NEW DELHI: Industry body, ASSOCHAM has recommended that tax holiday should be extended to the profit from production of natural gas produced in any block whether awarded under NELP-I to NELP-VII or CBM and should be available retrospectively.
Here are its pre-budget memorandum for the Oil and Natural gas sector
Deduction under Section 35AD of the Act
Under section 35AD of the Act, 100% deduction in respect of capital expenditure incurred (other than land, goodwill and financial instrument) prior to commencement of operation of the specified business to the assessee engaged in laying & operating a cross-country Natural Gas/Crude/Petroleum pipeline network for distribution is allowed.
Section 70 of the Act provides that in case of loss under any head of income (other than head of Capital gain), assessee is entitled to set off such loss from any other source of income under the same head. Therefore loss from one business can be set off from profits of another businesses.
However section 73A of the Act provides that loss computed under section 35AD of the Act will be set off only against profits & gains of Specified Business and Specified Business interalia includes business of laying and operating a cross-country natural gas (laid after 01.04.2007) or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network. This restricts the claim for adjustment of loss from profits of other income which is allowed otherwise in all other cases. This discrimination needs to be removed.
It is also observed that the proposed DTC is silent on the continuation of the deduction of carried forward loss.
ASSOCHAM has cited the rationale as in the initial 3 to 4 years there may be no profit in the Specified Business of an assessee. It is suggested to allow set off of loss under section 35AD of the Act against profits of any other business carried on by the assessee.
Deduction for production of natural gas
Finance (No. 2) Act, 2009 has restricted tax holiday benefits on the profits derived from the production of natural gas blocks licensed under NELP-VIII/Coal Bed Methane (“CBM”) which commence production on or after April 1, 2009.
It is recommended that the tax holiday should be extended to the profit from production of natural gas produced in any block whether awarded under NELP-I to NELP-VII or CBM and should be available retrospectively.
The said amendment is not in line with the promises made by the government since 1997 (Budget Speech), 1999 ( NELP Policy) and onwards (Petroleum Tax Guide, signed Production Sharing Contracts (“PSC”) for NELP I to VII and signed Contracts for CBM Rounds I to III). Withdrawal of contractual commitments by the government is clearly discriminatory in nature and could lead to avoidable litigations. Each of the signed PSC and CBM contracts provide for fiscal stability and the operators could well resort to seeking international arbitration where it is a settled principle that sovereign governments are bound to honour contractual commitments.
The limitation of the tax holiday for oil & gas to a single undertaking based on a single PSC is regressive and inconsistent with the construct of tax holidays for other sectors. This should be amended to define an ‘undertaking’ (consistent with the judicial decisions) that each distinct field development evidenced by a separate development plan should be an undertaking eligible for the tax holiday. This is all the more important as the amendment has been made retrospectively and declaring each block as a single undertaking, that too with retrospective effect, will adversely affect the profitability of operators. Courtesy:ET
10 Feb 2011 PB
Thursday, February 10, 2011
Tuesday, February 8, 2011
BPCL to process 22 % more crude in 2011-12
State-run Bharat Petroleum Corp (BPCL) will process 22% more crude oil in the fiscal year beginning April 1 as it starts commercial production at a new refinery to feed the nation's growing energy demand. The company will process 28 mn tonnes of crude, or 560,000 barrels a day, next fiscal year compared with 23 mn tonnes likely to be used this year, Chairman RK Singh said on Thursday. Its Bina plant will start commercial output by February 15, he said.
Indian refiners are expanding capacity as economic growth in the Asian nation boosts sales of cars and motorcyles and as rising affluence increases air travel. The new plant will ease BPCL's need to source products via imports or purchase fuels from other refiners to top up sales through its retail outlets.
Bina's "commissioning is getting completed by the end of this month. By February 15, commercial production will start," said Singh, who is visiting Singapore as part of a delegation led by India's oil minister Murli Deora. "The refinery is designed for Saudi crude so during the trial process we have to use Saudi crude."
