OPEC may decide to ease oil supply curbs in June – sources
OPEC may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources familiar with the discussions told Reuters. Gulf OPEC countries are leading the initial talks on when the exporting group can boost oil production to cool the oil market after crude rose above $80 a barrel last week, and how many barrels each member can add, the sources said. The Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia have agreed to curb output by about 1.8 million barrels per day (bpd) until the end of 2018 to reduce high global oil stocks, but the inventory overhang has now fallen close to OPEC’s target. “All options are on the table,” one Gulf oil source told Reuters, adding that a decision to raise output might be taken in June when OPEC next meets to decide on its output policy, but there is no certain number yet by how much the group would need to ease its oil supply curbs. OPEC and its non-OPEC allies may opt to relax record high compliance with the supply curb agreement, another source said. OPEC’s compliance with the deal reached an unprecedented 166 percent in April, meaning it has cut well above its target. “We are still studying the different scenarios,” the second source said, adding that even if OPEC decided to ease the output restrictions in June it may take three to four months to put into effect. “That is one of the options,” an OPEC source said, referring to adding more supply at the June meeting. Falling Venezuelan output due to an economic crisis has helped OPEC and its allies deliver a bigger cut than intended. Saudi Energy Minister Khalid al-Falih is set to meet his counterparts from Russia and the United Arab Emirates, which holds the OPEC presidency in 2018, in St. Petersburg this week to discuss this issue, sources said. So far, OPEC has said it sees no need to ease output restrictions despite a fall in global stocks to the group’s desired levels and concerns among consuming nations that the price rally could undermine demand. But the sources said that the quick decline in global oil inventories and worries about the impact on oil supplies after the U.S. decision to withdraw from the international nuclear deal with Iran, as well as Venezuela’s collapsing oil output, were behind the change in OPEC’s thinking. Concerns raised by the United States that oil prices were too high also made the exporting group start internal discussions, the sources added. U.S. President Donald Trump accused OPEC last month of “artificially” boosting oil prices. Last week, Falih, OPEC’s most influential energy minister, said he had called his counterparts in the UAE, the United States and Russia, as well as major oil consumer South Korea, to “coordinate global action to ease global market anxiety”. Earlier this month, an OPEC source familiar with the kingdom’s oil thinking told Reuters that Saudi Arabia is monitoring the impact on oil supplies of the U.S. withdrawal from the Iran nuclear deal and is ready to offset any shortage but it will not act alone to fill the gap. Odell Beckham Jr Authentic Jersey
India’s crude oil import bill swells 23 per cent despite fall in volumes
The recent rally in international crude oil prices has inflated India’s crude oil import bill by 23 per cent to $8.2 billion in the month of April despite the quantity of imports in the month falling by 5 per cent, fresh data published by Petroleum Planning and Analysis Cell (PPAC) showed. The data from the statistical arm of the oil ministry also shows the country’s total crude oil import bill in the current financial year (2018-2019) is expected to jump 24 per cent to $109 billion from $88 billion last fiscal year. India imported 17.2 Million Tonne (MT) of crude in the month of April, down 5 per cent from 18.1 MT imported in the corresponding month last financial year. The country’s gross petroleum imports including crude oil and petroleum products also decreased to 20.2 MT in April 2018 from 20.8 MT in April 2017. However, due to the rally in the crude oil and petroleum product prices, the country’s gross petroleum import bill grew 24 per cent to $9.4 billion as compared to $7.6 billion recorded in the corresponding month of the last financial year. Crude oil prices have surged since April on the back of tightening crude oil market due to Organization of Petroleum Exporting Countries (OPEC) oil production cuts, drop in Venezuela crude output, geo-political tensions in the Middle-East and economic sanctions imposed by United States on Iran, which is expected to impact the country’s oil exports. Rising crude oil prices may worsen the country’s Current Account Deficit (CAD) to 2.5 per cent in the present financial year from an estimated 1.9 per cent in the last financial year, SBI Capital Markets said in a recent report. Sector analysts expect that this may lead to petroleum subsidy to fall short on the back of steady rise in crude oil prices and revised target of providing 8 crore Liquefied Petroleum Gas (LPG) connections under Pradhan Mantri