HPCL keeps Rs 12,000 crore capex plan despite slide in profit
State run-Hindustan Petroleum Corporation (HPCL) has retained its plans to spend 12,000 crore on capital expenditure in 2020-21 despite its net profit plummeting over 50 per cent year on year in 2019-20, hit by inventory losses due to sharp fall in crude prices and exchange rate fluctuations. Chairman Mukesh Kumar Surana added a word of caution that plans for new projects may be revisited. “We will have a capex of Rs 12,000 crore in the current year; there is no change in plans. Our Mumbai and Vizag refinery expansion projects are at an advanced stage. Barmer project is also going on but the expenditure would be later on because other work is going on there,” Surana told reporters. He said there may be some issues in project execution due to the flight of labours during the Covid-19 lockdown and the monsoon season. HPCL reported net profit of Rs 2,637 crore in FY20, down sharply from Rs 6,029 crore reported a year ago. Gross sales in the FY20 declined to Rs 2,86,250 crore from Rs 2,95,713 crore in the previous year. Of the Rs 12,000 crore capex planned, about Rs 7,000 crore would be spent on refineries and balance Rs 5,000 crore would be invested in expansion of marketing and retail networks. The company aims to add 500 fuel retail outlets every year. It commissioned 1,194 retail outlets and 245 new LPG distributorships during 2019-20, taking the total number of retail outlets to 16,476 and number of total LPG distributors to 6,110 as of end-March.
UK inflation drops to four-year low in May as oil prices slump
British inflation fell to its lowest level since June 2016 last month as the coronavirus pandemic sucked demand from the global economy and caused oil prices to tumble, leaving the Bank of England free to ramp up its stimulus programme again. Consumer price inflation slowed to 0.5 per cent from April’s 0.8 per cent, the Office for National Statistics said, in line with the average forecast in a Reuters poll of economists. Core inflation – which excludes typically volatile energy, food, alcohol and tobacco prices – showed less of a decline, falling to 1.2 per cent from April’s 1.4 per cent. Economists had forecast a small drop to 1.3 per cent. “There was a continued drop in prices at the pump in May, following the huge crude price falls seen in recent months,” ONS Deputy National Statistician Jonathan Athow said. Most economists polled by Reuters expect the BoE to announce an extra 100 billion pounds of bond purchases when its publishes its June policy decision on Thursday, following on from 200 billion pounds of bond purchases it started in March. “Inflation is not something that is going to worry the Bank for some time. It will be more concerned about growth,” Neil Birrell, chief investment officer at asset management firm Premier Miton, said. Britain suffered a record fall in economic output in April, when the economy shrank by more than 20 per cent due to the closure of non-essential businesses to the public to slow the spread of COVID-19. Last month the BoE said lower oil prices, as well as a regulatory cap on household energy and water bills, were likely to keep inflation below 1 per cent for several months. The central bank added that weaker demand was likely to put downward pressure on inflation overall – though it would not make sense for all businesses to cut prices in response to reduced demand, and measuring some prices would be hard. Major factors pushing down on inflation in May included fuel, clothing and transport costs, the ONS said. Prices for fuel and lubricants showed their biggest annual fall on record, down 16.7 per cent on a year earlier, while clothing prices were 3.1 per cent lower, the biggest drop since July 2010. Producer output prices – which can give a steer on upcoming price pressures – dropped by 1.4 per cent after declining by 0.7 per cent in April. Economists had pencilled in a 0.9 per cent fall.
China, India to dominate global LNG regasification sector by 2024
China is likely to lead with 25% capacity share in the global liquefied natural gas (LNG) regasification industry from new-build (planned and announced) projects between 2020 and 2024, according to a report by GlobalData, a leading data and analytics company. The country will have the highest LNG regasification capacity additions of 3.8 trillion cubic feet (tcf) globally by 2024 from 16 planned and announced new-build regasification terminals, revealed GlobalData in its report ‘Global LNG Industry Outlook to 2024 – Capacity and Capital Expenditure Outlook with Details of All Operating and Planned Terminals.’ Out of the total new-build capacity, 2.5 tcf comes from planned projects that have received required approvals for development and the remaining 1.3 tcf will come from early-stage announced projects. Adithya Rekha, Oil and Gas Analyst at GlobalData, said: “Among the upcoming regasification terminals in China, Tangshan II has the highest capacity of 584 billion cubic feet (bcf). This announced onshore terminal is expected to start operations in the Hebei province by 2022.” According to GlobalData, India is expected to have the second highest regasification capacity additions globally by 2024. The Asian major is expected to add 2.5 tcf of regasification capacity through 15 terminals by 2024. Of this total capacity, 2 tcf is expected to come from 11 planned projects while 0.5 tcf is likely to come from four early-stage announced projects, stated the report. The neighbouring Pakistan comes third on the list for the highest global regasification capacity additions of 1.3 tcf by 2024. Four planned regasification terminals are expected to add a total capacity of 1.1 tcf by 2024 while the remaining 219.0 bcf of LNG regasification capacity would be added by an announced terminal– Sonmiani Floating in the Karachi state, the report added.