BPCL operates the 120,000 bpd refinery in central India with Oman Oil Co. The facility started crude processing in the middle of last year, but subsequently shut down as secondary units, including tankes to store products, were not enough. BPCL holds a majority stake, while Oman Oil owns 26%.
The last refinery commissioned in India was in December 2008, when Reliance Industries began production at its 580,000 bpd refinery at Jamnagar. India imports fuel to meet local demand, despite having surplus refining capacity, as private firms prefer to export refined products, saying they do not get compensation from the government to sell fuel at subsidised rates. Singh was positive on refining margins.
"Right now, the trend is that product prices are also increasing by the same proportion (as crude), therefore refinery margins are getting better," he said. The company's average refining margins for the third and fourth fiscal quarter was at around USD 5 a barrel, Singh said. BPCL operates a 240,000-bpd refinery in Mumbai as well as a 150,000-bpd refinery in the southern Indian state of Kerala, run by subsidiary Kochi Refineries Ltd. It also owns a majority stake in a 60,000 bpd refinery in northeast India. Courtesy: News Center
14 Jan 2011 PB
Indian refiners are expanding capacity as economic growth in the Asian nation boosts sales of cars and motorcyles and as rising affluence increases air travel. The new plant will ease BPCL's need to source products via imports or purchase fuels from other refiners to top up sales through its retail outlets.
Bina's "commissioning is getting completed by the end of this month. By February 15, commercial production will start," said Singh, who is visiting Singapore as part of a delegation led by India's oil minister Murli Deora. "The refinery is designed for Saudi crude so during the trial process we have to use Saudi crude."
BPCL operates the 120,000 bpd refinery in central India with Oman Oil Co. The facility started crude processing in the middle of last year, but subsequently shut down as secondary units, including tankes to store products, were not enough. BPCL holds a majority stake, while Oman Oil owns 26%.
The last refinery commissioned in India was in December 2008, when Reliance Industries began production at its 580,000 bpd refinery at Jamnagar. India imports fuel to meet local demand, despite having surplus refining capacity, as private firms prefer to export refined products, saying they do not get compensation from the government to sell fuel at subsidised rates. Singh was positive on refining margins.
"Right now, the trend is that product prices are also increasing by the same proportion (as crude), therefore refinery margins are getting better," he said. The company's average refining margins for the third and fourth fiscal quarter was at around USD 5 a barrel, Singh said. BPCL operates a 240,000-bpd refinery in Mumbai as well as a 150,000-bpd refinery in the southern Indian state of Kerala, run by subsidiary Kochi Refineries Ltd. It also owns a majority stake in a 60,000 bpd refinery in northeast India. Courtesy: News Center
14 Jan 2011 PB
Bina refinery to go commercial in mid february
Bharat Oman Refineries (BORL), a joint venture of state-owned Bharat Petroleum Corporation (BPCL) and Oman Oil Co, will start commercial production from its newly built Bina refinery in Madhya Pradesh by mid-February. The 6-million tonnes a year unit will "start producing fuel by February 15", a company official said. "We are trying to get Prime Minister Manmohan Singh to inaugurate the refinery."
The refinery started operations last June and "sequentially commissioning" of unit would be completed by the end of this month. The official said BORL plans to expand the annual capacity of its newly built Bina Refinery to 15 million tonnes by 2016-17. The Rs 11,397 crore Bina Refinery started its main unit -- the Crude Distillation Unit (CDU) -- on June 29.
"All other units of the refinery are being commissioned sequentially and full commercial production should start by mid-February," he said. Once it is fully commissioned, BORL would go in for a pre-feasibility study for expansion. An investment decision would be made based on the findings. OCC holds a 26 per cent stake in BORL, while the rest is with BPCL.
Although the 6-million tonnes per annum Bina Refinery was to be mechanically completed in December, 2009, it could not start processing crude oil as state-owned BHEL had not completed a 99-MW captive power plant on time. BHEL was to set up a captive power plant at the refinery by May, 2009, but implemented the project a year late. Besides supplying power to the refinery, the 99-Mw unit was also meant to provide steam for conversion of crude oil into petroleum products.
