Bharat Petroleum Plans Rs 1-Lakh-Crore Expansion Over Five Years
Bharat Petroleum Corporation Ltd. is planning to invest Rs 1000 billion over the next five years for refinery upgradation, marketing infrastructure, petrochemicals production and city-gas distribution. This will help the company expand its refining capacity to 50 million metric tonnes in five years and gas production to 5 million metric tonnes in four years, Chairman and Managing Director D Rajkumar told BloombergQuint in an interview. As of March 2018, total crude oil processed by the company’s group refineries was 31.35 million metric tonnes, at a capacity utilisation of over 117 percent. Its gas production stood at 1.87 million metric tonnes. The state-run oil marketer plans to spend Rs 74 billion in the ongoing financial year. “This is for the ongoing projects, especially for the Kochi and Mumbai refineries as well as some marketing projects,” Rajkumar said. BPCL completed its integrated refinery expansion project at Kochi, which increased its capacity from 9.5 million metric tonnes per annum to 15.5 million metric tonnes per annum. The company also plans to upgrade its Mumbai refinery from 12 million metric tonnes per annum to 14 million metric tonnes per annum. Besides, it’s looking to expand the capacity of its Assam-based Numaligarh refinery from 3 million metric tonnes per annum to 9 million metric tonnes per annum, Rajkumar said. The company, he said, is planning to expand the capacity of Bina refinery to 15.5 million metric tonnes per annum in four years. “That’s in the initial stages.” Bina refinery—a 50:50 joint venture between Oman Oil Company Ltd. and BPCL—is also looking for potential investors as Oman Oil plans to offload part of its stake. “The KPC (Kuwait Petroleum Corporation) could be a potential partner but that depends on how it’s going to pan out in the days to come,” Rajkumar said. Rising Oil Prices As oil prices peaked in the country, the oil-marketer said the government had not asked them to absorb the hike yet. “There is no communication from the government, whatsoever, at this point in time to absorb the prices,” Rajkumar said. “Currently, we are passing on the prices.” There are no plans to absorb either, he said. The tax component, he said, was on the higher side for oil. Citing the instance of Mumbai, Rajkumar said the taxes were as high as 40 percent for the high-speed diesel variant and 50 percent for the motor spirit-variant. In India, taxation on oil is ad-valorem, which means that as oil prices surge, the taxes levied also rise. Anthony Walker Authentic Jersey
PE-backed Invenire Energy may acquire Tata’s oil and gas business
Invenire Energy Pvt. Ltd will likely acquire Tata Petrodyne Ltd, the upstream oil and gas business of the diversified Tata Group, said three people aware of the matter. Invenire Energy is backed by a consortium of private equity firms for the potential deal, the people who didn’t wish to be named said in an interview. The transaction is expected to close shortly, they said without disclosing the estimated value of the deal. Tata Petrodyne is a wholly owned unit of Tata Sons Ltd, the group’s holding company. It has a net worth of about Rs 4 billion. “It is a corporate-level transaction for 100% shares of Tata Petrodyne. Invenire is positive about the hydrocarbon assets which Tata Petrodyne holds,” said the first person cited above. Directors of Chennai-based Invenire Energy include Vinod Kumar Saraogi, Manish Maheshwari, Rahul Saraogi and Prakash Kumar Saraogi. Rahul Saraogi is also the founder and managing director of Atyant Capital Advisors. Rahul Saraogi did not respond to an email seeking comment. A spokesperson for Tata Sons also declined to comment. Invenire Energy has allocated an initial capital of $500 million towards building a sustainable oil and gas portfolio with a production rate of about 10,000 barrels of oil per day in South-East Asia. The interest in Tata Petrodyne is part of that ambition. Mint in January reported that the Tata Group has hired EY to explore the sale of Tata Petrodyne. The deal follows Tata Sons’ chairman N. Chandrasekaran’s statement last July that the conglomerate is looking to prune its portfolio and exit businesses that are not offering returns. The Tata Group may use the sale proceeds to repay part of its debt, said the second person mentioned above. The group’s companies, Tata Power Ltd, Tata Steel Ltd and Tata Motors Ltd have a combined debt of about Rs2.3 trillion. Tata Petrodyne has a participating interest in four oil and gas blocks in India and one each in Indonesia and Tanzania. In its Indian blocks, the company holds between 21-30% stake in four oil and gas blocks. Its partners are Hardy Exploration and Production (India) Inc, Hindustan Oil Exploration Co Ltd, Oil and Natural Gas Corp. Ltd and Cairn India Ltd. Over the past few years, Tata Petrodyne has not expanded its hydrocarbon business given its limited success in the sector. “Tata Petrodyne has frozen hiring and also slashed salaries of a few employees,” said the third person cited above. Sammie Coates Jersey
DSF Bid round-II may attract $1.2 billion investments: DGH
