EK BHARAT SHRESHTH BHARATH BUDGET : Union Budget 2017 : India

FOX PETROLEUM : EK BHARAT SHRESHTH BHARATH  BUDGET : BUDGET WILL TAKE US TO THE DEVELOPMENT OF NEW INDIA; GREAT INDIA; POWERFUL INDIA; COUNTRYMEN SHOULD ACCEPT REFORMS FOR FUTURE: MARKS : 8.5/10 TO THIS BUDGET; WITH PREVIOUS BUDGETS OF 60 YEARS IT IS FAR BETTER;

Union Budget 2017 : India : an estimate of income and expenditure for a set period of time I mean for a year; It is good to see that the last two and half years administration has moved from discretionary, favouritism based to system and transparency based; Can see several measures of transparency has been announced; War against Black money has been launched but more will come up after five state polls or we can say as per result; Budget promised inflation brought under control. CPI-based inflation declined from 6% in July 2016 to 3.4% in December, 2016;

One thing Finance Minister of India forgets that 100% of the Indian pays Tax; May be in Government records it is 3% of the total Population, But Mr Finance Minister has to acknowledge that even a beggar in India pays – INDIRECT TAX to GOVERNMENT OF INDIA.  

WHEREAS the economy has moved on a high growth path. India’s Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP in the first half of 2016-17. FDI grew 36% in H1 2016-17 over H1 2015-16, despite 5% reduction in global FDI inflows. Foreign exchange reserves have reached 361 billion US Dollars as on 20th January, 2017; Which will sum up to 500 Billion USD till next one year; IF YOU COMPARE TO THE LAST GOVERNMENT IT WAS ONLY USD $ 78 BILLION APROX IN 2014; YES ! INDIAN GETTING AHEAD UNDER PRIME MINISTER SHRI NAREANDRA MODI. YOU LIKE HIM OR NOT BUT INDIAN ECONOMY IS GROWING UNDER HIM; Government continued on path of fiscal consolidation, without compromising on public investment. The Indian economy has been strong to mild shocks and IMF forecasts, India to be one of the fastest growing major economies in 2017. It will attract US President Trum, Japan Prime Minister, UAE Government, Australia and France and Germany; Do not forget Chinese investment in India thru BRICS Money and etc;

They will achieve by major transforming reforms as suggested by the Finance Minister Shri Arun Jetly, and I personally agree to him up to 90%; Like they have gone for GST -One India One Tax to clear Prime Minister’s demand to make - One India, Great India; SECOND step of transformation was - Demonetisation of high denomination bank notes; It has clearly eroded hoardings of currency in the form of kind of BLACK MONEY, thou I am not agree to it fully – my perception is – the money which is in rotation is not BLACK MONEY; The money or bills which has not seen the banks again once out from the bank is hoarding of bills or currency and that is – BLACK MONEY;

BUDGET ROADMAP & PRIORITIES shown by the Government in the Budget - : “Transform, Energise and Clean India” – TEC India - TEC India seeks to transform the quality of governance and quality of life of our people; Energise various sections of society, especially the youth and the vulnerable, and enable them to unleash their true potential; and clean the country from the evils of corruption, black money and

non-transparent political funding and en distinct themes to foster this broad agenda: -Farmers : committed to double the income in 5 years; Rural Population : providing employment & basic infrastructure;  Youth : energising them through education, skills and jobs; The Poor and the Underprivileged : strengthening the systems of social security, health care and affordable housing; Infrastructure: for efficiency, productivity and quality of life; Financial Sector : growth & stability by stronger institutions; Digital Economy : for speed, accountability and transparency;  Public Service : effective governance and efficient service delivery through people’s participation; Prudent Fiscal Management: to ensure optimal deployment of resources and preserve fiscal stability;  TAX ADMINISTRATION: HONORING THE HONEST.

To the above statement support – Government has given - Target for agricultural credit in 2017-18 has been fixed at a record level of ` 10 lakh crores Dolllar Equivalent to USD $ 180 Billion Dollars; It is the biggest kitty ever given to farmers across the globe; No dought, farmers will become rich if concluded with sincerity;

The military budget of the India is the portion of the overall budget of Union budget of India that is allocated for the funding of the Indian Armed Forces. ... Union Minister for Finance, Arun Jaitley allocated Rs.2,74,114 Approx USD $ 75 Billion in a year for Armaments crores including 86,488 crores for Defence capital in the 2017 Union budget of India. IT WILL MAKE MANY COUNTRIES OUR FRIEND NO COUNTRIES OUR ENEMY;

The Oil Industry is in dark doesn’t know what has been announced for them; Something I gather was LNG Import got cheaper only in transportation by 2.5%; Finance Minister has also  plan to combine all PSU’s in Oil into one entity; Combined market cap of India's key oil and gas companies -- Oil and Natural Gas Corp, Oil India Ltd, IOC, HPCL, and Bharat Petroleum Corporation Ltd -- is around $106 billion.

Besides that for Rural development - Over ` 3 lakh crores Dollar equivalent to USD $ 50 Billion spent in rural areas every year, for rural poor from Central Budget, State Budgets, Bank linkage for self-help groups, etc.   

BUT RORAL DEVELOPMENT AT THE COST OF URBAN EX-CHEQUERS, IT IS NOT HEALTHY BUT WILL ACCEPT AS ALL OF US HAVE COME FROM RURAL TO URBAN; NO ONE HAS THE URBAN ROOT WITHOUT A RURAL BACK GROUND;

For the YOUTH the Union Budget has some big announcements – like wise - introducing a system of measuring annual learning outcomes in our schools and Innovation Fund for Secondary Education proposed to encourage local innovation for ensuring universal access, gender parity and quality improvement to be introduced in 3479 educationally backward districts. SWAYAM platform, leveraging IT, to be launched with at least 350 online courses. Pradhan Mantri (PRIME MINITER)  Kaushal Kendras (SKILL DEVELOPMENT) to be extended to more than 600 districts across the country. 100 India International Skills Centres will be established across the country amount of Investment` 4000 crores. Industrial Value Enhancement (STRIVE) will also be launched in 2017-18 at a cost of ` 2,200 crores and also a  scheme for creating employment in the leather and footwear industries along the lines in Textiles Sector to be launched along with that Incredible India 2.0 Campaign will be launched across the world to promote tourism and employment.