Ujjwala Yojana (PMUY). The government under Budget 2018 allocated Rs 24,933 crore as petroleum subsidy for the current financial year, a mere 2 per cent increase over the Revised Estimate of Rs 24,460 crore allocated last financial year. Moody’s Investors Service in its latest report expects the country’s fuel subsidy bill to balloon to Rs 53,000 crore in the present financial year on the back of surging crude oil prices. The rating agency also added that state-owned Oil and Natural Gas Corp (ONGC) and Oil India (OIL) may have to bear a large part of the burden impacting their financials. As the oil prices rise, ONGC and OIL face increasing risk that the government will once again require them to share in the country’s fuel-subsidy burden. “Because of the government’s widening fiscal deficit, ONGC and OIL could be asked to bear part of the Indian government’s fuel subsidy for oil, if prices stay above $60 per barrel for the fiscal year ending March 2019,” said Vikas Halan, Senior Vice President at Moody’s. The report estimates fuel subsidies to range between 34,000 crore and Rs 53,000 crore in 2018-19, the highest since fiscal year 2014-15, assuming Brent crude oil prices average $60-$80 per barrel. Rating agency ICRA had also said in February the petroleum subsidy allocation of Rs 21,700 crore for 2018-19 would materially fall short by Rs 11,000-12,000 crore. The price of Brent Crude averaged $71.80 per barrel during April 2018 as against $65.90 per barrel during March 2018. The Indian basket of crude averaged $69.30 per barrel during April 2018 as against $63.80 per barrel during the previous month. Jon Halapio Womens Jersey
Indian Oil to turn to traditional suppliers to meet Iran oil shortfall
Indian Oil Corp (IOC), the country’s top refiner, will turn to its traditional oil suppliers, mostly in the Middle East, if U.S. sanctions against Iran result in supply disruptions, its head of finance said. U.S. President Donald Trump earlier this month pulled out of a 2015 international nuclear pact with Iran, and said he would impose sanctions on Tehran – and companies that continue to work with it – unless it curbed its influence in the Middle East. Other signatories of the pact – France, Germany, Britain, Russia and China – said they would try to salvage the deal and keep Iran’s oil trade and investment flowing. “So far we haven’t cut any volumes from Iran. We have to see how strongly the U.S. takes up sanctions. From our side, we would like to continue. Otherwise we will look to our traditional suppliers,” A.K. Sharma said. IOC, which controls 1.6 million barrels per day (bpd) of refining capacity or about a third of the country’s overall capacity, plans to buy 140,000 bpd of Iranian oil in 2018/19 and has an option to buy an additional 40,000 bpd. State refiners such as IOC have raised imports after Iran agreed to steep shipping discounts. “Iran’s high sulphur oil can be replaced with other crudes. It is just a case of economics. Replacing will mean slightly cost disadvantage,” Sharma added. IOC chairman Sanjiv Singh said the government had so far not directed refiners to cut imports from Iran. “We have to see how situation unfolds in future,” he said. Previously, India obtained a waiver from Western sanctions as the country had cut imports from the Islamic Republic. “We are working on a strategy. We are working on alternate plans if those volumes go down, then how do we manage the situation,” Singh said. IOC is Iran’s biggest Indian oil client. The company meets about 70 percent of its oil needs through annual contracts deals, mainly with Middle Eastern producers. It makes sense for IOC to look for alternatives to Iranian oil from other parts of the Middle East, due to geographical proximity and similarities in the oil produced. However, an IOC official said separately the company could also tap the spot market to buy U.S. oil. “There is an option to buy U.S. oil like Mars, but we will do that if arbitrage is favorable,” the official said. IOC recently bought 3 million barrels of U.S oil via a tender. Marcus Martin Jersey
Government should review taxes on petrol, diesel: HPCL chairman
There is a need to review taxation on petrol and diesel to provide relief to consumers after rates touched an all-time high, HPCL Chairman and Managing Director Mukesh Kumar Surana said today. One trigger after another has led to the 10th consecutive day of increase in retail selling price of petrol and diesel, but there is no case for going back on benchmarking domestic rates against international prices, he said. Surana said he was not aware of any meeting called by Oil Minister Dharmendra Pradhan or anyone else in the government to discuss the rising prices. More than a week after the state-owned oil firms ended a 19-day pre-Karnataka poll hiatus on revising fuel prices, petrol and diesel rates have touched record highs. Petrol costs Rs 76.17 per litre in Delhi while diesel sells for Rs 68.34. In the last nine days, petrol price has risen by Rs 2.54 a litre and diesel by Rs 