OMV expects price negotiations with Gazprom to drag on until summer
Oil and gas group OMV expects to agree a price for the Siberian gas assets it plans to buy from Gazprom by summer, later than an initial plan for early this year, the Austrian group’s chief executive told Reuters. That further delays OMV’s entry into the Russian company’s Achimov IV and V phase development in the Urengoy gas fields. The two groups had agreed in 2016 to swap 38.5 percent of OMV’s Norwegian assets for 24.98 percent of the Russian assets. However, they gave in to opposition from Norway in October, cancelling the swap deal and saying OMV would buy the assets. “We will do everything we can to finalise this in the summer,” Rainer Seele said on Sunday. In recent months, OMV has shifted its focus more towards the Middle East. It announced a landmark partnership deal with Abu Dhabi’s National Oil Company (ADNOC) and Italy’s Eni on Sunday.
ADNOC seals $5.8 billion refining and trading deal with ENI, OMV
Italy’s Eni and Austria’s OMV have agreed to pay a combined $5.8 billion to take a stake in Abu Dhabi National Oil Company’s (ADNOC) refining business and establish a new trading operation owned by the three partners. The transaction, which expands ADNOC’s access to European markets, furthers Eni’s diversification away from Africa and gives OMV a downstream oil business outside Europe. It was hailed as a “one of a kind” deal by ADNOC’s Chief Executive Sultan al-Jaber. “The whole oil and gas industry hasn’t seen a transaction of this size and sophistication,” he said. Under the agreement, Eni and OMV will acquire a 20 percent and a 15 percent share in ADNOC Refining respectively, with ADNOC owning the remaining 65 percent, the three companies said in statements on Sunday. The partners will own the same proportions of the joint trading venture, they added. OMV said that it would pay around $2.5 billion, while Eni said it would pay around $3.3 billion, giving ADNOC Refining, which has a total refining capacity of 922,000 barrels per day, an enterprise value of $19.3 billion. The agreement includes output from the Ruwais Refinery, the fourth largest single site refinery in the world. WIN/WIN The new trading venture will expand market access for ADNOC Refining’s products with export volumes equivalent to approximately 70 percent of throughput. “We are already well-positioned in Asia and we want to increase our market share there …. but this will also help us to have access to European markets and beyond,” al-Jaber said. Eni has signed several deals in the Middle East in recent months as it expands outside Africa where it is the biggest foreign oil and gas producer. The company’s CEO Claudio Descalzi said the partnership would increase its global refining capacity by 35 percent. “This transaction, which allows us to enter the United Arab Emirates’ downstream sector…(will make) Eni’s overall portfolio more geographically diversified, more balanced along the value chain, more efficient and more resilient to cope with market volatility,” he said. OMV described the deal, which is set to close in the third quarter of 2019, as a major milestone in relation to its “Strategy 2025” plan. It said it would finance the deal primarily out of its cash flow. “With (this transaction) OMV has established a strong integrated position in Abu Dhabi…spanning from upstream production to refining & trading and petrochemicals,” CEO Rainer Seele said. Founded in 1971, ADNOC has undergone major change since al-Jaber’s appointment in 2016, part of wider economic reforms led by Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan, who witnessed the signing of the three-way agreement. Al-Jaber has embarked on privatising its services businesses, ventured into oil trading and expanded partnerships with strategic investors.
Qatar energy minister says plans to order 60 new LNG carriers: South Korea
South Korea’s presidential office said on Monday that Qatar’s energy minister outlined plans during a bilateral summit for Doha to order 60 new liquefied natural gas (LNG) carriers. The energy minister, Saad Sherida Al-Kaabi, who also serves as deputy chairman of Qatar Petroleum, said he expects cooperation with experienced Korean shipbuilders on constructing the LNG carriers, according to a statement issued by South Korea’s presidential office. Financial details of the plan weren’t disclosed. Speaking during a luncheon after the summit, the chief executive of South Korea’s Daewoo Shipbuilding & Marine Engineering Co said most of the LNG carriers owned by Qatar were built by Korea’s top three shipbuilders. He said he hoped South Korean would be considered a primary option for building new LNG carriers for Qatar.
