India records lowest crude oil production in seven years
India produced 20,294 Thousand Tonne of crude oil in the first seven months of the current financial year (April-October 2018), the lowest output recorded in the past seven years during the same period, according to fresh data sourced from the oil ministry. Production in October alone fell 5 per cent to 2,885 thousand tonne, the lowest output in that month in the past five years since 2013. India’s oil production has declined over the past seven years mainly owing to fall in output from nearly all the offshore and onshore blocks, data shows. The decrease in domestic crude oil production pushed the country’s crude import dependence to 83.5 per cent in October from 82.1 per cent recorded in the corresponding month last year. The fall comes at a time oil import bill is expected to increase 42 per cent to $125 billion in the current financial year (2018-19) on the back of recent rally in global oil prices and a depreciating rupee against the dollar. While high oil prices had been pushing the country’s Current Account Deficit (CAD) higher in the current year, they have followed a downward trajectory since mid-October on increased worries about global economic growth prospects, building up of crude oil inventory and fears of a supply glut in the oil market. ONGC Oil production by India’s largest oil and gas producer Oil and Natural Gas Corporation (ONGC) fell 6.56 per cent to 1765 thousand tonne in October. Its share in the country’s total oil production fell to 61.18 per cent during the month from 62.19 per cent in October 2017. The state-owned company’s cumulative oil production in the April-October 2018 period fell 5.68 per cent to 12,441 thousand tonne on the back of declining output in western offshore fields along with loss of production from WO-16 and B-127 fields due to the absence of Mobile Offshore Production Units Sagar Samrat and Sagar Laxmi and sub-sea leakage in some well fluid lines of Mumbai High and Neelam Heera Asset, oil ministry said. ONGC’s share in the country’s crude oil production fell to 61.30 per cent for the first seven months of the current fiscal from 62.62 per cent recorded in the corresponding period last year. Oil India Ltd Crude oil production by the second-largest state-run explorer OIL fell 1.35 per cent to 283 thousand tonne in October. OIL’s share in the country’s total production increased marginally to 9.80 per cent during the month as compared to 9.44 per cent in the same months last year. For the first seven months of the current fiscal, OIL’s oil production fell 3.65 per cent to 1968 thousand tonne due to less than planned contribution from wells. The company’s share in the country’s total oil output increased to 9.70 per cent in the April-October 2018 period from 9.40 per cent in the corresponding period last year. PSC fields Oil production from fields operated by private players and joint ventures decreased 2.89 per cent to 836 thousand tonne in October as compared to 861 thousand tonne in the same month last year. Share of Production Sharing Contract (PSC) fields in the total output decreased to 29 per cent in October 2018 from 28.36 per cent in October 2017. Cumulative oil production from PSC fields in the first seven months of the current fiscal decreased to 5,884 thousand tonne as compared to 5,890 thousand tonne last year in the same period. Share of PSC fields in total oil output rose to 28.99 per cent between April and October 2018 from 27.96 per cent in the year-ago period.
BP to invest $1 billion in South Africa, including refinery upgrade
BP Southern Africa (BPSA) will invest $1 billion in South Africa in the next five years with more than a quarter of that set aside to upgrade the SAPREF refinery to produce lower sulphur diesel, its chief executive said on Thursday. The 180,00 barrels per day SAPREF refinery, South Africa’s largest, is a 50:50 venture between Royal Dutch Shell and BPSA, a subsidiary of British oil major BP. The plant is located in the east coast city of Durban. BP would invest 3.5 billion-4 billion rand ($252 million-$288 million) in the refinery upgrade, Chief Executive Priscillah Mabelane told Reuters, adding that about 40 percent of the total $1 billion investment would go on retail activities. She said the upgrade would make “sure the refinery can meet the new specifications in terms of low sulphur and Marpol regulations.” The plant would shut for maintenance from May to June 2019, she added. The upgrade has been driven by new rules demanding a lower fuel sulphur content and changing customer preferences for cleaner diesel, such as D50 and D10. Refinery operators have been in long-running talks with the government on how to recover costs from upgrading work needed to produce cleaner fuel in South Africa, the continent’s most industrialized economy. “From an industry perspective we are pushing very hard to ensure that there is policy clarity because we have been on this journey very long, almost a decade,” Mabelane said about the ongoing talks. Industry players estimated in 2009 that the cost to upgrade to cleaner fuels would be about $4 billion. Other operators in the sector include Total and Sasol. Besides upgrading the refinery, Mabelane said BPSA would expand its retail activities in South Africa. “We are aggressively going to grow our footprint in the country,” she said on the sidelines of an event with retailer partner Pick n Pay to launch a new innovation for a loyalty card that will also work at BP fuel stations nationwide. BP was looking at opportunities to expand its services in Mozambique, where it is the second largest oil company, Mabelane said. “The market is exciting and dynamic,” she said.
