TSRTC staff to run fuel outlets, corpn eyes Rs 20 lakh/mnth
After earning a revenue of over Rs 1.2 crore within two months through cargo and parcel services, the cash-strapped Telangana State Road Transport Corporation (TSRTC) is now planning to rake in another Rs 20.6 lakh per month by setting up fuel outlets which will be run with the help of RTC employees. The corporation has signed an MoU with oil companies for 92 outlets including HPCL at 61 locations and with IOCL at 31 locations in the state. It has decided to run these outlets on its own after a service provider from Karimnagar Zone opted for a premature termination of the agreement. Transport minister Puvvada Ajay Kumar, who virtually inaugurated operations of the fuel outlet at Janagaon in Karimnagar zone, said that the remaining outlets – Hanamkonda, Mahabubabad, Bichkonda, Birkur and Asifabad — will become operational from August 15. “With the operation of these fuel outlets, TSRTC will get a revenue of around Rs 20.6 lakh per month which includes Rs 17 lakh in the form of commission and Rs 3.65 lakh in the form of lease rentals. The outlets would be run with the help of RTC employees, who have become excess due to the introduction of private hire buses,” said Kumar. This apart, the TSRTC is also mulling 50 mini cargo vehicles with a capacity of 3 tonnes each. The larger vehicles that are currently operational have a nine tonne capacity. Officials expect a further rise in revenue once the inter-state and city bus services are restored.
Numaligarh Refinery Limited gets environmental clearance for the Refinery Expansion Project
Assam based Numaligarh Refinery Limited (NRL) stated that it is has received environmental clearance from the Ministry of Environment, Forest & Climate Change for the Refinery Expansion Project. NRL is planning to ramp up its capacity from 3 to 9 MMTPA (million metric tonnes per annum). The 27th Annual General Meeting of NRL was held on Monday, through online web conference, keeping in view the current pandemic of COVID-19. The Meeting was presided over by D. Rajkumar, Chairman and Managing Director-Bharat Petroleum Corporation Limited (BPCL) and Chairman-NRL and was attended by S K Barua, Managing Director NRL. The company stated that its focus is primarily on three major ongoing projects namely the Refining Capacity Expansion Project, Indo-Bangladesh Friendship pipeline(IBFPL) and Bio Refinery Project; which have gained momentum and recorded definitive progress. The company stated NRL has recently been accorded the Environmental clearance from the Ministry of Environment, Forest & Climate Change for the Refinery Expansion Project on 27th July 2020, which would be the zero date for the Project. M/s SBI Capital Markets Limited, Mumbai has been appointed for debt syndication of Rs. 15,102 crore for Refinery Expansion Project. Lining up of technical management consultant for Refinery Expansion Project, EPCM for pipeline project, licensors for fluid catalytic cracking gasoline desulphurisation Unit (FCC-GDS) and motor spirit (MS) block and allocation of 200 acres of land to set up crude oil terminal in Paradip are other significant developments in implementation of the integrated mega refinery expansion project. The 130 km Indo-Bangla Friendship Pipeline (IBFPL) for exporting NRL products from the Siliguri Marketing Terminal to Bangladesh is progressing well. Also, the country’s first 2G bamboo based bio refinery being executed through a JV with Finnish collaborators has recorded adequate progress on ground. MD NRL Mr. S K Barua said, “Stringent monitoring of the aforesaid projects taking into consideration lockdowns, travel restrictions, logistic disruptions and migrant worker availability will be critical to ensure their scheduled completion and commissioning.” The annual dividend paid by the company remained at 150% i.e Rs 15/ per share which was already disbursed as Interim dividend in February 2020. Though giant steps to secure the Company’s future was the highlight of the year, unanticipated bottlenecks and unprecedented volatilities affected bottom lines. Commenting on the present circumstances, Chairman D Rajkumar said, “The last few months have been tough with most of our efforts focused on adapting to the changing circumstances that have unfolded in the wake of the COVID-19 pandemic. On the positive side, the crisis has thrust upon us opportunities to break free from the conventional ways in which we have been carrying out our business and also to explore other possibilities to stay current and relevant.” The company stated that NRL’s profitability in year 2019-20 was adversely affected due to inventory losses in the month of March 2020, as Crude Oil prices reached a new low impacted by the pandemic situation. Revenue from operations recorded a dip at Rs. 14,073 crore during the year 2019-20 as compared to