Kochi to get India’s largest public sector refinery
Prime Minister Narendra Modi Sunday dedicated to the nation an integrated refinery expansion complex of the public sector Bharat Petroleum Corporation Limited at the Kochi Refinery here. He also laid the foundation stone for a petrochemical complex at the refinery and a skill development institute at Ettumanoor besides inaugurating a mounded storage vessel at the LPG bottling plant of the Indian Oil Corporation Limited here. The integrated refinery is a modern expansion complex and would transform the Kochi Refinery as the largest PSU refinery in the country with world class standards. It is equipped for production of cleaner fuels. It will double the production of LPG and diesel and commence production of feedstock for petrochemical projects in the plant. Mounded Storage Vessel, IOCL LPG Bottling Plant, inaugurated by Modi has a total storage capacity of 4350 MT. Storage capacity at the plant was enhanced to meet the LPG requirement of nearly six days bottling capacity of the plant. It is considered the safest storage vessel ensuring highest level of safety for plant and adjacent areas. LPG receipt through pipeline will bring down movement of LPG tankers on roads. Petrochemical complex, BPCL Kochi refinery is a Make in India initiative aimed at reducing dependence on imports. The skill development institute at Ettumanoor backed by the Ministry of Petrochemical and Natural Gas will provide vocational training and enhance employability and entrepreneurship for deserving youth both in oil & gas and other industries. This world class institute was being set up at an eight acre campus allocated by the state government and would have a capacity to skill around 1,000 youths annually in 20 different skills.
Saudi Aramco doubles down on South Korea with $1.6 bn bet on Hyundai Oilbank
State-owned Saudi Aramco plans to invest up to $1.6 billion for a nearly 20 per cent stake in South Korean refiner Hyundai Oilbank, expanding its foothold in one of its biggest Asian buyers of crude oil. Saudi Aramco is already the biggest shareholder in South Korea’s No.3 refiner, S-Oil, with a 63.41 per cent stake, and the latest deal should help Aramco boost crude oil sales to Hyundai Oilbank, the South’s smallest refiner by capacity. Saudi Arabia is the top crude oil supplier to South Korea, the world’s fifth-biggest importer. In 2018, South Korea imported 323.17 million barrels of crude from the kingdom, or 885,408 barrels per day (bpd), according to data from Korea National Oil. Saudi Aramco’s chief executive told Reuters in November that it planned to expand its market share in Asia — including China, India, Malaysia and Indonesia — and Africa. Saudi Aramco said it plans to buy a stake of up to 19.9 per cent of Hyundai Oilbank from Hyundai Heavy Industries Holdings, which now owns 91.13 per cent of Hyundai Oilbank. “Saudi Aramco seems to be boosting investments in downstream projects ahead of an initial public offering,” said Lee Dong-wook, an analyst at Kiwoom Securities. Saudi Energy Minister Khalid al-Falih said in early January that the state oil giant will be listed by 2021. Aramco, the world’s largest crude producer, plans to increase investment in refining and petrochemicals in a bid to cut its reliance on crude as demand for oil slows. Hyundai Oilbank has a total of 650,000 barrels per day of refining capacity in the southwestern city of Daesan and also aims to expand its petrochemical business. In May last year, it announced plans to build a 2.7 trillion won petrochemical plant with South Korea’s Lotte Chemical. “RECONSIDER” HYUNDAI OILBANK IPO Saudi Aramco plans to value Hyundai Oilbank at 10 trillion won, or 36,000 won per share, Hyundai Heavy Industries Holdings said in a statement. A person familiar with the matter said the company plans to offer a discount of 10 per cent to Saudi Aramco in a block deal that will require board approval from both firms. News of the stake sale drove up shares of the parent company by as much 6.6 per cent. Hyundai Heavy Industries Holdings also said it planned to “reconsider” the stock market listing of the refinery arm after completing the stake sale, possibly this year. Hyundai Oilbank, which had aimed to list on South Korea’s stock exchange in 2018, delayed the plan until this year due to regulatory scrutiny of its balance sheet. The holding company, which also includes shipbuilder Hyundai Heavy Industries, said it would use the funds from the Oilbank deal to invest in new businesses and improve its financial health. The shipbuilding firm is part of a joint venture with Saudi Aramco and others to build a shipyard on Saudi Arabia’s eastern coast.
