for a Rs.16,600 crore plan to expand the capacity has deterred both the central and the state government from looking at the proposal.
8The refinery was set up subsequent to the Assam Accord signed by the then Prime Minister Rajiv Gandhi with the agitating All Assam Students Union (AASU) which wanted the crude produced within the state to be refined locally. But the scenario has changed dramatically since the Accord on account of stagnating crude production from the Assam fields, forcing NRL to now propose building a 1,350 km crude import pipeline all the way from an East Coast port to feed the refinery expansion plan in Assam. In other words, crude will be imported all the way from the East Coast and then the finished product will travel back, perhaps the same distance, to the mainland as the market in the North East is not be big enough to absorb the expanded capacity.
The demand for capital subsidy will be over an above the demand for a hike in the excise duty relief of 50%, already available to finished products from the refinery because it is based in the North East of India, to 100%.
8At a 50% excise relief, NRL`s balance sheet is dolled up by around Rs 600 crore a year. At 100% excise relief, it come to Rs 1200 crore. On the expanded capacity of 9 MMTPA, the amount will be a whopping Rs 3600 crore annually. This will be over and above the capital subsidy of Rs 8,800 crore that is demanded for the expansion to go through.
 8By NRL`s estimate, the refinery expansion will end up giving employment to just 500 people. Sources at the petroleum ministry, the state government and Oil India Ltd (OIL) have made it clear that they are against the expansion. "It just does not make sense, particularly when diesel and petrol have been decontrolled, for any subsidies to be given to any of the refineries," a petroleum ministry official said.
 8Clearly, even Gogoi sees the futility of seeking an expansion of the NRL refinery.

Assam CM's memo to Modi-III: Briefs

Dec 19: 8Gas allocation from small pockets of gas fields around Golaghat districts for setting up new power projects: Gas from small pockets of gas fields around Golaghat districts is likely to be used for setting up of new power projects.
 --Associated gas in various isolated and remote areas in Assam are being flared by the oil companies for various reasons, when they can instead be used effectively for power generation.
 --ONGC had earlier declared availability of gas from various gas fields in Upper Assam totaling to about 142,000 SCMD.
 --Talks are on between ONGC and the ministry for utilizing this gas for power generation by APGCL in joint venture with ONGC.
8Oil India to supply additional 0.50 MMSCMD gas for implementation of Namrup Extension Power Project: Oil India Limited (OIL) is likely to supply additional gas of 0.50 MMSCMD for implementation of the proposed Namrup Extension Power Project.
 --Additional gas linkage of 0.50 MMSCMD is required for the 100 MW extension project at Namrup Thermal Power Project site.
8OIL requested to supply original allotment of gas of 0.80 MMSCMD each to NTPS and LTPS: The ministry has asked Oil India Limited (OIL) to supply NTPS and LTPS the originally allotted quantity of gas, that is, 0.80 MMSCMD each, to NTPS and LTPS.
 --Pertinently, OIL made agreements with APGCL for supply of only 0.66 MMSCMD and 0.50 MMSCMD for NTPS and LTPS, respectively.
 --NTPS and LTPS cannot generate power at their full capacity with the current contracted quantity of gas, and hence, the company has been asked to up its allotment.

Paradip refinery-I: Law and order a problem, says ministry

Dec 19: The petroleum ministry has reached out to the Odisha government, seeking help in addressing the law and order issues, which have created many a hurdle in the setting up of the Paradip refinery project, which is now at an advanced state of construction and is scheduled for commissioning from February, 2015.
8Law and order has been a major problem -- there have been several instances of stoppage of work and obstruction in the right of way due to activities of trade unions, land losers and other local interests which are delaying the commissioning of the project.
Further, delays have also occurred on account of many instances of theft from the refinery premises, which have been reported.
The ministry is keen that the Paradip refinery project`s hurdles are mitigated and it gets the required support from the Odisha government to steer its way forward.
The ministry wants the Odisha government facilitate the project through the following measures:
Declare it as a policy district and post a DSP to tackle the law and order problems promptly and effectively.
Instruct the local policy to be proactive for ensuring that work proceeds unhindered
Fully staffing the local police station at Abhaychandrapure, which has only 14 officials as against the sanctioned strength of 31.
Declaring Paradip refinery as prohibited area under Official Secrets Act of 1923, as per the request of IOC, which is pending with the district administration of Jagatsinghpur since 2012.
8Maintaining law and order on IOC premises whenever necessary by promulgation of prohibitory orders.

