HOEC updates on acquisition of Hardy Exploration & Production India Inc.
Hindustan Oil Exploration Company Limited (HOEC) had earlier made an announced regarding conditional agreement to acquire the entire share capital of Hardy Exploration & Production (India) Inc. (“HEPI”) and has provided updates on the deal. The Company had entered into a conditional agreement with Hardy Oil and Gas PLC (“Hardy”), a company listed in London, to acquire the entire share capital of HEPI, a company incorporated in the State of Delaware having an Indian Project Office, for a cash consideration of US$ 1,500,000. HEPI holds Participating Interest in certain oil and gas blocks in India viz, Blocks PY-3, CY-OS /2 and GS-OSN. The Company holds 21% Participating Interest in Block PY-3 and considering the opportunity to achieve an operating synergy the above transaction was contemplated. The completion of transaction was conditional upon Hardy obtaining the approval of its shareholders and other regulatory approvals on or before the Longstop date of September 30, 2019. However, subsequent to the offer made by the Company, it came to our knowledge that Hardy received an unsolicited offer of a significantly higher consideration of US$ 8,750,000 from another Indian company – Invenire Energy Private Limited (Invenire) to acquire HEPI. Pursuant to the offer made by Invenire, Hardy entered into a second conditional share purchase agreement with Invenire despite the initial agreement entered with the Company, and thereafter the Board of Hardy unanimously decided to proceed with the sale of HEPI to Invenire. Hence, the conditions for completion of transaction not being achieved for the reason stated above, the impact of the initial agreement entered with the Company is yet to be dealt with by Hardy.
More than half of what you pay for petrol is tax, duty and commission; here’s the breakup
If tax, duty and commission are removed from the retail price of petrol and diesel, petrol can be available at just Rs 33.94 per litre and diesel can be sold at Rs 38.48 per litre in the fuel pumps of India. Petrol price in India has more of tax, duty and commission built in it, than the cost of crude and refining. If tax, duty and commission are removed from the retail price of petrol and diesel, petrol can be available at just Rs 33.94 per litre and diesel can be sold at Rs 38.48 per litre in the fuel pumps of India — less than half their prevailing retail prices. However, these are just the dealer price but the retail price has a long list of additions. “Public sector oil marketing companies take appropriate decision on pricing of petrol and diesel in line with international product prices and other market conditions,” Anurag Thakur, MoS, Ministry of Finance, said in a reply to a query in Lok Sabha. Central excise duty of Rs 17.98 per litre, dealer commission of Rs 3.54 per litre and state VAT of Rs 14.98 per litre bring up the retail price of petrol to Rs 70.44 per litre in India, whereas the dealer price remained Rs 33.94 per litre as on 1st July 2019, according to the data provided in the reply. Similarly, central excise duty of Rs 13.83 per litre, dealer commission of Rs 2.49 per litre and state VAT of Rs 9.47 per litre lift the retail price of diesel to Rs 64.27 per litre in India, whereas the dealer price remained Rs 38.48 per litre as on 1st July 2019. The overall tax incidence for the fuel in Delhi comes out as 46.8% for petrol and 36.3% for diesel. On top of it, the government later imposed a further Rs 2 per litre as excise duty and cess on petrol and diesel prices, in Finance Minister Nirmala Sitharaman’s maiden budget 2019. The surcharge was levied with effect from the following midnight. Question regarding the inclusion of petroleum products in GST has been repeatedly asked since the new tax system was introduced in July 2017. Finance Minister Nirmala Sitharaman replied in the lower house last month that inclusion of petroleum crude, petrol, diesel, natural gas and aviation fuel require recommendations from the GST council. And, no such recommendation has come yet from the GST council. Duties on petrol and diesel contribute a large portion of the government’s revenue. The breakup of taxes on petrol and diesel prices, as on 1 July 2019 Petrol: Retail price – Rs 70.44 per litre • Dealer price – Rs 33.94 per litre • Central excise duty – Rs 17.98 per litre • Dealer commission – Rs 3.54 per litre • State VAT – Rs 14.98 per litre Diesel: Retail price – Rs 64.27 per litre • Dealer price – Rs 38.48 per litre • Central excise duty – Rs 13.83 per litre • Dealer commission – Rs 2.49 per litre • State VAT – Rs 9.47 per litre
Indian Oil Corp first quarter net profit falls 50 per cent to Rs 3,624 crore
Indian Oil Corporation (IOC), the country’s largest fuel retailer on Wednesday posted a 50 per cent slump in consolidated net profit at Rs 3,624 crore for the first quarter ended June, on the back of lower refinery margins and product sales. The company had posted a net profit of Rs 7,176 crore for the quarter ended June 2018. Revenue from operations during the quarter rose by a marginal 0.44 per cent to Rs 1,52,496 crore, as compared to Rs 1,51,814 crore posted in the corresponding quarter a year ago. The company’s gross refinery margin (GRM) during the first quarter declined to $4.69 per barrel, as compared to $10.21 per barrel reported in the corresponding quarter a year ago. The company’s total expenses during the June quarter increased 4.2 per cent to Rs 1,47,953 crore. IOC’s domestic sales declined to 21.54 million tonne (MT) during the three months ended June 2019 from 21.61 MT posted in the corresponding quarter a year ago. Exports during the quarter declined to 1.10 MT, as compared to 1.24 MT in the corresponding quarter. Refinery throughput and pipeline throughput during the June quarter declined to 17.28 MT and 21.85 MT, respectively, as compared to the corresponding quarter a year ago.
