Panna-Mukta-Tapti Gas Field

Business Standard

GAIL India, the country’s largest marketer and transporter of gas, has bagged the rights to market the entire gas produced from the Panna-Mukta and Tapti (PMT) fields jointly which would add around Rs 550 crore to the company’s revenues, a senior company official said.

The gas field in the western offshore, which is jointly operated by Reliance, British Gas and ONGC, currently produces 17 million cubic metres per day (mcmd) of gas. GAIL will get to transport and market the entire volume from April 1, 2008. It currently markets 4.8 mcmd of gas.

“With the incremental volumes for marketing, we will earn about Rs 100 crore annually by way of marketing margins and Rs 450 crore more annually from transportation charges,” the official said.

In proportion to their equity in the block, ONGC, RIL and British Gas market 12.2 mcmd of gas from the PMT field.

GAIL, which currently does not get a marketing margin on PMT gas, would be allowed to charge $0.12 per million British thermal unit on the entire gas volume from April 1, 2008, the official said.

ONGC holds 40 per cent stake in these fields, while Reliance and BG India hold 30 per cent each.

In March last year, the petroleum ministry had allowed the joint venture partners to directly market 5.6 mcmd gas from these fields for two years till March 31, 2008, and give the remaining 4.8 mcmd to GAIL.

The output from these fields has now increased to around 17 mcmd. While GAIL’s marketing share has remained the same, the joint venture partners have increased their direct sale of gas.

The ministry also found that the joint venture partners have entered into long-term gas supply contracts with customers, violating its March 2006 order of direct gas sales up to March 31, 2008.




Panna Gas Field:

Panna gas field is 430 sq. kms in area, located 50 km east of the giant Bombay High field (95 km NW of the Mumbai city) on the basin of the River Panna, which is also home to the Panna Tiger Reserve. It lies immediately to the north of the Bassein gas field separated by a shallow NE-SW trending syncline. The average water depth is 45 m.

Structure of Panna field is a broad, composite domal with approximately 60 to 80 m of vertical closure at the Middle Eocene level.

Mukta Gas Field:

The Mukta gas field is 777 sq.kms in area, located 100 km Northwest of the Mumbai city. It is contiguous with the Panna block to the east and lies in an average water depth of 65 m. Present field production is 30000 BOPD and 90 MMSCFD of Gas.

Tapti Gas Field:

Tapti field covers an area of 1471 sq.kms and lies 160 km north-north west of the Mumbai city along the basin of the River Tapti. It is approximately in a water depth of 20 M on the northeast flank of Surat depression, of Bombay Offshore Basin. The block comprises of two fields South Tapti and Mid Tapti, which occur in two large structural culminations.

At present, well fluid from 7 satellite platforms of Panna field and one Mukta platform reached to PPA through infield subsea lines. After processing, crude oil is loaded to a stand by Tanker through SBM loading facility and gas is dispatched through 18" & 22 kms export line tied to ONGC's 36" & 42" gas line going to Hazira. Living quarter at this facility accommodates 75 personnel. Facility comprises dehydration and sweetening plant for providing fuel for power generation and gas lift system.

Tapti Processing Platform (TPP) was designed, constructed and installed to handle 180
MMSCFD of Gas and 100000 barrels of liquid (both water and condensate). After recent de-bottlenecking the handling capacity has been enhanced to 210 MMSCFD. Two trend of TEG based Gas dehydration system process the gas to the recommended specification. Gas from 3 satellite platforms (19 Wells) comes to TPP for separation, dehydration, metering and dispatch. Gas is dispatched through18" & 70 kms export line tied to ONGC's 36" & 42" gas line going to Hazira.

Oil and the Dollar

Businessworld
Srikanth Srinivas

Here’s another decoupling theory: oil and the dollar. OPEC oil ministers last week said they were considering invoicing oil sales in currencies other than the dollar, mainly the euro. Their driving concern: inflation and the reduced purchasing power of the dollar. The UAE, Qatar and Saudi Arabia also hold large reserves of the currency.

