H-Energy will commission first LNG retail outlet in Maharashtra by October 2019: Darshan Hiranandani
H-Energy, the oil and gas arm of Mumbai-based Hiranandani Group, is planning to commission its first LNG retail outlet in Panvel, Maharashtra in a year. The outlet, part of a larger expansion plan, will help the company sell gas from its Jaigarh LNG terminal located in Ratnagiri district in the state. “H-Energy will have its first LNG retail outlet in Panvel by October next year. We are trying for four more (outlets) but the Panvel facility will be up and running by next Diwali,” H-Energy Managing Director and Chief Executive Officer (CEO) told ETEnergyworld. The company is setting up the Jaigarh terminal in two phases. The first phase of the project – consisting of a jetty-based Floating Storage & Regasification Unit (FSRU) of 4 million tonne per annum (MTPA) capacity — is already operational. In the second phase, a land-based terminal of 8 MTPA capacity is being planned. H-Energy has also started work on laying a tie-in pipeline from Jaigarh to Dabhol which will carry regasified LNG from the terminal to the natural gas grid of GAIL (India). The 60 Km tie-in pipeline will carry re-gasified LNG to natural gas grid of GAIL in Dabhol. Hiranandani said the 60 Km tie-in pipeline is expected to be complete in two months, effectively kicking off operations by next year, and helping the company extend gas supply to natural gas consumers located in key demand regions. Also, the company is working on laying a 635 Km pipeline from Jaigarh to Mangalore, to connect to natural gas consumers in the east part of the country. “We are currently working with National Highways Authority of India (NHAI) as the alignment of the pipeline is along the highway. We have received Right of Use (ROU) from them. Their work and our work has to go in parallel. We are waiting for their processes to complete and, in the meantime, we will finish our processes. We are hoping to start work in June next year,” Hiranadani said. He also informed the work on the second LNG terminal being planned to be set up by the company at Digha in West Bengal is likely to start in December. That project will be based on a mixed model with both floating and on-land facility for LNG regasification. The company’s investment plan of around Rs 4,500 crore for setting up the LNG terminals and the pipelines is on track, Hiranandani said. Petronet LNG Ltd (PLL), the country’s largest importer of natural gas, is also planning to launch around 20 LNG fuelling stations on a 4,000-Km route between Delhi and Thiruvananthapuram as part of a larger plan being worked upon with oil marketing companies and state road transport authorities of Rajasthan, Gujarat and Kerala. PLL expects around 2 lakh trucks to run on LNG every year in the near future. LNG, a cleaner option than conventional fuels, is seen to provide 30-40 per cent lower running costs.
Oman’s 2019 crude oil premiums rise on financing costs: Sources
Oman crude oil sellers have locked in higher premiums for 2019 supplies than the previous year on the back of higher financing costs, several trade sources said on Friday. Oman cargoes with a 0.2 per cent operational tolerance were sold at premiums of about 5 cents a barrel above the official selling price (OSP), against premiums of about 4 cents from the previous year, they said. The rise in outright prices and higher interest rates have increased financing costs for traders when they purchase Oman on the Dubai Mercantile Exchange, the sources said. The higher premiums for Oman were also indicative of expectations of lower supplies from Iran next year as U.S. sanctions hit Tehran’s exports, one of the sources said. The International Energy Agency said in its monthly report on Friday that Iran’s supply has dropped to a two-and-a-half year low in September. Talks were ongoing for cargoes with a 5 per cent operational tolerance, the sources said. Some of the sources expected deals to be done at premiums of 14-15 cents a barrel although an upstream company may have sold its supplies at premiums higher than 15 cents. For 2018, Oman cargoes with a 5 per cent operational tolerance were sold at premiums of 10-12 cents.