Paradip refinery-II: Odisha government doesn't seem to be helping; sits on many projects

Dec 19: The Odisha government doesn`t seem to be helping, as it sits on many projects, and the pending approvals and clearances required pile up.
8There are several requests of IOC pending with various departments of the state government including permission for tree cutting, laying of pipeline in corridor allotted by IDCO on lease, forest clearances, land acquisition for Balasore pump station, request for grant of exemption from payment of T, reduction in the rate of VAT and issue of NoC.
Highlights of the key approvals and clearances pending:
Work on laying the Paradip-Raipur-Ranchi pipeline is held up due to clearance on tree cutting in 6 forest divisions out of 14 divisions is still awaited despite sustained follow up with Odisha state departments.
The Odisha government does not seem to have moved in helping make the Paradip-Raipur-Ranchi pipeline corridor free of any claims, to enable IOC to lay the pipeline. Land owners are essentially not allowing the laying of the pipeline on the grounds that IDCO has not yet acquired the land.
There are law and order issues en route the Paradip-Raipur-Ranchi pipeline alignment as well. There are exhorbitant demands by land owners and threats of extortion by anti-social elements in the villages in Paradip-Jatni section. The district administration needs to do a lot to ensure no safety/ security risk to the persons and equipment of IOC and its contractors.
Once again, lack of relevant forest clearance in Odisha stalls the Paradip-Haldia-Durgapur LPG pipeline.
8Augmentation of Paradip-Haldia-Barauni pipeline is delayed and the state government is yet to hand over clear possession of the plot of land at Balasore to IOC. Forward movement is required on this to see that the work of construction of pump station can be started without any more delay. 

Paradip refinery-III: Industry ministry claims IOC should share blame for delay in commissioning of power plant

Dec 19: The department of heavy industry, the administrative ministry for BHEL, has, in response to a letter from the petroleum ministry that sought its intervention in speeding up work by BHEL on the captive power plant in the Paradip refinery, has claimed that IOC too is to blame for BHEL`s failure to install the plant in time.
 8The department claims that critical inputs, like the fuel to be used by the plant, were not given to BHEL by IOC on time, thereby delaying the project. The plant is now going to run on naphtha.
 8There were other factors too that delayed work on the plant, including strikes, thefts, the Phailin cyclone and failure by subcontractors to provide adequate back up assistance, which had a cascading effect on completion of activities by BHEL.
 8But the situation is now better and efforts are being speeded up for early commissioning.
 8Four out of 12 equipment packages (i.e. GTG-1, GTG-2, HRSG-1 and UB-1) are commissioned and ready to deliver 204 MW of Power and HHP (High High Pressure) Steam for the refinery`s use has been available since August, 2014.
 8IOC now requires steam at other pressures, and the Department claims that BHEL has undertaken that it would make the this available by end December, 2014.
 8To further enhance the availability of power and steam to the refinery, four set of equipment --. Gas Turbine-3, Steam Turbine-1, Utility Boiler-2 and HRSG-2 -- are targeted for commissioning by December, 2014 progressively. The balance facilities are in various stages of completion and expected to be completed by March, 2015.

News Briefs 1

Dec 19: 8Single regulator for safety in oil and gas sector: The website carries here, for reference purposes, a background note on the various safety regulators for the oil and gas sector, and recommendations for a single entity to oversee safety in the sector.
  --The note details out the roles of Oil India Safety Directorate (OISD), Petroleum and Explosive Safety Organization (PESO), Directorate General of Mines Safety (DGMS) and Petroleum and Natural Gas Regulatory Board (PNGRB)
  --Pertinently, all of these organizations work under different ministries and has resulted in significant fragmentation in the span of control of the concerned competent authorities under various statutes. Click here
8Note on Oil Industry Development cess: The website carries here, for reference purposes, a background note on the oil industry development cess, covering the following details:
  --How the Oil Industry (Development) Act was enacted
  --Purpose of the Act
  --Defined process for levying the cess
  --The practices being followed currently
  --Payments due and collections made. Click here