While nearly half of the refinery output will be diesel, it will also produce 0.6 million tonnes each of petrol and jet fuel. All the products produced would be for sale within the country. "However, if there is an excess of naphtha that is not sold in India, it will be exported," the official said. Crude oil for the refinery is being imported mainly from Saudi Arabia. BPCL has already contracted 0.5 million tonnes of crude oil from Saudi Arabia to start the refinery.
BORL has laid a 1,000-km-long pipeline from Vadinar, in Gujarat, to Bina to bring crude oil to the refinery. BPCL currently owns a refinery with an annual capacity of 12 million tonnes in Mumbai and a 9.5-million tonnes unit in Kochi. It also owns a majority stake in the 3 million tonnes a year Numaligarh Refinery. Courtesy: BS
14 Jan 2011, PB
The refinery started operations last June and "sequentially commissioning" of unit would be completed by the end of this month. The official said BORL plans to expand the annual capacity of its newly built Bina Refinery to 15 million tonnes by 2016-17. The Rs 11,397 crore Bina Refinery started its main unit -- the Crude Distillation Unit (CDU) -- on June 29.
"All other units of the refinery are being commissioned sequentially and full commercial production should start by mid-February," he said. Once it is fully commissioned, BORL would go in for a pre-feasibility study for expansion. An investment decision would be made based on the findings. OCC holds a 26 per cent stake in BORL, while the rest is with BPCL.
Although the 6-million tonnes per annum Bina Refinery was to be mechanically completed in December, 2009, it could not start processing crude oil as state-owned BHEL had not completed a 99-MW captive power plant on time. BHEL was to set up a captive power plant at the refinery by May, 2009, but implemented the project a year late. Besides supplying power to the refinery, the 99-Mw unit was also meant to provide steam for conversion of crude oil into petroleum products.
While nearly half of the refinery output will be diesel, it will also produce 0.6 million tonnes each of petrol and jet fuel. All the products produced would be for sale within the country. "However, if there is an excess of naphtha that is not sold in India, it will be exported," the official said. Crude oil for the refinery is being imported mainly from Saudi Arabia. BPCL has already contracted 0.5 million tonnes of crude oil from Saudi Arabia to start the refinery.
BORL has laid a 1,000-km-long pipeline from Vadinar, in Gujarat, to Bina to bring crude oil to the refinery. BPCL currently owns a refinery with an annual capacity of 12 million tonnes in Mumbai and a 9.5-million tonnes unit in Kochi. It also owns a majority stake in the 3 million tonnes a year Numaligarh Refinery. Courtesy: BS
14 Jan 2011, PB
Crude oil price rise a major worry
14 Jan 2011 PB
As policymakers struggle to combat rising food inflation, the country is faced with another big concern, of crude oil touching a 27-month high of $95.26 per barrel. India’s crude oil import basket has been rising in line with the global price, which is at a two-year high on a weakening dollar and concern about a fall in US supplies. India meets about 80 per cent of its consumption through imports.
The stocks of oil marketing companies (OMCs) took a beating today. At the Bombay Stock Exchange, Indian Oil lost 2.76 per cent to close at a monthly low of Rs 310.60, Bharat Petroleum lost 3.25 per cent to close at Rs 597.80 and Hindustan Petroleum lost 5.15 per cent to close at Rs 362.70, after touching a monthly low of Rs 359.55. All three companies are scheduled to declare their December quarter results in the last week of January. Analysts expect all of them to report losses.
“This is an extremely worrisome situation for the domestic economy, the industry and consumers. This is a cause for concern for a company like ours, as the cost of oilfield services also moves up and this offsets the increase in realisation. I apprehend the rally may not halt here,” said R S Sharma, chairman and managing director, Oil and Natural Gas Corporation (ONGC), the country’s biggest energy explorer. Its share price, however, gained 1.04 per cent to Rs 1,199.30.
