MAIN REGIONAL OIL AND GAS EXPANSION PLANS
 
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ONGC Proposes Rs 16,000-cr Investments

ONGC plans to invest Rs 16,200 crore on its upstream business for the financial year 2003-04, 47 per cent higher than the Rs 11,000 crore invested last year, the Chairman, Mr Subir Raha, told analysts.

Of this, around Rs 5,700 crore will be spent on oil exploration, production and development drilling within India and Rs 6,200 crore has been earmarked for investment in oil equity abroad. The balance would be for other capital investments and for Research and Development expenditure.

ONGC has reserves of more than $1 billion.

Mr Subir Raha told analysts and reporters the company would probably make an announcement relating to a new find shortly. He did not, however, divulge details. The company plans a total investment of Rs 4,000 crore on exploration surveys and drilling, Rs 1,700 crore on development drilling, Rs 4,000 crore as production capex, Rs 300 crore on Research and Development institutes and Rs 6,200 crore on acquiring oil equity abroad, officials later explained.

ONGC Videsh Ltd, the subsidiary of ONGC, expects revenue realisation of $30 to 40 million from the sale of gas from Vietnam where it holds equity. The company also holds oil equity in Sakhalin oilfields in Russia and is trying to acquire oil equity in Libya, Myanmar, Kazakhstan, said Mr Atul Chandra, Managing Director, OVL.

In the refining sector, the company is investing Rs 400-500 crore on product improvement to upgrade its manufacturing facilities to produce MS and HSD conforming to Bharat III and Bharat IV standards and Rs 250 crore on de-bottlenecking at its newly acquired 9 million-tonne Mangalore Refinery. Mr Raha said ONGC does not plan to increase MRPL's refinery capacity.

He said the company was awaiting gas price revision. "We are subsidising our joint venture partners (private sector and multinational companies), direct customers and even distributing companies Gail India and Oil India to the tune of Rs 1300-1500 crore."

Speaking about ONGC's plans for retailing transport fuels petrol and diesel, Mr Raha said the company would set up a retail network of over 1,100 outlets over the next three to five years. Only a couple of retail outlets will be put up in the current financial year, Mr Raha said.

Source : The Business Line, Mumbai, 27th June, 2003

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Totalfina Offers ONGC Stake In Oil/Gas Blocks

Totalfina has offered ONGC stake in its oil and gas blocks in Absheron in Azerbaijan and Barbados in return for Indian state-run firm farming in the French oil major in its three
Western offshore oil and gas blocks.

Francois Badoual, manager (international new venture identification), Totalfina, has written to ONGC seeking to "enter in a joint venture association with ONGC on selected exploration licenses in India, for a stake in the order of magnitude of 20 to 40 per cent, with or without operatorship being delegated to Totalfina"

"By means of reciprocity, ONGC will get an optional right to enter in a joint venture association with Totalfina on selected blocks overseas, presenting similar exploration potential and risks factors as those presented to Totalfina by ONGC," Badoual wrote.

Totalfina has identified GS-OSN-2001/1 shallow water block in Gujarat Saurashtra basin and CY-DWN-2001/1 deep water blocks in Kaveri basin from the blocks awarded to ONGC in the third round of offering under New Exploration Licensing Policy, and block GK-DW-1 from the blocks the Indian company got on nomination basis, sources said.

Totalfina is interested in GK-DW-1 in Kutch, Saurashtra deep sea as it is having a deep-water block in adjoining area across the border (in Pakistani territory) where a deep water well is planned to be drilled.

"Within Totalfina's exploration portfolio, we have presently selected the following blocks: block Absheron in Azerbaijan as well as block Barbados. Depending on mutually acceptable
circumstances, we could consider other blocks in future," he wrote.

In block GS-OSN-2001/1, ONGC holds 100 per cent interest whereas in block CY-DWN-2001/1 it has 80 per cent with remaining 20 per cent being held by Oil India Ltd.

ONGC board in its meeting on June 10 considered the proposal and felt it "deserved consideration" and decided to enter into a Memorandum of Cooperation (MOC) with Totalfina covering in general manner the areas of cooperation without identifying the specific blocks.