News Briefs 2

Dec 19:  8MOU 2014-15 between IOC and CPCL: The website carries here, for reference purpose, a copy of the MoU signed between Chennai Petroleum Corporation Limited (CPCL) and Indian Oil Corporation Limited (IOCL) for 2014-15, under the following heads:
  --Preamble and organization objectives, including mission, commitments and assistance from the government, revision in Ravva crude pricing mechanism, OIDB assistance for funding of the RESID project
  --MOU performance evaluation criteria and targets
  --Project management and implementation
  --Shutdown plan
  --Crude-mix required to achieve product pattern
  --Income and Expenditure statement
  --Sales turnover, gross operating margin, EBITDA/Net block %, PAT per employee
  --Sales realization and raw material cost statement
  --Details of financial data
  --Additional information on financial parameters
  --Key financial indicators of CPCL relating to last five years, along with MOU targets for 2014-15
  --Self declaration and certification
  --Reference documents for verification of MOU parameters at the time of evaluation. Click here
8Note on Indian Strategic Petroleum Reserves: The website carries here, for reference purposes, a background note, including recent updates and the current status on Indian Strategic Petroleum Reserves, under the following heads:
  --Visakhapatnam crude cavern project, including physical and financial progress as at the end October, 2014
  --Mangalore crude cavern project, including physical and financial progress as on October, 2014
  --Padur crude cavern project, including physical and financial progress as on October, 2014
  --Action with respect to crude oil filling, and current status.Click here

Abandonment of Mid and South Tapti fields-I: BG-RIL says it has no obligation but will still fulfill commitment

Dec 19: The Tapti JV -- consisting of ONGC with a 40% stake and BG and RIL holding 30% each -- has decided to abandon the gas fields (Mid and South Tapti) but issues over creating a Site Restoration Fund (SRF) are yet to be sorted out.
8The BG-RIL duo is of the view that neither t
he Tapti PSC obliges the contractors to set up an SRF nor does it require them to deposit any money into such an account. However, despite this, it is in good faith that an SRF account has been set up by all PMT JV partners.
 8The bone of contention is that
s the government nominee, has decided to take over the TCPP and TPP platform facilities from the Tapti JV to process the additional gas coming from its Tapti-Daman block subject to the understanding that the abandonment and site restoration of balance facilities (wells, unmanned platforms and infield pipelines within the field which ONGC is not taking over) will be carried out by the PMT JV and adequate funds would be transferred to ONGC that would be required to abandon the facilities which ONGC is taking over.
8The Tapti partners, RIL and BG, however are willing to transfer the facilities to ONGC only if it takes up their abandonment obligation.

Abandonment of Mid and South Tapti fields-II: Government caught on the wrong foot, has no option but to rely on BG

Dec 19: Even though the PMT JV has agreed to create a Site Restoration Fund (SRF), no agreement has been reached on the amount of money that has to be put into it.
 8To arrive at this amount, the cost of abandoning TCPP, TPP and other related export pipelines needs to be worked out first.
A firm hired by the BG-RIL combine has estimated the cost
at $335 million.
8The government does not seem to have an estimate in hand. The PMT JV claims that there are in fact no provision in the PSC for estimating the quantum of funds required under the Site Restoration Plan
Caught on the wrong foot, the government now seems to have no option but to rely on
estimates worked out by the firm hired by BG.
8The BG-RIL duo has made it clear a
s far as deposits into the SRF account are concerned it will bear the shortfall between the amount deposited in the SRF and the actual cost of abandoning the residual facilities (which ONGC is not taking over). However, it does not agree with the DGH`s decision that the cost recovery will be allowed only for the amount which it can recover from the remaining production.
 8Clearly, given the complexities involved, the stalemate is going to continue for some more time to come.

Implementation of surveillance system in ONGC: Reply from IB still awaited

Dec 19: The ONGC's Rs 407-crore tender for implementation of an access control and surveillance system across ONGC assets has got stuck in the mud as the requisite go-ahead from the Intelligence Bureau (IB) has not yet come in.
Though the tender was issued in June 2013, it hit a hurdle after few technological issues were raised by three Members of Parliament (MPs) who were also members of the Standing Committee on Petroleum and Natural Gas.
8The three MPs alleged that security will be compromised if a non-robust Key Management System (KMS) and an Automatic Fingerprint Identification System (AFIS), as included in the scope of work of the tender, are allowed to be set up.

