Companies & Sectors
India keen to buy BP's assets in Vietnam: Deora

Oil minister Murli Deora flew into the Vietnamese capital today with heads of blue chip Indian oil firms to lay a claim with Hanoi on BP's stake in two offshore gas fields — a pipeline and power project.

With BP Plc looking at selling interest in some fields to fund its the Gulf of Mexico oil spill liability, India is pitching for buying the British energy giant's stake in the $1.3 billion Nam Con Son gas project in Vietnam, reports PTI.

Oil minister Murli Deora flew into the Vietnamese capital this morning with heads of blue chip Indian oil firms to lay a claim with Hanoi on BP's stake in two offshore gas fields, a pipeline and power project — together referred as Nam Con Son, Vietnam's largest gas project.

"This is a great opportunity for us. The gas fields were originally allocated to us but due to foreign exchange crisis of 1990s, we had to farm-out (give away) some stake to BP. We will like to get back that stake," Mr Deora said ahead of his meetings with Vietnamese prime minister Nguyen Tan Dung and government-run PetroVietnam.

BP is considering selling fields in Colombia, Venezuela and Vietnam in order to meet the $20 billion clean-up bill of the worst US spill. It had in June announced a $10 billion asset sale programme to pay the costs of compensating victims of the Gulf of Mexico oil spill caused by the blowout of the Macondo well in April.

China's CNOOC and Sinopec, as well as Thailand's PTTEP may also be interested in BP's stake in the Vietnam project.

ONGC Videsh, the overseas arm of state-run Oil and Natural Gas Corporation (ONGC), already has 45% stake in the offshore gas fields where BP has 35% and the balance is with PetroVietnam.

A 370-km pipeline ships the gas produced from the fields to onshore power plants. BP has 32.33% stake in the $565 million pipeline where its other partners are ConocoPhillips (16.7%) and PetroVietnam (51%).
The gas produced from the fields is supplied to a 720 MW, $412 million power plant where BP, NI of Japan and Semb Corp of Singapore have 33.3% stake each.

Oil secretary S Sundareshan said India is interested in taking over BP's stake in all the segments of the Nam Con Son project — the gas fields, pipeline and the power plant.

While OVL along with state-owned Oil India Ltd (OIL) may takeover BP stake in the gas fields, gas utility GAIL India was interested in the British energy giant's stake in the pipeline. GAIL and refiner Indian Oil Corporation (IOC) can together manage the power plants.
Nam Con Son project's upstream part is the Block 06.1, located 370 km south-east of Vung Tau on the southern Vietnamese coast. The 955 sq km block has Lan Tay and Lan Do gas fields. Lan Tay currently produces around 14 million standard cubic meters per day of gas (mmscmd) while Lan To is being developed currently.

OVL recouped all its investment in the project in 2006 and currently earns $35-$40 million of net revenues, officials said.

OVL has so far invested $217 million in the gas fields and has government approval to invest up to $377.46 million.

ONGC chairman and managing director R S Sharma, OVL managing director R S Butola, GAIL chairman and managing director B C Tripathi, OIL chairman and managing director N M Borah and IOC director (refineries) B N Bankapur are part of the high-level delegation Mr Deora is leading.

"There are reasonable expectations that BP may exit its project in Vietnam. We will like to put on record our claim (on this)," Mr Sundareshan said.

If Nam Con Son was put on the auction block, Asian interest would be strong, especially from Thailand and India, who have regional ambitions but often play second-fiddle to China's outbound merger and acquisition (M&A) deal-making prowess.

Chinese oil majors could come up against political opposition in Vietnam, where suspicion of China runs high due to the territorial disputes between the countries in the South China Sea.

Besides Nam Con Son, BP also owns 75.9% operating interest in Block 5-2 with PetroVietnam holding 24.1%. It partners ConocoPhillips and PetroVietnam in Block 5-3.

OVL also has two other exploration blocks — 127 and 128 in Vietnam.

The gas fields in Block 06.1 were discovered in 1998 and were put on production in January 2003. The field produced an average of 12 mmscmd in 2009 and with additional compressors being put, the output will rise to 15 mmscmd.


