India seeks Mexican crude to meet its growing energy needs
Mexico has emerged as the most important supplier of crude oil for India. In fact, India is the third biggest market of Mexican crude oil and there is a great potential for it to grow further. Its export to India in this commodity has always been rising however in terms of value it shows fluctuation because of international prices. Mexico is one of the top oil producers in the with its production at 110 mt. According to the Indian ambassador to Mexcio, Mukhtesh Pardeshi, “Mexico has become a reliable partner in our energy security. The country has exported $ 3.73 billion of crude oil to India with an increase of 36% over the previous year. In 2010, Mexico exported 8.36 million barrels, which rose continuously to 50.89 million barrels in 2017 to India.” “Unfortunately, the Mexican export basket is not very diversified and 75% of the basket is occupied by crude oil,” he adds. Sources have also confirmed to Financial Express Online that with the political uncertainty continuing in Venezuela and Indian companies shutting down its crude imports from that country, to meet its growing energy needs, India has started looking at expanding its imports from other countries in the South American region. The Indian private companies have started seeking other markets for buying crude. According to diplomatic sources after the India-Mexico bilateral trade touch an all time high of $10 billion for the first time ever, both sides are keen on expanding their relations in the energy sector as well as other important minerals and metals. Earlier this year, at the Petrotech 2019, Rocio Nahle Garcia, Minister of Energy, Mexico while highlighting the vision of her government towards an affordable energy, said that there are plans to bring in reforms which would privatize energy production and ensure clean energy. Garcia had also met with her Indian counterpart Minister of Petroleum and Natural Gas, Dharmendra Pradhan and the two sides had discussed the possibility of the Indian companies participating various energy related projects in that country. Reportedly there has been decline in production at the state owned oil company Pemex in Mexico, with new reforms in place Indian companies are expected to participate in production, exploration and extraction.
Ten oil and gas PSUs team up for Rs 3.20 billion startups fund
Oil and Natural Gas Corporation Limited (ONGC), Oil India Limited (OIL), GAIL India Limited, Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL), Engineers India Limited (EIL), Mangalore Refinery and Petrochemicals Limited (MRPL), Numaligarh Refinery Limited (NRL) and Blamer Lawrie Limited, have come together to launch over Rs 3 billion startups fund. ONGC will alone contribute Rs 1 billion to the fund. The fund will be used to foster nurture and incubate new ideas from startups and entrepreneurs. Every PSU participants will have its individual policies for giving grant or equity to the selected startups. The fund will support startups or entrepreneurs serving in areas such as oil and gas, energy, waste to wealth, renewable, health and hygiene, environment and safety, IT, IoT, agriculture, nanotech intervention, education, women empowerment, rural development, skill development, project management and other areas of social impact. Any Indian Startups firm who fulfills eligibility criteria as per the DPIIT definition can apply for the fund. An individual or startups can send applications through online mode till April 15. The implementing partner of the fund is KIIT- Technology Business Incubator, Bhubaneswar. It is entrusted with responsibilities to provide screening, evaluation, selection of startups. We are moving to more than 15 cities organising roadshows at learning institutes and incubators, said Sanjukta Badhai, COO, KIIT-Technology Business Incubator. Startups will have to pass through four stages process – eligibility screening, shortlisting, evaluation, and approval. After being selected in online preliminary screening, startups will be reviewed by another committee through presentations and personal interactions with the applicants. The fund aims to process the proposals in four months.
Oil marketing firms looking at higher profits on improved marketing margin, inventory gains
Oil Marketing Companies (OMCs), including Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL), are likely to deliver robust financial results for the fourth quarter ended March on the back of elevated marking margins and large inventory gains due to increase in crude oil prices. “We expect downstream PSUs to report sharply higher EBITDA led by around Rs 3.75 per liter of increase in marketing margins for auto fuels amid quarter-on-quarter decline in global product prices and large adventitious gains amid a sharp $14 per barrel increase in end-period crude price, which will be partly offset by lower underlying refining margins,” equity research firm Kotak said in a report. The firm also expects a sharp sequential decline in profitability for upstream firms due to a $5 per barrel fall in global crude oil prices and a $8-8.5 per barrel of subsdy discount due to the shortfall in budgeted provision for Kerosene subsidies. RIL to report a marginal increase in consolidated profits as lower standalone profits, due to weaker refining margins and stronger Rupee, will be offset by higher contribution from Jio and retail. Also, gas utility GAIL’s profits are expected to decline sequentially amid lower gas marketing and LPG contribution.