Oil hits 2018 lows on emerging supply glut
Oil prices slumped to 2018 lows on Friday in thin but volatile trading, pulled down by concerns of an emerging global supply overhang amid a bleak economic outlook. Even an expectation that the Organization of the Petroleum Exporting Countries (OPEC) producer group will start withholding supply in 2019 to rein in any glut provided little support, traders said. International benchmark Brent crude oil futures hit their lowest since December 2017 at $61.52 per barrel, before recovering to $62.10 by 0430 GMT. That was still 50 cents, or 0.8 percent below their last close. U.S. West Texas Intermediate (WTI) crude futures slumped by more than 2 percent, to $53.35 a barrel, after coming within 5 cents of an October 2017 low reached earlier in the week. Amid the plunge, Brent and WTI price volatility has surged in November to approach levels not seen since the market slump of 2014-2016 and, before that, the financial crisis of 2008-2009. The divergence between U.S. and international crude comes as surging North American supply is clogging the system and depressing prices there, while global markets are somewhat tighter – in part because of reduced exports from Iran due to newly imposed U.S. sanctions. Overall, however, global oil supply has surged this year, with the top three producers of the United States, Russia and Saudi Arabia pumping out more than a third of global consumption, which stands at around 100 million barrels per day (bpd). High production comes as the demand outlook weakens on the back of a global economic slowdown. Oil prices have plunged by around 30 percent since their last peaks in early October, as global production started to exceed consumption in the fourth quarter of this year, ending a period of undersupply that started in the first quarter of 2017, according to data in Definitive Eikon. Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply. “We will not sell oil that customers don’t need,” Saudi Energy Minister Khalid al-Falih told reporters. Saudi Arabia is pushing OPEC to cut oil supply by as much as 1.4 million bpd to prevent a supply glut. The group officially meets on Dec. 6 to discuss its supply policy. U.S. bank Morgan Stanley said it saw “a far greater probability that OPEC reaches an agreement to balance the market in 2019” than not, adding that this would likely support oil prices “in the high-$50s, at least near term.”
Over 60,000 Himachal Pradesh houses to get gas pipeline: CM
Over 60,000 households in six districts of Himachal Pradesh will be supplied liquefied petroleum gas through pipeline, Chief Minister Jai Ram Thakur said here on Thursday. Thakur stated this while participating in the function organised by Indian Oil-Adani Gas Private Limited (IOAG) on the occasion of foundation stones laying ceremony of city gas distribution projects for 65 geographical areas of 129 districts and the launch of 10th city gas bidding round for 50 GAs, covering 123 districts by Prime Minister Narendra Modi from Vigyan Bhawan, New Delhi, an official spokesperson said. The foundation stones were also laid for city gas distribution projects approved for six out of total 12 districts of the state by the union government. The CM said that IOAG would develop city gas distribution network in Sirmaur, Solan and Shimla districts, while Bharat Gas Resources Limited in Bilaspur, Hamirpur and Una. Thakur thanked the prime minister on behalf of the people of the state for including six districts of Himachal Pradesh under this project through two geographical areas. More than 55 CNG stations will be set up in the state and besides kitchen, the natural gas would also be supplied to industrial and commercial units, he added.
Govt to raise target for ethanol blending of petrol
The government intends to further increase the target level for the Ethanol Blended Petrol (EBP) programme that aims to bring down India’s imports of petroleum products, as also provide cleaner fuel, Prime Minister Narendra Modi said on Thursday. State-run oil marketing companies (OMCs) currently implement the EBP programme with the annual target of 5 per cent blending with ethanol, while India has targeted a 10 per cent blending of petrol with the biofuel by 2022. “Government intends to raise the target for programme of blending petrol with ethanol, the production of which has crossed a record 140 crore litres this year,” Modi said at the foundation stone laying event here for city gas distribution (CGD) projects across 129 districts in the country. According to Petroleum Ministry officials, the target for the EBP programme could be increased to 20 per cent by 2030. India currently imports over 80 per cent of its oil requirements. For the next ethanol supply year, that begins in December, OMCs have indicated a requirement of 329 crore litres of ethanol, which is more than double of this year, that will result in a blending rate of 10 per cent, officials said. The government has already approved a hike in the price for the forthcoming year’s procurement of ethanol by OMCs by over 3, increasing the rate for the clean fuel derived out of B-heavy molasses from the current 47.13 per litre to 52.43. In a decision taken in September, the Union Cabinet also decided to fix the ex-mill price of ethanol derived from 100 per cent sugarcane juice at 59.13 per litre, from prevailing price of 47.13, for those mills which will divert 100 per cent of sugarcane juice for production of ethanol, thereby not producing any sugar. At the event, Modi also said that the government has budgeted a sum of 5,000 crore for setting up compressed biogas plants over the next five years. “It is also planned to set up 12 bio-refineries in the country with an investment of 12,000 crore,” he added. According to officials here, the 12 upcoming refineries will be owned by state-run companies like HPCL (four), IOCL (three), BPCL (three), MRPL (one) and Numaligarh Refinery (one).