Iran accuses US of using crude oil sanctions to gain market clout
Iran’s oil minister has accused the US of using sanctions to “shock” the global oil supply and gain market clout for its booming shale oil production. Washington abandoned a landmark 2015 nuclear deal between Tehran and world powers last year and reimposed sanctions on the Islamic republic’s crucial oil sales as well as other parts of the economy. “I think one of the reasons for sanctions against Iran and Venezuela is opening up the market for American oil sales,” Oil Minister Bijan Namdar Zanganeh said in an interview with state TV late Sunday, a transcript of which was provided by his ministry’s SHANA news agency. “This much oil production needs a market and could not be compensated for with regular OPEC cuts, therefore America needed to shock the market to find a place for itself. Some sanctions are (imposed) so that Americans can keep producing and developing shale oil,” he added. New technology that allows for extracting oil and gas from shale rock formations has led to a boom in oil production in the US in recent years. Zanganeh said that according to US figures, shale oil’s breakeven cost can be as low as $40 per barrel. Benchmark Brent crude was trading at around $64 dollars a barrel in London on Monday. The US is currently the world’s biggest oil producer followed by Russia and Saudi Arabia, and is set to become a net exporter from 2021, according to the International Energy Agency. The White House said in April that tightening sanctions on Iran will have “no material impact” on oil prices given the large supply of US oil on the global market. OPEC, pressured by US output, abundant global crude supplies and weak oil demand growth, agreed last week to extend by nine months daily oil output cuts first announced in December aimed at supporting prices and soaking up excess supplies. Iran, whose production has been severely hit by US sanctions, is exempt from the cuts agreement along with crisis-stricken Venezuela and Libya. Battling what he called “the most severe organized sanctions in history,” Zanganeh last week vowed to keep selling oil via “unconventional means”. Iran’s state TV recently aired a programme showing an Iranian-flagged tanker under US sanctions that delivered one million barrels of crude oil to China, one of the remaining partners to the nuclear deal and which has rejected Washington’s efforts to cut Tehran’s oil exports to zero.
IOC, GAIL pact to take stake in Adani’s Dhamra LNG project expires, no investment made: Dharmendra Pradhan
State-owned refiner Indian Oil Corp (IOC) and gas utility GAIL India Ltd’s initial agreement to buy a 50 percent stake in Adani Group’s Rs 50 billion Dhamra LNG project in Odisha has expired, Oil Minister Dharmendra Pradhan said on July 8. IOC and GAIL had on September 21, 2016, signed a “non-binding MoU” with Adani Petroleum Terminal Pvt Ltd to take 39 percent and 11 percent stake respectively in the planned 5 million tonnes a year liquefied natural gas (LNG) import terminal at Dhamra, he said in a written reply to the Lok Sabha. The MoU was “subject to management approvals of IOC and GAIL and successful negotiation of the respective regasification agreements,” he said. “The MoU has expired on September 20, 2018.” “Further GAIL and IOC have informed that no capital expenditure has been made by them on this project,” he said without saying if the two firms have altogether scrapped the plan to buy a stake in the Dhamra LNG project or they continue to be in dialogue with the Adani Group. He also did not give reasons for the expiry of the MoU. Adani Petroleum Terminal Pvt Ltd was to hold the remaining 50 percent stake. IOC had in 2015 signed up to use 60 percent of the terminal capacity for importing gas for its refineries at Haldia in West Bengal and Paradip in Odisha. GAIL too had signed up for 1.5 million tonnes of the terminal’s regasification capacity. The MoU for taking an equity stake in the Adani terminal followed GAIL dropping plans in March 2015 to set up a floating LNG import terminal at Paradip. IOC too had in 2012 signed an MoU with Dhamra LNG Port Corp Ltd (DPCL) to develop an LNG terminal at the port. After shelving their respective plans, the firms signed a pact with Dhamra LNG Terminal Pvt, a firm owned