Indian state-owned refiner Hindustan Petroleum Corp. Ltd. (HPCL) has set aside 5 billion rupees ($109 million) for oil exploration and production, which marks the latest Indian state oil and gas company saying that it wants to diversify.
Late last month, HPCL Chairman and Managing Director M.B. Lal told reporters in Mumbai that the E&P allocation was "an initial investment amount for our upstream foray."
In other developments related to Indian oil and gas companies:
- India's state-owned Oil & Natural Gas Corp. (ONGC) has earmarked 165.7 billion rupees ($3.6 billion) for capital expenditure, a figure almost 40% higher than the 110.3 billion rupees spent in the previous fiscal year. Much of the increased spending will be for exploration efforts.
- Royal Dutch/Shell Group has offered the Gas Authority of India Ltd. (GAIL) a 15% equity stake in a medium-sized gas field off Egypt. The name of the field was not released pending GAIL's decision.
- Manila-based Asian Development Bank and Qatar-based Ras Laffan Liquefied Natural Gas Co. Ltd. (RasGas), held by ExxonMobil Corp., and Qatar Petroleum, have each taken 10% equity in the Indian government-owned Petronet LNG.
In other news:
- ChevronTexaco Corp. announced the sale of Texaco North Buzachi Inc. to China National Petroleum Co. International Ltd. Texaco North Buzachi holds a 65% interest in the North Buzachi oil and natural gas field in northwestern Kazakhstan.
- In its strategy to develop across the European gas chain, Gaz de France (GDF) has acquired, through PricewaterhouseCoopers LLP, the 215 Mw Shotton cogeneration plant in northeastern Wales.
- TransCanada Corp., Calgary, has agreed to acquire Houston-based El Paso Corp.'s 29.64% interest in Portland Natural Gas Transmission System (PNGTS) for $137.2 million, including assumed debt of $80.7 million.
- Kinder Morgan Energy Partners LP, Houston, signed an agreement with Shell Oil Products US to purchase five refined products terminals in the western US for $20 million.
HPCL exploration
HPCL is talking with other Indian exploration firms about joint participation in exploration blocks.
"Depending on the wells and acreage acquired by us, we will increase the allocation for exploration. We are keen on becoming a big player in the E&P business," Lal said.
Regarding the downstream and retail marketing, HPCL expressed interest in acquiring 100 Sri Lankan outlets being sold by Ceylon Petroleum, which owns 260 outlets total.
The Sri Lankan government placed HPCL on a short list of candidates and asked the Indian refiner to submit technical and price bids.
ONGC spending
While 62.6 billion rupees will be spent by ONGC's international arm, ONGC Videsh Ltd. (OVL), the remaining 103.1 billion rupees will go toward various upstream and downstream projects within India.
"The capital expenditure has been ramped up on a high-risk, high-return policy," said ONGC Chairman and Managing Director Subir Raha, adding that a large portion of the money would be spent on deepwater exploration.
"We are concentrating on increasing our reserves, improving crude oil recovery rates, and acquiring stakes in crude oil projects overseas," he said. "During the year, we will be combing the offshore, deepwater regions of highly prospective areas like the Krishna-Godavari basin."
Last year, Indian and Canadian companies including Reliance Industries Ltd., Mumbai, discovered a giant gas field in the Krishna-Godavari basin just off the central Andhra Pradesh coast (OGJ Online, Nov. 7, 2002).
GAIL, Shell
Proshanto Banerjee, GAIL's chairman and managing director, said, "We have also been offered a 19% stake in Fayum Gas Co. and a 10% stake in Shell CNG Co., both of which are city gas distribution companies in Egypt."
GAIL also is evaluating the feasibility of participating in Natgas Inc., another Egyptian gas distributor (OGJ Online, Jan. 31, 2001).
The Indian government-owned firm also is looking at equity participation in oil and gas exploration blocks in Argentina, where Shell has offered it a 10% stake, and in Mozambique.
Currently, GAIL's sole exploration overseas holding is a 10% stake in a Myanmar gas field (OGJ Online, Oct. 15, 2001).
"We are looking at the distribution of compressed natural gas in Manila, Cairo, Istanbul, and the Iranian city of Isfahan," Banerjee said. "We estimate that our foreign operations will account for 15% of our sales turnover [during] the next 10 years."
Petronet LNG
Indian Oil Corp. (IOC), Bharat Petroleum Corp. Ltd. (BPCL), ONGC, and GAIL each have 12.5% interest in Petronet, while project consultant GDF holds a 10% stake.
With these investments, 80% of the equity has been tied up in Petronet, which is scheduled to begin importing LNG in January.
Company sources said an initial public offering for the remaining 20% of equity is expected in January.
Meanwhile, a team of RasGas senior officials was expected to visit India in late October to renegotiate the price at which the Qatar firm will sell LNG to Petronet. GAIL, IOC, and BPCL were expected to sign the offtake agreement with Petronet at the same time.
North Buzachi
Terms of the Texaco North Buzachi sale were not released. North Buzachi field is estimated to hold 1.5 billion bbl of OOIP, with current production at 8,400 b/d. The field is close to crude export pipelines to Russia, giving access to the Black, Mediterranean, and Baltic seas, and to European markets.
ChevronTexaco is the leading oil producer in Kazakhstan and has a portfolio of assets there, including 50% of giant Tengiz oil field, 20% of the Karachaganak gas-condensate development, and 15% of the Caspian Pipeline Consortium.
GDF, Shotton
The Shotton cogeneration plant was built by TXU Europe.
The acquisition bolsters GDF's energy trading position in the UK where its affiliate, GDF Energy Supply Solutions (ESS), already is involved in about 10% of gas sales to the industrial and service sectors.
Through its acquisition in November 2002 of RWE Trading Direct Ltd., which specializes in the sale of electricity to large industrial and service clients, ESS already was in a position to provide its clients with a gas and electricity offer.
TransCanada, PNGTS
TransCanada expects to close on the additional PNGTS stake by Dec. 31. Under terms of the PNGTS partnership agreement, Gaz Métropolitain Co. Ltd. has the right to acquire its pro rata share of El Paso's offered interest. This right is exercisable for 30 days after receipt of formal notice from El Paso.
If this right of first offer is not exercised, TransCanada' s interest in Portland will increase to 73.06% from 43.42%.
If Gaz Métropolitain exercises its right, TransCanada's total interest will be limited to 61.71%. In that case, the purchase price paid by TransCanada would be reduced proportionately.
PNGTS owns a 290-mile, 220 MMcfd interstate natural gas pipeline that connects with the Trans Québec & Maritimes Pipeline near Pittsburg, NH, and serves delivery points in Maine, New Hampshire, and Massachusetts.
Previously, TransCanada increased its PNGTS stake by 10.13% with the acquisition of part of DTE East Coast Pipeline Co.'s interest in PNGTS for $47.1 million, including assumed debt of $27.8 million (OGJ Online, Sept. 23, 2003).
Kinder Morgan, Shell
Following the anticipated closing of the deal for the five refined products terminals in the fourth quarter, KMP plans to invest an additional $8 million in the facilities.
The terminals are in Colton and Mission Valley, Calif., Phoenix and Tucson, Ariz., and Reno, Nev. They have a combined 28 tanks with 700,000 bbl storage capacity for gasoline, diesel, and jet fuel.
KMP Chairman and CEO Richard D. Kinder said, "As part of the transaction, Shell has entered into a long-term contract to store products in the terminals, providing KMP investors with an additional source of stable, fee-based income."
The acquisition was expected to be immediately accretive to earnings. Besides additional storage capacity, the terminals provide greater flexibility to meet shippers' needs, KMP said.
