Saudi Aramco discussing investments in Reliance Industries – CEO
Saudi Aramco’s Chief Executive Officer Amin Nasser said on Wednesday that the company is in talks with India’s Reliance Industries Ltd for possible investments and is seeking other opportunities in the country. Saudi Aramco signed an agreement in April with a consortium of state-owned Indian refiners to participate in a $44 billion refinery project on the country’s west coast. “We are looking at additional investment in India so we are in discussions with other companies as well, including Reliance and others,” Nasser said in a panel discussion in New Delhi. “We are looking at it. We are not limited to that investment which is the mega refinery,” Nasser said, referring to the west coast project, which would process 1.2 million bpd of crude and produce 18 million tonnes per year of petrochemicals. Nasser is part of the entourage travelling with Saudi Arabia’s Crown Prince Mohammed bin Salman, who is in India for a one-day visit. Reliance Industries, controlled by Asia’s richest man Mukesh Ambani, is India’s biggest refining and petrochemicals company and runs a 1.4 million barrels per day (bpd) refinery in western India. It plans to expand the capacity to 2 million bpd by 2030, according to plans shared with the Indian government. Saudi Arabia, the world’s biggest crude oil exporter, is keen to expand further into oil refining and petrochemicals. India would provide a fast growing market for oil and fuels and is already a steady buyer of Saudi oil. “India is an investment priority for Saudi Aramco. India takes from us almost 800,000 barrels a day and by 2040 India’s total consumption will be around 8.2 million barrels per day,” Nasser said. India is currently world’s third-biggest crude oil consumer with demand of 4.7 million bpd, according to government figures. However, Aramco is already facing delays for the refinery project, planned for the western state of Maharashtra, as thousands of farmers have refused to surrender land for it. Reuters reported on Tuesday the Maharashtra government is looking to move the refinery location. Yousef al-Benyan, the chief executive officer for SABIC, the Saudi Arabia-based petrochemical company that is the fourth largest in the world, was also on the panel. He said SABIC wants to expand its business and presence in India.
India’s fuel demand rose 6.4% year-on-year in January
India’s fuel demand rose 6.4 percent in January compared with the same month last year. Consumption of fuel, a proxy for oil demand, totalled 18.34 million tonnes, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed. Sales of gasoline, or petrol, were 13.2 percent higher from a year earlier at 2.37 million tonnes. Cooking gas or liquefied petroleum gas (LPG) sales increased 11.0 percent to 2.31 million tonnes, while naphtha sales fell 1.2 percent to 1.26 million tonnes. Sales of bitumen, used for making roads, were 15.1 percent up, while fuel oil use edged unchanged in January.
Anadarko signs another supply deal for Mozambique LNG project, FID imminent
Anadarko Petroleum has signed a deal with Indonesia’s Pertamina to sell 1 million mt/year of LNG from its planned Mozambique LNG project for a period of 20 years, bringing the project one step closer to a final investment decision, the US-based company said Tuesday. The deal is the fifth sales agreement signed for the 12.88 million mt/year Mozambique LNG project this month alone, and brings the total SPAs signed to seven, for more than 9.5 million mt/year. “The Anadarko-led Mozambique LNG project is well positioned to make a sanctioning decision in the first half of this year, as we remain on track to complete the project financing process, secure the necessary approvals, and have executed a sufficient volume of long-term SPAs, which now total more than 9.5 million mt/year,” Anadarko vice president Mitch Ingram said in a statement. Already this month, Anadarko has agreed deals with India’s BPCL, China’s CNOOC and Anglo-Dutch giant Shell, as well as a joint deal with the UK’s Centrica and Japanese utility Tokyo Gas. A non-binding heads of agreement was also signed in 2017 with Thailand’s PTT to sell 2.6 million mt/year. Anadarko is developing Mozambique’s first onshore LNG facility, which will have two LNG trains with a total nameplate capacity of 12.88 million mt/year, to support the development of the Golfinho/Atum field in Offshore Area 1. Partners in Offshore Area 1 include Anadarko (26.5%), Mitsui (20%), Mozambique’s state-owned Empresa Nacional de Hidrocarbonetos (15%), India’s ONGC Videsh (10%), Beas Rovuma Energy Mozambique Limited (10%), India’s BPCL (10%) and Thailand’s PTT Exploration & Production (8.5%).