India will continue to buy Iranian crude in Nov; payment mechanism to be worked out: S C Garg
India will continue to buy Iranian crude to some extent and the quantity of imports will not be the same, India’s economic affairs secretary Subhash Chandra Garg said in an interview to news channel CNBC-TV18. Garg conveyed oil minister Dharmendra Pradhan’s decision to continue oil imports from Iran. Pradhan had said in a press event earlier this week that two state-owned refiners have placed orders for importing crude oil from Iran in November. Responding to a query on India’s decision to buy Iranian crude post November despite US sanctions, a senior petroleum ministry official said: “We need to look at our energy needs too.” The government’s stand comes amid increased pressure from the US on major oil importing countries to cut their respective crude oil imports from Iran to zero from 4 November. Reacting to India’s stand to continue imports of Iranian crude, US State Department spokesperson Heather Nauert today said: “India’s decision to continue buying oil from Iran after November 4 and purchase the S-400 Triumf air defence system from Russia is “not helpful” and the US is reviewing it very carefully.” Noting that she has seen reports of India’s decision, she said this was a topic of conversation with the Indian government when Secretary of State Mike Pompeo was in India last month for the first 2+2 Dialogue. “The President had addressed it – I believe it was just earlier today – which he was asked about that question about whether or not India would buy oil from Iran after sanctions are reimposed. And the President said – and I’m not going to get ahead of the President, certainly – but he said we’ll take care of that,” she said. US special representative for Iran Brian Hook is currently in India to further discuss US foreign policy towards Iran. US had in May walked out of the Joint Comprehensive Plan of Action with Iran and re-imposed economic sanctions on the country. The sanctions prohibit other nations to enter into new contracts with Iran immediately and provide a six-month period ending 4 November to wind-down existing commitments with the country, especially with Iranian oil companies. India’s oil imports from Iran in the first five months (April to August) of the current financial year increased 43.69 per cent to 13.32 MT as compared to 9.26 MT imported in the corresponding period a year ago, data sourced from the Directorate General of Commercial Intelligence and Statistics, an arm of the ministry of commerce and industries, showed. India meets over 82 per cent of its crude requirement through imports. Around 10-12 per cent of these shipments are sourced from Iran. Indian refiners prefer Iranian crude owing to better pricing and credit terms. The 3-month credit period offered by Iran results in lower working capital for domestic Indian refiners leading to lower borrowings and increased floating money.
World oil market “adequately supplied for now”, says IEA
Oil markets look “adequately supplied for now” after a big production increase in the last six months, but the industry is coming under strain, the West’s energy watchdog said on Friday. The International Energy Agency said in its monthly report that the world’s spare oil production capacity was down to 2 per cent of global demand, with further falls likely. “This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy,” the Paris-based organisation said. Members of the Organisation of the Petroleum Exporting Countries (OPEC) and other exporters such as Russia agreed in June to raise output as the market appeared increasingly tight. The price of global benchmark Brent crude has risen from around $45 a barrel in June 2017 and peaked at over $85 this month on bullish bets by speculators. OPEC, Russia and others such as US shale companies had increased production sharply since May, the IEA said, raising global output by 1.4 million barrels per day (bpd). Overall, OPEC had boosted production by 735,000 bpd since May as West Asian producers such as Saudi Arabia and the UAE more than compensated for declining output in Venezuela and Iran, which is facing US sanctions from next month. Supply from Iran during September dropped to a two-and-a-half year low, the IEA said, as customers continued to cut back in the run-up to new sanctions, which start on November 4. Iranian output fell to 3.45 million bpd, it said, down 1,80,000 bpd month-on-month. Iranian oil exports in September fell to 1.63 million bpd, down 800,000 bpd from recent 2Q18 peaks, the agency estimated. “The decline may deepen significantly ahead of US sanctions—and subsequently as final cargoes are delivered,” said the IEA, which advises major oil consumers on energy policy. Strong output But, the outlook for world oil consumption is faltering, the IEA said as it cut its forecast of global oil demand growth by 0.11 million bpd for both this year and next to 1.28 million bpd and 1.36 million bpd respectively. “This is due to a weaker economic outlook, trade concerns, higher oil prices,” it said. OECD commercial stocks rose by 15.7 million barrels in August to 2.854 billion barrels, their highest level since February, on strong refinery output and liquefied petroleum gas restocking, the IEA said. It added that OECD inventories were likely to have risen by 43 million barrels in the third quarter, the largest quarterly increase in stocks since the first quarter of 2016. “The increase in net production from key suppliers since May of approximately 1.4 million bpd, led by Saudi Arabia, and the fact that oil stocks built by 0.5 million bpd in 2Q18 and look likely to have done the same in 3Q18, lends weight to the argument that the oil market is adequately supplied for now,” the IEA said.