Madras HC pulls up RIL for starting project without green nod

The court also asked the Puducherry government to ask for and obtain an environment impact report from experts, since the project area spread over mangrove forests

The Madras High Court (HC) has taken exception to Reliance Industries (RIL) going ahead with a gas pipeline related project in the union territory of Puducherry without obtaining environmental clearance in advance, reports PTI.

Passing an order on a PIL filed by S Sai Kumar, hailing from Yanam in Puducherry, a division bench comprising Justices Prabha Sridevan and G M Akbar Ali said on Tuesday that the fact that Reliance had obtained approval after commencing the project was not enough.

The court also asked the Puducherry government to ask for and obtain an environment impact report from experts, since the project area spread over mangrove forests.

The bench said it was disturbed by the company's attitude and expected it to have greater social responsibility. "If an environment disaster strikes, it will strike the mighty and the weak equally. We do not understand why the company should have commenced production and then obtained approval", the bench said.

In his petition, Mr Kumar asked the court to restrain the respondents from establishing a 'block valve station' for the pipeline project in Dariyalatippa village without due process of law as laid down in the Madras River Conservancy Act. He said he apprehended there would be environmental damage if the project was established.

The Puducherry government and the company had entered into a memorandum of understanding (MoU) for implementing a national gas development project. 25% of the local population were fishermen dependent on the river. If the project was not halted, then, by virtue of destruction of coconut plantation and mangrove forests, the possibility of flooding would increase, the petitioner said.

The mangrove forests should be protected, Mr Kumar said in his petition.

Disposing of the petition, the bench said the applicant should come forward with an environmental management plan, which must be cleared by experts. To prevent possible future damage, the government should also be satisfied that the damage was not irreversible.

The applicant should be prepared and must sufficiently secure the cost of reversing any damage, the bench said.

The government should also have in place necessary infrastructure to maintain periodical survey and enforce stipulations subject to which the permission may be granted.

Before granting approval, the government should call upon the company to publish its proposal so that the public, particularly those who were likely to be affected, were made aware of the proposed action.

This would ensure transparency in the process and at least safeguard against a possible misjudgement if a mishap occurs, the bench said.


Power ministry prioritise projects seeking gas allocation

As per the new mechanism, the ministry would grant points or weightage to the power projects, which would in turn enable the inter-ministerial panel to allocate the fuel

Power projects, which have made good progress in land acquisition, are likely to be accorded top priority for gas allocation reports PTI.

According to sources, the power ministry has prepared a list of projects seeking gas allocation and has prioritised as per certain milestones. After land acquisition, states which have shortage of electricity and do not have coal resources would be considered for gas.

As per the new mechanism, the ministry would grant points or weightage to the power projects, which would in turn enable the inter-ministerial panel to allocate the fuel, they said.

"Power projects, which have acquired the entire land needed for the projects would get the highest weightage of 30 points," a power ministry official said.

Similarly, states that do not have coal resources and are facing acute power shortage would get 30 points and are likely to get second priority followed by projects at coastal locations using sea water instead of fresh water, the official said.

Power plants which are high on efficiency or have less heat rate may get gas before the projects that have obtained environment clearance.

An Empowered Group of Ministers (EGoM) headed by finance minister Pranab Mukherjee would meet on 27th July to decide on the allocation of gas from Reliance Industries’ (RIL) KG-D6 block to consumers, including power and fertiliser plants.

Anil Ambani-led Reliance Power (R-Power) earlier this month had written to the oil ministry asking for 28 mmscmd (million standard cubic metres of gas per day) for its three gas-based power projects at Samalkot (Andhra Pradesh), Shahapur (Maharashtra) and Bharuch (Gujarat).

R-Power made the application for gas after inheriting the Gas Sales Master Agreement (GSMA) that another ADA Group firm, RNRL, had signed with RIL. The GSMA outlined RIL's intent of supplying gas to RNRL till 2022. It was passed on to R-Power after RNRL was merged with it.

The company has sought gas allocation from not just KG-D6, but also from other fields, like those of ONGC and GSPC in the KG basin.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)