Policy
India Keen On Establishing A Gas Trading Hub
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Draft Policy For EOR Projects Noble But Challenges Likely
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ONGC In Desperate Hurry To Acquire Producing Assets
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Battle For Reduction In Cess On Crude Oil Begins
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OVL To Be Strengthened For Enhanced Role In Asset Acquisitions
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Regulation
India To Launch Bidding Round Under OAL On January 16
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Projected Domestic Gas Availability May Derail LNG Terminals
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FSRUs Face Uncertainty, Move At Slow Pace In India
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Pet Coke Unlikely To Disappear From India In Near Future
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Alternative Energy / Fuel
NITI Aayog Proposes 15,000 Ton Coal–To-Methanol Unit
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New Projects
L&T Wins A Major ONGC Contract
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McDermott International Awarded Contract In KG Basin By RIL
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RIL Completes $16-Billion Expansion, Doubles Ethylene Capacity
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Six Cos Evince Interest For Storing Crude In Pudur Oil Reserve
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Market Watch
India Challenges China As World’s Biggest LPG Importer
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IGL Smart Card Program
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ONGC Petro Seeks Dealers
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Apar Industries Enters A JV To Market Auto Lubricants
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Companies
Indraprastha Gas Limited
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L&T Hydrocarbon Gets Rs 21 Billion Projects From RIL, HPCL
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OIL Makes 2 Hydrocarbon Discoveries
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GAIL Commissions India’s Second Largest Rooftop Solar Plant
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Essar Oilfields Bags Contracts From Mercator Petroleum
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Cairn India Acquires Controlling Stake In Avanstrate For US$158 Million
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Press Release [FREE Access]
Petro Intelligence » PLL: Making Up For Old Lapses

by R. Sasankan

Dr. Vijay KelkarPetronet LNG Ltd’s MD and CEO Prabhat Singh is trying to make the best out of a botched job.

“Petronet LNG Ltd is eyeing a stake in the planned LNG expansion projects in Qatar as it looks to venture overseas to diversify its portfolio. (We are) keen on a stake that will give it a position on the board of the Qatari company,” Singh recently said.

Singh’s move is designed to make up for the lapses of his illustrious predecessors. About five years ago, this column carried a series of reports highlighting corruption at the top management of Petronet LNG Ltd (PLL) which is headed by the secretary in the Ministry of Petroleum and Natural Gas. The PLL management had colluded with RasGas of Qatar in wrecking certain provisions of the 25-year agreement for the supply of 7.5 million tons of LNG per annum.

This column was the first to talk about the malefic intent of a few bureaucrats who had deeply compromised national interest by quietly forgoing the 5 per cent equity stake that Petronet LNG Ltd, or its nominee, had been offered in an upstream liquefaction plant in Qatar. The Indian side had bargained hard for the equity stake and worked it into the contract. Such a facility has already been granted to Ko Gas, the South Korean company, because it is a major LNG importer from Qatar. The PLL contract had provided for a 5 per cent stake at face value, which would have ensured a seat on the board of the company.

Prabhat SinghOur exposure did not provoke any response from the management of Petronet LNG Ltd, which was one of our subscribers. The first two chief executives of PLL, who acted more like representatives of the Qatari company, could not be expected to respond. The then CEO (who genuinely believed in the Falstaffian dictum of discretion being the better part of valour) preferred to maintain a stoic silence. However, the then Petroleum Minister Jaipal Reddy sent us a note through his information officer which said he had ordered a departmental inquiry into the alleged corruption in PLL (There were other issues as well). Reddy did order an inquiry. But departmental inquiries are normally cover-up operations. PLL is headed by the secretary of the ministry as its ex-officio chairman and an additional secretary of the same ministry cannot be expected to give a report against an organization headed by his boss. This might happen in the US or the UK but certainly not in India. The present petroleum minister Dharmendra Pradhan had also committed in parliament that he would disclose the outcome of the inquiry but nothing has come out so far.

Suresh MathurPrabhat Singh has now acknowledged that there was such a provision in the contract and PLL had assigned Oil and Natural Gas Corporation (ONGC), one of the four promoters of PLL, to pick up the stake which at that time was estimated to cost only $ 135 million.

Singh’s statement points towards a highly sophisticated operation. For a cash-rich company like ONGC, a sum of $ 135 million is peanuts. Its overseas subsidiary, ONGC Videsh, spends millions of dollars every year to acquire overseas oil and gas assets, some of which are in geopolitically volatile places. ONGC itself was planning to diversify into LNG imports and, in fact, the then chief executive of PLL A.K. Balyan, in his previous role as director (Business Development) of ONGC, had negotiated with quite a few LNG producers. I spoke with a few ONGC board members who could not recall a discussion on such a proposal at any of the board meetings. The Qatar company would have been extremely happy if PLL did not insist on the equity stake which, according to Prabhat Singh’s admission, is now worth $ 2 billion.