Rolls-Royce corruption case: ONGC, GAIL executives may have received kickbacks, says CBI FIR
Unknown officials of government-owned Oil and Natural Gas Corporation (ONGC) and GAIL India may have received kickbacks for award of tenders between 2007-2011 in a suspected corruption case involving automobile giant Rolls-Royce, according to a first information report (FIR) filed by the Central Bureau of Investigation (CBI). “There is every likelihood that the part of the above payment made by Rolls-Royce to Aashmore Pvt Ltd (APL) in case of ONGC and APL/Infinity in case of GAIL may have been paid as kickback to unknown officials of ONGC and GAIL involved in the procurement process,” the FIR read. CBI has alleged that Rolls-Royce, in order to win procurement tenders for supply of spare parts by GAIL, ONGC, and Hindustan Aeronautics misrepresented facts and wilfully failed to disclose engaging the services of Singapore-based APL through its director Ashok Patni. The investigating agency also said that officers of ONGC and GAIL were negligent towards protecting the interest of the company. “ONGC and GAIL had provision within the aforesaid contracts which required declaration of agent at the time of bid/tender and also the details of percentage of commission paid to those agents by the buyers. Engagement of Ashok Patni, director of Aashmore as commercial advisor was in contravention to the terms of agreements and pre-contract integrity pact, which barred payment of such commission,” according to the FIR. CBI as part of its investigation also found that APL along with another company related to Ashok Patni, namely Turbotech Energy Services, also made payments of Rs 10 lakh as donation to a cooperative society of ONGC called the ONGC Officers Mahila Samiti, which according to the investigation agency was unethically accepted by the aforesaid society. CBI’s investigation found that ONGC and GAIL being buyers continued to place supply orders from Rolls-Royce through Ashok Patni. Rolls-Royce paid Rs 29.81 crore as commission to Aashmore for 73 purchase orders related to ONGC between 2007-11 and Rs 8.36 crore for 68 purchase orders related to GAIL between 2007-10. Enquiry by CBI also found that Infinity, owned by Ashok Patni at Singapore, was also engaged by Rolls-Royce and paid 2 per cent extra commission without disclosing full level of commission to GAIL for Vijaipur-Dadari-Bawana pipeline project in 2008-09 and the total payment of commission paid by Rolls-Royce during the 2007-10 period was approximately Rs 28.09 crore. CBI has filed an FIR against Rolls-Royce, Rolls-Royce India, APL, Ashok Patni, Turbotech Energy Services and unknown officials from ONGC, GAIL and HAL. The action comes after a five-year long inquiry by the agency initiated on the basis of a complaint from the defence ministry, which had received a letter about the engagement of Singapore-based Ashok Patni and his company APL by Rolls-Royce.
Eni acquires 20 per cent of ADNOC Refining for $3.24 billion
Eni and Abu Dhabi National Oil Company (ADNOC) today announced they have closed their strategic partnership, announced in January, through which Eni acquired a 20 per cent equity interest in ADNOC refining. The final cash price is approximately $3.24 billion. The partners, including Austria’s OMV, also set up a new trading joint venture. ADNOC Refining refines over 922,000 barrels per day of crude at its Ruwais and Abu Dhabi based refineries. The transaction is one of the world’s largest-ever in the refining business and reflects the scale, quality and growth potential of ADNOC Refining’s assets, Eni said in a statement. Ruwais is the 4th biggest single-site refinery in the world and is the focus of further expansion and integration to develop the world’s largest single-site refining and petrochemicals complex. Expanding its refining and petrochemical operations at Ruwais supports ADNOC as it evolves to become a leading global downstream player. ADNOC, Eni and OMV have now incorporated a new trading joint venture at Abu Dhabi Global Market, with the same shareholding as in ADNOC Refining. Trading is expected to begin in 2020 when all necessary processes, procedures and systems are in place. Eni and OMV will provide ADNOC with the know-how, operational experience and support to accelerate the development of the trading joint venture, enabling ADNOC and its partners to optimize their systems and better manage their international product flows. “These agreements demonstrate the strong partnership between Eni and ADNOC. With this transaction, Eni enters the UAE downstream sector and increases its global refining capacity by 35 per cent. It follows the company’s strategy of making Eni’s overall portfolio more geographically diversified and more balanced along the value chain,” Eni said. Eni has been present in the UAE upstream sector since March 2018 when it was awarded a 10 per cent interest in ADNOC’s Umm Shaif and Nasr concession and a 5 per cent interest in the Lower Zakum concession, followed in November 2018 by the award of a 25 percent interest in the Ghasha Concession, ADNOC’s mega offshore sour gas project. On 12 January this year, Eni was awarded a 70 per cent interest in offshore exploration blocks 1 and 2. In addition to the United Arab Emirates, in the Middle East Eni is also present in Oman, Bahrain, Lebanon and Iraq.