 8Though proper replies were submitted to the MPs, the ONGC chairman decided to put the tender on hold and get the technical specifications reviewed by a reputed agency. The issue was forwarded to the Intelligence Bureau (IB) for review and validation of the proposed technology in the ONGC's tender.
But a reply from the IB is still awaited.
8The total cost of the tender is pegged at Rs 407.5 crore.

Leighton's demand for high barge rates cause ONGC to change BEC for offshore projects-I: Company eventually settles at ONGC's terms

Dec 19:  Leighton India Contractors Private Limited`s (formerly known as Leighton Welspun Contractors) demand for a high stand-by barge rate in the ONGC`s contract for installation of surface facilities related to clamp-ons on three platforms -- HJ, HZ and HG -- in the Heera field has forced the E&P major to change the bid evaluation criteria (BEC) for future offshore turnkey projects.
 8The hook-cum-accommodation barge -- dubbed Sea Jaguar -- was deployed for carrying out modification work on the three platforms in the Heera field. As there was no work front available for the barge
it was shifted to a different location and then brought back to the original site, resulting in idling of the barge.
8Accordingly, Leighton made a claim of $4.78 million on ONGC for 22.78 days for which the barge was on stand-by
. The cost of the barge was meant to be paid on actuals by ONGC
8The day rate quoted by Leighton was found to be very high, and ONGC drove a hard bargain.
The E&P major, as recommended by its certification agency, Certification Engineers International Ltd (CEIL), approved standby charges for only 10.46 days amounting to a meager $742,325.
 8Leighton did not agree with the number of days and the day rate considered by ONGC for calculation of the stand-by charge but in the spirit of getting the project closed, it accepted the payment $742,325.
 8To avoid such a situation in future where there is scope for differences cropping up over calculation of stand-by charges, ONGC has now decided to make a few changes in the BEC for its future offshore tenders.
 8As per the new BEC, the E&P major will
include the cost of the barge in the LSTK contract itself and not pay for it separately on the basis of the number of days for which the barge is used.

8For evaluation purposes, a cost of 5% of the total estimated offshore construction time worked out on the basis of bidder quoted marine spread day rate would be included and applied to the LSTK cost.

Leighton's demand for high barge rates cause ONGC to change BEC for offshore projects-II: Three different methodologies to calculate barge rate investigated

Dec 19:  Before arriving at the cost of stand-by charge for the barge, Sea Jaguar, at $742,325 (10.46 days), ONGC investigated three different methodologies to calculate the barge rate.
8As per the price schedule of the contract, the day rate for working or standby for extra work was $210,000. Accordingly, considering a standby of 10.46 days, the claim worked out to $2.19 million.
 8Again, as per the approved cost estimation methodology worked out by VCB, the day rate for the hook-up barge came to $126,000.
 8Then again, it was observed that the barge day rate indicated in some other ONGC contracts varied between $51,000 and $210,000.
 8The contractor of the barge,
Leighton, on the other hand,
submitted a day rate of $214,000, duly endorsed by a government-approved valuer.
 8As there was a huge variation in rates, ONGC invited Leighton for price negotiations.
 8It was after Leighton`s refusal to negotiate the rate that ONGC took the barge day rates of the same period from its other projects, as reference, to arrive at the stand-by charge.
 8As the execution schedule of the present tender -- installation of surface facilities related to clamp-ons on three platforms (HJ, HZ and HG) in the Heera field -- clashed with the execution schedule of the WO-16 Cluster and the SB-14 well platform project, a day rate of $70,968 was taken as the stand-by charge of the barge, Sea Jaguar, in line with the WO cluster and SB-14 contracts.
 8Considering a period of 10.46 days, the total stand-by claim worked out to $742,325.