Rs. 18,511 crore in the previous year due to lower sales volume and reduction in prices of petroleum products in the international market. Profit before tax decreased to Rs. 1,735 crore during the year 2019-20 from Rs. 3,052 crore in the previous year. Consequently, profit after tax decreased to Rs. 1,381 crore during the year as compared to Rs. 1,968 crore in the previous year. NRL’s net worth stood at Rs. 5,304 crore as on 31st March, 2020. The Company has a near-zero debt position and favourable credit ratings, making for a strong balance sheet position to raise funds for its upcoming refinery expansion project. The refinery processed 2,383 TMT of crude oil compared to 2,900 TMT in the year 2018-19, the decline being mainly attributable to refinery turn around undertaken after a gap of 4 years and lower capacity utilization during March 2020 in the aftermath of COVID-19. During the year 2019-20, the refinery also processed maiden imported Miri Light Crude Oil from Malaysia. Overall, in terms of production efficiency, NRL continues to be in the league of best performing refineries in the country with one of the highest distillate yield, lowest specific energy consumption and high gross refining margin (GRM). Overall sales volume during 2019-20 was 2,361 TMT against production of 2,300 TMT. Highlight of the year of launch of NRL’s own brand of Food Grade Wax ‘Pristene’ which recorded a sale of 0.5 TMT during the year. Bulk LPG Tanker unloading facility was commissioned in Numaligarh to facilitate receipt of external LPG input to boost packed LPG production. Additional 4 lakh LPG cylinder could be bottled using the external LPG input.
Oil and Natural Gas Corporation cuts debt by 35 per cent to Rs 13,949 crore
State-owned Oil and Natural Gas Corporation (ONGC) has cut its debt by more than one-third but faces an uphill challenge to meeting planned expenditure during current fiscal due to oil and gas prices falling below sub-optimal levels, according to company officials and regulatory filings. ONGC’s outstanding debt of Rs 21,593 crore as on March 31, 2019 has come down to Rs 13,949 crore as on March 31, 2020, as it used revenue from better operations to retire some of the borrowings, according to the company’s regulatory filings. Out of this debt, long-term borrowings account for Rs 2,245 crore which are due for maturity in December 2029. The company had cash and cash equivalent (including other bank balances) of Rs 968 crore as on March 31, 2020, up from a record low of Rs 504 crore a year back. Standalone debt-equity ratio at the end of March 31, 2020 is only 0.07 which is considered comfortable. Company officials explained that ONGC has been working on bringing operational efficiencies and financial discipline and used surplus revenues to repay debt. “While we ended the 2019-20 fiscal year with a comfortable financial position, we face an uphill challenge during the current 2020-21 financial year. The pandemic has played havoc on oil prices and government mandated gas price is way below cost of production,” a senior official said. ONGC has planned a capex of over Rs 26,000 crore and meeting that with current oil and gas price will be a challenge, he said. Another official said the company had taken an impairment loss of Rs 4,899 crore in Q4 FY’20 to factor into estimated future crude oil and natural gas prices. However, the company believes that oil and gas prices will recover in future and in that case this impairment loss shall be reversed as and when prices rise, he said. ONGC once was India’s most profitable company with a cash balance of over Rs 10,000 crore. But the fortunes reversed after the company bought the government’s 51.11 per cent stake in oil marketing company Hindustan Petroleum Corporation Ltd (HPCL) and the Gujarat government’s GSPC in a KG basin gas block. It funded the Rs 36,915 crore acquisition of 51.11 per cent equity shares in HPCL through internal funds of Rs 12,034 crore and balance Rs 24,881 crore from borrowed money from commercial banks. The funding requirement of Rs 7,560 crore for Gujarat State Petroleum Corporation’s KG block acquisition was met by way of borrowing against term deposits. Its cash and balances dipped to touch a record low of Rs 504 crore in March 2019, down from Rs 1,013 crore in March 2018 and Rs 9,511 crore in March 2017 and Rs 9,957 in March 2016. “We live in an era of sub-optimal oil prices and government mandated natural gas prices that are way below the cost. The answer to such a scenario is to optimise cost and bring in operational efficiencies,” an official said. He said the company has sufficient lines of credit/ short term fund facilities with banks amounting to Rs 7,800 crore for meeting the working capital or deficit requirements. Further, the company has an overall limit of Rs 10,000 crore for raising funds through Commercial Paper.