THE POOR AND THE UNDERPRIVILEGED has got attention in the budget - Mahila Shakti Kendra (Woman Empowerment) will be set up with an allocation of ` 500 crores,  Under Maternity Benefit Scheme ` 6,000 each will be transferred directly to the bank accounts of pregnant women who undergo institutional delivery and vaccinate their children;  Affordable housing to be given infrastructure status where as Government promised to build 10000000 Houses for poor in one year;  and also,  National Housing Bank will refinance individual housing loans of about ` 20,000 crore in 2017-18; And many more promises by class and category;

The biggest take out from URBAN PEOPLE IS INFRASTRUCTURE BUDGET - For transportation sector as a whole, including rail, roads, shipping, provision of ` 2,41,387 crores Dollar Equivalent to 50 Billion USD  has been made in 2017-18. It is a good sum if Government can use the entire SUM in a year;  

In FINANCIAL SECTOR Foreign Investment Promotion Board to be abolished in 2017-18 and further liberalisation of FDI policy is under consideration, I appreciate that;  An expert committee will be constituted to study and promote creation of an operational and legal framework to integrate spot market and derivatives market in the agricultural sector, for commodities trading. e- NAM to be an integral part of the framework.

Bill relating to curtail the menace of illicit deposit schemes will be introduced. A bill relating to resolution of financial firms will be introduced in the current Budget Session of Parliament. This will contribute to stability and resilience of our financial system.  A mechanism to streamline institutional arrangements for resolution of disputes in infrastructure related construction contracts, PPP and public utility contracts will be introduced as an amendment to the Arbitration and Conciliation Act 1996.  A Computer Emergency Response Team for our Financial Sector (CERT-Fin) will be established;  In line with the ‘Indradhanush’ roadmap, ` 10,000 crores for recapitalisation of Banks provided in 2017-18; Lending target under Pradhan Mantri Mudra Yojana to be set at ` 2.44 lakh crores. Priority will be given to Dalits, Tribals, Backward Classes and Women.

INDIA GOES ON DIGITAL ECONOMY means CASHLESS by the GOVERNMENT DEFINITION & PLAN, LESS CASH in my understanding; As per Finance Minister 125 lakh people have adopted the BHIM app so far out of 125, 0000000 of population whereas s 26 0000000 account has been opened by Government itself on ZERO Balance Account. The Government will launch two new schemes to promote the usage of BHIM; these are, Referral Bonus Scheme for individuals and a Cashback Scheme for

Merchants;  Aadhar (UID) Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly; A Mission will be set up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards. A proposal to mandate all Government receipts through digital means, beyond a prescribed limit, is under consideration and BLAH BLAH BLAH;

PUBLIC SERVICE - The Government e-market place which is now functional for procurement

of goods and services; The Biggest Human resource Channel The Postal service - To be utilised the Head Post Offices as front offices for rendering passport services;  A Centralised Defence Travel System has been developed through which travel tickets can be booked online by our soldiers and officers;  Web based interactive Pension Disbursement System for Defence Pensioners will be established; To rationalise the number of tribunals and merge tribunals wherever appropriate;

TRANSPARENCY IN ELECTORAL FUNDING -Need to cleanse the system of political funding in India; Maximum amount of cash donation, a political party can receive, will be ` 2000/- from one person. Political parties will be entitled to receive donations by cheque or digital mode from their donors.  Amendment to the Reserve Bank of India Act to enable the issuance of electoral bonds in accordance with a scheme that the Government of India would frame in this regard.

EASE OF DOING BUSINESS - Scope of domestic transfer pricing restricted to only if one of the entities

involved in related party transaction enjoys specified profit-linked deduction; Threshold limit for audit of business entities who opt for presumptive income scheme increased from ` 1 crore to ` 2 crores. Similarly, the threshold for maintenance of books for individuals and HUF increased from turnover of 10 lakhs to 25 lakhs or income from 1.2 lakhs to 2.5 lakhs;  Foreign Portfolio Investor (FPI) Category I & II exempted from indirect transfer provision. Indirect transfer provision shall not apply in case of redemption of shares or interests outside India as a result of or arising out of redemption or sale of investment in India which is chargeable to tax in India. Commission payable to individual insurance agents exempt from the requirement of TDS subject to their filing a self-declaration that their income is below taxable limit.  Under scheme for presumptive taxation for professionals with receipt upto ` 50 lakhs p.a. advance tax can be paid in one instalment instead of four.Time period for revising a tax return is being reduced to 12 months from completion of financial year, at par with the time period for filing of return. Also the time for completion of scrutiny assessments is being compressed further from 21 months to 18 months for Assessment Year 2018-19 andfurther to 12 months for Assessment Year 2019-20 and thereafter.