Iran and Venezuela have long been pushing for delinking oil prices from the dollar, but then, those countries are no friends of the US. In any event, Iran invoices 85 per cent of its sales in currencies other than the dollar. But a move from the dollar to a currency basket — Kuwait did it in May this year — might encourage other countries with large dollar holdings to follow suit.

But will invoicing in another currency change anything? The prices of currencies are relative, and prices of tradeable goods such as oil are relative to currencies.


If oil is $50 a barrel, and $1 = 1 euro, then, in euros oil costs 50 euros. If the euro doubles in value so that $2 = 1 euro, a barrel of oil will cost $100, which is still 50 euros. What matters are terms of trade — the ratio of export prices to import prices — not changes in currencies relative to one another.

The terms of trade have worsened for America relative to oil producing countries because America is paying double for oil whereas the oil countries can now buy twice as much from America.

But the terms of trade between the eurozone and oil producing countries do not change because one barrel of oil still costs 50 euros. So if the oil producing countries do not want to hold depreciating dollars, they could sell the currency forward for euros in the futures markets.

Saudi Arabia — the pivotal player in OPEC, which also maintains a close relationship with the US — is not likely move out of the dollar; it vetoed an OPEC move to mention dollar concerns in the cartel’s post-meeting statement. This decoupling theory, too, comes with several qualifications.

Motives for promoting low-cost computing devices

Plenty of things

There was an outpouring of philanthropy and corporate generosity a few years ago. Leading providers of computer hardware and software came together to design and manufacture a cheap, hardy, and no-frills PC for poor people.

In a project titled, "One Laptop Per Child", Nicolas Negroponte of the Massachusetts Institute of Technology introduced the $100 laptop in 2006. Computer chip manufacturer AMD also unveiled a cheap Personal Internet Communicator (PIC) that same year.

And again in 2006, AMD's arch-rival Intel showcased its $250 Eduwise Laptop, also meant for the poor in the developing world.

Before you express your awe and gratitude at such unselfish generosity or rush to buy one of these gadgets for your pen-pal in Rwanda; know that all three projects have failed. When given to a sample population these low-cost computers were promptly returned because of their minimal functionality.

MIT's laptop constantly required a hand-operated crank to power itself, the PIC did not have most Windows features, and the Eduwise was too expensive for the very basic functions it performed. In fact the poor, for whom these devices were meant, "survive on less than a dollar a day" as we are constantly told....why would such people shell out hundred hard-earned bucks for a barely usable device?

At a conference the hand-cranked MIT laptop was showcased to delegates from the Third World.....each member was given the device free. But at the end of the conference the delegates left these devices behind since they had minimal functionality.

Motives

The manufacturers of the low-cost computing devices are big corporations with their eyes set on the poor in the developing world. But these are not eyes of benevolence or charity....their motives are surprisingly material and businesslike:

· The manufacturers in the west are banking on the aspirations of the poor in the Third World. Their objective is to advertise these "very cheap" devices and create a captive market.....of the 5 billion poor if only 1% bought these $100 devices that would still give revenue of $5 billion!

· As the poor people acquire a taste for computing and surfing the web, they will rely on the brand they currently use and are familiar with to upgrade. This will allow the big corporations to do brand building in new markets.

· In most countries the corporations are banking on Third World governments to provide the cash to finance their "benevolent" scheme. These governments can be pressured into doing something for the education of their people....and out of their education budgets be persuaded to shell out cash in order to provide these devices to their poor populace. Or they can be persuaded to take a loan for financing this scheme.....in either case the corporations end up making a financial windfall!

Shared telecom towers

GTL Infrastructure, based in Mumbai, is the only listed company in the telecom tower infrastructure business in India. While telecom towers have traditionally been erected by each telecom operator separately, increasing their costs and reducing efficiencies, GTL-built towers can be shared between several private telecom operators.