by Adani Enterprises. “GAIL has informed that in September 2012, GAIL engaged a consultant to undertake a feasibility study for exploring the possibility of setting up Floating Storage & Re-gasification Unit (FSRU) project(s) in upper part of the east coast of India which would facilitate development of natural gas market in eastern part of India,” Pradhan said. The consultant shortlisted two locations – one falling near Dhamra port and the other close to Paradip port in Odisha. “Before finalising the location, it was decided to have consultations with Indian Ports Association and Government of Odisha. Meanwhile, Paradip Port Trust also approached GAIL and expressed their interest in the establishment of the LNG regasification terminal in the Paradip Port water. “Accordingly, GAIL entered into an MoU with Paradip Port Trust on October 26, 2013, for a period of three years. However, during the meeting held in March 2015, it was discussed that as gas demand in the eastern part of the country would take some time to mature, setting up of two competing LNG terminals at the same time in such close proximity would not be commercially viable on a standalone basis,” he added. While GAIL has dropped plans of a 4 million tonnes project at Paradip, Petronet LNG – a firm in which GAIL and IOC are promoters, has shelved plans to set up a 5 million tonnes a year LNG import facility at Gangavaram in Andhra Pradesh. GAIL, along with GdF and Shell, had proposed a 3.5 million tonnes floating LNG terminal at Kakinada while IOC has freshly built a 5 million tonnes facility at Ennore in Tamil Nadu. Real estate player Hiranandani Group is looking to set up a Rs 24 billion, 4 million tonnes floating LNG import terminal off Haldia in West Bengal. In the October 2013 MoU, the Paradip Port Trust was to invest Rs 6.50 billion in breakwater and dredging and GAIL was to invest Rs 24.58 billion for the 4 million tonnes terminal which could be expanded to 10 million tonnes.
IndianOil, IGL to commission H-CNG station in Delhi by November
Indian Oil Corporation (IndianOil) and Indraprastha Gas Ltd (IGL), which is setting up a 4-tonne-per-day compact reformer-based H-CNG station at Delhi Transport Corporation’s (DTC) Depot-1 at Rajghat, will help in reducing emissions and improve the fuel economy of the vehicles in the country. Field trials for the project will be conducted on 50 DTC buses using the patented technology developed by IndianOil’s Research & Development Centre, the company said in a statement. As per the directive of Supreme Court, IndianOil and IGL collaborated to put up its first semi-commercial station as a pilot project for conducting a study on the use of H-CNG fuel in 50 BS-IV compliant CNG buses in Delhi. The station is planned to be commissioned by November 2019, and the performance report will be submitted to the Supreme Court after a trial of six months. The Environment Pollution (Prevention and Control) Authority has been authorized to monitor the trials by the Supreme Court. Sanjiv Singh, chairman, IndianOil, said, “It is for the first time that we are producing hydrogen through this patented process. We are standing at the cusp of a breakthrough, with this hydrogen-based technology offering a tailor-made solution to deal with air pollution in our cities. We intend to scale-up after initial trials and extend this technology to even older vehicles.” Sunita Narain, member, Environment Pollution (Prevention & Control) Authority, said,” We are witnessing the dawn of a hydrogen-based economy. The initiative will go a long way in not only reducing air pollution but will also contribute towards achieving energy security.” According to the company officials, hydrogen-spiked CNG (or H-CNG), when used in an engine in place of CNG, results in cleaner combustion, thereby reducing emissions and improving fuel economy. H-CNG, produced from natural gas through IndianOil’s patented Compact Reformer technology, when tested at the Automotive Research Association of India (ARAI), resulted in a 70% reduction of carbon monoxide and 25% reduction in hydrocarbon emissions as compared to baseline CNG. It is estimated that the compact reforming process will be 30% more cost-effective compared to the physical blending of hydrogen in CNG for deriving the same benefits.
