Gloom at offshore drilling companies
Crude oil below $50 per barrel sends jitters to offshore drilling business. With business climate continuing to remain grim due to sliding global crude oil prices, offshore drilling companies like Aban Offshore, Dolphin and Jindal Drilling among others may not get any wage hikes for the current financial year. “Appraisals usually take place in April but there is no sign of it so far. We haven’t been told formally of no appraisals this year but looking at the business scenario, don’t think there will be any salary hikes,” a senior marketing official with Jindal Drilling told Business Standard. Crude oil prices need to be at least $50 a barrel to make offshore shallow water drilling viable. With prices below $50 per barrel at present, overall offshore business (shallow and deep) has hit rock bottom, said industry officials. “We are getting our salaries as of now but it is not always on the first of every month. The situation is scary,” said an official with Dolphin Offshore Shipping. According to Rigzone data, offshore rig utilisations in South America-Brazil region is the lowest in the last two years having dropped below 30 per cent in September from over 70 per cent in September 2014. “A lot of internal meetings are taking place in the company and senior officials when asked about appraisals say that there will be none this year. But no formal announcement is being made, we are already in mid-FY2017,” said another official with Jindal Drilling. In June quarter, Aban Offshore, the flagship company of Aban Group, reported a 24 percent sequential fall in its net sales and 51 percent on year-on-year basis led by lower utilization of rigs and rig renewal at lower rates. Currently, out of 18 rigs only eight rigs are operating. Aban Offshore’s future growth depends mainly on rise in crude oil price and higher exploration activity, said Kotak Securities in its report. The blood bath taking place in the offshore drilling business at present has not just remained restricted to lower earnings growth but is expected to lead to more serious consequences to the extent of companies filing for bankruptcy. “Of course, a lot of people are making losses, because of the utilization problems. A few significant players are already in financial distress. Couple have already filed for bankruptcy. There is a lot of stress in the offshore segment,” said G. Shivakumar, executive director and chief financial officer of Great Eastern Shipping said in the earnings conference call of June quarter. The latest casualty of low crude oil prices is Singapore-based offshore construction and support services company Swiber Holdings Ltd. The company in July has filed an application to wind up operations and has placed the firm in provisional liquidation. Swiber owns an operating fleet of 13 construction vessels, with 2,700 employees spread across Southeast Asia and other countries. Though the business scenario in offshore segment is grim and is expected to remain in this mode for the next couple of years as crude oil prices are not seen going up significantly, domestic offshore drilling companies are not expected to witness a bankruptcy situation by virtue of their presence largely in shallow offshore drilling. “Decline in crude oil prices will hit deep offshore drilling more because the cost of production is higher for them when compared with companies into shallow drilling. Indian companies are largely in shallow offshore drilling and due to this they will face weak earnings situation but bankruptcy is ruled out,” said an analyst with local brokerage on condition of anonymity. Aban Offshore and Great Eastern Shipping are among top offshore drilling companies in the country among others. While GE Shipping has its offshore drilling vessels deployed on longterm, Aban Offshore does not enjoy an equally comfortable position. Currently, ten rigs of Aban are lying idle out of a portfolio of 18 rigs. Significant leverage on Aban’s balance sheet and ageing of fleet are other key factors which makes brokerage cautious on its fundamentals, said Kotak Securities in its recent report. “The stock continues to be an event-driven performer and we expect the stock price (in the near term) to move based on crude oil price movement,” it said. Aban Offshore provides drilling services globally both shallow and deep waters to offshore exploration and production (E&P) companies. Marshall Faulk Womens Jersey
Asian gasoline cracks rise to three-month high