PERSONAL INCOME-TAX - Existing rate of taxation for individual assesses between income of `2.5 lakhs to 5 lakhs reduced to 5% from the present rate of 10% ; Surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between `50 lakhs and ` 1 crore; Simple one-page form to be filed as Income Tax Return for the category of individuals having taxable income upto ` 5 lakhs other than business income;  Appeal to all citizens of India to contribute to Nation Building by making a small payment of 5% tax if their income is falling in the lowest slab of 2.5 lakhs to 5 lakhs

I GIVE 8.5 OUT OF 10 TO THIS BUDGET; HOPE GOVERNMENT WILL DO AS SATTED IN THE BUDGET TO MAKE – EK BHARAT SHRESHTH BHARATH

Ajay Kumar (Fox Petroleum) Views

FOX PETROLEUM : The way Parliament is running will give more Questions unanswered. They are arguing not to settle; But debate has no more importance for them; Debate is Dangerous, it gives outcome, argument kills any all outcomes; We will not be able to see any outcome from this monsoon session; I think in our desire to create a better India, we have to have civilized debate in this country and not just bawling.

Ajay Kumar, Chairman [FOX PETROLEUM]

Every Government is worried about terrorism. Well, there’s really an easy way and one way: Stop Governments care and participation in it. “May 26, 2014 the swearing in of our Prime Minister Shri Narendra Modi and that same day I have received the threatening SMS 74 and calls from goons of X-Cop and his terrorist gang whom he nurtured during his tenure in service; Did I feared – “A Big No”. He tried hard to terrorize me;

The best way to deal with terrorism is not to get terrorized; I will never see defeat from any terrorist, may be due to love of my Country, it may had happened within my Country but now I am not emotional to give my life free; I will not spare those who will terrorize me, even if they get shelter in 169 Countries, Will chase them to teach them to fall in line or in lane, they will not get safe heaven, excluding India only because this Government is too good in handling terrorist;

I pray for France, the people of France should be a little vigilant and at this time they must support their Government without any if and but; Saddened; In Nice killing of innocent civilians is terrorism; Being good is not limited to border, France must react and all Countries must support; When we stop being a good nation, we stop being great. Let us make France Great with helping them to fight in terror;

Ajay Kumar (Fox Petroleum)

FOX PETROLEUM : ELEPHANT GETS SUPPORT OF LION;

FOX PETROLEUM : ELEPHANT GETS SUPPORT OF LION; GEOPOLITICS PLAYED IN PERSIAN GULF WILL MAKE IRAN NO. 01; LET US GIVE TIME TO ELEPHANT TO MOVE;

The Prime Minister HE Shri Narendra Modi is in the form of Dynamic Mahatma Gandhi of India;

 "The Father of our nation wanted to join with world without any border or color or power; But Our Prime Minister has difficult task, He is joining world with Border and with Business; He is dynamic in doing so, but adopted no casualty; Our Father of the Nation & Our Prime Minister both are from Gujrat, and both knows their Business with respect to time very perfectly in pursuit of the nation; I feel our Prime Minister has dynamism to join the world with borders to India; " 

 My Prime Ministers is the biggest Geopolitical Planner before the world leader; And He has shown it since last two years; GEOPOLITICAL IMPACT OF PRIME MINISTER HE SHRI NAREDRA MODI DUE TO HIS VISIT IN THE MIDDLE EAST WILL MAKE INDIA ANOTHER HUB IN ASIA FOR PERSIAN AND ARAB BUSINESS; He has joined Countries with economic ties which is more reliable ties than blood relations; For example – LNG with Qatar, Investment from Dubai; Crude and Gateway to central Asia with Iran, and very important tie with Saudi Arabia; Like I said,  LNG has made impact relating to politics, especially international relations, as influenced by geographical factors. Because, Crude Oil and Refined Petroleum products has been in control with almost all countries with the Governments, and further they have added Natural Gas business too into Government Subject. Private Players are merely working like an investor and contributing 3-4% average in developing countries. And in developed countries too, their investment share is not too high and that too depend on Government’s preference.  That is why, Oil & Gas business is playing major role in Geopolitics - rivalry or promise settlement; I mean, the counties are friendly can import Crude Oil and LNG if they have good relation where the American Stamp is in favor of both; If not, the deal is at risk; You know what I am talking, Iran is an example; Russia is an Example for Europe supply with dominance. 

 Now, India played the biggest economic geopolitical ties with Iran during Our Prime minister visit to Iran; It has turned Gas market to single point India; Iran’s Chahbahar Port will be linking Turkmenistan Gas Resource at the same time the natural resource of Afghanistan will be open to market and Afghanistan will end one day on foreign subsidy, that is the beauty of the Indian Prime Minister’s visit to Iran; As far as I know Iran is the persistent “elephant in the room” of international gas trade. The country could well become, one day, a major game changer of international gas markets but today its potential still remains fundamentally untapped due to a number of geopolitical and commercial reasons. Iran owns the first largest proven gas reserves in the world, but since 1997 it is basically a net-importer of gas. In fact, a full resolution of the nuclear issue will unlikely automatically change the Iranian gas market in the short term, as a number of commercial issues will continue to remain on the table. In other words, the “elephant” will need a bit of time to move. However, it is sure that its movement will ultimately have a profound and longlasting impact on international gas markets.

 Afghanistan has approximately $3 trillion USD worth of exploitable minerals, gems, oil and gas within its borders. There is considerable interest from the international community and the local government in exploiting this natural resource to ensure that Afghanistan has a future after the international community withdraws its financial support. The win win situation is for Afghanistan; And as an Indian we are happy to see Afghanistan our neighbor rising; Afghanistan rising means India will have more presence in Central Asia;

 The other most dynamic impact will be a flow of natural gas towards India from Central Asia; I mean from Turkmenistan; Among the Central Asian countries, Turkmenistan has the largest natural gas reserves and the world’s sixth largest reserves that amount 13,7 tcm. In 2015, Turkmenistan expects a total 48 bcm of natural gas exports comparing to 2014 figures of 45,1 bcm. At the same time, the country forecasted a 9 percent increase in natural gas production to 83,8 bcm in 2015. That means that Turkmenistan would have 35,8 bcm of natural gas for local consumption. That amount of gas might be too high for Turkmenistan’s domestic consumption, because the country burned roughly 22,3 bcm in 2013. Therefore, the margin between the production, consumption and export demonstrates that Turkmenistan has a significant potential to increase the export of its energy source.