India targets oil traders for $1.5 billion emergency oil reserve
India is seeking $1.5 billion of investments from global oil producers and traders to build additional emergency crude reserves that will act as a buffer against volatility in oil prices. The plan is to build underground caverns that can hold a combined 6.5 million tons of crude at two locations, Indian Strategic Petroleum Reserves Ltd. Chief Executive Officer H P S Ahuja said. The state-run ISPRL will collaborate with private entities, who will invest in the project, he said. Getting investors to build the storage facilities will lessen the strain on state finances and help Prime Minister Narendra Modi’s government meet its budget goals, while expanding strategic petroleum reserves to shield the economy from oil-price volatility. India, which meets almost 85 per cent of its crude needs through imports, this month cut taxes on fuel sales to lower the burden of high oil prices on consumers. “We are taking the commercial model for building and filling the caverns, which will provide opportunity to the investor to make some profits,” Ahuja said. “India will continue to reserve first right over the crude stored in these caverns.” The two new reserves include 4 million tons of storage at Chandikhol in the eastern state of Odisha and a 2.5 million-ton facility at Padur in southern India’s Karnataka. India has built 5.33 million tons of underground reserves in three locations, including Padur, under an earlier phase that can meet 9.5 days of the country’s oil needs. The government purchased crude to fill the caverns in Visakhapatnam in Andhra Pradesh and half of another facility in Mangalore in Karnataka, while leasing out the other half to Abu Dhabi National Oil Co. Indian Strategic Petroleum Reserves, which was formed in 2006, is scouting investors to fill the caverns at Padur. It will hold roadshows in New Delhi, Singapore and London this month to draw investors for the new caverns as well as filling the Padur facility. “Strategic reserves are crucial for a growing consumer like India,” Ahuja said. “The new SPRs will be sufficient to cover the country’s oil needs for another 12 days.”
India’s decision on buying oil from Iran, defence system from Russia not helpful: US
India’s decision to continue buying oil from Iran after November 4 and purchase the S-400 Triumf air defence system from Russia is “not helpful” and the US is reviewing it “very carefully”, the State Department has said. The US is trying to cut off all oil imports from Iran following President Donald Trump’s decision in May to pull out of the 2015 multilateral deal that eased global sanctions in exchange for curbs on Iran’s suspect nuclear programmes and malign activities. It has given a November 4 deadline to its allies to bring down their import of Iranian oil to zero. Responding to questions on reports that India will continue to purchase oil from Iran after November 4, State Department spokesperson Heather Nauert said this was not helpful. India’s Oil Minister Dharmendra Pradhan on Monday said that two state refiners have placed orders for importing crude oil from Iran in November. “Overall with regard to those sanctions that will take effect on November 4th – and you’re referring to the oil sanctions for Iran and countries that choose to continue purchasing oil from Iran – we have conversations with many partners and allies around the world about those sanctions,” she said on Thursday. “We make our policies very clear to those countries. We continue to have conversations with the government of Iraq about that particular issue and the implications for the reimposition of sanctions that were previously lifted or even waived under the Joint Comprehensive Plan of Action (JCPOA),” Nauert said. The Trump administration has given the same message to all countries around the world, and the president has said that the United States is committed to re-enforcing all of its sanctions. “We believe that countries coming together and recognising the malign influence that Iran has had around the world is important. We know that Iran and the government of Iran has taken the benefits that it received under the JCPOA and they’ve poured that money not into their own population, not into the good of the people, not into its medical hospitals and things of that nature, but rather they’ve used it for its own nefarious programmes,” Nauert said. Noting that she has seen reports of India continuing to buy oil from Iran after November 4, she said this was a topic of conversation with the Indian government when Secretary of State Mike Pompeo was in India last month for the first 2+2 Dialogue. “The President had addressed it – I believe it was just earlier today – which he was asked about that question about whether or not India would buy oil from Iran after sanctions are reimposed. And the President said – and I’m not going to get ahead of the President, certainly – but he said we’ll take care of that,” she said. On the implication of the Countering America’s Adversaries Through Sanctions Act or CAATSA on India after it inked the USD 5 billion deal with Russia to purchase the S-400 Triumf air defence system, Nauert said, “He (the president) was asked also about CAATSA sanctions and possible imposition of CAATSA sanctions. And he said, you know, India is going to find out. “And India will find out. We’ll see. So I’m not going to get ahead of him, but certainly when we hear about things such as purchasing oil or the S-400 systems, it’s not helpful. The United States government just reviews that very carefully,” Nauert said.