The OMCs, which purchase crude oil at market rates, are required to sell diesel, kerosene and liquefied petroleum gas (cooking gas) at government-set prices, resulting in losses. These are usually compensated by a cash subsidy from the government and discounts on crude purchase from the upstream companies, ONGC and Oil India Ltd.
Diesel, kerosene and LPG together account for 60 per cent of the consumption of petroleum products. Their price has not been increased since June 25. Currently, the three OMCs are incurring under-recovery (revenue loss) of Rs 7 per litre on diesel, Rs 19.60 per litre on kerosene and Rs 366 per cylinder on domestic LPG. These losses would increase when data based on the current fortnight’s average is compiled this weekend. The two private sector retailers, Reliance and Essar Oil, have increased diesel prices. Petrol prices were decontrolled from June 26, 2010, and the OMCs have raised these every now and then to pass on the loss.
The Indian basket of crude oil has averaged $92.85 per barrel in January so far, up 3.4 per cent from an already high December average of $89.78. Crude oil averaged $85.06 in the last quarter. The current fiscal average price is $79.84 per barrel, up 14.4 per cent from the 2008-09 average of $69.76. Courtesy: BS
As policymakers struggle to combat rising food inflation, the country is faced with another big concern, of crude oil touching a 27-month high of $95.26 per barrel. India’s crude oil import basket has been rising in line with the global price, which is at a two-year high on a weakening dollar and concern about a fall in US supplies. India meets about 80 per cent of its consumption through imports.
The stocks of oil marketing companies (OMCs) took a beating today. At the Bombay Stock Exchange, Indian Oil lost 2.76 per cent to close at a monthly low of Rs 310.60, Bharat Petroleum lost 3.25 per cent to close at Rs 597.80 and Hindustan Petroleum lost 5.15 per cent to close at Rs 362.70, after touching a monthly low of Rs 359.55. All three companies are scheduled to declare their December quarter results in the last week of January. Analysts expect all of them to report losses.
“This is an extremely worrisome situation for the domestic economy, the industry and consumers. This is a cause for concern for a company like ours, as the cost of oilfield services also moves up and this offsets the increase in realisation. I apprehend the rally may not halt here,” said R S Sharma, chairman and managing director, Oil and Natural Gas Corporation (ONGC), the country’s biggest energy explorer. Its share price, however, gained 1.04 per cent to Rs 1,199.30.
The OMCs, which purchase crude oil at market rates, are required to sell diesel, kerosene and liquefied petroleum gas (cooking gas) at government-set prices, resulting in losses. These are usually compensated by a cash subsidy from the government and discounts on crude purchase from the upstream companies, ONGC and Oil India Ltd.
Diesel, kerosene and LPG together account for 60 per cent of the consumption of petroleum products. Their price has not been increased since June 25. Currently, the three OMCs are incurring under-recovery (revenue loss) of Rs 7 per litre on diesel, Rs 19.60 per litre on kerosene and Rs 366 per cylinder on domestic LPG. These losses would increase when data based on the current fortnight’s average is compiled this weekend. The two private sector retailers, Reliance and Essar Oil, have increased diesel prices. Petrol prices were decontrolled from June 26, 2010, and the OMCs have raised these every now and then to pass on the loss.
The Indian basket of crude oil has averaged $92.85 per barrel in January so far, up 3.4 per cent from an already high December average of $89.78. Crude oil averaged $85.06 in the last quarter. The current fiscal average price is $79.84 per barrel, up 14.4 per cent from the 2008-09 average of $69.76. Courtesy: BS
Saturday, December 11, 2010
ONGC to get 10 % return on Cairn fields
07 Dec 2010 PETROLEUM BAZAAR
NEW DELHI: The government has agreed in principle to ensure a minimum 10% return on investment (RoI) to ONGC in Cairn India’s Rajasthan blocks, boosting the firm’s valuation ahead of its follow-on public offering and removing a big obstacle for the $9.6-billion Cairn-Vedanta deal, petroleum ministry sources said.
The state-run explorer has been losing money from these blocks, as it has to bear the entire royalty burden, and has been using the deal to negotiate better terms for itself. Oil ministry sources said the government may transfer a part of its own share of profit from the blocks to help ONGC, but this would require the approval of the finance ministry because it would be a direct subsidy from the government.