 To export natural gas to different markets, Turkmenistan needs to improve its pipeline infrastructure with Iran. It means Turkmenistan will have three networks for Hydro Carbon Business and safe too; At the time, there are two pipeline routes; one going to China with the current capacity of 55 bcm per year and another going to Russia with a capacity of 80 bcm. That too via Afghanistan to Chabahar Port;  

 As sourced on Afghanistan Govt Sources :http://www.afghanembassy.in/en/news/601-oman-india-gas-pipeline-project-to-have-afghanistan-on-board

" 

As a major step towards binding the countries of Oman and India economically, to meet the current demand for oil and natural gas to increase the regional economic interdependency, Fox Petroleum Group India in collaboration with the Government of the Sultanate of Oman has agreed to invest in a joint venture known as “Oman – India Deepwater Multipurpose Pipeline” for the transportation, storage and marketing of oil and natural gas blocks from Oman to India and vice-versa.

In a meeting with Mr. Sayed Mujtaba Ahmadi, Economic Counselor at the Embassy of Afghanistan, Mr. Ajay Kumar, Chairman and Managing Director of Fox Petroleum, briefed Mr. Ahmadi about their upcoming project. As a lucrative step towards building regional capacity and increasing self –reliability, Dr. Ajay proposed to integrate Afghanistan with their upcoming project. Describing about the importance of integrating Afghanistan along with this project, Dr. Ajay outlined the benefits and opportunities Afghanistan would be gaining from it. “Afghanistan being a resource-rich country with its versatile climate and strategic location is a potential hub of various mineral resources” said Dr. Ajay .The pipeline once constructed would be an alternative to TAPI project which would be serving the same purpose for Afghanistan i.e integrating Afghanistan with other regional partners and also at a very lesser cost.

Mr. Ajay further proposed his idea of investing in the field of exploration, production, transportation and storage of oil and natural gas blocks in Afghanistan. The products could then be transported to India via Turkmenistan, Iran and Oman, hence giving Afghanistan a huge market to sell its products. This would further create employment opportunities, increase investment in the resource sector and increase Afghanistan’s self-dependency.

Welcoming the idea, Mr. Ahmadi appreciated Mr. Ajays endeavor for investing In Afghanistan and assured him full cooperation and assistance from the Embassy’s side to communicate their concerns with the relevant Ministries in Afghanistan. "

It will boost our plan for Oman India gas Pipeline - As Chahbahar will be connected to Oman, the deal between Oman and Iran has been signed;  And Chahbahar will be gateway to Turkmenistan nad Afghanistan too; 

 

Let me explain you what Geopolitics means for me…. “Geopolitics” meant “the study of how factors such as geography and economics influence politics and relations between nations.”  Now it means politics among (not just between) nations and rivalries for international power.  A geopolitically successful nation delivers on promises to allies and threats to rivals or loses allies and strengthens rivals. And, earlier weapon was Crude Oil and now it’s is LNG, an added weapon to settle the score between the Countries.

Let me take this LNG Geopolitics in two parts – Firstly, Geopolitics of American – Europe and Russian impact. Sinking oil prices have put extra pressure on Russia’s government. Over two-thirds of Moscow’s state budgets come from taxes on Russian oil and gas firms. Destabilized oil revenues have caused the Ruble to fall 41 percent against the Dollar over the past year, creating fear that the economy could fall into a recession in 2015 which is worst then the past recession hit in the region. The World Bank sees a recession as likely, indicating it expects the Russian economy to shrink by .7 percent. Fears over Russia’s economic vitality have caused mass capital outflow, totaling to some $85 billion in 2014. And with lucrative energy projects like the South Stream pipeline on hold, Russian Government have to find ways to lessen his country’s exposure to turbulent oil markets. Thus European nations are increasingly - and justifiably - worried about the impending winter months when Russia could ratchet up the pressure on Europe, as it has done in the past, by imposing another gas halt with the consequent loss of life and negative economic impacts. However, instead of sending a clear message that LNG export licenses and American energy leadership are coming, the U.S. Senate has put off addressing legislation on LNG exports until September, a risky delay when U.S. LNG could be a life-saving game-changer for Europe.

 And secondly Geopolitics of Arab World – Indian Sub Continent – Africa and Australian ;  However, access to energy sources is not the problem today for India, but India does face a problem, given its heavy dependence on the Persian Gulf countries and Iran for sourcing its oil and LNG. And, the problem is Sanction. A new theme is finding its way to the Indian discourses on energy security, as is bound to happen, drifting in from the West. Simply put, the United States is ending its dependence on oil imports from the Middle East and the geopolitics of the Middle East could never be the same again. The facts that could go into buttressing the thesis are rather meager and yet a fairly good case can be made out of them. New sources of fossil energy have appeared such as shale gas and new gas fields are being discovered. Besides, the US, the world’s number one consumer, is attaining self-sufficiency in LNG that may last for at least one century ahead. This comes as a game changer. The old assumptions regarding the West’s dependence on the steady flow of cheap oil from the Middle East and the politics that devolved upon it is becoming redundant. Also, the Middle East’s share of the global recoverable reserves is itself declining and is already below 16% while the locus is shifting to the US, Canada, Brazil, Russia, Central Asia and other countries. Conceivably, therefore, there is a method in the madness of the West and it does not seem to be very different from what George Kennan wrote over half a century ago – that control of the Middle East’s oil is extremely vital for the West’s prosperity. So, far Oil Reserve is concerned middle east can feed 5 Trillion Dollars Business every year, and this will enhance the relationship with the world; If India makes the business with – Saudi Arabia, Qatar, UAE and Oman for making a way to import LNG to India by proposed Oman India Pipeline or by Ship; It will make – a- Geopolitical impact in Asia; Because Gas imported in India will serve all SAARC Nations too. The major Geopolitical impact of LNG supply to India will be more realistic ties with Arab World with Republic of India leading to Australian Continent; Sinking crude oil price as less demand from Middle East to USA and Europe as well as India & China will force them to open their LNG supply to the market; Private Players are ready to bag the contract; Let’s see who is lucky;

Thank You.