GTL Infrastructure, established in 2004, is the pioneer in Shared Telecom Infrastructure in India and offers ready to use passive infrastructure to wireless telecom operators. GTL Infrastructure, part of the Global Group, is setting up a Pan India network of over 25,000 towers that can be shared among the Telecom Operators. The Towers located in rural India will help bringing in connectivity at affordable prices to the poorest of poor and create a positive impact on the Indian economy.

Infrastructure sharing can be used in both the start-up phase to build coverage quickly or, longer term, to build more cost effective coverage in rural areas. Passive Elements Sharing typically involves sharing the site and mast for antenna placement. In addition to this, the power equipment, transmission equipment and antennas can be shared among operators. Passive Elements Sharing provides cost savings for site acquisition, civil works, annual site rent, transmission and operational costs for running the site. Site acquisition and site preparation represent a large part of the network rollout costs, about 20% of expenses.

In the case of active network sharing, two or more operators deploy a completely shared radio network and in some case, a partly shared Core Network. The shared radio network consists of Radio Base Stations, Radio Network Controllers, transmission, site etc.




GTL Infrastructure Ltd. Successfully completes FCCB issue of US$ 300 Million

GTL Infrastructure Limited (GTL Infra), pioneer of Shared Passive Telecom Infrastructure in India, has raised US$ 300 million, through a successful Foreign Currency Convertible Bonds (FCCBs) Issue on October 29th, 2007.

The issue lead managed by Citibank and Standard Chartered Bank, received an overwhelming response. A total of 93 Global Investors participated with confirmed orders in excess of US $ 1.102 billion, resulting in subscription of 4.41 times.

The funds raised will be used for the company’s expansion plans, and shows the confidence of the Foreign Institutional Investors in an Indian company executing a green field infrastructure project. GTL Infra is plans to roll out approximately 25000 towers across India, with a capital expenditure of US$ 1.7 Billion (Rs. 6800 Crores).

According to data collated by global accounting firm Grant Thornton, six PE deals of more than $500 million were struck in India out of which four were in the infrastructure sector including telecom infrastructure and real estate. (see private equity in infrastructure)

The richest Indian!

Businessworld

Baiju Kalesh

Everytime the Sensex scales a new peak, there is a mad scramble to figure out who tops the chart in the market cap sweepstakes. Well, it is definitely not either of the Ambani brothers.

It happens to be the President of India, who holds all the shares of government-owned companies. The notional wealth of the President of India climbed a staggering $190 billion, a steep rise of 116 per cent in rupee terms since March 2007.

As on November, the government holding in listed stocks is valued at $327 billion. If the pile-up of forex reserves — $261 billion — with the Reserve Bank of India is added, the collective wealth managed by the government stands at $558 billion, just a shade off 60 per cent of India’s $1-trillion economy.


For more eye-popping details: it is not the government-owned Oil and Natural Gas Company or the Fortune 500 Indian Oil Corporation that commands the maximum valuation. The little-known National Mineral Development Corporation (NMDC) and Metals and Mineral Trading Corporation (MMTC) have added most to the President’s portfolio — almost $100 billion, says Credit Suisse in a report to its clients on 5 November.

The growing hunt for limited resources to power infrastructure of growing economies such as India and China is driving valuations of such companies to the roof.

This humongous wealth is sufficient to retire the nation’s external debt two times over. India’s fiscal deficit can be wiped out by just about a 9 per cent yield on the total value. It is enough to fund the entire country’s infrastructure needs.

However, now that privatisation has been put on the backburner, it is like having the cake, but not being able to quite relish it.

Foreign investment funds in India

TOI
Prabhakar Sinha

India has attracted the highest private equity (PE) investments at $10 billion in 2007 so far in the emerging economies including China. According to an India-focused cross-border advisory firm IndusView, China attracted $8.3 billion during the same period.