Oil rises 1% on Saudi Aramco’s upbeat demand view, Iraq supply cut
Oil prices climbed on Monday, supported by Saudi optimism about Asian demand and an Iraqi pledge to deepen supply cuts, although uncertainty over a deal to shore up the US economic recovery capped gains. Brent crude futures rose 34 cents, or 0.8 per cent, to $44.74 a barrel by 0641 GMT, while US West Texas Intermediate (WTI) crude futures were up 47 cents, or 1.1 per cent, to $41.69 a barrel. Both benchmark contracts fell on Friday, hurt by demand concerns, but Brent still ended the week up 2.5 per cent, with WTI up 2.4 per cent. “Comments from the weekend from Aramco are the driver at the moment,” said Michael McCarthy, market strategist at CMC Markets and Stockbroking. Saudi Arabian Aramco’s Chief Executive Amin Nasser said on Sunday he sees oil demand rebounding in Asia as economies gradually open up after the easing of coronavirus lockdowns. “He painted a rosy picture on the outlook for demand in the Asian region,” McCarthy said. On the supply side, Iraq said on Friday it would cut its oil output by a further 400,000 barrels per day in August and September to compensate for its overproduction in the past three months. The move would help it comply with its share of cuts by the Organization of the Petroleum Exporting Countries and their allies, together called OPEC+. The sharper cut will take Iraq’s total reduction to 1.25 million bpd this month and next. “Saudi Arabia and Iraq forging better relationships over the oil deal are excellent for the compliance outlook,” AxiCorp market strategist Stephen Innes said in a note. The Saudi and Iraqi energy ministers said in a joint statement that OPEC+ efforts would improve the stability of global oil markets, accelerate its balancing and send positive signals to the markets. While hopes grew on stalled talks between US Democrats and the White House on a new support package for cash-strapped US states hit by the coronavirus pandemic, delays in reaching a deal weighed on the market. US House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin both said they were willing to restart talks on a deal to cover the rest of 2020. “The longer this drags on the worse it is for the demand scenario,” McCarthy said. He said there was strong technical resistance for WTI around $42.50 and between $45 and $45.50 for Brent. Holidays in Japan and Singapore on Monday dampened market activity in Asia.