India must manufacture petrochemicals domestically: PM Modi
Prime Minister Narendra Modi on Sunday said most of the petrochemicals being used in India are sourced through imports and it will be the government’s endeavour to ensure they are manufactured domestically. He was dedicating a refinery expansion project by Bharat Petroleum Corporation (BPCL) in Kochi. Modi also laid the foundation stone of BPCL’s planned petrochemical complex. “Petrochemicals are a grade of chemicals which we do not speak much about, but they exist invisibly and touch many aspects of our daily life. This includes building materials, plastics and paints, foot-wear, clothing and other fabrics or auto-motive parts, cosmetics and medicines. However, most of these chemicals are imported from other countries. It is our endeavor to see that these petro-chemicals are manufactured in India itself,” he said. The PM said India is the second-largest oil refiner in Asia and is emerging as refinery hub in the region, refining more than its demand. According to BPCL, the new integrated refinery expansion complex of Kochi Refinery was implemented at a cost Rs 16,504 crores. After expansion, the refining capacity has increased to 15.5 Million Tonnes Per Annum, from the earlier 12.4 MTPA, making it the largest public sector oil refinery project. BPCL’s upcoming petrochemical complex is expected to go on stream by the end of 2022. Modi also said government has taken decisive steps to reduce crude oil imports and save foreign exchange, adding that this involves establishing 12 second-generation ethanol plants in 11 states and six Memorandum of Understandings (MoUs) have already been signed in this direction.
Nepal-India oil pipeline moving ahead with forest clearance okayed
The stalled Nepal-India petroleum pipeline has been expedited with the Nepal government okaying forest clearance for the project, which is now expected to be completed by April-end, said a Nepal Oil Corporation (NOC) official. The state-owned NOC received the Cabinet’s go-ahead to cut trees that lie along the nine kilometre Pathlaiya-Amlekhgunj section of the project. A Cabinet meeting on January 17 decided to allow the project to cut down around 80,000 trees in the section of Pathlaiya-Amlekhgunj forest route. Of the trees set to be cut down, 6,533 are big trees, an official of the corporation told Kathmandu Post. The Timber Corporation of Nepal, which has been assigned the task of cutting the trees, was issued a 30-day notice last Tuesday. The 69 km-long pipeline stretches from Amlekhgunj in Nepal to Motihari in India. Pipe laying works on a nine-km stretch in Nepal had stalled due to the forest clearance issue. “If the project is expedited, it can be completed within two months,” said the Nepal Oil Corporation official. Initially, NOC had aimed to begin commercial operations of the pipeline by March. “However, due to the delay in forest clearance, it has been pushed back by a month to April-end.” The pipeline project started on March 9 last year. The ground-breaking of the pipeline project took place more than two decades after the first discussion on the project was held between Nepal and India. Indian Oil Corporation had proposed construction of a cross-border pipeline in 1995 and signed a memorandum of understanding with NOC at the junior executive level a year later. In 2004, the two sides upgraded the agreement to the chief executive level. However, due to a number of legal hurdles, the project failed to take off. Indian construction company Likhiya Infrastructures has been awarded the pipeline construction project with the completion deadline of 15 months. Simlesh Limited of Maharashtra, India, is manufacturing the steel pipes being used in the project. Moti Prabha Infra Tech, another Indian company based in Faridabad, has been upgrading four vertical fuel storage tanks at the Amlekhgunj depot of NOC. These tanks have a combined storage capacity of 13,400 kilolitres. Two of the tanks can hold 3,900 kilolitres each and the other two tanks can hold 1,500 kilolitres and 4,100 kilolitres respectively, said the daily. Around 200,000-litre diesel can be imported in an hour upon completion of the project. This would also reduce the transportation and leakage costs, which total over Rs 1 billion. Almost 70 per cent of pipe-laying works of the cross-border pipeline have been completed along the Nepal side, but the pipe-laying works along almost 10-km area that falls within the Parsa Wildlife Reserve and a few other community forests had been halted due to lack of government permission to cut down trees. The fuel pumping facilities will be located in Motihari, India. NOC plans to conduct a trial of the project by supplying diesel in the first phase. Nepal and India have invested Indian Rs 2.75 billion for the project of which the Indian Government is investing Rs 2 billion while the remaining amount will be invested by Nepal.