Asia’s gasoline cracks rose to its highest in about three months at $8.42 a barrel on an expected tightening of supplies during peak refinery maintenance. Japan’s JX Negishi, South Korea’s S-Oil and Taiwan’s Formosa, among others, have planned maintenance in September or October. Though Singapore onshore light distillates stocks were marginally higher, the levels were far below the record high this year. The stocks, which comprise mostly gasoline and gasoline blending components, were up 100,000 barrels, or 0.7 percent, to reach a three-week high of 13.74 million barrels in the week to September 7, official data showed. This was sharply lower than the record high of about 15.54 million barrels in early March. NAPHTHA India’s biggest refiner, Indian Oil Corp, plans to start producing gasoline at its Paradip refinery before year-end after a delay caused by problems at a secondary unit. The state-owned refiner aims to cut its naphtha exports to the bare minimum once the gasoline unit stabilises because the Paradip refinery is designed to maximise gasoline yield with naphtha as a feedstock. Naphtha is mired in a stubborn glut because of recent high refinery runs, cracker maintenance and heavy exports to Asia from the Middle East. The easy availability of liquefied petroleum gas (LPG) as a feedstock this year was also hurting naphtha sellers because between 5 percent. Allen Hurns Womens Jersey
HPCL wants ONGC to cut stake in MRPL
Hindustan Petroleum Corp. Ltd (HPCL), one of the promoters of Mangalore Refineries and Petrochemicals Ltd (MRPL), wants Oil and Natural Gas Corp. Ltd (ONGC) to divest a part of its stake in the refinery so that it can meet minimum public shareholding norms, said two HPCL officials aware of the development. At the end of June, HPCL held a 16.95% stake in MRPL, and ONGC, the other promoter, owned 71.6%. The public shareholding in MRPL was 11.42%, less than half the 25% prescribed by the Securities and Exchange Board of India (Sebi). “ONGC holds majority share in MRPL while our shareholding is small in comparison. We would prefer if ONGC offloads (a part of) their stake for MRPL to meeting the public holding norm,” one of the HPCL officials cited above said, requesting anonymity. MRPL and ONGC did not reply to emails sent on Friday. At MRPL’s annual general meeting, held on 3 September, the company said it authorised its board “for exercising any of the options available” to meet Sebi’s public shareholding norms. Options before the board include divestment of the promoters’ shareholding through an offer for sale or issue of fresh shares by MRPL through a public offer. Ron Jaworski Womens Jersey
Petroleum ministry for uniform taxation on petroleum products across the country
In an attempt to help benefit consumers, the ministry of petroleum and natural gas is working on a uniform tax structure for petroleum products across the country. This comes in the backdrop of the Constitution Amendment Bill to the goods and services tax (GST) receiving the President’s nod. First conceptualised in 2006 and dubbed as the biggest tax reform since Independence, GST will subsume all other indirect taxes. However, petroleum and petroleum products shall only be subject to GST later depending on the GST Council’s recommendation. The GST Council will comprise of state finance ministers and is expected to be in place shortly to decide the tax rate. The petroleum ministry is working towards a uniform taxation regime for petroleum and petroleum products, confirmed two government officials requesting anonymity. At present, different petroleum products are taxed differently across states. Given the huge variance in the value-added tax (VAT) on petroleum products across the states, the petroleum ministry has been advocating for uniformity in taxes. Michael Palardy Authentic Jersey
Pradhan mulls replicating Singapore’s petrochemical complex in India
Petroleum Minister Dharmendra Pradhan on Saturday mulled over the possibility of replicating Singapore’s petrochemical complex at two places in India- in Odisha’s Paradip port and Haryana’s Panipat district. The minister, who is on a 6-day visit to Singaporeafter which he will go to Britain, tweeted: “Jurong model is interesting; similar petrochemical complex can be developed in Panipath and Paradip with good planning.” Jurong, a reclaimed island in Singapore, hosts ports, three refineries and several petrochemical plants manufacturing the entire value chain of products. Pradhan visited the centralised utilites operations — offering a comprehensive range of energy, water and on-site logistics solutions – of Sembcorp Industries at Jurong island. “Visited Jurong Island at Sembcorp, that provides all common utilities to the industries in the 35 sq km island,” Pradhan tweeted. Earlier in the day, the Petroleum Minister also visited the Keppel Shipyard, here to review the technologies that can be useful for India. Many rigs working in Indian oil sector are developed here, he said, adding that the innovative technological work and rig manufacturing at the Keppels can be useful in India. Pradhan is on a visit to Singapore to lead India’s road shows to attract foreign investors for its small oil and gas fields. Brandon Montour Authentic Jersey