The Director General of Hydrocarbons Wednesday said the ongoing Discovered Small Filed (DSF) second round bidding, once completed, will entice about $1.2 billion worth of investments by the successful bidders. “The total investment committed in the DSF-I was $600 million. We expect it to double this time at least double to $1200 million ($1.2 billion). Here the area is also doubled and reserves are also doubled 9 when compared to the round one). The area is 3000 Sq Km and reserves are 190 mmtoe ( million metric tonnes of oil equivalent),” VP Joy, Director General of Directorate of Hydrocarbons told reporters. He was in the city to participate in the investor meet organised by the DGH for the DSF Bid Round-II. He said under the current round 25 contract areas covering 59 discovered oil and gas fields spread over 3000 Sq Km with prospective resource base of over 190 mmtoe was announced. The e-bidding portal was open since August 9 and would continue till December 18. The government had in 2016 brought a new DSF policy, offering “idle” small discovered fields of state-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) in an auction on liberalised terms including marketing and pricing freedom and lower taxes. In the first round of bidding for DSF last year, 134 bids were received for 34 blocks out of 46 on offer. Joy said within this financial year the contracts would be awarded to the successful bidders who were supposed to start production within three years after being awarded the contract. “The successful bidder will get the Petroleum Mining Lease on their name. They will have to submit the field development plan. Then drill the wells and start the production. As per the terms and conditions they will have to start production within three years after they were awarded,” he explained. Replying to a query on the National Seismic Programme, he said the government has earmarked Rs 30 billion for the purpose and about Rs 10 billion was spent on that. Joy said the processed data pertaining to Mahanadi Basin has already been published and about 60 percent of the data has been acquired. “Rajasthan data we are hoping to display next month,” he said. The DGH had identified 26 basins across the country and out of which only seven are witnessing commercial production and another five basins have been identified of having good potential of oil and gas reserves. Adarius Glanton Womens Jersey
Modi Cabinet approves policy to promote and incentivize ER for oil & gas
The Union Cabinet chaired by Prime Minister Narendra Modi has approved the Policy framework to promote and incentivize Enhanced Recovery (ER) Improved Recovery (IR) Unconventional Hydrocarbon (UHC) production Methods/techniques to improve recovery factor of existing hydrocarbons reserves for augmenting domestic production of oil and gas. The ER includes Enhanced Oil Recovery (EOR) and Enhanced Gas Recovery (EGR), Unconventional Hydrocarbon (UHC) production methods include Shale oil and gas production, tight oil and gas production, production from oil shale, gas hydrates and heavy oil. Enhanced Recovery, Improved Recovery, and exploration and exploitation of unconventional hydrocarbons are capital intensive, technologically complex and challenging in nature. It calls for supporting infrastructure, logistic support, fiscal incentives and enabling environment. The strategic objective of the Policy is to build a supportive ecosystem through academic and research institutes, industry-academia collaboration and to support and encourage Exploration and Production (E&P) Contractors to deploy ER/IR/UHC Methods/ techniques. The Policy will be applicable to all contractual regimes and Nomination fields. This policy initiative is expected to spur new investment, provide impetus to economic activities and generate additional employment opportunities. The Policy is expected to facilitate induction of new, innovative and cutting-edge technology and forging technological collaboration to improve the productivity of existing fields. The Policy envisages a systemic assessment of every field for its ER potential, appraisal of appropriate ER techniques and fiscal incentives to de-risk the cost involved in ER Projects to make the investment financially viable. Mandatory Screening of fields through designated institutions, to be notified by Government, and conducting Pilot before actual implementation of ER Project on a commercial level, are other prominent features of the Policy. An Enhanced Recovery (ER) Committee comprising of representatives of Ministry of Petroleum & Natural Gas, Directorate General of Hydrocarbons (DGH), experts from the upstream sector, and academia would monitor and implement the Policy. The Policy, having a sunset clause, will be effective for 10 years from the date of its notification. However, the fiscal incentives will be available for a period of 120 months from the date of commencement of production in ER/UHC projects. In the case of IR Projects, the incentives will be available from the date of achievement of the prescribed benchmark. Defined timelines have been prescribed to complete the various processes under the Policy. The fiscal incentives are extended in form of a partial waiver of applicable Cess/Royalty on incremental production resulting from the adoption of ER methods on designated wells. Technological interventions have significant potential in stimulating the recovery of hydrocarbon reserves from the matured/aging fields. An increase of 5% in the recovery rate of original in-place volume in oil production is envisaged producing 120 MMT additional oil in next 20 years. In case of gas, an increase of 3% recovery rate on original in- place volume is envisaged, leading to the additional production of 52 BCM of gas in the next 20 years. Jordan Bell Womens Jersey