IndianOil goes up value chain, signs fuel supply deal with US
To ensure a steady inflow of crude oil at a time imports from Iran are falling, state-run Indian Oil Corp (IOC) has become the first domestic company to sign a long-term supply contract with the US. The oil marketing company, in a statement released on Monday, said the annual deal is worth $1.5 billion and will be effective for FY20. “IOC has finalised a term contract for import of up to 3 million tonne of crude oil of US origin grades as a part of its strategy to diversify term crude sources,” the company said, adding the contract was finalised on February 15. FE in January reported IOC was looking at long-term contracts with US suppliers, and that negotiations were on while non-availability of official selling price (OSP) was proving to be a hurdle. Till now, Indian refiners have been buying US crude oil in spot markets since 2017. FE had reported that Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) might also sign long-term contracts with the US since IOC was the negotiator and the terms were likely to be finalised for all three national oil marketing companies. Unlike national oil companies with whom Indian refiners predominantly deal, US suppliers do not declare OSPs. Most state-owned oil explorers publish OSPs for different streams of crude oil and long-term customers are offered these prices. These prices are revised periodically and in most cases monthly. OMCs need approval from their boards to sign term deals with non-government foreign oil producers. Prior to signing the term contract, IOC had entered into a term-tender deal with the US in August for 6 million barrels of US crude oil under a single tender for delivery between November 2018 and January 2019. The expected value of India’s oil imports from the US is likely to be about $4 billion this financial year, which is likely to go up as trade between the two countries expands. According to reports, crude oil import from sanction-hit Iran fell to 270,500 barrels per day (bpd) in January from the estimated 300,000 bpd, or 1.25 million tonne per month, allowed as per the waiver extended by US for six months starting November. Before US put sanctions against Iran, the Persian Gulf country was the third largest supplier of crude oil to India. It currently is at seventh spot.
Govt reverts back to old system of awarding oil and gas blocks
The government Tuesday approved new rules for bidding out oil and gas blocks as it reverted back to a two-decade old system of awarding areas based on exploration work commitment, granted marketing and pricing freedom to yet to be developed discoveries and allowed ONGC to induct private firms in existing fields. In a bid to boost flagging domestic production and cut imports, the Cabinet headed by Prime Minister Narendra Modi approved “a transparent, investor-friendly and competitive policy framework to accelerate exploration activities and provide impetus to expeditious production of oil and gas,” an official statement said. The new system of awarding blocks in not so prolific areas will replace a two-year-old method of awarding them to companies offering the highest revenue share to the government. The Cabinet approved awarding of exploration blocks in Category-I basins, where commercial production of hydrocarbon has already been established, on the basis of a mix of work commitment and revenue share in the ratio of 70:30, Finance Minister Arun Jaitley told reporters here. Exploration blocks in Category II and III basins will be awarded purely based on the exploration work programme. This, he said, was based on the recommendation of a six-member panel, headed by NITI Aayog Vice Chairman Rajiv Kumar, which was formed on directions of Prime Minister Narendra Modi last year to give a boost to domestic exploration. He said there will be no revenue or production sharing in these contracts but the government will get a share in case of windfall gains. The trigger for such a sharing has been fixed at USD 2.5 billion in a financial year from the block. The BJP-led NDA government had two years back moved from production sharing contracts, where acreage for exploration of oil and gas was allocated to firms offering the largest work programmes (such as carrying out seismic survey and drilling of wells), to revenue sharing contracts, where the firm offering highest revenue to the government was given the blocks. In the older system, the explorer was guaranteed that his entire cost will be allowed to be recovered once commercially exploitable oil and gas is found. But in revenue sharing contract, the cost has no bearing and the companies are supposed to bid the revenue or production that they would give to the government at different levels of output and price. The move to revenue sharing was despite several industry players stating that prospectivity in the country was poor and there was a need to give incentives to companies for exploration. India has 26 sedimentary basins measuring 3.14 million square kilometers. These are classified into four categories: Category-I basins where commercial production has been established like Cambay, Mumbai Offshore, Rajasthan, Krishna Godavari, Cauvery, Assam Shelf and Assam-Arakan fold belt; Category-II basins with known accumulation of hydrocarbons but no commercial production so far such as Kutch, Mahanadi-NEC (North East Coast), Andaman-Nicobar and Kerala-Konkan-Lakshadweep. The category-III basins have hydrocarbon reserves that are considered geologically prospective such as in Himalayan Foreland basin, Ganga Basin, Vindhyan basin, Saurashtra basin, Kerela Konkan basin, Bengal basin; and Category-IV which are the ones having uncertain potential which may be prospective by analogy with similar basins in the world. These include Karewa basin, Spiti-Zanskar basin, Satpura-South Rewa-Damodar basin, Chhattisgarh basin, Narmada basin, Deccan Syneclise, Bhima-Kaladgi, Bastar basin, Pranhita Godavari basin and Cuddapah basin. “To incentivize enhanced gas production, marketing and pricing freedom has been granted for those new gas discoveries whose Field Development Plan (FDP) is yet to be approved,” the statement said adding fiscal incentive is also provided on additional gas production from domestic fields over and above normal production. To raise output from existing nomination fields of ONGC and OIL, enhanced production profile will be prepared by both PSUs. “For production enhancement, bringing new technology, and capital, national oil companies will be allowed to induct private sector partners,” it said. The production enhancement scheme for nomination field of state-owned ONGC and OIL is likely to augment production by leveraging new technology, capital and management practices through private sector participation, it added. The committee included Cabinet Secretary P K Sinha, Economic Affairs Secretary Subhash Chandra Garg, Oil Secretary M M Kutty, NITI Aayog CEO Amitabh Kant and ONGC Chairman and Managing Director Shashi Shanker. The operators in Category II & III areas be given more concessions such as full marketing freedom to expedite production. An official statement issued after the Cabinet meeting said the objective of the policy is to attract new investment in exploration and production (E&P) sector, intensification of exploration activities in hitherto unexplored areas and liberalizing the policy in producing basins. “Considering stagnant/declining domestic production of oil and gas, the rise in import dependence and decline in investment in E&P activities, the need to bring further policy reforms was felt,” it said. “The policy provides for shorter exploration period and fiscal incentive for the commencement of early production. The contractor will have full marketing and pricing freedom for crude oil and natural gas to be sold at arm’s length basis through a transparent and competitive bidding process.”