Oil & Gas is risky, say it again .... .... ....

FOX PETROLEUM      "A foreign policy aimed at the achievement of total security in Oil & Gas is the one thing I can think of that is entirely capable of bringing this country to a point where it will have no security at all" . - Ajay Kumar -

The risk in Oil Sector is as common as other industries facing but it has some more grave concerns to deal with; General risks apply to every stock, such as management risk, but there are also more concentrated risks that affect that specific industry. In this article, we'll look at the biggest risks that oil and gas companies face. We teach but we don’t adopt about risk; Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so.

Politicians don’t take risk with business; Not taking risks one doesn't understand is often the best form of risk management that is best with political management; The primary way that politics can affect oil is in the regulatory sense, but it's not necessarily the only way. Typically, an oil and gas company is covered by a range of regulations that limit where, when and how extraction is done. This interpretation of laws and regulations can also differ from state to state. That said, political risk generally increases when oil and gas companies are working on deposits abroad.

Factually, India Government under Prime Minister HE Shri Narendra Modi, we see less complications in understanding policies related to oil and gas exploration, and production and marketing; that doesn’t mean we are free to do anything; But one thing is sure, he has eaten up the job of power brokers; Business people need to understand the psychology of risk more than the mathematics of risk;

Stability in Government is must to minimize the risk; the biggest threat to oil and gas industry is Join Venture Governments; India will show the strength if same Government continues for three terms minimum; Oil and gas companies tend to prefer countries with stable political systems and a history of granting and enforcing long-term leases and hence needs a stable Government. However, some companies simply go where the oil and gas is, even if a particular country doesn't quite match their preferences. Numerous issues may arise from this, including sudden nationalization and/or shifting political winds that change the regulatory environment. Depending on what country the oil is being extracted from, the deal a company starts with is not always the deal it ends up with, as the government may change its mind after the capital is invested, in order to take more profit for itself.

But I feel dictatorship Governments are more viable than any elected Government in Oil and gas sector, as policy is designed to suit the dictator and his galaxy of friends; And they have done well; Political risk can be obvious, such as developing in countries with an unstable dictatorship and a history of sudden nationalization - or more subtle - as found in nations that adjust foreign ownership rules to guarantee that domestic corporations gain an interest. An important approach that a company takes in mitigating this risk is careful analysis and building sustainable relationships with its international oil and gas partners, if it hopes to remain in there for the long run.

Second most risky environment is geology of the location of OIL; I mean Geological risk also effects oil & gas job; Many of the easy-to-get oil and gas is already tapped out, or in the process of being tapped out and it has always been done by favoritism of the Government. Exploration has moved on to areas that involve drilling in less friendly environments - like on a platform in the middle of an undulating ocean. There is a wide variety of unconventional oil and gas extraction techniques that have helped squeeze out resources in areas where it would have otherwise been impossible.

When the map and the territory don’t agree, always believe the territory. Geological risk refers to both the difficulty of extraction, Supply and the possibility that the accessible reserves in any deposit will be smaller than estimated. Oil and gas geologists work hard to minimize geological risk by testing frequently, so it is rare that estimates are way off. In fact, they use the terms "proven," "probable" and "possible" before reserve estimates, to express their level of confidence in the findings. Still the game inside the earth has been played by horizontal drilling; Squeezing others oil crossing the border;

Third most dangerous thing is Capital intensive and less security in pricing formations; BUT HARDLY THEY LOSS ANY MONEY; CAPEX and OPEX can be achieved at any point of time, but they suffer from – “LOSS IN PROFIT MARGIN”. Pricing is a false cry with respect to investment and oil reserve intimated; Beyond the geological risk, the price of oil and gas is the primary factor in deciding whether a reserve is economically feasible. Basically, the higher the geological barriers to easy extraction, the more price risk a given project faces. This is because unconventional extraction usually costs more than a vertical drill down to a deposit. This doesn't mean that oil and gas companies automatically mothball a project that becomes unprofitable due to a price dip. Often, these projects can't be quickly shut down and then restarted. Instead, O&G companies attempt to forecast the likely prices over the term of the project in order to decide whether to begin. Once a project has begun, price risk is a constant companion.


Oil & Gas Experts are like artist; An artist that makes art merely to meet a demand is a slave to what his patrons wants to see, or, hear. The theory of supply demand has very less implications on Oil & Gas industry; Supply and demand shocks are a very real risk for oil and gas companies is a paper tantrum. Yes it is true, as mentioned, operations take a lot of capital and time to get going, and they are not easy to suspend when prices go south, or ramp up when they go north. The uneven nature of production is part of what makes the price of oil and gas so volatile. Other economic factors also play into this, as financial crises and macroeconomic factors can dry up capital or otherwise affect the industry independently of the usual price risks. It may have risk from some Black Colored Oil is mixed in supply with Black supply of Oil; Like ISIS is doing in SYRIA and IRAQ;

All of these preceding risks feed into the biggest of them all - operational costs. The more onerous the regulation and the more difficult the drill, the more expensive a project becomes. Couple this with uncertain prices due to worldwide production beyond any one company's control, and you have some real cost concerns. This is not the end, however, as many oil and gas companies struggle to find and retain the qualified workers that they need during boom times, so payroll can quickly rise to add another cost to the overall picture. These costs, in turn, have made oil and gas a very capital-intensive industry, with fewer and fewer players all the time.