Officials in the finance ministry said they were looking at ways to help ONGC while petroleum secretary S Sundareshan said his ministry wanted India’s second-largest company by market capitalisation to get a reasonable return.
“This will come as an upside for investors ahead of the FPO as the Rajasthan blocks will generate more revenues in the years to come. A positive return for ONGC would help the Cairn-Vedanta deal as well as ONGC’s concerns would be addressed without making any changes for Cairn India materially,” says Sanjeev Prasad of Kotak Securities .
The ministry is considering ways to give ONGC a return of 10-15% on its investment in the Rajasthan blocks and is consulting ONGC and the Directorate General of Hydrocarbons, the quasi-regulator for the sector, the official said, requesting anonymity. One of those options is to amend the tripartite contract between Cairn India, ONGC and the central government for the Rajasthan blocks. The amendment would allow the Union government to directly compensate ONGC.
By altering a specific contract, as opposed to making a policy change that affects 70-odd royalty deals that are in the same situation as ONGC, the government will not need cabinet clearance, speeding up the deal. The government would like to resolve the royalty issue quickly, as it is looking to sell 5% in ONGC through a public issue by March 2011; if the royalty issue is still pending, it might lower the valuations the government gets.
However, the Cairn-Vedanta deal, pending for about four months, might run into another hurdle. If the delay continues, Vedanta Resources might ask Cairn Energy, Cairn India’s Scottish parent, to lower the deal price, a person involved in the transaction said last Thursday.“The change in crude prices and scrip movements will be variables we will have to keep in mind as the deadline approaches,” he said. The deadline for the deal is April 15, which can be extended by one month. Courtesy:ET
NEW DELHI: The government has agreed in principle to ensure a minimum 10% return on investment (RoI) to ONGC in Cairn India’s Rajasthan blocks, boosting the firm’s valuation ahead of its follow-on public offering and removing a big obstacle for the $9.6-billion Cairn-Vedanta deal, petroleum ministry sources said.
The state-run explorer has been losing money from these blocks, as it has to bear the entire royalty burden, and has been using the deal to negotiate better terms for itself. Oil ministry sources said the government may transfer a part of its own share of profit from the blocks to help ONGC, but this would require the approval of the finance ministry because it would be a direct subsidy from the government.
Officials in the finance ministry said they were looking at ways to help ONGC while petroleum secretary S Sundareshan said his ministry wanted India’s second-largest company by market capitalisation to get a reasonable return.
“This will come as an upside for investors ahead of the FPO as the Rajasthan blocks will generate more revenues in the years to come. A positive return for ONGC would help the Cairn-Vedanta deal as well as ONGC’s concerns would be addressed without making any changes for Cairn India materially,” says Sanjeev Prasad of Kotak Securities .
The ministry is considering ways to give ONGC a return of 10-15% on its investment in the Rajasthan blocks and is consulting ONGC and the Directorate General of Hydrocarbons, the quasi-regulator for the sector, the official said, requesting anonymity. One of those options is to amend the tripartite contract between Cairn India, ONGC and the central government for the Rajasthan blocks. The amendment would allow the Union government to directly compensate ONGC.
By altering a specific contract, as opposed to making a policy change that affects 70-odd royalty deals that are in the same situation as ONGC, the government will not need cabinet clearance, speeding up the deal. The government would like to resolve the royalty issue quickly, as it is looking to sell 5% in ONGC through a public issue by March 2011; if the royalty issue is still pending, it might lower the valuations the government gets.
