India records lowest crude oil production in nine years
India produced 31,349 Thousand Tonne (TMT) of crude oil in the first eleven months (April-February) of the current financial year (2018-2019), the lowest output recorded in the past nine years during the same period, according to fresh data sourced from the oil ministry. The declining trend in the country’s domestic crude oil production is coming at a time when the country’s oil import bill has already ballooned 29 per cent to $102.9 billion during the April-February period of the current fiscal. Also, the decline in domestic crude oil production has pushed India’s oil import dependence to 83.8 per cent, the highest recorded in the April-February period in the last five years for which data is publicly available. The government had earlier said it is working towards a plan to reduce the country’s crude oil import dependence by 10 per cent by 2022. India’s crude oil production in February 2019 declined 6.4 per cent to 2,564 TMT, as compared to 2,731 TMT produced in the corresponding month a year ago, primarily due to fall in production from fields operated by Oil and Natural Gas Corporation (ONGC), private players and fields operated under a Joint Venture, data showed.Cumulatively India’s crude oil production in April-February period declined 4 per cent to 31,349 TMT, as compared to 32,643 TMT recorded in the corresponding period a year ago. India’s oil production has declined over the past nine years mainly due to ageing fields leading to fall in output from nearly all the offshore and onshore blocks, data shows. ONGC ONGC’s crude oil production during February 2019 declined 5 per cent to 1,599 TMT mainly due to decreased production from Western Offshore fields. Cumulatively, the firm’s oil production during the first 11 months of the current fiscal dropped 5.38 per cent to 19,274 TMT. According to the the oil ministry, the reasons for reduced output include problems in Electric Submersible Pump (ESP) in some wells of NBP fields, loss of production from WO-16 fields due to absence of Mobile Offshore Production Unit, sub-sea leakage in some well fluid lines of Mumbai High and Neelam Heera asset. Oil India Oil India’ crude oil production during February 2019 declined 6.45 per cent to 244 TMT mainly due to fall in production from Assam fields. Cumulatively, the company’s oil output during the April-February period declined 3 per cent to 3,015 TMT. The reduced output was due to less than planned contribution from work-over wells and drilling wells and loss of production caused due to strikes and miscreant activities in operational areas. Pvt/ Joint Venture fields Oil production by private operators and JVs dropped 8.30 per cent to 721 TMT in February due to decline in Rajasthan fields as well as offshore fields. Cumulatively, oil production by private and JV operators during the April-February period slumped 1.29 per cent to 9,060 TMT. The decline is attributed to loss of production from Mangala due to delay in upgrade of Mangala Process Terminal (MPT) and delay in drilling, completion and hooking up online 45 wells, along with closure of around 98 oil wells at Cairn Oil and Gas’ assets due to various reasons like liquid handling constraint at MPT plant, pump failure, surface facility limitation.
UK’s National Grid forecasts Summer 2019 gas demand at 36.1 bcm
Britain’s National Grid forecast gas demand during the summer period will total 36.1 billion cubic metres, it said in its annual Summer Outlook on Tuesday. The figure is almost 6 percent higher than summer gas demand in 2018, once weather related adjustments were made, the report said. Electrcity demand is expected to peak at 33.7 gigawatts (GW) while the minimum summer electricity demand is forecast at 17.9 GW.
All state-run oil companies exceed capex target
Indian Oil, Hindustan Petroleum, Bharat Petroleum, and GAIL have exceeded their capital expenditure targets for the current fiscal, having spent heavily on refinery upgrades, pipelines, and marketing infrastructure. The combined capex target set for all staterun oil producers, refiners and marketers for 2018-19 is Rs 89,335 crore, of which they have collectively spent Rs 82,711 crore, or about 93%, in the 11 months through February. Explorer Oil and Natural Gas Corp, which typically has much higher spending budget every year than the refiners, has spent about 80% of its annual target of Rs 32,000 crore. Its overseas arm, ONGC Videsh, has used up about 85% of its Rs 5,890 crore target, while another state-run producer, Oil India, has spent 78% of its target of Rs 4,300 crore. Gas marketer GAIL and refiners Indian Oil, HPCL and BPCL have surpassed their annual target in 11months. BPCL has spent Rs 8,993 crore, or 121% of its target. GAIL, which is investing heavily in laying a gas pipeline in eastern India, had spent Rs 5,059 crore until February, or 107% of its target for the year. HPCL has already used up Rs 8,938 crore, or 106% of its annual outlay. Indian Oil, the nation’s largest refiner and fossil fuel retailer, has invested Rs 23,492 crore, or 103% of its target. Refiners have been upgrading their facilities to produce lower-emission fuels that will help curb intense air pollution in cities. They have also been spending on setting up new pipelines, depots and retail outlets. Indian oil companies have been investing heavily in finding, refining and distributing oil and gas across the country for the last many years to meet mounting demand for fuel and feedstock. Meanwhile, economic expansion has pushed up oil demand by 3.2% during April-Feb of 2018-19. India is also hoping to increase its domestic oil output and reduce its dependence on import by making massive investments in exploration and production. Domestic crude oil output has been declining for years. India imports about 80% of the oil and about half of the natural gas it consumes. The import bill of crude oil is estimated to expand 27% from $88 billion in 2017-18 to $112 billion in 2018-19.
Oil companies have more expertise than GAIL in operating city gas business: Fitch
India’s state-owned oil marketing companies (OMCs) will have more expertise than GAIL in operating the retail-oriented business model required under the city-gas distribution (CGD) rights but GAIL would benefit more from the rising transmission volumes, said research and ratings agency Fitch Ratings. In a report on the recent award of city-gas distribution rights in India to state-owned OMCs, the firm said that the initiative would help them diversify from their oil refining and marketing business and maintain their strong market shares in the domestic cooking and auto fuel markets over the long-term. The government had last month awarded Indian Oil (IOC) and Hindustan Petroleum (HPCL) CGD rights to nine geographical areas (GAs) each and Bharat Petroleum Corp (BPCL) rights to two areas. BPCL had won the rights to 11 GAs in a previous auction in September 2018. The investment by the winners of each GA will depend on its physical size, as well as the number of natural gas stations for automobiles that must be built and length of PNG steel pipeline that must be laid under the terms of the distribution rights. “In any case, we expect the investments in city-gas distribution to remain relatively small over the medium-term relative to the overall investment plans of the state-owned oil marketing companies,” the report said. Other companies which had won the bids in the auction of rights for 50 GAs included state-owned gas processing and distribution company GAIL India, state-owned Maharashtra Natural Gas and Rajasthan State Gas apart from private companies Adani Gas and Torrent Gas. The expansion in gas distribution networks is likely to increase gas consumption over the medium to long term while industrial demand is likely to remain highly sensitive to prices. Natural gas consumption increased by around 3 per cent in April 2018-January 2019 period and 4.5 per cent last financial year (2017-18).