Fuel prices rise again in Delhi, troubled commuters urge govt to provide relief
The rates of fuel have been increased again in the national capital on Wednesday causing more troubles for the commuters. With the hike in fuel prices, the petrol prices stand at Rs 77.28/litre (increase by Rs 0.55), and the diesel prices stand at Rs 75.79/litre (increase by Rs 0.69) in Delhi, according to a price notification of state oil marketing companies. The daily commuters, who were spotted filling the tanks of their vehicles at petrol pumps today morning. “Even a one rupee increase has an effect on us. The government should not increase prices like this, they should try to stop this hike as and when they can,” a commuter told here. Another customer, Naresh, at the same pump said that the hike in prices, especially during the phase when the city is trying to recover from the effects of COVID-19 induced lockdown is making it worse for the people and urged them to take immediate steps in this direction.
AK Jana takes over as IGL’s new Managing Director
Indraprastha Gas Ltd (IGL) said on Tuesday that AK Jana has taken charge as its Managing Director. He has taken over from ES Ranganathan who ceases to be a Director and Managing Director. IGL is a joint venture of GAIL India Ltd, Bharat Petroleum Corporation and Delhi government. Before joining IGL as Managing Director, Jana was Chief Executive Officer of Gail Gas Ltd (a wholly-owned subsidiary of GAIL) engaged in the business of city gas distribution. Jana is a graduate in Production (Mechanical) Engineering and has over three decades of experience in the gas sector. He has vast experience in project execution of construction, commissioning, operation and maintenance of gas processing plant and LNG terminal, rotary equipment, natural gas and LPG pipelines.
Uniform transmission tariff will boost liquidity, ensure robust price discovery: Rajesh Mediratta, IGX
A uniform transmission tariff in the gas market will ensure more liquidity and active participation of industry players resulting into effective and robust price discovery, according to Rajesh Kumar Mediratta, Director at Indian Gas Exchange (IGX), the country’s first gas trading platform launched Monday. “Tomorrow if there is a uniform gas transmission tariff policy across the country, then there will be one virtual hub for quoting the price which will facilitate more active participation, more liquidy and more competition leading to an effective and robust price discovery,” Mediratta told ETEnergyworld in an interview. At the launching ceremony of the IGX platform, oil minister Dharmendra Pradhan said that the downstream regulator Petroleum and Natural Gas Regulatory Board (PNGRB) will soon announce a new “pro-business” tariff policy for gas transport. Speaking on the move, Mediratta said that this is a very suitable move as reforms in transportation of gas will give a boost to trading through exchange. “We will be facilitating trade and taking care of delivery and financial settlement through this delivery based platform,” he said. Presently there are three hubs for physical delivery of liquified natural gas (LNG) – Dahej and Hazira in Gujarat and Kakinada in Andhra Pradesh. Since gas transmission through pipelines is based on distance, the buyer located in some other state will have to include the transportation cost while buying the LNG from any of these three hubs. “The buyer in some other state can quote a price which is taking care of the transportation and transmission charge as well,” Mediratta said, adding that gas exchange will be working on the basis of daily, day-ahead, weekly, fortnightly and monthly market. Speaking on the potential of gas market in the country, he said that currently 30 per cent of natural gas is traded in the short term spot market. IGX focus will be on LNG spot agencies which sell gas under short term contract of upto one year. “We are eyeing around 4 to 5 per cent of this 30 per cent market share as our first year target,” he said. India has set the target to increase the proportion of natural gas in the country’s energy mix from current 6.2 per cent to 15 per cent by 2030 and for this the government will come up with a new pipeline tariff policy which will replace existing practice of seven different pipeline operators charging separate rates. “With improving gas infrastructure and more terminals getting connected across the country like the Urja Ganga pipeline providing connectivity to the North-Eastern region, will really boost the gas demand,” Mediratta said. He also added when the gas demand goes up, the supply automatically comes and the real expansion of market takes place. At present there are 12 members and 350 clients registered at IGX which includes buyers, sellers and users. “There are many industries that use gas as fuel and they can actually move to the gas exchange as gas is going to become cheaper, once you have a robust pipeline connectivity,” he said. India has around 24,000 megawatt of stressed gas based power plants, according to the Standing Committee Report on Energy submitted in parliament in January 2019. Speaking on this stranded gas based capacity, Mediratta said that these power plants can actually utilise their stranded gas capacity through exchange. “Today what is happening is when a gas plant wants to buy gas, they have the option to buy under a one year contract, which means that if the gas is not consumed, they will still have to pay for the gas,” he said. He added that with the introduction of gas exchange, these buyers can check the price of gas in the market and if it is low they can purchase it, which will ultimately benefit them by making their cost of power production only be Rs. 2 to 2.5 per unit. Speaking on the future of trading through gas exchange platform, Mediratta said that he is quite optimistic as today there is around 10 to 12 per cent of electricity market available for short term trading but here there is much higher 30 per cent of LNG available for trade in the spot market.