IOC bets big on digital change to retain biz in post-Covid era
State-run Indian Oil (IOC) is betting big on mobile computing, a lean, digital-savvy workforce and new-age offerings such as natural gas, hydrogen as well as electric mobility to reshape its leadership role in the post-pandemic “new normal” of India’s energy market, according to chairman Shrikant Madhav Vaidya. Parallelly, IOC will consolidate its core business by becoming the least-cost supplier through cost and asset optimisation. Expansion of business footprint will be through “meaningful collaborations”, sources quoted Vaidya as saying in his video message to employees after taking over reins of India’s largest refiner-retailer on July 1. He said IOC’s focus on “technological immersion” has proven to be a promising enabler in the “new normal” and sought to scale up the digital transformation for smooth business process flow and empowering customers as well as channel partners with digitally-aided logistics, supply and distribution network.
What is winter diesel and how will it help Indian Army in Ladakh?
India’s armed forces may soon be using winter diesel for operations in high altitude areas such as Ladakh, where winter temperatures plummet to extremely low levels. State-owned Indian Oil Corporation (IOC), which is the largest oil marketing company in the country, has sought approval from the Directorate General of Quality Assurance (DGQA) of the armed forces to approve winter diesel that is said to be usable at temperatures as low as -30° celsius. What is winter diesel? Winter diesel is a specialised fuel that was introduced by IOCL last year specifically for high altitude regions and low-temperature regions such as Ladakh, where ordinary diesel can become unusable. SV Ramakumar, director of research and development at IOC said the flow characteristics of regular diesel change at such low temperatures and using it may be detrimental to vehicles. Ramakumar noted that winter diesel which contains additives to maintain lower viscosity can be used in temperatures as low as -30°C and that besides a low pour point, it had higher cetane rating — an indicator is the combustion speed of diesel and compression needed for ignition— and lower sulphur content, which would lead to lower deposits in engines and better performance. What are the armed forces using in this area currently? IOCL and other oil marketing companies, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd, provide the armed forces with Diesel High sulphur Pour Point (DHPP -W) to armed forces for operations in these areas which also has a pour point of -30°C.
Petrobras considers LNG units for pre-salt’s natural gas: executive
Brazilian state-controlled oil company Petrobras is considering installing offshore units to liquefy the growing natural gas production from the so-called pre-salt area, the company’s emissions and climate change manager said during a webinar on Friday. Liquefied natural gas units could be an alternative for the gas associated with oil produced at the deep-water exploratory region located more than 100 miles off the coast, said Viviana Coelho. It was unclear if a projected program has a timeframe. Petroleo Brasileiro SA, as the firm is formally known, currently relies on offshore pipelines to bring natural gas produced offshore to the coast for processing. Lack of infrastructure to ship offshore natural gas to the coast is seen as a possible limitation for rising oil production at the pre-salt, Petrobras has said. The reservoirs, where oil is trapped beneath a thick layer of salt in the Atlantic seabed, have supplied more than 65 per cent of Brazil’s production in just over a decade since their discovery. The rate is expected to keep rising. A small portion of the gas is burned through flaring systems at the platforms. Brazil has strict legislation to limit flaring, and Petrobras wants to reduce its routine flaring emissions to zero by 2030, Coelho said in the presentation. Flaring releases methane, and Petrobras aims to reduce the company’s greenhouse gas emissions by 30 per cent to 50 per cent by 2025, she said. The Brazilian company used 97.6 per cent of its natural gas in May, according to Brazil’s oil regulator. A significant portion is reinjected into the ground to control reservoir pressure and increase oil production, Petrobras said.
Gas Economy may remain pipedream for India in near future
The much vaunted Gas Economy drive propelled by the NDA Government, in pursuit of a cleaner and cheaper fuel is likely to be stumbled, at least in the short and medium terms due to the price shock that has forced major global suppliers to shut-in many of their projects and put planned investments on hold. According to India Gas Foundation (IGF), a research NGO, the sharp decline in demand and prices have sent the global LNG (Liquified Natural Gas) industry completely out of gear resulting in severe impact on India’s plan for long term arrangement with the major producers. “The Covid-19 Pandemic has hammered the demand by around 30 per cent and the situation is yet to look up as the industry consumption will take months, if not years, to normalise,” said Biswajit Roy, a research analyst at IGF. The IGF researcher further explained that the price in the spot market is hovering below $2 per mmBtu when the producers expect a price between $5-$6. “Several projects were seen in an advanced stage for final investment decision (FID) even same time last year. “But now they have already withheld their FIDs or withdrawing from the projects,” says Roy. Tellurian, one of the major US LNG producers, has already deferred its much hyped project, Driftwood in which India’s largest LNG player, Petronet LNG agreed to take up a 20 per cent stake for uptake of 5 million tonnes of LNG every year for next 40 years. The deal fell through because of the sheer uncertainties in the sector. Tellurian is not alone. The global gas giant, Shell has also pulled out from its highly ambitious Lake Charles LNG project and reportedly mulling over the sale of a major stake in its Australian LNG business.