China received $13 billion in PE investments in 2006 compared to $7 billion in India. The equation has changed since then, with India taking the lead this year, said the firm. In 2005, India had attracted only $2 billion as private equity.

The Indian real estate and infrastructure sectors have been a key contributor to this rising inflows. Out of $10 billion PE fund that India attracted so far, $5 billion came in these sectors.

Real estate emerged as the favourite segment with 26% share in all private equity investments in value terms, receiving $2.6 billion in 32 deals, closely followed by telecom with 21% share, investment touching $2.1 billion.




Globally also, real estate and infrastructure have emerged as the most attractive sectors to invest. In 2006, global real estate private equity funds have raised $72 billion in 2006 and $50 billion in 2007 so far, said the report. A large portion of these funds will be invested in emerging markets such as India and China.

"India's private equity market can expand four-fold, using deal value as a percentage of the gross domestic product and maintain the top slot ahead of China, its nearest competing economy, and the infrastructure sector will provide the necessary edge." says Bundeep Singh Rangar, chairman of IndusView.

India's trajectory in attracting PE fund has grown sharply by 51% since 1998. Private equity investments in the country as a percentage of GDP at 1% is however, when compared to developed countries like the US at 2.3%, and UK at 3.3%.

According to government estimates, India will require around $ 500 billion investments in infrastructure sectors like road, energy, ports and airports. This will create a huge opportunity for foreign investors. "Indian infrastructure's favourable flavour is its predictable investment climate and a strong entrepreneurial culture," added Rangar.

Some of the major PE funds, which are active in Indian market, are Temasek Holdings, investment arm of Singapore government, Blackstone Group, a global private equity and investment management firm, Warburg Pincus, Carlyle Group, Washington and Actis Capital. Warburg Pincus is managing around $14 billion fund. Carlyle has more than $75 billion of capital under management.

When will our ports improve?

The problems with Indian ports have been known for a long time....they have been listed earlier on this blog. Recommendations fro improving our port infrastructure have also been discussed in an earlier post. And after all this we still have problems with our ports:

Businessworld

Vishaka Zadoo

In September, 34 vessels floated idle in the Indian seas even as port authorities scurried to find berths for them. Despite all efforts, it took more than two days to get berths for half the vessels. In contrast, Port of Singapore offers berths on demand, and even in neighbouring Colombo, vessels do not have to wait for more than two hours.

That’s not a good sign for India, which sees 70 per cent of its trade happen through ports. A study by Crisil Infrastructure reveals that the cost incurred on transporting commodities from ships to factories in India accounts for 11 per cent of the cost of production. The global average is around 6 per cent.

“For a liner, every day is precious,” says Gopal Sarma, chief operating officer of Feedback Ventures’ infrastructure division. “A small vessel, on an average, costs $10 million (Rs 40 crore). Even if one accounts only for financing charges of 7 per cent and depreciation of 7 per cent a year, each day of fruitless wait will cost a shipping liner about $4,000.”

Khawar Ahmed, vice-president of operations at Emirates Shipping Lines in Singapore says that to reduce delays, shipping lines would rather send their bigger ships to more efficient ports such as Dubai, Singapore or Colombo. Consignments bound for India are then put on smaller ships, which are easier for Indian ports to handle. That saves some time, but still escalates costs.

Private Investment: Round One

Ever since India struck its first privatisation deal in 1996 when Nhava Sheva International Container Terminal was awarded to global port operator P&O (since bought by Dubai Ports), Indian ports have attracted Rs 7,585 crore in private investment: an average of Rs 700-plus crore a year. That’s still a trickle compared to the Rs 7,000 crore per year required in the next five years, but it has helped. The average turnaround time for Indian ports has improved from 5.23 days in 1998-99 to 3.5 days now.

Then, efficiency has taken a hit, even in Jawaharlal Nehru Port Trust (JNPT), which handles more than half the containers being shipped to India, despite two of its terminals being privatised.