Pachpadra refinery will be built on time: Rajasthan government
Work on the Rs 43,123-crore refinery at Pachpadra may have stalled due to lockdown, but with a little over two years left to meet the deadline for completion of the project, now there is a race to accelerate construction activities. Before the Covid outbreak, 3,800 people were working on the site, but as of now the workforce has gone up to 5,000, said an official of the petroleum department after a review meeting of the project. He said the joint venture company HPCL Rajasthan Refinery Ltd (HRRL) has fast-tracked development of various projects of the refinery to make up for the lost time. “Conscious of the deadline and the lost time due to the lockdown, HRRL has fast-tracked processes for developing key projects of the refinery. The number of people working on the project has actually exceeded 5,000, which was 3,800 before the pandemic broke out. But the number will increase significantly to about 25,000 once the fabrication of the refinery starts in 4-5 months’ time. Similarly, awarding works contracts has been given priority,” said Subodh Agarwal, additional chief secretary, mines and petroleum department. He said the original deadline of completing the refinery was fixed for October 2022, which now looks within reach, while commercial operation is expected to start from March 2023. “Now, the priority is to meet the deadline and accordingly, we are ensuring that there is no delay in decision making,” Agarwal added. As per the findings of the review meeting, HRRL has already issued 155 work orders worth Rs 20,000 crore, including four of the 13 processing units, which are at the heart of any refinery. Works worth Rs 4,185 crore have already been completed on ground. A survey for laying 540km long pipeline from Mandvi port in Gujarat has been completed. As per the plan, HRRL would import 7.5 million tonne Arab mix crude oil which will be stored in a tank at Mandvi from which, it will come to the Pachpadra refinery through the pipeline. Additionally, the 9-million tonne refinery will get 1.5 million tonne crude oil from Rajasthan, mostly from Cairn. A reservoir for 28 million of gallons daily (MGD) water has been constructed on the refinery site. Currently, it has been connected with 18-km long pipeline to get water from a PHED point for construction. But ultimately, when the refinery becomes operational, water will come from Nachna where HRRL has started construction work for a reservoir.
Saudi Aramco still aims for $15 billion investment in India’s Reliance
Saudi Aramco said it’s still working on a deal to buy a $15 billion stake in Reliance Industries Ltd.’s refining and chemicals business, even as lower oil prices forces it to slash investment spending. Reliance’s shares fell in mid-July after Chairman Mukesh Ambani said a transaction had been delayed “due to unforeseen circumstances in the energy market and the Covid-19 situation.” A deal with Reliance would help the world’s biggest crude exporter join the ranks of the top oil refiners and chemical makers. State-owned Aramco is already a major supplier of crude to India, while Reliance sells petroleum products, including gasoline, to the kingdom. “We are still in discussion with Reliance,” Aramco Chief Executive Officer Amin Nasser said on a call with reporters on Sunday. “The work is still on. We will update our shareholders in due course about the Reliance deal.” Aramco reported on Sunday that second-quarter net income was down almost 75 per cent from a year earlier. It has been slammed by the roughly 33 per cent drop in oil prices in 2020. The coronavirus pandemic halted travel and business, slashing demand for crude and fuel. Ambani, the world’s fourth-richest person, said last year that Aramco was set to buy a 20 per cent stake in his company’s refining and petrochemicals business, valuing it at $75 billion. The Reliance transaction would help Aramco reach its goal of more than doubling refining capacity to between 8 million and 10 million barrels a day. The Saudi firm had refining capacity of 3.6 million barrels a day at the end of last year, including wholly-owned plants and stakes in joint ventures. The gross capacity of facilities in which Aramco has stakes was 6.4 million barrels daily. The company, officially known as Saudi Arabian Oil Co., is working to start the 400,000 barrel-a-day Jazan refinery on Saudi Arabia’s southern Red Sea coast this year. It also owns the biggest refinery in the U.S. as well as plants in countries such as South Korea and Japan. It’s planning several Chinese ventures. Reliance’s need for a cash infusion has eased in recent months. The Indian conglomerate raised some $30 billion by attracting investments from the likes of Google and Facebook Inc. into its digital unit, Jio Platforms Ltd., and by selling shares to existing stakeholders.
