Cairn raises Rajastan field estimates

The India unit of UK-based Cairn Energy Plc raised estimates of in-place reserves at its Rajasthan field, the country’s largest onshore petroleum deposit, to four billion barrels of oil equivalent from 3.7 billion.

Cairn India Ltd also lifted its estimates on potential reserves to 6.5 billion barrels of oil equivalent from four billion on Tuesday.

As a result, “the recovery potential has doubled from 700 million barrels to 1,400 million barrels, with the plateau production increasing from 240,000 bpd (barrels per day) from the earlier approved plateau production of 175,000 bpd,” said Rahul Dhir, chief executive of Cairn India.

However, the directorate general of hydrocarbons, the regulator, said it doesn’t endorse such numbers. “We have received a copy of the report as prepared by the independent agency,” said director general of hydrocarbons S.K. Srivastava. “The DGH does not certify contingent resources. Contingent and prospective resources are futuristic resources.”

An official of state-run Oil and Natural Gas Corp. Ltd, which has a 30% stake in the Rajasthan field that’s operated by Cairn India, said the DGH hadn’t ratified the new numbers, on condition of anonymity. Cairn India said it had informed the regulator of the revised estimates.

“There has been a significant increase in the prospective resource base. All stakeholders including DGH were informed regarding the revised estimates,” Cairn India spokesperson Manu Kapoor said by email. “In addition to a comprehensive internal review, (consultants) DeGolyer and MacNaughton have conducted an independent assessment of the majority of the leads and prospects in the prospective resources.”

Shares of Cairn India rose 3.76% on the Bombay Stock Exchange to close at Rs292.80 on Tuesday. The benchmark Sensex index rose 0.23% to 17,451.02 points.

Cairn Energy jumped to a record in London trading after announcing the start of oil drilling in Greenland and forecasting higher output at its Rajasthan field. It climbed as much as 12% to 425.1 pence, the highest price since the stock began trading in 1989. The shares were at 418.5 pence as of 11:28am local time, valuing the Edinburgh-based company at £5.84 billion (8.75 billion).

Production of the waxy crude oil from the Rajasthan field is around 25,000 bpd, which the company expects to ramp up to 125,000 bpd by the second half of this year.

Cairn India has sales arrangements to supply 1,43,000 bpd to refiners such as Hindustan Petroleum Corp. Ltd, Mangalore Refinery and Petrochemicals Ltd, Indian Oil Corp. Ltd, Reliance Industries Ltd and Essar Oil Ltd. Cairn has already made an investment of $4 billion in the Rajasthan field with an additional $2 billion to be invested over the next two years. “We are fully funded for the next phase,” Dhir said.

Source:http://www.livemint.com/2010/03/23214424/Cairn-raises-Rajasthan-field-e.html

Shutdowns clip India's Feb refinery output growth

India's refinery output inched up an annual 0.8 percent in February, the slowest pace since July, as maintenance shutdown of some state-run units offset higher crude processing by private companies, government data showed on Thursday.

Indian refiners processed 3.39 million barrels per day (bpd) of crude oil in February, when refining margins for simple Asian refiners rose to $1.84 from $1.78.

State-run refiners processed 2.5 percent less crude oil in February compared with a year ago, while Reliance Industries Ltd (RELI.BO: Quote, Profile, Research) increased output by 9 percent and Essar Oil processed 9.8 percent more crude oil than in February last year.

For a table of February refinery output, see [ID:SGE62O0CG]

State-run Mangalore Refinery and Petrochemicals Ltd (MRPL.BO: Quote, Profile, Research) shut a diesel unit towards end-February.

A third of the 190,000 bpd Manali refinery of Chennai Petroleum Crop was shutdown in February to raise its capacity by 20,000 bpd and revamp some units to produce cleaner fuel. [ID:nSGE62F08T]

State-run refineries operated at 112 percent of their declared capacity in February, down from about 115 percent a year ago, while private refiners increased capacity utilisation to 117 percent from 107 percent.

India's refinery output has grown year-on-year every month since last August, after recording monthly annual declines since November 2008.

India's natural gas output rose 72.6 percent to 4.22 billion cubic metres, helped by Reliance Industries's production from its deep-sea field, which started pumping gas last year.

Source:http://in.reuters.com/article/domesticNews/idINSGE62O09220100325

South India to receive Reliance’s KG gas by 2012: Petroleum secy

Union Petroleum Secretary S Sundareshan on Saturday said that south India will start getting natural gas from the Krishna-Godavari basin from 2012.

The Ministry of Petroleum and Natural Gas had called for a meeting of Reliance Industries Ltd (which owns the gas fields) and Gas Authority of India Ltd (which lays pipelines) about ten days ago and told them to implement the project in a “strict timeframe”.

Mukesh Ambani's Reliance has been authorised by the government to lay a pipeline from Kakinada to Chennai and this pipeline would further extend to Tuticorin. Reliance would also lay a pipeline between Chennai and Bangalore, he told a press conference here.