2.41. “We should find methods to handle (such) situation from time to time,” he told reporters here. Oil marketing companies, which are volume driven, operate on a thin margin and as such cannot do much if the international cost of oil rises, he said. “We have to maintain our capex plans and growth plans,” Surana reasoned. The solution has to be found while balancing the budgets of oil companies, the consumer and the government, he said. While the consumer has price sensitivities even though he has not shown any trend of moderating consumption in the face of rise in prices, the government heavily relies on oil revenues to meet its spending budget. “There is need to review taxation on the fuel,” he said without elaborating. A cut in excise duty combined with states being asked to reduce VAT is on the cards. The central government levies Rs 19.48 excise duty on a litre of petrol and Rs 15.33 on diesel. State sales tax or VAT varies from state to state. Unlike excise duty, VAT is ad valorem and results in higher revenues for the state when rates move up. In Delhi, VAT on petrol was Rs 15.84 a litre, and Rs 9.68 on diesel in April. Today, it is Rs 16.41 on petrol and Rs 10.05 a litre on diesel. Every rupee cut in excise duty on petrol and diesel will result in a revenue loss of Rs 13,000 crore. Surana said financial health of oil companies has to be maintained while providing a comfort to consumers. He, however, said going back to a cost-plus method of calculating prices as against the current methodology of pricing fuel at a 15-day moving average of benchmark international product price would be a retrograde move. The long-term solution is bringing petroleum products under the Goods and Services Tax (GST) regime, he said, adding it was not true that oil companies were making big profit with rising prices. They were only passing on the cost of input to consumers, he said. The GST, which subsumed over a dozen central and state levies including excise duty, service tax and VAT, was implemented from July 1 but crude oil, natural gas, petrol, diesel and ATF were kept out of its purview for the time being. The government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre. Subsequent to that excise duty reduction, the Centre had asked states to also lower VAT. Just four of them — Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh — reduced rates while others including BJP-ruled ones ignored the call. In all, duty on petrol rate was hiked by Rs 11.77 and that on diesel by Rs 13.47 a litre in those 15 months that helped government’s excise mop up more than double to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15. Mike Webster Jersey
India to take a ‘long-term” view on fuel pricing – minister
India wants to take a long-term view on pump prices of petrol and diesel to shield consumers from the volatility in global markets, the country’s law minister said on Wednesday, indicating the government could change its fuel pricing mechanism. Prices of diesel and petrol in India have surged to a record high. A liter of petrol costs 77.17 rupees ($1.13) while diesel is sold at 68.34 rupees/ liter. “The government is keen that instead of having an ad hoc measure it may be desirable to have a long-term view which addresses not only the volatility but also takes care of the unnecessary ambiguity arising out of frequent ups and downs,” Ravi Shankar Prasad told a news conference. Opposition leaders have criticised the government for failing to rein in rising fuel prices, a politically-sensitive issue in one of the world’s biggest economies. Mike Webster Womens Jersey
ONGC’s hi-tech pipeline to prevent oil theft, leakages in Ahmedabad
The Oil and Natural Gas Corporation (ONGC), which for years has been suffering heavy financial losses due to theft from its crude oil pipeline, has gone hi-tech to prevent pilferage as well as leakages. ONGC has laid a new pipeline from its desalter at Nawagam in Ahmedabad district for transporting crude oil produced in its Ahmedabad and Mehsana assets to Indian Oil’s Koyali Refinery in Vadodara. “The 80-km pipeline has been laid at a cost of Rs1970 million. It is equipped with LDS (Leak Detection System) and PIDS (Pipeline Intrusion Detection System) technologies with fibre optic cables. The two systems would not only help in accurately identifying the spot of leakages, but also in detecting any intrusion activity taking place on the pipeline route,” Debasis Basu, asset manager of ONGC’s Ahmedabad Asset, told DNA. While the new oil pipeline was commissioned in January, officials said that the LDS and PIDS too are in advanced stages of completion, and are likely to be put to use by July. Basu said that they are also looking at ways to tackle theft from its producing as well as non-producing wells. ONGC said in a statement that it has adopted PIDS for the first time in its history. While exact numbers related to the financial loss to the energy behemoth due to leakages and pilferage are not available, it is pegged at several millions in a year. A