BPCL to shift LPG facility from Mumbai refinery; other refineries also to follow
State-run Bharat Petroleum Corporation (BPCL), which had a string of fire accidents this year at all its facilities, including the recent blasts at its flagship refinery here, is planning to shift the LPG facility out of the city to the nearby Rasayani, as part of its efforts to strengthen safety measures. The second largest state-run refiner and oil marketer is also planning similar options for its other refineries in Kochi, and its joint venture refineries at Numaligarh in Assam and Bina in Madhya Pradesh as well, a top company official said here Tuesday. “Will look at moving some of the related facilities, especially the LPG facility, to an alternate location for safety and commercial reasons,” said D Rajkumar, chairman and managing director, BPCL. The relocation of the LPG facility from the Mumbai refinery complex to Rasayani, which is around 60 km off the eastern waterfront, will be completed in the next two years, he said, adding this will help cut down truck movement near the refinery by as much as 43 per cent. But Rajkumar, addressing the media after the AGM here late last evening, was quick to add that there is no plan to move the refinery itself to an alternate location. BPCL’s director for refineries, R Ramachandran, said the Rasayani facility over the years will attract Rs 36,000-38,000 crore of investments over the next few years as the company is also planning a petrochemical facility there. “The investment plans are still at the drawing board level, except for the LPG facility which is already underway. We already have taken 250 acres and the entire plan will involve taking in an additional 500 acres. And thankfully land acquisition will not be an issue as the land was earlier an industrial plot,” said Ramachandran. The first phase will have the LPG bottling facility, followed by a poly-propylene block, and the second phase will have an enthoneyline plant, he added. Rajkumar also said BPCL will invest around Rs 7,400 crore towards capital expenditure this fiscal year, of which around Rs 5,300 crore will be managed through internal accruals and the rest will be debt. He said most of the capex will go into the upcoming petrochemical facility in Kochi as it will be focusing big on the petrochemicals sector going forward. He also said the next focus area will be LNG and with the latest auctions, the company will have licences for 25 cities, up from the existing 14 cities. But he ruled out setting up an LNG terminal for now. The Mumbai refinery had fire accident in July which left close to 50 employees injured, and a commercial loss of about Rs 97 crore. And the company attributed the incident to a material-related failure. On the impending sanctions on Iran crude imports, Rajkumar said, the company has already sourced about 3.8-million tonnes (mt) of the 4.2 mt contracted for this year, and if need be, will take in the balance of 0.5 mt. Rajkumar also said the refinery has not booked cargo from Iran since August. “Last year, we imported 4.25 mt. Till September, we have imported 3.08 mt, that is around 73 per cent of what we have imported last year. Even if we really want to import, we will end up importing 0.56 mt more. That is the shortfall we can think of. We are hopeful that now there are alternative sources,” he said. He further said BPCL has already booked Louisiana crude recently and will continue to do so going forward. “If it is going to work out economically for us to procure US crude, then we will do that. We believe that enough sources are available. Our refineries are versatile. We can process 108 types of crudes and we have 96 potential crudes in our baskets. I don’t see any problem in sourcing crude even if it not going to come from Iran,” he said. When asked whether any direction from government on freezing petrol and diesel prices which are at a record high now, Rajkumar said, “There is no communication whatsoever from the government so far. We are passing on the spike in crude prices and there is no plan to absorb the hike at all.” BPCL is also developing an oil block in Brazil through a 50:50 joint venture with Videocon, which is at the bankruptcy court now. The chairman said the ongoing insolvency proceedings against Videocon will not have any negative impact on the future investments in this block. On the Mozambique oil field joint venture, where the company has a 10 per cent equity consideration and has already pumped in over $700 million so far, Rajkumar said, the firm have entered into a legal framework with the government and will shortly be signing the final investment plan (around $22 billion) as well. Cam Newton Jersey
Oil prices slip as economic growth concerns counter tighter supplies