Never take both hands off the pump. As an entrepreneur, you need to be on constant lookout for opportunity, and that will involve risk. But you minimize those risks by keeping one hand on the pump that is producing for you. Oil and gas investing isn't going anywhere. Despite the risks, there is still a very real demand for energy, and oil and gas fills part of that demand. Investors can still find rewards in oil and gas, but it helps to know the potential risks that go along with those potential rewards.



My Views in short - Government Priorities for the Development of LNG in India

FOX PETROLEUM Just because you have stolen someone's heart, luckily owned and occupied as a home, doesn't give you the audacity to enforce hurtful policies. ---> 

Government Priorities for the Development of LNG in India: The current Government has shown substantial economic growth in India coupled with increased energy consumption to drive a fast growing economy. As set by Government of India the future growth aspirations of economy, it is very well clear that access to abundant and economically viable energy will be critical to sustaining the momentum of this growth due to lack of Energy Infrastructure specially the fuel side like LNG Infrastructure. Liquefied Natural Gas (LNG) can be a long term solution to India's needs in particular that it is a proven and procured or explored from commercially viable energy source.

I am very blunt may cause some problem to me – because I need to learn which questions are unanswerable, and not to answer them: this skill is most needful in times of stress and darkness. What to do …feeling very sad to state that – 50 years old LNG industry, India is still a new comer to the celebration since it missed the first round of LNG trade growth and infrastructure development. Whereas  LNG usage has risen dramatically in the country in last decades, but it has done so in an unplanned manner that the industry was not able to utilize its fracking for economic growth rather it has created debts of developed infrastructure;

 Government is keen in development of LNG Infrastructure and LNG import for power plants; You can see that from his speech during election time in 2014 when the Current Prime Minister HE Shri Narendra Modi has stated in public meetings about 16000 MW Power Plant are shortage of fuel; It shows from day one the commitment of this Government towards LNG needs in India. Our Prime Minister vision seems that Commerce with all nations, alliance with tech transfers, Joint Participation for use of commerce and technology at ground zero India – it all sums up – Make in India.

What role will LNG play in India’s future energy mix? – Natural gas became the beneficiary of this trend as countries realized the utility of a fuel that had until then been flared as a waste product during crude oil extraction. Over the next few decades, extraction became more viable, enabling commercialization of natural gas in a number of applications as a substitute to coal and crude oil derivatives. I think use of natural gas in trucks will cut emission ratio as well efficiency of the machines on road; It will vest down environmental politics of India – THE NGO GAME; There are several advantages of natural gas over traditional fossil fuels like oil and coal. It is the cleanest burning fossil fuel. The combustion of natural gas produces 60–90 percent less emissions of hydrocarbons in the atmosphere as compared to oil. No soot or ash is left behind after combustion, thus reducing pollution levels further. Natural gas infrastructure, once established, is convenient and economical. The gas can be piped directly to the customer facility, eliminating the need for regular deliveries as is the case with oil, leading to a more reliable supply.

Natural gas is the economy's great white hope. As a fuel, gas is underrepresented in India's energy mix, accounting for a mere ~12 percent of primary energy consumption, well below the world average of 23 percent. The Planning Commission has an ambitious target of increasing the share of natural gas to 20 percent from the current levels by 2025.

 

Ajay Kumar Chairman Fox Petroleum

The bulk of this shift towards a gas economy will come from four consuming sectors: power, fertilizers, industrial (petrochemicals, refining, steel etc) and City Gas Distribution (CGD). It is estimated that by 2029–30, these four sectors will account for 746 MMSCMD of gas demand. The capacity of domestic gas production to serve this demand is limited and there is substantial uncertainty around trans– national pipelines. By implication, LNG will play a critical part in establishing the foundation of India's aspirational gas economy, and by extension, its energy security endeavour. In this section, we will investigate the gas demand and supply in detail and identify the LNG opportunity.

How does the government seek to promote city gas distribution? – No idea, when we don’t LNG supply grid to station to station it is impossible to talk about LNG City Gas distribution network; India doesn’t have LPG Grid, how come we say we will create LNG Grid; Huge players with heavy investments are waiting but Government wants to wait more on seeing its pros and cons; Like Oman India Pipeline will be fully funded, if it happens it will transport minimum 8 trillion cubic feet of gas in 20 years; It will enhance use in Power plant, fertilizers and daily use in replacement of diesel trucks and cargo trains;  

What tax and regulation measures can be used to promote LNG consumption? – I am not interested in relaxation of tax on importation, but when it goes to end user, I support end user not to be charged extra on the second sale of gas in the name of tax as import duty on gas is already been charged to importer;

Can LNG meet India’s international carbon reduction commitments? – India is far better in carbon reduction before LNG import and after it will be known as pioneer in carbon reduction commitment of the Government before world leader; We don’t need lessons from anywhere on carbon reduction; We pollute less despite having number two in situation of population. 

Ajay Kumar Chairman Fox Petroleum

Ajay Kumar Chairman Fox Petroleum

FOX PETROLEUM

Oil & Gas Contracts: Part - II

FOX PETROLEUM Before going to learn about what is Petroleum Contract and how it is constituted into an agreement, we must know – THE LIFE & THE TIMES OF A PETROLEUM PROJECST; Petroleum doesn't last forever. It is a non­renewable resource. This fundamentally drives the business decisions of companies, a key part of which is that most petroleum contracts are structured to contemplate the entire life span of a project, it's beginning, middle, and end. The key stages of a project's life (or "petroleum operations") are:- 1. explore to find it in the first place; 2. develop the infrastructure to get it out; 3. produce (and sell) the petroleum you've found; 4. abandon when it runs out and clean up ("decommission").