The gas would start flowing to Tamil Nadu anytime between March 2012 and the end of that year, he said. There would be connectivity to Madras Fertilisers Ltd and SPIC, he said, referring to the two fertiliser companies, whose operations are suffering for want of natural gas.

On the issue of pricing of petroleum products, he said, “It is not possible to insulate consumers continuously from the volatile international crude price and the government has to take a hard decision in the future.”

At present, subsidy component for petrol is Rs.5 per litre, for diesel Rs. 3, for kerosene Rs. 16 and for LPG Rs. 260 a cylinder. Due to under-pricing the government had incurred an expenditure of Rs.45,000 crore in the current financial year.

Poor people were forced to pay for supplying subsidised petrol and petroleum products to those who were affluent.

The Secretary said oil marketing companies were fully geared to meet the increasing demand for petroleum products, which had been going up at 15 per cent per annum for petrol, 8 to 9 per cent for diesel, and 10 per cent for LPG. In Tamil Nadu, there had been a 10 per cent increase of LPG consumers every year. The State had achieved a coverage of 75 per cent in respect of LPG supply, which might increase to 83 per cent in the next four or five years.

There was no shortage of LPG in the State and new connections were being released to prospective consumers without any waiting list and efforts were being made to supply refills expeditiously.

Source:http://www.hindu.com/2010/03/21/stories/2010032159130100.htm

Reliance Industries to supply 3 times more natural gas to NTPC

State-owned power utility NTPC Ltd has tripled the volume of natural gas it buys from Reliance Industries controlled by CMD Shri.Mukesh Ambani at the government-approved price of USD 4.2 per mmBtu, to 1.81 million standard cubic meters a day.

NTPC, which till last month was taking 0.61 mmscmd from RIL's eastern offshore KG-D6 field, has begun drawing an additional 1.2 mmscmd of gas to boost power generation, sources in know said.

In October, the government had allocated an additional 3.85 mmscmd gas to NTPC. Since NTPC did not want to use the KG-D6 gas at its Kawas and Gandhar power plants in Gujarat that are connected with pipelines ferrying KG-D6 gas from the Andhra coast, a complex swap arrangement was worked out with state-owned gas utility GAIL India.

Under this arrangement, GAIL diverted gas from other sources to NTPC plants and supplied RIL gas to its existing customers.

Source:http://reliance-news.blogspot.com/2010/03/ntpc-trebles-natural-gas-procurement.html

Reliance Industries ties up with Transocean Ltd under a five year drilling contract

Transocean Ltd’s new ultra deepwater drillship Dhirubhai Deepwater KG2 is at work offshore India for Reliance Industries under a five-year contract. The vessel is a joint venture between Transocean and Pacific Drilling Ltd.

The dynamically positioned vessel has National Oilwell Varco drilling packages, off-line tubular-handling and stand-building capacity, advanced mud systems, and can build, store and run several subsea trees, says Transocean. In addition, the vessel has a variable deckload of 20,000 metric tons (22,046 tons), can work in waters to 12,000 ft (3,658 m) of depth and drill to 35,000 ft (10,668 m).

Source:http://www.businessweek.com/ap/financialnews/D9EAM6401.htm

Mukesh Ambani’s RIL close to striking hydrocarbon at Cauvery

The company has temporarily shifted focus to Cauvery-Palar offshore from the Krishna-Godavari Basin where it had a huge success.

In the Palar block, Mukesh Ambani'sRIL is understood to be testing a well. The hydrocarbon success would be known only after testing is completed, industry sources said.

After successful completion of its drilling activity in the Palar block, the company has now moved to CY-D5 and is drilling an appraisal well. Sources told Business Line that RIL started drilling the appraisal well a few days ago.

CY-D5 is where RIL had run out of luck after striking oil and gas in only one out of the five wells drilled.

On why the company returned to CY-D5, a source said: “Though the company ran out of luck in the subsequent wells drilled, the first discovery was significant. An appraisal well is drilled to quantify the find.”

The find in the first well showed two hydrocarbon bearing zones.

The first zone had 550 barrels a day of oil and one million cubic feet a day of gas, while in the second zone the company found 31 million cubic feet a day of gas and 1,200 barrels a day of condensate.
According to the initial appraisal programme for CY-D5 as submitted to the management committee of the block, RIL was estimated to invest about $22.75 million for undertaking additional work. “This number, however, is expected to go up now,” a source said while not indicating the definite figures.

These two blocks were awarded to RIL in NELP III. As on date, RIL has 29 oil and gas blocks, and has made 44 discoveries (both commercial and non-commercial) including overseas properties.
Blocks such as CY-D5 are called wild cat blocks, and the success ratio is one in 10 globally in such blocks. Wild cat blocks are new frontier areas.

Source:http://www.thehindubusinessline.com/2010/03/08/stories/2010030851470100.htm