The MOC covers intellectual knowledge sharing in areas where parties are in a position to complement each other; swapping of information and collaboration in acreages presenting similar exploration potential and risk factor; collaboration and sharing of expertise in ONGC's deepwater acreages and adjacent area; and collaboration in future opportunities.


Source :The Pioneer, New Delhi - 23rd June 2003

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ONGC Hikes Stake in MRPL

ONGC has increased its stake in Mangalore Refinery Petrochemicals Ltd (MRPL) to 71.49 per cent from 51.25 per cent.

Last year, ONGC acquired 37 per cent stake from the Aditya Birla Group following which its stake in MRPL went up to 51 per cent after the financial restructuring.

MRPL, in a communication to The Stock Exchange, Mumbai (BSE) said, "Exercising the call option for MRPL shares, held by various banks and financial institutions, allotted to them under the debt-restructuring package, ONGC has acquired 35,60,04,552 equity shares of MRPL. These shares shall continue to remain as locked-in till March 29, 2004.

MRPL recorded a turnover of Rs 8,058 crore (Rs 5,354 crore) for the year ended March 31, 2003 as against Rs 5,354 crore the previous year. The company also managed to reduce its losses from Rs 492 crore last year to Rs 412 crore in the year ended March 31, 2003.

The company is planning to invest around Rs 600 crore to upgrade its manufacturing facilities to produce petrol and diesel conforming to Bharat III and Bharat IV standards. Investment of about Rs 75 crore is also likely to be made for manufacturing Mix Xylenes, which will add value to the product mix profile. De-bottlenecking of the existing facilities is planned to improve capacity utilisation and cut costs.

In terms of the new shareholders agreement entered between HPCL and ONGC in March, HPCL has committed to continue lifting the products from MRPL. Earlier, MRPL underwent a Rs 525 crore restructuring whereby debt was converted into equity, preference shares and zero-coupon bonds (ZCB).

ONGC has also agreed to the conversion of a maximum of Rs 365 crore of rupee term-debt - which was 20.8 per cent of MRPL equity post-restructuring - being converted into equity share capital. As per the debt-for-equity swap being worked out, senior rupee term-lenders and DPG banks will receive a minimum of Rs 400 crore and Rs 125 crore of these instruments, respectively.

As per the restructuring, preference share capital exchanged at par will carry a coupon rate of 0.01 per cent per annum redeemable in two equal installments at the end of nine and ten years. ZCBs too shall be exchanged at face value in two equal installments at the end of nine and 10-years. Of the total debt of Rs 4,375.44 crore to be restructured, the rupee term-debt amounts to Rs 2,388.41 crore with the foreign currency loan component at Rs 848.26 crore.

Source : The Financial Express, Mumbai - 21st June, 2003

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Negotiations on for supply of third LNG train output

Negotiations are continuing to identify prospective customers for long-term supply of liquefied natural gas (LNG) from the upcoming third train project, Dr Mohammed bin Hamad al Rumhy, Minister of Oil and Gas, said yesterday. Discussions are progressing with leading LNG players from both the East and the West, the minister added.

The recent LNG supply deals clinched by Oman on the sidelines of the World Gas Conference in Tokyo relate to spot cargoes, the minister pointed out, adding that long-term supply deals are finalised after a lengthy process. Spanish utility Union Fenosa has committed to procure half of the 3.8 million tonne annual output of the third LNG train over a 20-year period. The unit, which takes the combined annual LNG output to 10 million tonnes, will be commissioned in 2006.

Source : Oman Daily Observer - 16th June 2003

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Oman LNG exploring new markets

Oman LNG expects tough competition from other liquefied natural gas producers in the Far Eastern countries but the company is confident of securing contracts in the United States and Europe for 2004 supplies.

An official from Oman LNG said: "The LNG market in the Far East is becoming more competitive, that means marketing in those countries has now become quite a challenge,"

"The other challenge is that some markets in the Far East are going through some problems from internal crises and unexpected bad weather conditions that forced customers to suspend operations," he added.

However, Oman LNG is confident of securing contracts in Europe and the United States because of the growing demand. "We are going to be more aggressive in Europe and the US for our 2004 production. These markets plan many new terminals and we also know that they are fast using up their reserves, which will increase volume growth," he said.