However, the Cairn-Vedanta deal, pending for about four months, might run into another hurdle. If the delay continues, Vedanta Resources might ask Cairn Energy, Cairn India’s Scottish parent, to lower the deal price, a person involved in the transaction said last Thursday.“The change in crude prices and scrip movements will be variables we will have to keep in mind as the deadline approaches,” he said. The deadline for the deal is April 15, which can be extended by one month. Courtesy:ET
ONGC Videsh for 25 % stake in Kazakh oilfield
07 Dec 2010 PETROLEUM BAZAAR
ONGC Videsh Ltd (OVL) will sign a formal agreement for taking a 25 per cent stake in Kazakhstan’s Satpayev oilfield by the end of February 2011. It is to invest about $400 million (Rs 1,800 crore) in the 1,582 sq km North Caspian Sea oilfield.“India is a very important partner for Kazakhstan. Though there were some issues, the agreement (exploration and production) contract will be signed by end of February,” said that country’s oil and gas minister, Sauat Mynbayev.
He was speaking to reporters after the eighth meeting of the India-Kazakhstan Inter-Governmental Commission (IGC) on Trade, Economic, Scientific, Technological, Industrial and Cultural Cooperation.India’s petroleum secretary said details of the agreement were in the final stages of discussion. OVL, the foreign arm of state-run Oil and Natural Gas Corporation, signed a memorandum of understanding for the block in 2005, along with the LN Mittal group. The Mittals pulled out last year.
Satpayev has 256 million tonnes (1.75 billion barrels) of recoverable reserves and a peak output of 287,000 barrels per day (14.3 mt a year) is envisaged. KazMunaiGas, the Kazakh national oil company, is to be operator of the field, holding 75 per cent stake.“OVL will have the option of taking an additional 10 per cent stake in the block on commercial rates when a discovery is made,” said a senior OVL executive.
The initial agreement for OVL and its partner, Mittal Investment Sarl (the holding firm of steel magnate Lakshmi Mittal), getting 25 per cent stake in Satpayev was signed during Kazakhstan President Nursultan Nazarbayev’s state visit in January 2009.In November 2009, Mittal pulled out of the project and OVL decided to take the entire 25 per cent stake on its own.
A top official said OVL would pay $26 million as signing amount to the Kazakhstan government. Besides, it will also pay $80 million as one-time assignment fee. On top of this, OVL has committed a minimum exploration investment of $165 million and an additional optional expenditure of $235 million.Murli Deora, minister of petroleum and natural gas, led the Indian talks during the eighth meeting of the IGC. The Kazakh side was led by Mynbayev.Courtesy:BS
ONGC Videsh Ltd (OVL) will sign a formal agreement for taking a 25 per cent stake in Kazakhstan’s Satpayev oilfield by the end of February 2011. It is to invest about $400 million (Rs 1,800 crore) in the 1,582 sq km North Caspian Sea oilfield.“India is a very important partner for Kazakhstan. Though there were some issues, the agreement (exploration and production) contract will be signed by end of February,” said that country’s oil and gas minister, Sauat Mynbayev.
He was speaking to reporters after the eighth meeting of the India-Kazakhstan Inter-Governmental Commission (IGC) on Trade, Economic, Scientific, Technological, Industrial and Cultural Cooperation.India’s petroleum secretary said details of the agreement were in the final stages of discussion. OVL, the foreign arm of state-run Oil and Natural Gas Corporation, signed a memorandum of understanding for the block in 2005, along with the LN Mittal group. The Mittals pulled out last year.
Satpayev has 256 million tonnes (1.75 billion barrels) of recoverable reserves and a peak output of 287,000 barrels per day (14.3 mt a year) is envisaged. KazMunaiGas, the Kazakh national oil company, is to be operator of the field, holding 75 per cent stake.“OVL will have the option of taking an additional 10 per cent stake in the block on commercial rates when a discovery is made,” said a senior OVL executive.
The initial agreement for OVL and its partner, Mittal Investment Sarl (the holding firm of steel magnate Lakshmi Mittal), getting 25 per cent stake in Satpayev was signed during Kazakhstan President Nursultan Nazarbayev’s state visit in January 2009.In November 2009, Mittal pulled out of the project and OVL decided to take the entire 25 per cent stake on its own.