International Energy Agency sees world oil market ‘adequately supplied’
Oil markets look “adequately supplied for now” after a big increase in production over the last six months but the oil industry is coming under strain as it copes with increasing global demand, the West’s energy watchdog said on Friday. The International Energy Agency said in its monthly report that the world’s spare oil production capacity was already down to only 2 percent of global demand, with further reductions likely to come. “This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy,” the Paris-based IEA said. Members of the Organization of the Petroleum Exporting Countries and other exporters such as Russia and U.S. shale producers had increased oil production sharply since May, the IEA said, raising output by 1.4 million barrels per day (bpd). Overall OPEC had boosted production by 735,000 bpd since May as Middle East Gulf producers such as Saudi Arabia and the UAE more than compensated for declining output in Venezuela and Iran, which is facing U.S. sanctions from next month. And the outlook for world oil consumption was faltering. The IEA cut its forecast of global oil demand growth by 0.11 million bpd for both this year and next to 1.28 million bpd and 1.36 million bpd respectively. “This is due to a weaker economic outlook, trade concerns, higher oil prices and a revision to Chinese data,” said the IEA, which advises major oil consumers on energy policy. OECD commercial stocks rose by 15.7 million barrels in August to 2.854 billion barrels, their highest level since February, on strong refinery output and liquefied petroleum gas restocking, the IEA said. It added that OECD inventories were likely to have risen by 43 million barrels in the third quarter, the largest quarterly increase in stocks since the first quarter of 2016. “The increase in net production from key suppliers since May of approximately 1.4 million bpd, led by Saudi Arabia, and the fact that oil stocks built by 0.5 million bpd in 2Q18 and look likely to have done the same in 3Q18, lends weight to the argument that the oil market is adequately supplied for now,” the IEA said.