India an investment priority for Saudi Aramco – CEO Amin Nasser
Saudi Aramco said on Wednesday that investing in India is a priority for the company, and it expects the country’s oil demand to rise to 8.2 million barrels per day by 2040. “India is an investment priority for Saudi Aramco,” CEO Amin Nasser said at a panel discussion in New Delhi. Nasser is part of the entourage travelling with Saudi Arabia’s Crown Prince Mohammed bin Salman, who is in India for a one-day visit. The prince, known as MBS, is in India along with leading Saudi businessmen and company representatives at the invitation of Prime Minister Narendra Modi. Nasser said India currently buys about 800,000 barrels a day of Saudi Arabian oil. “India looking for stronger ties with Saudi,” said Sanjiv Singh, chairman of India Oil Corp Ltd, India’s biggest state-owned crude oil refiner. The panel discussion was also attended by SABIC, a unit of Aramco and the world’s fourth-largest petrochemicals maker.
Modi’s poll math puts at risk $44 billion refinery with Saudis
India’s poll politics and Prime Minister Narendra Modi’s ambition to win a second straight term has claimed an unlikely victim. A proposed $44 billion oil refinery on the western coast to be built with investments from Saudi Arabia. On Monday, Maharashtra government decided to relocate the project, a day ahead of Saudi Crown Prince Mohammed bin Salman’s visit to India. BJP, which leads the government in the nation’s richest state, has been facing stiff opposition from ally Shiv Sena over the site of the refinery. “There is a lot of political risk associated,” said Sri Paravaikkarasu, an analyst at industry consultant FGE in Singapore. The refinery’s completion “also depends on what is going to be the outcome of the next general election, who wins or if it is going to be a single party or a coalition government.” While the project is crucial for meeting India’s expanding appetite for fuels, shoring up popular support of the farmers who account for over 60 per cent of the population is key for Modi’s re-election bid in polls due by May. Its ally Shiv Sena holds considerable influence in a state that elects the second-largest number of lawmakers and the ruling party hopes the deal will help contain discontentment over job creation and a slowdown in economic sentiment. Maharashtra Chief Minister Devendra Fadnavis announced relocating the project from the proposed location in Ratnagiri district just after sealing the alliance with the regional party that had joined the farmers in opposing the oil refinery in the area. The project will now be built at a different location, Fadnavis said, without specifying the new area. The mega plant, announced in 2016, hasn’t made much physical progress as locals refused to hand over land fearing damage to farming in the region famous for its Alphonso mangoes and cashew plantations. It is also classified as an ecologically-sensitive area. Saudi Arabian Oil Co., popularly called Saudi Aramco, and Abu Dhabi’s state oil producer Abu Dhabi National Oil Co. agreed to jointly pick up half of the equity in the planned 60 million-tons-a-year refinery and downstream petrochemicals units. Aramco, the world’s biggest oil exporter, and Adnoc are seeking to strengthen ties with refineries in Asia to lock up market share in the region driving growth in global oil demand. Rising demand for oil products in India has drawn investments in the refining and fuel retailing business from Russia’s Rosneft to BP and Total in recent years. Refiners are spending billions of dollars for adding capacities to satiate India’s demand. “India has the fourth largest refining capacity in the world. This will further grow by about 200 million metric tons by 2030,” Modi said on February 11. FGE estimates that the first phase of the project may be ready only by 2027-28. “But now looking at the recent developments we think probably that also in an optimistic timeline,” Paravaikkarasu said.
Gail India Ltd offers new swap of U.S. LNG volumes – sources
Gail India has offered a cargo of liquefied natural gas (LNG) loading from the United States on June 27-29 this year, two traders said. Gail is also seeking an LNG cargo for delivery into India’s Dahej or Hazira terminals on Sept. 8-12. The tender for both cargoes closes on Feb. 21. Including this tender, Gail has offered 10 cargoes from its U.S. offtake for loading in 2019 and 2020.