A top official said OVL would pay $26 million as signing amount to the Kazakhstan government. Besides, it will also pay $80 million as one-time assignment fee. On top of this, OVL has committed a minimum exploration investment of $165 million and an additional optional expenditure of $235 million.Murli Deora, minister of petroleum and natural gas, led the Indian talks during the eighth meeting of the IGC. The Kazakh side was led by Mynbayev.Courtesy:BS
Australia may overtake Qatar in Global LNG race
07 Dec 2010 PETROLEUM BAZAAR
Bloomberg cited Mr Neil Beveridge analyst of Sanford C Bernstein & Company as saying that Australia, defeated by Qatar in a bid to host the 2022 World Cup soccer tournament may overtake the Arabian Gulf nation in liquefied natural gas production in 10 years.
The Hong Kong based analyst said that LNG output in Australia may increase to 80 million tonnes a year by the end of the decade from 20 million tonnes a year now. Depending on how many projects are approved, Australia may vault to first among LNG producers and surpass Qatar. Australia was fourth largest in 2009, behind Qatar, Malaysia and Indonesia.
Mr Beveridge said that “Australia is in a sweet spot; the expansion we’re going to see over the next 10 years will be very significant and will take Australia into a competitive position with Qatar as the world’s largest supplier of LNG.”
According to US estimates, soccer’s governing body awarded Qatar, holder of the world’s third largest gas reserves, the 2022 tournament yesterday after a secret vote at FIFA’s headquarters in Zurich, defeating the US, Japan, South Korea and Australia. Hosting the event is worth about USD 5 billion.
Mr Beveridge said that a projected glut of LNG won’t last as Asia, the Middle East and Latin America drive global demand higher by an average 8 percent annually over the next 5 years. Australia will benefit the most as consumption rises and supply is limited partly because of a moratorium on new ventures in Qatar.
Chevron Corporation is advancing with the USD 42 billion Gorgon LNG project off northwest Australia and BG Group on October 31 said it would proceed with USD 15 billion LNG venture in Queensland. Woodside Petroleum Limited is due to start the AUD 14 billion Pluto development in August 2011, converting gas to liquid form for export.Mr Beveridge said that the Australian LNG industry faces threats to that projected growth. The big issue is around the potential for cost overruns and delays. But there isn’t a lot of competition out there to Australia.
Courtesy:BLOOMBURG
Bloomberg cited Mr Neil Beveridge analyst of Sanford C Bernstein & Company as saying that Australia, defeated by Qatar in a bid to host the 2022 World Cup soccer tournament may overtake the Arabian Gulf nation in liquefied natural gas production in 10 years.
The Hong Kong based analyst said that LNG output in Australia may increase to 80 million tonnes a year by the end of the decade from 20 million tonnes a year now. Depending on how many projects are approved, Australia may vault to first among LNG producers and surpass Qatar. Australia was fourth largest in 2009, behind Qatar, Malaysia and Indonesia.
Mr Beveridge said that “Australia is in a sweet spot; the expansion we’re going to see over the next 10 years will be very significant and will take Australia into a competitive position with Qatar as the world’s largest supplier of LNG.”
According to US estimates, soccer’s governing body awarded Qatar, holder of the world’s third largest gas reserves, the 2022 tournament yesterday after a secret vote at FIFA’s headquarters in Zurich, defeating the US, Japan, South Korea and Australia. Hosting the event is worth about USD 5 billion.
Mr Beveridge said that a projected glut of LNG won’t last as Asia, the Middle East and Latin America drive global demand higher by an average 8 percent annually over the next 5 years. Australia will benefit the most as consumption rises and supply is limited partly because of a moratorium on new ventures in Qatar.
Chevron Corporation is advancing with the USD 42 billion Gorgon LNG project off northwest Australia and BG Group on October 31 said it would proceed with USD 15 billion LNG venture in Queensland. Woodside Petroleum Limited is due to start the AUD 14 billion Pluto development in August 2011, converting gas to liquid form for export.Mr Beveridge said that the Australian LNG industry faces threats to that projected growth. The big issue is around the potential for cost overruns and delays. But there isn’t a lot of competition out there to Australia.
Courtesy:BLOOMBURG
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