Big Oil still reluctant to open spending taps: Goldman
Energy companies and investors are focused on profits and reluctant to boost spending even after crude prices surged to four-year highs, a senior Goldman Sachs banker said on Thursday. Rattled by the recent downturn in the sector and long-term concerns over oil demand and the switch to renewables, Big Oil is facing an unprecedented challenge. “We’re firmly through that survival phase and the better capitalized players are now positioned to do well on the other side of it,” Andrew Fry, global head of energy at Goldman said at the Oil & Money conference in London. Companies typically seek to increase spending as they emerge from a downturn in order to capture low drilling costs and an expected supply shortage. But this time round, the barriers for investments are high, with investors seeking returns of as much as 15 to 20 percent from multi-billion dollar oil and gas projects, Fry said. “In the near term the focus is on returns as opposed to growth for the sake of growth,” he said. As a result, companies are currently focusing on buying back shares and paying dividends to investors with the excess cash they generate. “For the first time since the downturn, the oil companies now have their balance sheets in order. They are all starting to think about growth but it is very conservative,” James Janoskey, global co-head of oil and gas at JPMorgan, said. “When we came out of downturns in the past, we didn’t have energy transition issues and there probably wasn’t that much pressure from investors.” M&A Capital expenditure among the world’s top oil companies is expected to rise to $140 billion by 2021, from the current $100 billion, but will remain well below the $200 billion before the 2014 oil price collapse, according to Adam Brett, HSBC global head of natural resources advisory. That means oil majors will show very healthy returns on capital invested, he added. He said that even in the United States, where oil output has resumed spectacular growth on the back of high oil prices, large companies will try to maintain capital discipline and focus on returns rather than pure production growth. “For Big Oil, value will prevail over volume,” Brett said, adding that most remuneration reports now made clear that top executives at oil majors are being rewarded for delivering robust cash flows rather than production increases. Acquisitions, another way to boost production and reserves, are also expected to be constrained and focused. Energy mergers and acquisitions amounted to $360 billion last year and stand at $280 billion so far this year, said Brett. Although the volume of M&A has been relatively stable in recent years, the structure has changed since China largely suspended its buying spree over the past three years, he said. An anti-corruption drive and revisions of overly expensive deals have prompted China to cut down on buying resources around the world in the past three years. Brett said that M&A were currently dominated by downstream and mid-stream transactions with the share of upstream declining to 35-40 percent, from as high as 60-70 percent when China was an active asset buyer. “You see much more downstream M&A activity. And I expect this to continue in the years ahead,” Brett said.
ONGC Flexes Its Muscles: Plans Purchase Of 27 Oil Rigs To Replace Old Ones For Rs 35 billion
In a bid to improve the quality of operations and increase efficiency, the state-run Oil and Natural Gas Corporation of India has decided to purchase 27 rigs to replace the existing on-load rigs reports The Economic Times. The investment is reported to cost the company around Rs 30 to Rs 35 billion. ONGC has initially planned to buy 50 rigs, reports suggest that they settled for 27. The newly bought rigs will help replacement of 67 ageing one involved in onshore operations. Drilling rigs are mostly massive mobile structures which house equipment used to penetrate the earth’s surface to allow extraction of oil and gas from underground reservoirs. ONGC had already drilled 503 wells in 2017-2018, the highest in 27 years in a bid to boost the production which has been stagnant for the past years. India’s production of crude oil has been falling for more than six years, increasing its dependence on imports as local consumption expands with the rapidly growing economy. Domestic oil production contracted 3.3 per cent from a year earlier to 14.6 million metric tons in the April-August period this year, thereby raising dependence on imports for 83.2 per cent of the country’s oil requirement.
India asks Aramco for another 4 Mmbbl of crude: sources
Saudi Arabia appears to be filling the Iranian crude oil supply gap to Indian refineries, with reports suggesting the world’s top oil exporter will add another 4 million barrels (Mmbbl) of crude to India’s supply in November, Kallanish Energy learns. Refineries Reliance Industries, Bharat Petroleum Corp, Hindustan Petroleum Corp. and Mangalore Refinery Petrochemicals have asked Saudi Aramco for an extra 1 Mmbbl each next month, Reuters reported Wednesday, citing unnamed market sources. Last week, Saudi crown prince Mohammed Bin Salman said in an interview with Bloomberg that Trump’s request that Saudi Arabia and other Opec countries ensure they meet any loss of supply from Iran, has been fulfilled. “We export as much as two barrels for any barrel that disappeared from Iran recently,” the prince said. “So we did our job and more.” With Saudi Arabia and Russia publically committing to add some 1 Mmbpd of crude to the market, in light of current market conditions, there are fears a supply crunch due to the Nov. 4 implementation of sanctions on Iran, will continue to lift crude prices. There are rumors the Saudis and the Russians have privately agreed to boost their output further. But Saudi oil minister Khalid Al-Falih said last week Riyadh’s 1.3 Mmbpd spare capacity will only be used if demand materializes, adding the market seems to be well-supplied and there’s no need for further input.