Leighton's demand for high barge rates cause ONGC to change BEC for offshore projects-III: New BEC condition to be used on a pilot basis

Dec 19:  The new BEC formulated by ONGC to minimize the barge rates will be initially used on a pilot basis only in one case.
8The decision to use it on a pilot basis was taken keeping in mind the fact that the new BEC would be
introduced for the first time and as such there are chances that it might have a bearing on the award of the project.
 8A pre-bid meeting will also be held by the E&P major for getting feedback from prospective bidders.
 8The new methodology will be adopted in the future tenders only if it is accepted by the bidders.
 8In case, any changes are suggested by the bidders, then modifications in the BEC will be made accordingly and put up before the ONGC's apex Executive Procurement Committee (EPC) for approval before adoption in future tenders.
 8The primary purpose of loading the bids (for evaluation), as per the new BEC, is to deter the bidders from quoting arbitrarily high standby rates.
 8Since it would be known to the bidders that their quoted prices would be loaded, even 5% would be sufficient to ensure reasonable quoted rates from the bidders for optional rates.

Leighton's demand for high barge rates cause ONGC to change BEC for offshore projects-IV: Details of change made in BEC

Dec 19: The details of the changes made in the BEC are:
The bidders will have to furnish a Day Rate for working as well as stand-by purposes, along with a provision for increase and decrease of work.
The bid price will be loaded by adding the cost of marine spreads in the price schedule by multiplying the number of days with the day rates of marine spreads quoted by the bidder.
The number of days has been sought for internal assessment by ONGC for the limited purpose of loading of bids. The number of days, in no way, will be used for any other purpose.
In case, the inter-se ranking between the L-1 bidder before loading (original L-1) changes with the L-1 bidder after loading under the clause, then the opportunity will be given to the bidder, who was L-1 before loading, to match the day rates of the marine spread for increase/decrease of work with the bidder who has emerged as L-1 after loading under this clause.
However, the L-1 bidder will not be allowed to increase any of the quoted day rates for various marine spreads.
8In case, the L-1 bidder before loading (original L-1) fails to match the price of the L-1 bidder after loading under, ONGC will reserve the right to take a suitable decision in the company's interest.

ONGC's production from offshore areas: A presentation

Dec 19: The website carries here, for reference purposes, a copy of a presentation by ONGC on its offshore production activities. The presentation includes details on:
Company's offshore assets (Mumbai High field, Neelam & Heera, Bassein & Satellite and Eastern Offshore Asset)
Asset-wise details are carried in terms of the number of oil and gas producers in the field, commencement of production, ultimate reserves and cumulative oil and gas production.
Oil and gas production from offshore areas since inception and in the last five years
Gas balancing details in terms of gas sold, gas used for internal use and gas flared
Measures taken by the company to reduce gas flaring
Production during April-September, 2014, period, along with 2013-14 data
Trend of offshore oil production during 2014-15
8Recent initiatives taken to increase production from offshore areas

 Click here to access the presentation

Tender Briefs

Dec 19:  8GAIL invites bids for inline inspection of pipelines: GAIL has invited bids for carrying out inline inspection (ILI) of its pipelines.
 --The services will be hired on a rate contract basis.
 --The tender documents will be made available on the company's website from December 23, 2014.
 --A pre-bid meeting will be held on January 5, 2015 (at 11:00 hrs)
 --The due date and time for submission of bids is January 23, 2014 (upto 14:00 hrs)
 Click here for more information

8Cairn invites EOI for Impressed Current Cathodic Protection System in Rajasthan: Cairn has invited a global EOI for supply and monitoring of an Impressed Current Cathodic Protection (ICCP) system for its buried plant and injection water tanks at the Mangala Processing Terminal of the RJ-ON-90/1 block.
 --Interested bidders should have at least five years of experience in providing such a system.
 --Interested bidders can put in their offers before December 28, 2014.
 Click here for more information
More tenders: Some more tenders floated by oil and gas companies are:
 --Procurement of gate valves, Vododara [ONGC] Details
 --Hiring of agency for ultrasonic thickness surveys, Haldia refinery [IOC] Details
 --Supply of sulphur analyzer spare parts, Panipat refinery [IOC] Details
 --Hiring of services of effluent treatment plant for drilling rigs, Dehradun [ONGC] Details
 --Hiring of services for operation and maintenance of work-over rigs, Assam [OIL] Details
 --Hiring of environment monitoring services for rigs, Dehradun [ONGC] Details
 --Carrying out calibration and performance evaluation test for gas chromatograph analysers [GSPC] Details