Let us know these stages in short – Explore - Petroleum is rarely found on the surface of the earth. One is very unlikely (though would be quite lucky) to step into a puddle of oil, though when this does occur it is known as a "seep" which means what one would think it means: oil below the ground has "crept up" from below the surface to "seep out" onto the surface. In the early years of oil discovery, seeps were probably one of the best means to find oil and gas. And oil still does seep to the surface of the earth in many locations across the globe. But a seep does not mean an oil boom. Nowadays, we use much more scientific and data­intensive means of finding petroleum beneath the surface of the earth.

Stage one planning depends on Seismic data or Seismic survey report; today, geological surveying methods is known as seismic studies (or just "seismic") are usually the starting point of any oil exploration effort. The essences of seismic studies are to use sound waves, shot down into the earth; to 'see' what is underground. Although it is often said that one cannot be certain that petroleum is in a given location until a exploration well is drilled, taking seismic surveys help increase one's confidence that drilling ­ an expensive endeavor ­ in a particular location is worthwhile. In other words, seismic helps climb the 'confidence scale'.

Commonly found beneath the earth's surface are various types of rocks, water and salt, all of which react differently when hit with a sound wave. Large amounts of data are captured from this process and used to give an image of what lies beneath the earth's surface. As computer technology has improved, seismic has been able to handle increasingly large quantities and complexity of data, though the cost of gathering and interpreting this incures increasing costs. This is why you will see in some contracts the type of seismic required (eg. 2D vs 3D), how many kilometers of seismic is to be gathered ("shot" in industry jargon) and specifically that it must be interpreted and the results provided to the host government.

Exploration Drilling i.e. If the seismic produces promising results ­ sometimes called a "lead" ­ then the next phase of exploration will typically be drilling an exploration well. Here, an extraordinarily large drill bit is cut into the earth's surface in order to bring up a "core" or a cylindrical sample of that portion of the earth. Even with conducting seismic to help climb the confidence scale, one might need to drill several exploration wells to establish what is in fact below the earth's surface. One commonly used comparison to exploration drilling (particularly in the deep offshore) is trying to stick an extremely long straw in a drinking bottle from the top of a skyscraper and then drink from it. Of course, there are many areas where hydrocarbons are known to exist, though they might not be evenly distributed. In these cases seismic is still needed to increase the chances of 'hitting the target'.    Because most of us use fuel in our cars which we see as a liquid, many of us envision petroleum to be in lake­like pools below the earth's surface.  In fact, it is found in spaces or cracks within rock formations and needs various techniques to extract (relieve pressure, create pressure, etc).  One might picture a glass with a lot of crushed ice and trying to drink a milkshake from it. While there is no standard amount of time one might conduct seismic studies and drill exploration wells in the world, these studies and drilling and the interpretation of the results even on a very rapid schedule takes months at the very lesat and more often around 2­4 years.

Note : We must know – EXCERPT FROM GHANA PETROLEUM WITH TULLOW, KOSMOS AND SABRE MARCH 10, 20016: “Exploration “ or Exploration Operations” means the search for petroleum by geological, geophysical and other methods and the drilling of exploration Well(s) and includes any activity in connection therewith or in preparation thereof and any relevant process and appraisal work. Including technical and economic feasibility studies, that may be carried out to determine whether a Discovery of Petroleum constitutes a commercial discovery.

          Let us assume that, lucky you, you found hydrocarbons while drilling; you have "discovered" petroleum! Is the pay day coming? Most likely, not quite yet. You may have "discovered" hydrocarbons, but the question then becomes, how much did you find? Enough to make it worthwhile, "commercially viable" or economical to develop and produce? What you will need to do next: "appraise" the discovery.

   Appraising entails more drilling and seismic to asses what you have discovered, but to a greater degree of accuracy. It will lead to more detailed geological discovery while also involving assessment and reflection on how to build the necessary infrastructure to produce the petroleum you've found. You will want to know more about: the chemical composition of the various hydrocarbon deposits:- the chemical composition of the various hydrocarbon deposits and the quantity of reserves in the area also how to get these hydrocarbons out of the ground (if the discovery is found to be of commercial significance). Once hydrocarbons have been found in sufficient quantities and with an economically viable extraction cost, the discovery becomes a "commercial discovery". It is important to stress here that a commercial discovery is not a geologic term but a business term. For this reason, the length of time an appraisal takes will likely depend on such considerations as:- the business considerations of the company that has found the oil & the local laws and regulations that determine the process of development; 

Oil & Gas Contracts: Part - I;

FOX PETROLEUM : OIL CONTRACTS: We put it in our car. It heats wer house. Flies planes. One day we might be beyond it, but today we are not. Petroleum Products – are not for solace its light for life.  The material behind these critical functions that literally fuel the world, is made up of strings of carbon and hydrogen, known as hydrocarbons, formed from the compression of organic matter over hundreds of millions of years. Old stuff that drives the modern age. Oil, gas, petrol, diesel, butane ­ they all come from hydrocarbons beneath the earth's surface that are then are refined to make them more useful to us. But today, I will talk about my experience related the contracts that make finding and producing these substances possible right now.

The first thing that will probably come into our mind when we think about products that could be made out of all that petroleum is probably fuel. However, there are numerous other materials and products that contains oil or gas, e.g. toothpaste, candles, medicines, or even computers. This also explains why currently petroleum is of utmost importance to our lives today.

          Historically, petroleum contracts were designed with crude oil in mind, and this continues to dominate the logic and structure of contracts today. Gas has only recently also become a valuable resource. As the old industry saying went: "What is worse than not finding oil? Finding gas!" This is not true any more, as gas becomes increasingly marketable. But not all contracts around the world have, as yet, caught up to this reality.