P. DasguptaThis level of corruption was possible because PLL is technically a private company with the equity stake of four public sector promoters limited to 50 per cent. As a result, it remains outside the purview of the Vigilance Commission and the Central Bureau of Investigation (CBI). PLL was the brainchild of Dr Vijay Kelkar the then petroleum secretary who believed that it ought to be headed by K.K. Kapoor, who was the GAIL boss at that time and on the verge of retirement.

But that was not to be. Kelkar’s concept for PLL was noble but certainly not suitable for India. It must have emanated either from his innocence or his insufficient understanding of the Indian character.

A.K. BalyanInquiries reveal that somebody at the very top of the decision-making system intervened to ensure that PLL did not exercise the option of picking up an equity stake in the Qatar project. At that time, the international LNG lobby was aggressively pushing its interests through a top bureaucrat. He is understood to have pulled the strings. But then, the surrender of PLL’s interest would not have been without a quid pro quo. The then political leadership in the petroleum ministry had an extremely sharp antenna that could detect all sources of Additional Resource Mobilisation (ARM) for the ruling party.

Prabhat Singh’s idea of investing in liquefaction plants makes business sense. He is trying to make up for the lapses of his illustrious predecessors. But PLL will have to shell out a lot of money for this. Qatar will certainly accommodate PLL in its new projects because in an LNG market that is facing a glut it is eminently prudent to have representatives from a large market like India on its board. PLL has surplus cash.

But why should such investments be restricted to Qatar alone? True, Qatar is geographically the closest and, therefore, the best bet. However, there is no reason to put all the eggs in one basket? Iran can be an equally attractive market. Even Australian companies will be ready to offer very attractive terms.



To download the latest issue 'Volume 24 Issue 19 - January 10, 2018', click here
Petro Intelligence [FREE Access]
Putin’s Great Game: A Gas Pipeline To India
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ONGC: More Sinned Against….
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PLL: Making Up For Old Lapses
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Bombay High’s Tale Of Woe: Short Shrift For Local Talent
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Foreign Investment
Debt-Ridden Aban Offshore Seeks Settlement With Lenders
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Overseas Investment
India To Help Mongolia Set Up Refinery
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Gas Scene
Sector-wise Consumption of Natural Gas in November 2017
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List Of Importers & Source-Wise LNG Imports In November 2017
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Gas pipelines under execution / construction as on 1st November, 2017
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Domestic Natural Gas Scene : November 2017
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Capacity Utilisation of Gas Pipeline Network as on 1st October, 2017
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Status of Coal Bed Methane Gas development in India (Sept 2017)
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Status of Shale Gas and oil development in India
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Sectoral Consumption of gas in October 2017, far below demand projections
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LNG Imports and Domestic Gross Natural Gas Production In October 2017
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Update: CNG Stations & Vehicles and CNG Sales
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Update: CGD Factsheet as of September 2017
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Natural Gas Share in Prime Energy Mix
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Domestic Gas Price (November 2014 -March 2015 to October 2017 - March 2018)
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Source-Wise LNG Imports In September 2017
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Sector-wise gas consumption of domestic gas and RLNG (July 2017)
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ONGC Asset-wise gas flaring in FY 2016-17
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Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
End-Use Sectors of High Speed Diesel
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IOC’s Unparalleled Cross -Country Pipeline Network, Market Share, Throughput and Capacity Utilisation
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Petroleum products demand & Gross Domestic Product (GDP) during five year period
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Retail Selling Prices of Petrol and Diesel: India vis-a-vis Developed Countries
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Status of blocks under NELP (2017-18)
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Petroleum Sector’s Contributions To States Through Taxes
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Revenue from the Petroleum Sector and Payout from Government for petroleum subsidy
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Important terms in pricing of petroleum products
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India’s Region-Wise Crude Imports in November 2017
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Retail Selling Price (RSP) of major products in India & neighbouring countries
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Power deficit: Region-wise position for November, 2017
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High Sulphur Crude Processing Hits An All Time High
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Oil India Ltd Cost Structure
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Specific energy consumption (MBN number) of PSU refineries
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Uptrend Stalled In Distillate Yield Of PSU Refineries
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Oil India Ltd : Large and Diversified Domestic Reserve Base
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ONGC: VAP Production
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ONGC Intensifies Exploration In Kutch-Saurashtra
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High Sulphur (HS) & Low Sulphur (LS) crude oil processing
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Latest Estimated Hydrocarbon Reserves In India
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An Updated LPG Profile In Brief ( April- September 2017)
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Import of Crude oil and Petroleum Products (April – October 2017)
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Tenders [FREE Access]
IndianOil
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IndianOil
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IndianOil
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Oil and Natural Gas Corporation Limited
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