IOC's deal with Nepal for pipeline-I: 15-year supply provision incorporated

Dec 18:  India and Nepal have successfully resolved their differences in laying of an oil pipeline from IOC's depot at Raxaul (India) to Nepal Oil Corporation's (NOC) depot at Amlekhganj (Nepal).
 8Though the idea of the Raxaul-Amlekhgunj pipeline has been on the drawing board since 1997, it got the much needed impetus after the Indian Prime Minister Narendra Modi`s recent visit to Nepal.
 8As per the agreement, a
15-year supply provision has been incorporated
in the contract.
8While Nepal was initially insisting on
supply period of five years, it later agreed for a 15-year tenure as this would lead to immediate commencement of the project.
 8As the 10-inch, 38-km-long pipeline (of which 37.5 km will fall in Nepal) will only pass through government land, the Nepal government will provide an encroachment free pipeline corridor at no cost to the Indian side.

 8Besides laying of the pipeline, which will be constructed at a cost of Rs 275 crore, the scope of the project also includes construction of two petrol (MS) tanks and setting up of a TLF gantry, along with a laboratory and firefighting facilities at Amlekhgunj in Nepal.
 8Of the total project cost of Rs 275 crore, IOC will chip in with Rs 200 crore towards constructing the pipeline system (Rs 150 crore) and limited re-engineering and revamp of the Amlekhgunj depot (Rs 50 crore). NOC will pump in the remaining Rs 75 crore for setting up of additional facilities at the Amlekhgunj depot.
 8The pipeline is expected to start operations from July 2017.

IOC's deal with Nepal for pipeline-II: Third party access a ground for contention

Dec 18: In order to provide flexibility to the Nepal Oil Corporation (NOC), IOC has agreed to consider allowing third party access to the Raxaul-Amlekhgunj pipeline system after an exclusivity period of five years.
 8However, as of now, allowing third party access remains a ground for contention between the two sides as no decision has been reached on who will fund the setting up of the additional infrastructure.
8It is highly likely that the third party will be required to create its own infrastructure at the originating station. This is likely to be an entry barrier.
 8The entity using the pipeline system will have to pay IOC an agreed tariff fixed by both IOC and NOC.
 8Access in the pipeline to the third party will be given only with the consent of IOC and NOC at the originating station of the pipeline, that is, Raxaul in India.
 8As the objective of seeking third party access appears to be the privatization of marketing of petroleum products in Nepal, the IOC-NOC duo may set up Retails Outlets (ROs) in Nepal, under a mutually agreed mechanism.

GAIL pipeline blast: Gas major faces heat in acquiring land for CY-ONN-2005/1 block in Tamil Nadu

Dec 18: The ghost of the blast in GAIL`s pipeline in Andhra Pradesh in June 2014, is refusing to go. It has been around six months since the incident happened but the gas major is still feeling the heat of the blast as farmers in Tamil Nadu are up in arms against the laying of a pipeline for the block CY-ONN-2005/1.
8The exploration block CY-ONN-2005/1, awarded under NELP-VII, covers an area of 946 sq km in the districts of Thanjavur and Thiruvarur in Tamil Nadu. As per the Production Sharing Contract (PSC), GAIL, the operator, has to drill three wells for which three prospective locations -- Naduvikottai, Bhavajikottai (Pattukottai Taluk) and Kannugudi (Orthanadu Taluk) -- have been identified.
 8However, work is yet to commence, due to opposition by farmers in the Thanjavur district.
 8The District Collector of Thanjavur has also expressed his helplessness in resolving the issue with the farmers in view of the GAIL`s problem with the Tamil Nadu government over laying of its Kochi-Koottanad-Mangalore-Bengaluru Pipeline (KKMBPL), where work has been stalled because of the continued agitation amongst farmers and villagers, who have been demanding that GAIL re-route its pipeline away from agricultural land and instead, lay it along state highways.
 8Since the
CY-ONN-2005/1 PSC mandates time-bound completion of the MWP commitment (which includes drilling of three wells), any delay in resolving the issues will lead to further delay in the commencement of drilling operations.
 8In light of this, GAIL has now requested the Tamil Nadu government to arrange peace talks with the local people so that the issue can be resolved.




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