number of cases of oil theft from its pipeline have been reported with the police. According to officials, the earlier pipeline was laid in the year 1990. However, being in operation for more than a quarter of a century, it was leaking frequently and had become a major source of loss of production. Additionally, there were frequent shutdowns, besides environmental degradation, loss of crop for farmers, and was also a potential safety hazard. Basu said that laying of the Nawagam-Koyali pipeline was a major challenge as its route ran through three river crossings, and had to be completed using the Horizontal Directional Drilling. The pipeline also crossed five railway crossings, two national highway crossings, besides numerous roads and canal crossings, he added. PROGRESS REPORT While new oil pipeline was commissioned in January, officials said the LDS and PIDS too are in advanced stages of completion, and are likely to be put to use by July. Matt Skura Womens Jersey
ONGC, OIL face risk of fuel subsidy sharing: Moody’s
State-run exploration and production companies Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Limited (OIL) face the increasing risk that the government of India will once again require them to share in the country’s fuel-subsidy burden, said Moody’s Investors Service in a note released on Tuesday. “Because of the government’s widening fiscal deficit, ONGC and OIL could be asked to bear part of the Indian government’s fuel subsidy for oil, if prices stay above $60 per barrel for the fiscal year ending March 2019,” said Vikas Halan, a Moody’s senior vice president. The two companies have since 2015 not contributed to fuel subsidies. They had, however, in previous years paid for more than 40% of the country’s annual subsidy bill. “The net impact of the subsidy sharing will be manageable for ONGC and OIL, even if the two companies are required to bear the entire shortfall between budgeted and actual amounts for the fiscal year ending March 2019,” added Halan. Moody’s added that if ONGC and OIL are obligated to contribute the entire subsidised amount exceeding the government’s budgeted figure for the fiscal year ending March 2019, such a requirement would constrain their net realised prices to $52-$56 per barrel. This is only marginally lower than or equal to the $56 for fiscal 2018. Moody’s estimates that fuel subsidies could total Rs340-530 billion in fiscal 2019, the highest since fiscal 2015, assuming Brent crude oil prices average $60-$80 per barrel. The government has budgeted for Rs250 billion of fuel subsidies in fiscal 2019, leaving a shortfall of Rs90-280 billion. This could be met by ONGC and OIL entirely, or in part, if the government increases the budget allocation for these subsidies. According to Moody’s, the oil marketing companies—Indian Oil Corporation Ltd, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Ltd—have been asked to share less than 1% of the total fuel subsidies since fiscal 2012 and it is unlikely that the proportion will rise. The rating agency says that the government is unlikely to reverse fuel pricing deregulation because it remains committed to reforms. However, it could intervene to address record high prices of petrol and diesel by reducing the excise duty on these products, especially if oil prices stay high. These taxes make up more than 20% of the retail selling prices and were increased in 2016 when oil prices fell. Most petroleum products are sold at market-linked prices in India, except liquefied petroleum gas and kerosene. Malcolm Smith Womens Jersey
Analysis: India could provide Iranian crude with stable outlet at least in near term
Indian refiners could offer Iran some respite at least for the next few quarters as the South Asian crude oil importers are keen to adhere to their term supply contract obligations with the Persian Gulf producer, undeterred by Washington’s efforts to restrain Tehran’s oil sales. The US’ re-imposition of sanctions on Iran has exerted little impact on the trade flows between India and the OPEC producer so far. India’s state-run Bharat Petroleum Corp. Ltd., for one, is set to receive its regular monthly term crude oil cargo from National Iranian Oil Company in the coming days. BPCL’s 190,000 b/d Kochi refinery on the west coast of India will receive 130,000 mt of its monthly term Iranian crude oil for May, trade sources with knowledge of the matter told S&P Global Platts last week. Indian state-run refiners typically source their crude oil requirements through term contracts with a host of suppliers, including Iran. BPCL currently holds a term contract with NIOC to buy 1 million mt for its Kochi refinery over April 2018-March 2019. In April, the refinery received two cargoes totaling 260,000 mt of Iranian crude oil. The impact of US sanctions could be felt after six months, but “not immediately,” a New Delhi-based trade source said. India’s flagship state-run refiner Indian Oil Corp. also holds a term contract with Iran to receive 180,000 b/d in the current fiscal year