Oil prices fell on Thursday, reversing some of the strong gains from the previous session, as economic concerns raised doubts about ongoing fuel demand growth. US West Texas Intermediate (WTI) crude futures were at $69.91 per barrel at 0220 GMT, down 46 cents, or 0.6 per cent, from their last settlement. Brent crude futures slipped 38 cents, or 0.5 per cent, to $79.36 a barrel. The falls came on the back of a potential slowdown in fuel demand growth because of trade disputes between the United States and China as well as emerging market turmoil. American companies in China are being hurt by tariffs in the growing trade war between Washington and Beijing, according to a survey of hundreds of firms, prompting the US business lobbies behind the poll to urge the Trump administration to reconsider its approach. The Trump administration has invited Chinese officials to restart trade talks, just as Washington prepares to escalate the US-China trade war with tariffs on $200 billion worth of Chinese goods. The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday reduced its forecast for 2019 global oil demand growth, pointing to economic risks. In its monthly report, OPEC said world oil demand next year would rise by 1.41 million barrels per day (bpd), 20,000 bpd less than last month and the second consecutive reduction in the forecast. TIGHTER SUPPLY Despite this, the short-term outlook for oil markets is for tighter supply. Brent rose above $80 per barrel the previous session for the first time since May, spurred by expectations that US sanctions against Iran’s oil exports, which will start in November, will tighten global markets. WTI was pushed over $70 the previous session due to falling crude inventory and production levels. US crude inventories fell 5.3 million barrels in the week to Sept. 7 to 396.2 million barrels, the lowest since February 2015 and about 3 per cent below the five-year average for this time of year, the US Energy Information Administration (EIA) said on Wednesday. Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said the inventory data showed “a much deeper drop than analyst’s expectations.” US crude oil production fell by 100,000 bpd, to 10.9 million bpd, as the industry faces pipeline capacity constraints. Innes said the slight dips on Thursday came as rising refined product inventories, which the EIA also reported, “slightly dampened market overexuberance” as it indicated that US fuel demand may be weakening. Gasoline stocks rose 1.3 million barrels, while distillate stockpiles, which include diesel and heating oil, climbed by 6.2 million barrels, the EIA data showed. Marcus Maye Womens Jersey
Fuel prices on the boil, petrol breaches Rs 81 for the first time in New Delhi
Retail prices of petrol and diesel breached record levels again on Thursday with Oil Marketing Companies (OMCs) raising rates by 13 paise per litre and 11 paise per litre respectively for the two automobile fuels in the national capital. Oil Minister Dharmendra Pradhan and Piyush Goal, Minister for Railways and Coal yesterday during a press briefing refused to take any questions on rising fuel prices. Post the price hike, non-branded petrol was priced at Rs 81 per litre in Delhi while diesel costs Rs 73.08 per litre – the highest ever prices recorded in the country’s history. Petrol, diesel prices have been hiked continuously since 1 August, with petrol prices being increased by Rs 4.69 per litre and diesel prices by Rs 5.26 a litre in the national capital, on the back of a depreciating Rupee against the dollar and an increase in global fuel prices. Government has ruled out any cut on excise duty for the two fuels, citing fear of revenue loss. Law minister Ravi Shankar Prasad on Monday blamed Organization of Petroleum Exporting Countries (OPEC) for the surge in international prices of crude and said that the solution for the fuel price hike in not in government hands. “An atmosphere of fear is being created. When there is no support to the protests, they are resorting to violence. We stand with the people on this issue but the solution to the increase in petrol and diesel prices is not in our hands,” Prasad said. He added, “There is political instability in Venezuela. An attempt was made on the life of the Venezuelan president. There are US sanctions on Iran. The oil production in US has decreased. We have to depend on imports for oil.” While, Oil Minister Pradhan had on Saturday last week said that a weak Indian rupee against the US dollar and supply side constraints have led to high domestic fuel prices. The government had in May this year — when petrol, diesel prices had reached their earlier peaks — said it is working on a long-term solution to reign in fuel prices when they reach uncomfortable levels. The centre is yet to disclose such a strategy. Petrol prices were increased to Rs 88.39, Rs 82.87 and Rs 84.19 per litre in Mumbai, Kolkata and Chennai respectively on Tuesday. Diesel prices in the three cities were also raised today to Rs 77.58, Rs 74.93 and Rs 77.25 per litre, respectively. Rajasthan government has already announced a four percentage point cut in Value Added Tax (VAT) on petrol and diesel, while Andhra Pradesh announced a Rs 2 cut in petrol and diesel prices on Monday by slashing sales tax on the fuels. Phillip Gaines Authentic Jersey