Oman LNG produced near full capacity in 2002 selling 6.5 million tonnes, six million more than the previous year, from the plant's capacity of 6.6 million tonnes a year.

Source : Khaleej Times - 15th June, 2003

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Qatar plans QR87b energy projects

President, Abdullah bin Hamad Al Attiyah, Qatar's Minister of Energy and Industry - told businessmen that the country plans to invest around QR87 billion in energy projects over the next five years. Qatar has about 4.5 billion barrels of oil and its huge North Field is the largest single non-associated gas field in the world with proven reserves in excess of 900 trillion cubic feet.

Qatar's is set to become the worlds largest exporter of LNG, with plans to build new 7.5 million tonnes per annum (mtpa) trains and raise export levels to 40 mtpa. It hopes to become world leader in Gas-to-Liquids projects, and there are plans to build the world's largest ethane cracker in Qatar's Ras Laffan Industrial City.

Addressing members of the American Business Council of Qatar in Doha, Al Attiyah said the oil and gas sector has contributed about 60 per cent of the country's GDP over the past couple of years. Until now, oil has been the main contributor, but Al Attiyah told the gathering that natural gas is expected to overtake oil as a revenue earner within the next ten years.

Source : Khaleej Times - 10th June 2003

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Mega gas plant production starts in Saudi Arabia

Haradh Gas Plant, the second multi-billion-dollar project for non-associated gas in Saudi Arabia, has started experimental production and is almost ready to come on-stream, Saudi Aramco said yesterday.

"Partial production of Haradh Gas Plant started on April 23, as the first processing unit of the plant began operation," Nasser Al Nafisi, head of Saudi Aramco public relations, told AFP in a statement.The plant will be on stream with full capacity at the end of July, five months ahead of schedule, Nafisi added.

The project, underway 280 kilometres (175 miles) southwest of Dhahran, is part of Aramco's long-term programme of non-associated gas exploration and development. It will increase sales-gas supplies by 1.5 billion cubic feet (42.5 million cubic metres) per day to the kingdom's Master Gas System (MGS), bringing the company's combined sales-gas production to about seven billion cubic feet (198.2 million cubic metres).

The plant is designed to process 1.6 billion cubic feet (45.3 million cubic metres) of non-associated feed gas daily, increasing the total amount of feed gas to be processed by the MGS to about nine billion cubic feet (254.8 million cubic metres).

The project will recover 145,000 barrels per day (bpd) of high quality condensates, which will be transported to Abqaiq Plants for treatment via a 230-kilometre (144-mile) pipeline.

Haradh is a twin of the Hawiyah Gas Plant, which was commissioned in 2002 as Saudi Arabia's first non-associated gas plant, adding 1.5 billion cubic feet of sales gas to the MGS and boosting gas supplies by more than 30 per cent. The two plants are located in Ghawar, the largest oilfield in the world, and are expected to almost double the kingdom's sales gas production.

Hawiyah also produces 160,000 barrels of hydrocarbon condensates and 1,000 metric tonnes of sulfur each day. The project transported gas by pipeline for the first time to the Riyadh area to fuel three electric power plants, which previously consumed crude oil.

Resorting to gas-fired systems has freed up a considerable amount of crude for export and is
more environmentally friendly. Gas production is due to be around 10 billion cubic feet (283.1 million cubic metres) per day by 2010.

The MGS network, initially set up some 25 years ago, extends from the Gulf to the Red Sea, and from the north to the south of the kingdom.

Saudi Arabia's proven natural gas reserves grew in the past decade to 224 trillion cubic feet (6.34 trillion cubic metres), the fourth largest in the world.


Source : Khaleej Times - 25th May, 2003

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Construction contract for Sohar refinery signed

The Government of Oman and Japan's JGC Corporation yesterday signed an 'Early Works Agreement' for the construction of the RO339.3 million Sohar Refinery Project coming up at the heavy industrial zone adjacent to the Sohar industrial port complex.

Minister of Oil and Gas Dr Mohammed bin Hamad Al Romhi and Kazua Yamaga, senior managing director of the energy sales division of JGC Corporation, signed the agreement here, which was witnessed by the Japanese ambassador and a number of senior officials of the Ministry of Oil and Gas and Sohar Refinery Company (SRC).