ending March 2019. IOC is keen to maintain its trade relationship with NIOC as “Iran offers a longer credit period than the usual 30 days offered by other oil exporting nations,” a company official said. India, Asia’s second biggest energy consumer, had received regular supply of crude oil from Iran during the previous international sanctions against its unclear nuclear program. Among the top 10 suppliers to India, Iran occupied the third spot with around 18.4 million mt of crude oil imported during the first 10 months of the fiscal year over 2017-2018 — from April 2017 to January 2018 — according to the Indian oil ministry’s provisional data. MIXED RESPONSE IN ASIA India’s stable imports from Iran comes in stark contrast to other major Iranian crude oil buyers in Northeast Asia, with South Korea already well on its way to limit its crude intake from the OPEC producer. Latest trade data from Seoul showed that South Korea’s crude oil imports from Iran fell 24.9% year on year in April to 9.09 million barrels, marking the sixth straight month of declines since November last year, when imports fell 26.8% year on year to 10.37 million barrels. On the contrary, India’s crude oil imports from Iran are forecast to increase by around 31% year on year to 500,000 b/d in fiscal 2018-2019, as both the countries pledged for enhanced engagement in the oil and gas sector. In April, India offered a fresh $4 billion development plan for the Farzad B gas field to Iranian oil minister Bijan Namdar Zangeneh during the latter’s visit to the South Asian nation. India’s oil ministry officials said it is still early to assess what would be the fallout of US President Donald Trump’s move to restore sanctions on Iran, and its implications on India’s next term contracts with NIOC. “As a crude buyer, we have all options open that include imports from the US. But the main determinant will be a competitive price,” a senior official with an Indian state-run refiner said. Earlier this month, NIOC had raised the June OSP for Iranian Heavy crude bound for Asia by 85 cents/b from May, to a discount of 65 cents/b to the average of Platts Oman/Dubai crude assessments in June. The latest monthly price tag puts the Iranian grade’s OSP differential 60 cents/b cheaper than its rival Saudi Arabia’s crude. Saudi Aramco has set the June OSP for Arab Medium grade bound for Asia at Platts Oman/Dubai average minus 5 cents/b. Marreese Speights Jersey
ONGC, OIL face risk of fuel subsidy sharing: Moody’s
State-run exploration and production companies Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Limited (OIL) face the increasing risk that the government of India will once again require them to share in the country’s fuel-subsidy burden, said Moody’s Investors Service in a note released on Tuesday. “Because of the government’s widening fiscal deficit, ONGC and OIL could be asked to bear part of the Indian government’s fuel subsidy for oil, if prices stay above $60 per barrel for the fiscal year ending March 2019,” said Vikas Halan, a Moody’s senior vice president. The two companies have since 2015 not contributed to fuel subsidies. They had, however, in previous years paid for more than 40% of the country’s annual subsidy bill. “The net impact of the subsidy sharing will be manageable for ONGC and OIL, even if the two companies are required to bear the entire shortfall between budgeted and actual amounts for the fiscal year ending March 2019,” added Halan. Moody’s added that if ONGC and OIL are obligated to contribute the entire subsidised amount exceeding the government’s budgeted figure for the fiscal year ending March 2019, such a requirement would constrain their net realised prices to $52-$56 per barrel. This is only marginally lower than or equal to the $56 for fiscal 2018. Moody’s estimates that fuel subsidies could total Rs340-530 billion in fiscal 2019, the highest since fiscal 2015, assuming Brent crude oil prices average $60-$80 per barrel. The government has budgeted for Rs250 billion of fuel subsidies in fiscal 2019, leaving a shortfall of Rs90-280 billion. This could be met by ONGC and OIL entirely, or in part, if the government increases the budget allocation for these subsidies. According to Moody’s, the oil marketing companies—Indian Oil Corporation Ltd, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Ltd—have been asked to share less than 1% of the total fuel subsidies since fiscal 2012 and it is unlikely that the proportion will rise. The rating agency says that the government is unlikely to reverse fuel pricing deregulation because it remains committed to reforms. However, it could intervene to address record high prices of petrol and diesel by reducing the excise duty on these products, especially if oil prices stay high. These taxes make up more than 20% of the retail selling prices and were increased in 2016 when oil prices fell. Most petroleum products are sold at market-linked prices in India, except liquefied petroleum gas and kerosene. Alexander Nylander Authentic Jersey