Russia’s Gazprom Neft in talks with Novatek on offshore cooperation
Russia’s Gazprom Neft, the oil arm of gas giant Gazprom, is in talks with gas producer Novatek about possible cooperation at its offshore deposits, Gazprom Neft CEO Alexander Dyukov said on Friday. “We’re holding (talks with Novatek) concerning deposits that belong to us,” Dyukov said.
CNG, PNG prices set to rise, but don’t worry; Modi govt’s natural gas boost may actually help India
Even as the natural gas prices have been increased by nearly 10 per cent for H1FY20, impact on domestic consumption would be limited considering growing demand for CNG vehicles and PNG connections, a report said. A 9.8 per cent rise in natural gas prices will increase the WPI directly by 0.05 per cent which is not very significant, CARE Ratings said. Even as the natural gas prices have been increased by nearly 10 per cent for H1FY20, impact on domestic consumption would be limited considering growing demand for CNG vehicles and PNG connections, a report said. In view of the current volatility in crude oil prices, the number of CNG vehicles and PNG connections have surged lately. Since CNG is 60 per cent cheaper than petrol and 45 per cent cheaper than diesel, while PNG costs 40 per cent lower against LPG, the demand is only surging, CARE Ratings said. Interestingly, PNG rates are nearly equal to the subsidised LPG based on prices in the national capital, it added. The government is also looking at boosting natural gas usage, in place of coal, considering rise in pollution levels lately, similar to what China has been doing, it noted. China has been shifting its focus to gas-based plants, reducing dependence on coal in the last few years to control the rising menace of air pollution in the country. The government recently hiked the natural gas prices by 9.8 per cent per cent, fourth consecutive rise, for the next six month period, according to the New Domestic Gas Policy. The rates have been revised upwards for April-September at $3.69 per million metric British thermal units (mmBtu) as compared to the last six months of the previous fiscal. The rates were fixed at $3.36 per mmBtu in the last period by the Narendra Modigovernment. A 9.8 per cent rise in natural gas prices will lead to a rise in the WPI directly by 0.05 per cent which is not very significant, CARE Ratings report said. The increase in natural gas prices is always expected to impact consumers as CNG (compressed natural gas) is used as auto fuel, and PNG (piped natural gas) in households as cooking gas. The New Domestic Gas policy, 2014, suggests revising the natural gas prices in every six month period.
GAIL struggles to profit from sale of gas in domestic market
GAIL (India) Ltd. is struggling to earn adequate profits in the domestic market owing to the fall in liquefied natural gas prices. The company operates such that it purchases Liquefied Natural Gas (LNG) at contracted prices in the international market. It then sells the same at prevalent rates in the domestic market. This activity is responsible for generating nearly 70 to 75 per cent of its revenue. However, the dip in selling prices and a surge in buying prices is a legitimate cause of concern for the company. The Singapore LNG prices are the benchmark LNG prices for Asia. They have declined over 60 per cent and have plummeted to as low as US$ 4.2 per million British thermal unit over the course of the last 6 months. This is due to the supply glut and high inventory in North Asia. GAIL has three long-term LNG contracts to purchase gas, two of which are with the US while the final one is with Russia. The landed cost of US LNG contributes over 69 per cent of its import volumes in India. Presently, it is at a 25 per cent premium to the Singapore spot price. The Henry Hub prices are the benchmark in the US. The contracted price of GAIL is 115 per cent of the Henry Hub prices. Fixed fees amount to US$ 3 per million metric British thermal unit, while transportation charges amount to US$ 1.5-2 per million metric British thermal unit. GAIL can always mitigate this risk by hedging, swapping or selling these contracts. The subdued spot market could very likely engender losses for unhedged contracts and exert pressure on the company’s trading profits. The business of natural gas trading has been the largest contributor in terms of GAIL’s revenue; its contribution to operating income, however, has fluctuated over the past year based on the fluctuations in prices. On Thursday, the shares of GAIL (India) Ltd. opened at Rs. 353.25, and hit a high and low of Rs. 354.90 and Rs. 347.00. At 12:17 pm, the stock was trading at Rs. 347.95, down 1.47 per cent.
Tokyo Gas signs deal to buy LNG from Shell Eastern Trading
Japan’s Tokyo Gas said on Friday it has signed a heads of agreement (HOA) with Shell Eastern Trading for 500,000 tonnes per annum of liquefied natural gas (LNG) for 10 years from April 2020. The two companies have come up with an innovative pricing formula based on coal indexation, which is included in the agreement, it said. Under the deal, Royal Dutch Shell will supply LNG to Tokyo Gas from the Shell Group’s global LNG portfolio, rather than from specific LNG projects, it added.