Ramnath Iyer, director at Delhi-based Crisil Risk and Infrastructure Solutions, says the average time a ship has to wait before docking on to a berth at JNPT, the most efficient port, is 10 hours. In Singapore, the waiting period is zero; in Colombo, it is just two hours. The time taken for a ship to unload and leave the berth — the turnaround time — in JNPT is 1.98 days, in Singapore just 12 hours, and in Colombo, 15 hours.

Here’s why. The cranes at JNPT and Singapore have similar unloading speeds (20-25 containers an hour and 25-30 containers an hour, respectively). But the difference in turnaround time happens because Singapore’s four terminals accommodate 131 cranes, whereas the three terminals at JNPT have just eight.

According to Ahmed, such inefficiencies in operations and high turnaround time result in increased costs, which are ultimately passed on to the customer. “The inefficiencies are making our exports uncompetitive,” says Ajay Sahai, secretary general of Federation of Indian Export Organisations, in Delhi. “In an era when import duties are being pared, logistics costs will become a deciding factor.”

The Second Round

Iyer recommends raising capacity as one of the solutions. In 2006-07, India handled 495 million tonnes of cargo, which is 98 per cent of the current port capacity. “Ideally, there should be 30 per cent spare capacity available at all times. Otherwise, it is impossible to avoid the wait for a berth,” he says.

The government thinks so, too. India’s 12 major ports are expected to almost double their capacities to 1 billion tonnes in the next five years; the expected traffic estimated by the shipping ministry is about 780 million tonnes.

“Building capacity will be easy as it will attract private investment,” says Anwarul Hoda, member of Planning Commission. “Private companies with better management bring about higher productivity, too.” But private players are not as optimistic about the second round of investment. Connectivity, port deepening, electronic exchange of information and, last but not least, a clear policy on port tariffs are crucial issues that serve as dampers for attracting more private money.

Private Players More Efficient

After Nhava Sheva, ports such as Chennai, Tuticorin and Visakhapatnam have also privatised their terminals, with big names in port operations such as Dubai Ports and Maersk starting their operations in India. Much of the private investment has flown into building more berths. (see ‘The Money Trail’ on page 50).

So far, the fruit of giving the reins in private hands is evident. The average turnaround time for vessels has come down by about two days since 1998-99. Leading the way are the private terminals, mainly the container terminals, which were much more efficient than the public sector ports.




What Irks Them Now

Some private operators are of the view that the government policy on tariff fixation is having a debilitating impact on future investment. “The revenues earned from tariffs set by Tariff Authority of Major Ports (Tamp), do not encourage investment,” says a top executive of PSA Corporation of Singapore, which operates the Tuticorin container terminal. The terminal recently withdrew services for a few days, protesting against the regulator Tamp’s decision to reduce tariffs at the port, while the terminal had requested for a hike.

The reason why private operators are unhappy with Tamp’s cost-plus method of setting tariffs is that the revenue shared with the landlord port is not taken as cost, explains Hoda.

The other reason is poor support infrastructure. Nikhil Gandhi, who heads SeaKing Infrastructure, which operated the first private sector port in India, Pipavav, says that constraints outside the port are affecting efficiency. “If there is no evacuation, what is the point in improving efficiency of the port?” he says. “There is investment, but there is a limit to which we can do so. Otherwise there will be a pile-up on the port itself.”

Even the policy makers admit to these bottlenecks. “Inefficient evacuation could be the reason for the reluctance of private companies,” says Hoda, when asked why the private players were shying from inducting more machinery. “There is no incentive to invest more,” says the PSA executive. “Look at minor ports like Mundra and Pipavav that do not come under the jurisdiction of Tamp. They have been investing in connectivity and deepening of ports.”

Connectivity Woes

The case of Paradip port in Orissa illustrates how investment in better facilities can go down the drain in the absence of a better back-up. In 2001, it invested Rs 850 crore on installing state-of-the-art equipment that doubled its capacity to receive coal consignment to 20 million tonnes. Six years on, it still manages to handle just 15 million tonnes of coal, the rest being diverted to Visakhapatnam Port.