  

Natural gas, or just gas, is usually classified within contracts as either non­associated gas and associated gas. Non­associated gas refers to gas reservoirs that contain only gas and no oil, whereas associated gas is found together with crude oil. The implications of these can be far reaching and will affect environmental, social, political, fiscal and technological considerations. Countries with significant gas deposits will typically address these considerations in far greater details in their contracts than countries with primarily crude oil reserves.

Note : In 2011 88 million barrels of oil were produced per day worldwide; one barrel is roughly 160 litres or about 44 US gallons. 317 billion cubic feet (bcf) of natural gas was produced daily. Now it is 48 times more;

Contract depends on drilling on land or in water; Let me explain - Petroleum operations can be either onshore or offshore. Some countries have separate contracts for onshore and offshore, whereas others treat them differently within the contract. In what might be one of the most straightforward terms used in daily talk of oil and gas, onshore operations refer to operations taking place on land, while offshore, or subsea, operations take place in the sea and through the seabed.

   The following diagram shows the three types of petroleum extraction and their comparative costs.

Offshore operations are more expensive than offshore operations because of the type of facilities and structures required. Deep­water drilling is much more expensive than shallow­water drilling because the platforms are technically more difficult to construct. These considerations are addressed in contracts by providing financial incentives (e.g. tax reductions) for those operations and stages of production that are more challenging, riský and costly to the contractor.

Conventional vs Unconventional : Flipping through the newspapers, you read about protesters upset about "unconventional" oil being developed on pristine farm land. Or France is considering banning it. But what is unconventional oil? For that matter, what is conventional oil? The distinction between conventional and unconventional operations refers to the manner, ease and cost associated with extracting the petroleum.

   Conventional oil extraction employs traditional oil wells, and unconventional, the new and emerging technologies and methodologies allowing access to more inaccessible reserves, such as those found in oil shale and oil sands.

   Conventional gas is typically free gas trapped in rock formations and is easier to extract. Unconventional gas reservoirs include tight gas, coal bed methane, gas hydrates, and shale gas (which sits in sand beds). Drilling for unconventional gas can be more expensive compared to conventional gas. The supply of and interest in gas extracted from unconventional reservoirs is growing rapidly, mainly due to technological advances ....but as of the writing of this article, most contracts do not provide for the unique attributes of unconventional gas.

In any contract Price of the Commodity is the main importance of the agreement : Price of the Petroleum :- The price of petroleum is another headline grabber. We all know it is out there, but we probably do not stop to think about the details too terribly often.

    “*What does "Oil is at $100 a barrell mean"? All oil? Some oil? The answer to this is, "some oil".*”

    Petroleum is being bought and sold at many different prices all over the world though they tend to be compared or "benchmarked" off certain common standards. For Oil, West Texas Intermediate (WTI) or Brent crudes or blends and commonly used.

For Gas, Henry Hub is common. These benchmarks, which are the prices that make the headlines, are used to determine the price of oil and gas produced elsewhere. This will be discussed in more detail later in the "Valuing Oil" in the next session of this article.

BUT FOR ME BOTH ARE MAN MADE GAME; FUTURE PRICE OF OIL & GAS THAT’S SURROUNDS UNCERTAINTITY ABOUT THE FUTURE PRICE OF OIL & GAS IS SOMETHING CONTRACTORS AND COUNTRIES KNOWS IN ADVANCE. THEY TRY TO ACCOUNT FOR IT IN BOTH FINANCIAL SYSTEM AND PETROLEUM CONTRACTS SO THAT STAKE HOLDERS MAY PROFIT FROM ANY MARKET CONDITIONS AND ALSO BE PROTECTED WHERE THESE CONDITIONS CHANGE;

Future pricing is like trying to become oil astrologer; But I never failed to make effective forecasting; A critical and heavily debated question is what will the future price of petroleum be? Unfortunately, there is no single or easy answer to this question. What drives oil prices is a subject of much debate about; global oil consumption, economic growth patterns, technological innovation, and political dynamics in oil producing countries. This is not the subject of this article, however, and will be something we'll leave to the experts. Real experts are the daily used of the products;

When OIL & GAS has FUTURE PRICING than WHAT is  FUTURE trends of Contract - The price of oil has, historically, driven fundamental shifts in the oil business and the contracts that underpin it. In late 1960s and 1970s, the famous first wave of nationalisation of natural resources led to the creation of a new form of contract ­The Production Sharing Contract.

   Nowadays, with the price of oil being high, there is an increasing movement of people in resource rich countries wanting visual proof that their natural resources are directly benefiting them. From their position as citizens of the country and therefore as co­owners of the resource, there is a call for re­negotiation of contracts and the formation of new contracts that address this.

LIKE INDIA GOVERNMENT CALLED FOR QATAR GAS RENEGOTIATION AND IT HAS HAPPENED WITH HUGE GAIN TO INDIA SIDE; THE BIGGEST GAME PLAYED BY PRIEM MINISTER TO RENEGOTIATE THE CONTRACT;

   What does all of this mean for oil contracts, the subject of this ATICLE? Who knows, is the short answer. It would seem to suggest that the search for petroleum will continue, at least in the short term, with developing extraction technologies. Maybe this will produce a flurry of new oil contracts between companies and governments that address these new methods of extraction. But they might not.

   The oldest contracts, from the days of Edwin Drake in Pennslyvania back in 1859, did not look terribly different, at the most fundamental level, than many of the contracts today. Is it time to race forward? Keep what we have got? A combination of the two?

  

We do not claim to know and it probably depends on who you're asking, but we do hope that this book enables you to engage in such a discussion and ask questions that could lead you to an answer. The contracts and laws in the petroleum sector are often reformed for various policy reasons and this book is designed to help the reader actively engage in this process. 

TO BE CONTINUED : ----- TO NEXT PART