Subdued refining margins, inventory losses may dent IOC’s Q1 profit
Indian Oil Corporation (IOC) may post a weak set of June quarter results on Wednesday, owing to subdued refining margins and inventory losses. All eyes will be on the management updates on the status of Ennore LNG terminal project and any clarity on LNG tie-up with suppliers, analysts said. Besides, comments on the progress of PP project at Paradeep will also be keenly watched, they said. HDFC Securities expects the oil major to report a 68.90 percent YoY in profit after tax (PAT) at Rs 2,124 crore for the quarter. It sees Ebitda margin to contract 446 basis points sequentially and 555.4 bps YoY Net sales for the quarter is seen coming at Rs 1,36,490 crore, up 8.1 percent QoQ and 5.4 percent YoY, HDFC Securities said the oil major may report a core gross refining margin (GRM) of $3.9 per barrel and crude inventory loss of $0.4 per barrel. The company’s GRM stood at $4.09 a barrel level in March quarter. “Inventory loss may come around Rs 510 crore and forex loss of Rs 570 crore for the June quarter,” HDFC Securities said. In the Jan-March quarter of FY19, the company had posted an inventory gain of Rs 2,655 crore. Nirmal Bang said IOC’s petrochemical segment revenues are likely to fall 10 percent YoY, while the segment’s Ebitda margin is expected to come in 500bps lower at 26 percent. “We expect overall revenues to fall 12.8 percent at Rs 1,12,900 crore and Ebitda margins to be down 334bps to 6.4 percent. This is likely to result in 53.5 percent fall in PAT to Rs 3,170 crore,” the brokerage added. HDFC Sec expects IOC’s marketing volumes to go up by 5 percent year-on-year (YoY) to 22.8mmt. “Blended marketing margin should go down by 27.2 percent QoQ to Rs 4.2 per litre, while refinery crude throughput is likely to be 17.6mmt against 17.4mmt in 4QFY19,” said the brokerage. Brokerage Nirmal Bang Securities thinks IOC seems to have suffered pressure on petrochemical margins due to weak global demand and spreads for naphtha crackers. “We expect IOC to report declines of 24.5 percent in GRMs ($7.7 per barrel) and 2 per cent in product sales volume,” said the brokerage.
BP says quarterly profit sinks on lower oil prices
BP’s profits slumped by 35 percent in the second quarter on the back of sliding crude oil prices, the British energy major said on Tuesday. Profits after taxation tanked to $1.8 billion (1.6 billion euros) in the three months to the end of June from $2.8 billion a year earlier, BP said in a results statement, adding that this partly “reflects lower oil prices”. Weaker crude prices translate into falling profits and revenues for the energy sector. The energy major also took a $634-million impairment charge on the back of asset sales in Egypt and the United States. BP added however that its underlying replacement cost profit — a widely-watched measure which strips out exceptional items and changes in the value of oil inventories — was broadly unchanged at $2.8 billion. That beat the average analyst forecast of $2.48 billion, according to Bloomberg. BP noted that this reflected the company’s “continued good operating performance” thanks to its growth strategy that was launched in 2016. “At the midpoint of our five-year plan, BP is right on target,” said BP Chief Executive Bob Dudley in Tuesday’s earnings release. “Reliable performance and disciplined growth across our businesses are delivering strong earnings, cash flow and returns to shareholders. “And this is also allowing us to grow businesses that can make a significant contribution in the energy transition, helping deliver the energy the world needs with lower carbon.” Revenues dipped four percent to $73.747 billion in the second quarter, but production rose four percent to 3.8 million barrels of oil equivalent per day. Output remains boosted by last year’s vast purchase of US shale oil and gas operations from mining titan BHP. Benchmark Brent crude oil prices averaged $62.63 per barrel in the reporting period. That was down from $67.24 a year earlier. BP added Tuesday that it paid another $1.4 billion for scheduled costs arising from the 2010 Gulf of Mexico oil spill catastrophe. The London-listed energy major’s total bill so far for the Gulf of Mexico disaster stands at about $70 billion.