“The reason is poor connectivity,” says Anandita Singh, a consultant at Feedback Ventures. Inadequate connectivity adds to logistics costs. According to a KPMG estimate, it costs 53 per cent more to move a 20-foot container for a kilometre in India as compared with the US. Cutting this to the level in the US would result in savings of $20 billion and possibly a 4.3 per cent reduction in prices of Indian goods.

Experts lament that too little attention has been paid to connectivity. Sarma of Feedback Ventures points out, “Of the Rs 56,000-crore investment envisaged in the National Maritime Development programme, only 8 per cent (Rs 4,000 crore) has been set aside for connectivity.” The National Highway Development Programme announced in 2000 earmarked only 380 km for port connectivity. In the last seven years, 5,000 km of Golden Quadrilateral were completed, but only 159 km for port connectivity.

Less IT, More Red Tape

Apart from poor connectivity, long-drawn procedures too delay cargo dispatches. In Shanghai and Hong Kong, the procedural work (including customs clearances) takes just a day, while in India it takes nearly three days. Sample this: for import cargo, a total of 84 documents have to be furnished, while for export cargo as many as 68 documents have to be put in place. “There are as many as 150 signatures required,” says Crisil’s Iyer.

Singapore and Rotterdam ports have mechanised working, where the transactions are nearly paperless. In India, too, most major ports have installed electronic data interchange systems, but the implementation is partial.

Policy makers, as always, are optimistic. By the end of the Eleventh Five-Year Plan (2007-12), Hoda says, India would be comfortably placed in terms of capacity. The major ports are expected to handle cargo at 70 per cent of their capacity. Of the Rs 54,000 crore projected investment in ports in the next five years, 43 per cent is to be spent on connectivity, dredging and equipment.

But for connectivity and dredging, hardly any private investment is forthcoming; and going by the past, ports have invested next to nothing in these crucial areas. Take, for instance, the deepening of entry channel for the Mumbai port and JNPT. It took JNPT two years to agree to fund the dredging.

Setting tariffs is another critical issue. Under the proposed model concession agreement, tariffs are to be set on a normative basis (instead of cost-plus method), indexed to inflation. The matter is stuck in inter-ministerial disputes, with the shipping ministry reluctant to change Tamp’s way of setting rates. This will impact the pace of capacity addition since most projects on terminal development are expected to be on a public-private partnership basis.
Singapore and Colombo can celebrate meanwhile.

More LNG for energy-hungry India

Petronet LNG (PLL), India’s largest liquefied natural gas (LNG) importer, has put its plans for augmenting the capacity of its Dahej LNG terminal on a fast track. The company has appointed the world's largest independent marine consultants, BMT Consultants, to undertake the conceptual design of the new LNG jetty and contract documentation.

BMT had made an India foray last year with offices in Ahmedabad and Mumbai. PLL is expanding the capacity of the Dahej facility from the current 5 million metric tonne per annum (mmpta), which is equivalent to 20 million metric standard cubic metre per day (mmscmd), to 12.5 mmpta.

The new or stand-by jetty would be 2.5 km long and designed to accommodate Qmax ships, the largest LNG carriers in the world. PLL is investing $120 million for this infrastructure. Earlier, UK-based consultant HR Wallingford had carried out the marine impact studies for this jetty.

Talking to TOI, Suren Vakil, managing director of BMT in India said that this was an important step forward towards meeting India's energy needs. The project will be a technically challenging one bearing in mind the site at Dahej, which has strong cross currents and heavy sediments on the sea bed, Vakil added. Vakil said that his company would complete the design work in about a year, after which PLL would go in for a tender for constructing the jetty.

At present, one LNG tanker can berth at Dahej every alternate day. The stand-by facility is being developed to meet any mishap or outage.