Production resumes at two oilfields shared with Saudi Arabia: Kuwait oil ministry
Crude oil production resumed early July at the Wafra oilfield, shared by Kuwait and Saudi Arabia, after a five-year halt, the Kuwaiti oil ministry said on Twitter on Monday. The Wafra and Khafji oilfields are located in the Neutral Zone on the boundary of the two countries. Saudi Arabian Chevron (SAC), which jointly operates the Wafra field with Kuwait Gulf Oil Company (KGOC), said in a statement in June that the two companies were making preparations to resume operations. Initial output at the Wafra oilfield is seen at 10,000 bpd, before rising to 70,000 bpd at the end of August, and then up to 145,000 bpd by the end of 2020, Abdullah al-Shammari, deputy chief executive for finance and management at Kuwait Gulf Oil Company, which operates the field, told Reuters in June. Production also resumed on Monday at another shared field, Khafji, on July 1, after a one-month halt, the Kuwaiti oil ministry said. Output from Khafji oilfield, which was halted for a month, is expected to be about 80,000 barrels per day (bpd) on July 1, before rising to 100,000 bpd two month later, Al-Shammari said. Production is expected to reach 175,000 bpd from Khafji field by end of the year, he added.
Reliance plans to up aviation fuel stations by 50 pc
Billionaire Mukesh Ambani’s Reliance Industries Ltd (RIL) plans to increase its network of aviation fuel stations by 50 per cent as it looks to capture greater market share in the business currently controlled by public sector oil retailing firms. In its latest annual report, RIL said the double-digit growth observed over 52 consecutive months might have been stalled due to the COVID-19 pandemic, but India continues to be one of the fastest growing aviation markets in the world for the fifth consecutive year. RIL, which operates the world’s largest single location oil refining complex, plans to capture this opportunity through increased presence at airports to refuel airplanes. Air-passenger traffic in India rose 9 per cent even in February after the Indian carriers recouped to full capacity that was lowered following the closure of a major domestic carrier in the first few months of financial year 2019-20 (April 2019 to March 2020) as well as disruptions at Mumbai airport owing to construction and maintenance, it said. Following the COVID-19 pandemic, while travel restrictions were being imposed elsewhere, India was largely unaffected till the end of March 2020, before the sharp escalation in travel bans globally and lockdowns impacted India’s aviation sector too. “On account of its network strength, cost competitiveness, industry leading technology and best-in-class service standards, RIL improved its volume share in the domestic market,” according to the annual report. Reliance Aviation has the highest market share in 20 per cent of the operating airports. “RIL is looking to increase its network to 45 locations as against 30 at the end of FY 2019-20 and is well geared to benefit with the growth in the Indian aviation market,” it said. India currently has 256 aviation fuel stations, with state-owned Indian Oil Corp (IOC) owning 119 of them. Bharat Petroleum Corp Ltd (BPCL) has 61 and Hindustan Petroleum Corp Ltd (HPCL) the remaining 44. RIL is the largest private aviation fuel retailer with 31 stations, according to the latest data from the oil ministry. In comparison, RIL’s auto fuel retailing network is very small. Out of 69,392 petrol pumps in the country, RIL operates 1,398. IOC has the highest number of outlets at 29,208, followed by HPCL with 16,557 and BPCL with 16,309 petrol pumps. Russia’s Rosneft-backed Nayara Energy is the biggest private auto fuel retailer with 5,720 petrol pumps. RIL said it registered 9.8 per cent growth in retail diesel sales and 14.7 per cent in retail petrol volume as compared with 1.5 per cent and 6.3 per cent for industry, respectively. During financial year 2019-20, RIL registered over 10 per cent growth in average outlet sales volume. On bulk diesel, RIL said it registered a volume growth of 10.8 per cent, increasing market share to 8.8 per cent, despite expected demand contraction and margin pressure. Direct sales volume would be driven by continued volume growth from railways and sourcing higher volume shares in State Transport Units (STUs), it said.