The Omani government - represented by the Ministry of Finance - holds 80 per cent share in SRC, while the remaining stakes are held by the Oman Oil Company.

Yesterday's signing of the agreement also allows the construction of a refinery of international class at the new heavy industrial zone being developed near the Sohar industrial port complex. The facility will have a 116,400 barrels per day (bpd) capacity crude unit and a residue fluid catalytic cracking unit (RFCCU) with a capacity of 75,260bpd.

On-site construction is expected to start in the fourth quarter of this year, while commercial start-up is slated for the second quarter of 2006.

In effect, the project also opens up a new industry for polypropylene in Oman. Operating in the 'maximum Olefin mode', the refinery will maximize propylene production of nearly 327,000 tonnes per annum, which will serve as feedstock for a polypropylene project. This is also being simultaneously developed alongside.

Oman's Tender Board selected the consortium of Japan's JGC/Chiyoda early this year for the contract to construct the Sohar Refinery at RO339.334 million ($875.48 million). JGC also undertook the front-end engineering design for the project. ABB Lummus are the project management consultants.

The company intends to seek financial close by the third quarter of 2003 through a combination of commercial debt and export credit agency support.


The refinery will operate as a toll-processing unit and the development of the company will be closely linked to Oman Refinery Company, which owns the feedstock and the refined products at SRC.

The feedstock consisting of a blend of long residue from ORC's Mina Al Fahal refinery and crude oil. This feedstock will be delivered to SRC via a pipeline from Mina Al Fahal.

Minister Romhi said the Sohar Refinery would complement the Mina Al Fahal plant in the production of petroleum products for the growing domestic market.

However, ORC will export the refined products in excess of local needs through a 10-year off-take agreement it has with BP. To begin with up to 90 per cent of SRC's output of refined products will be exported to international markets.

Dr Romhi said the polypropylene plant, being developed separately by Oman Oil Company and ABB Lummus Global and LG International, would be closely integrated with SRC for its feedstock besides the utilities such as cooling water, fire-fighting water, compressed air, etc.


Source : Times of Oman - 20th May, 2003

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$100 m Pipeline to link Mina Al Fahal & Sohar Refineries
ILF wins contract to design 260 km Pipeline

The Government is forging ahead with plans to establish a multi-million dollar pipeline link between Oman Refinery Company's Mina Al Fahal facility and the new Sohar Refinery.

The pipeline, involving an estimated investment of $80- 100 million, will meet the feed- stock requirements of the Sohar Refinery currently being developed at the Sohar Industrial Port Complex at a cost of around $1 billion.

When operational in early 2006, the new refinery will not only secure the country's future demand for high-value refined pipeline products, but also herald a new era of exports of refined petroleum products from the Sultanate.

"The pipeline will serve as the vital lifeline to Soar Refinery transporting a blend of oil residue from Oman Refinery and crude oil from Petroleum Development Oman (PDO), for processing at Sohar" an official of Oman Refinery Company (ORC) said. .

Leading engineering consultant ILF & Partner has been selected by ORC to undertake the engineering design and route optimization studies for the pipeline proje
ct. The firm led a field of international consultants, including Mott MacDonald, Tebodin, Granherne and Electrowatt to win the prestigious contract.

Envisaged is a 24-inch diameter pipeline that will run 260 kilometers along the Batinah coast from ORC's Mina Al Fahal facility to Sohar. According to officials, the buried pipeline will be large enough to transport 116,000 barrels/day (bbl/d) of mixed feedstock, which corresponds to the processing capacity of Sohar Refinery.

Long residue, which is a byproduct of the Mina al Fahal refinery, will account for roughly 35 per cent of the feedstock. ORC's entire output of 40,000 bbl/d of long residue, presently being exported, would be ear-marked for the Sohar refinery. The long residue will be blended with 76,000 bbl/d of crude oil from the nearby PDO tank -farm and pumped to the Sohar refinery.

As part of its consultancy contract, ILF & Partner will also design a pumping station at Mina al Fahal, and if necessary, .an additional booster pump along the pipeline route, to ensure the smooth flow of the feedstock to Sohar, The firm will also design an advanced pipeline control system complete with SCADA, telecom and leak detection capabilities.