No proposal to merge state-owned firms: Pradhan
Oil Minister Dharmendra Pradhan Monday said there is no proposal, at present, for the merger of state-owned oil and gas entities under consideration of his ministry. While state-owned Oil and Natural Gas Corporation (ONGC) had last year acquired government stake in Hindustan Petroleum Corporation Ltd (HPCL), Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL) were both keen on acquiring gas utility GAIL India Ltd. “At present, there is no proposal to merge state-run oil and gas entities under consideration of the ministry,” Pradhan said in a written reply to a question in the Lok Sabha here. He had on February 7, 2018, told the Rajya Sabha that IOC and BPCL have separately indicated to the petroleum ministry their interest in taking over GAIL to add natural gas to their oil refining and marketing business. Then finance minister Arun Jaitley had in the Budget 2017-18 unveiled the government’s plan to create integrated public sector oil majors “through consolidation, mergers, and acquisitions” so that the merged company has the “capacity to bear higher risks, avail economies of scale, take higher investment decisions” and is “able to match the performance of international and domestic private companies”. In response to this, ONGC expressed interest in taking over refiner HPCL and completed the Rs 369.15 billion acquisition in January last year. “IOC and BPCL had written to the ministry for integration with GAIL (India) Ltd. However, the government has not taken any decision in this regard,” Pradhan had said last year. In the reply on Monday, he said ONGC has acquired 51.11 per cent of government equity shareholding in HPCL. “Post-acquisition by ONGC, HPCL will continue to be a central government public enterprise (PSE), having become a subsidiary of ONGC. It will maintain its cultural uniqueness and brand identity,” he said. For GAIL, it was said that the government may separate the firm’s natural gas transportation and marketing business and sell off the later to a prospective bidder. Incorporated in August 1984 by spinning off the gas business of ONGC, GAIL (India) Ltd owns and operates about 14,000 km of natural gas pipelines in the country. It sells around 60 per cent of natural gas in the country. The government has a 54.89 per cent stake in GAIL India.
Budget 2019 waives Rs 1 per tonne excise duty on oil output
Budget 2019 India: As a token incentive for crude oil producers — especially who plan to bid for 66 hydrocarbon fields offered by ONGC and Oil India for enhanced recovery — the government has decided not to charge the Rs 1 per tonne excise duty for their production, which was introduced in Budget 2019. The charge will be nil for ‘crude petroleum oil produced in specified oil fields under production-sharing contracts or in the exploration blocks offered under the New Exploration Licensing Policy through international competitive bidding’, the Budget documents states. A Rs 1 per tonne of excise duty has been levied on domestic crude oil production and a similar amount as Customs duty will be charged on imported crude, as per the Budget. The two together will contribute Rs 250 million to the exchequer. Till now, a national calamity and contingent duty (NCCD) of Rs 50 per tonne was charged on petroleum crude oil. “In certain cases this levy (NCCD) has been contested on the ground that there is no basic excise duty on these items. To address this issue, a nominal basic excise duty is being imposed,” finance minister Nirmala Sitharaman had said. State-run ONGC and OIL have invited bids for marginal nomination fields on partnership basis with the intention to maximise recovery from these fields by infusion of new technology. These fields contribute a meagre 5% to the total hydrocarbon production at present. The firms have already announced various incentives for fields to be offered under production enhancement contracts. The bids would be evaluated on the basis of revenue-sharing from the incremental oil and gas production and it will be applicable on incremental production over and above the baseline production under business-as-usual scenario, the current production. Also, unlike in a farm-in contract, bidders will not have to reimburse ONGC the capital investment already made in these fields. Winners will have marketing and pricing freedom to sell oil and gas on arm’s length basis through a competitive process. ONGC and OIL have been battling to increase production from these fields and despite PM Narendra Modi’s call to reduce import dependence, India’s crude oil imports was at 83.8% of the requirement in 2018-19 and is expected to increase to 86.8% in 2019-20. The state-run firms are offering a contract period of 15 years extendable by five years for the 64 fields on offer. Winners will also get a reduction of 10% in the royalty rate for additional production of natural gas over and above current production. Explorers will also be permitted the right to explore all kinds of hydrocarbon and will be given incentives for achieving production higher than the committed incremental production. Experts believe the exemption made for specified fields are done to further encourage overseas explorers. “During roadshows, often investors ask for incentives. This is one of them, though may not address the issue fully,” said an oil sector expert. “The fields offered under the Discovered Small Fields (DSF) may be a part of it,” said the expert. Under DSF policy, 57 contract areas have been bid out by the directorate general of hydrocarbons.