India exploring avenues to help Mauritius deal with oil spill
India is exploring all avenues to help Mauritius to deal with the oil spill after which the country declared a state of environmental emergency. The incident happened when a Tanker MV Wakashio carrying over 4000 tonnes of fuel got stuck in a reef at Pointe d’Esny. Indian govt sources told WION, “This is an evolving situation and we are in regular touch with Mauritian authorities.” Explaining further, “We are ascertaining their various requirements and exploring all avenues to offer all possible help for salvage operations and for environment protection concerns.” Indian Oil (Mauritius) Ltd has already positioned a barge at the site to extend any assistance which may be needed in evacuating fuel oil from the vessel
Reliance has a 15-year plan to convert itself into a new energy company
Billionaire Mukesh Ambani’s Reliance Industries Ltd has a 15-year vision to build itself as a new energy company that aims to recycle CO2, create value from plastic waste and has an optimal mix of clean and affordable energy, analysts said. While the oil-to-chemical conglomerate has in recent times seen focus on consumer business, RIL’s core oil-to-chemical (O2C) business is well placed to generate sustained free cash flow, BofA Securities said in a report. “Until demand normalises, RIL is looking to maximise throughput, focus on cost by leveraging deep petrochemical integration and continue to focus on domestic fuel marketing,” it said. Future of O2C is new energy company and partnerships. “RIL has a 15-year vision to build itself as one of the world’s leading new energy and new material companies. It also intends to be a net carbon zero company by 2035. To achieve this, the company is open to work with global financial investors, reputed technology partners and start-ups working on futuristic solutions,” it said. This new energy business based on the principle of carbon recycling and circular economy is a multi-trillion opportunity for India and the world. The brokerage said a key focus for RIL is renewable energy, and for that it intends to build an optimal mix of clean and affordable energy with hydrogen, wind, solar, fuel cells and battery. “It intends to use proprietary technology, recycle CO2, create value from plastic waste; RIL is also looking to make its operations cleaner and more customer-centric,” it said. Reliance has the largest single site refinery at Jamnagar in Gujarat with crude processing capacity of 1.24 million barrels per day. The brokerage said RIL is looking to make CO2 as a recyclable resource, rather than treating it as an emitted waste. While the company will remain a user of crude oil and natural gas, it is looking to embrace new technologies to convert CO2 into useful products and chemicals. “One viable application RIL has found for such ‘end of life-cycle’ plastic waste is in road construction. Road constructed with post-consumer, non-recyclable plastic waste ensures enhanced durability, higher resistance to deformation, increased resistance to water induced damages and improved stability and strength,” it said. In November last yera, RIL confirmed plans to invest Rs 70,000 crore to establish a crude oil-to-chemicals (COTC) complex at the company’s Jamnagar facility. The company is proposing to develop a total area of 2,000 acres adjacent to its world-scale facilities at Jamnagar to build the COTC complex. The plan is also to convert the Jamnagar site’s existing fluid catalytic cracking (FCC) unit to a high severity FCC (HSFCC) or Petro FCC unit, to maximise ethylene and propylene yields. “RIL’s strategy is to transform the Jamnagar refinery from a producer of transportation fuels to chemicals. The company ultimately wants to achieve a rate of more than 70 per cent in the conversion of crude to olefins and aromatics,” it said. RIL in its recent annual general meeting stated that potential partnerships will help it remain competitive and better serve the Indian/ international markets. The company intends to approach the National Company Law Tribunal with a proposal to spin off its oil-to-chemical (O2C) business into a separate subsidiary to facilitate this partnership opportunity. BofA said Saudi Aramco picking 20 per cent stake in O2C business is a win-win for both companies. “RIL will be able to better utilise its refinery capabilities with availability of several grades of crude oil from super light to heavy being supplied by Aramco,” it said adding the partnership going ahead will leverage the O2C value chain to maximize margins and meet the evolving needs of consumers by supplying energy, base chemicals and new materials. The strategic partnership with Aramco will help in increasing its crude oil to chemicals conversion ratio, which presently stands at 20 per cent. “With the deal RIL will get technological expertise from SABIC (Saudi Basic Industries Corporation), in which Aramco recently bought a controlling stake,” it said. For Aramco, it creates a long-term crude supply contract of 0.5 million barrels per day (about 5 per cent of current production) to RIL’s Jamnagar refinery, with reduced demand risks. Aramco currently covers only about 40 per cent of its crude output via refining and strives to increase it further. “It would give Aramco the opportunity to participate in Indian market growth story where demand will likely be strong over the next two decades,” it added.