The Japanese consortium of JGC and Chiyoda has already initiated work on the Sohar Refinery. In January the consortium was awarded a contract valued at $879 million for the engineering-procurement-construction (EPC) of the refinery. The project is one of several petrochemical and industrial ventures at Sohar promoted by the government of Oman as part of its economic diversification and industrialization objectives.

While BP will lift the Sohar Refinery's exportable output of refined products, propylene a key byproduct - will be used as feedstock for the Oman Polypropylene Project (OPP) being developed alongside the refinery at a cost of around $200 million. OPP, jointly owned by Oman Oil Company, ABB Limmus and South Korea's LG International, will produce 340,000 tonnes of polypropylene annually.

The international consultancy had earlier handled the project management of the key Sohar and Salalah -pipelines built by Oman Gas Company at an estimated cost of $300 million. Furthermore, the company is supervising the construction of the Mahdha-Buraimi pipeline, through which Omani gas will be exported to the UAE.

Other ongoing contracts include the design and supervision of a gas pressure reduction terminal at the Sohar Industrial Port Complex, and a SCADA system in that will monitor the health of Oman Gas Company's elaborate gas transmission system.

Source : Oman Daily Observer- 23rd April, 2003

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Oman Refinery seeks bids for pipeline project

Oman Refinery Company has invited bids for the design of a 200-km pipeline linking the crude oil exporting terminal at Minal Al Fahal in Muscat to the planned Sohar Refinery project.

Specialist companies for front-end engineering and design (FEED) have up to mid-February to send in their bids. A company spokesman said: "This pro
ject is on fast track because we expect to invite bids for the pipeline construction before June this year."

He said Holland's Tebodin, Granherne & Company of the United States and Parsons Oman Engineering Company have already submitted bids for the design work. British firm Mott McDonald completed the conceptual study of the pipeline last month. The pipeline will be able to transport up to 100,000 barrels per day of mixture of crude oil and long residue as a feedstock to the Sohar Refinery.

Last month Oman last awarded a Japanese consortium of JGC Corp and Chiyoda Corp a contract worth $879 million to build the 75,000 barrel per day Sohar refinery in the northeast of the country.

Government officials said the construction of the pipeline was expected to cost around $175 million. International companies, which are already associated with the energy projects, are expected to win the contract to build the pipeline. The shortlist may well include firms like Dodsal, SK Engineering and Chiyod, according to official sources.
South Korea's SK Engineering has already won a $99.5 million contract to manage and operate Sohar refinery while Indian firm Dodsal has built a gas pipeline to Salalah.

The Sohar refinery project, which is expected to start production in mid-2006, will feed the Oman Polypropylene Plant (OPP) with raw material. The OPP project, a joint venture of state-run Oman Oil Company, South Korea's LG Engineering and ABB Lummus of Holland, is expected to cost $200 million.

Source : Khaleej Times- 9th Feb, 2003

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Iran's South Pars Gas Field Phases 2, 3 On Stream-Oil Minister

Phases two and three of Iran's South Pars gas field are now on stream, bringing an estimated $1.5 billion in revenues to the Persian Gulf state, Iran's Oil Minister Bijan Namdar Zanganeh said on state-run television Thursday.

"Around 20 gas wells have been dug in the two phases from which 55 million cubic meters of natural gas are being injected into the national gas network," said Zanganeh. He said the gas produced by the two phases would be worth about $2 million a day if calculated at 3-4 cents a cubic meter, the low end of its potential price range. Analysts say the upper end of the price range would be around 9 cents/cm.

There are also around 85,000 barrels of gas condensates being produced at the two phases which will bring around $2.5 million in revenues if sold at their average price of $25 a barrel, he added. The development of the two phases involved the construction of two offshore platforms and four 105-kilometer pipelines.

A giant onshore gas processing refinery linked to these two phases is operational in the Pars special economic zone at Assaluyeh, in the southern province of Bushehr.

The two phases will also produce around 1 million tons of liquefied petroleum gas a year, with a projected annual revenue of $250 million, he said. A consortium comprising TotalFinaElf SA, Gazprom OAO and Petronas Gas BHD was in charge of the $2 billion buyback development project.

Source : Dow Jones - 7th Feb, 2003

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