Bahwan CyberTek and Lightbend expand partnership for MENA region
Digital transformation solutions provider Bahwan CybrTek (BCT) announced the expansion of its global partnership with Lightbend, a cloud native architecture firm. The pact focuses on use of Lightbend’s Akka Platform which simplifies the delivery of distributed systems with reactive microservices frameworks and runtimes for building cloud native applications. Under the pact, BCT will become a system integrator partner of Lightbend in the Middle East and North Africa (MENA) region, where BCT has enterprise customers across Oil and Gas, Telecom, Power, Banking, Retail and Logistics sectors. “Our partnership with Lightbend comes at a time when many digital transformation initiatives across the region have been driven to high levels of maturity. Akka Platform is a great addition and complements our range of specialized IP and services offerings,” said S Vishwanathan, Executive Vice President, BCT. BCT will provide digital transformation initiatives based on Akka Platform in key use cases across Predictive Analytics, Digital Experience and Digital Supply Chain Management. Lightbend’s customers include Credit Karma, Hootsuite, iHeartRadio, LinkedIn, Norwegian Cruise Lines, Starbucks, UniCredit Group, Verizon, Walmart, Weight Watchers and William Hill.
Fall in natural gas prices have impacted operational performance, says Oil India
Earnings weakness persists for Oil India in the third quarter as the company reports an EBITDA loss of Rs 60 million led by oil and gas losses and higher operational expenses. Harish Madhav, Director-finance of Oil India said, “The crude prices in Q3 improved from Q2 but still they were just around $44 per barrel realization, but the other thing which affected very negatively was the fall in the natural gas prices. As against last year’s Q3, the price has fallen by almost 45 percent so fall in natural price has affected the profitability very negatively.” On other expenses, he said, “We have in fact made provisions for a write off of two wells which have been finally turned out to be non-commercial, so total write off for these two wells is close to about Rs 5.50 billion that has increased the other expenses. Almost every year if we see past history on an average Rs 6-7 billion well write off or provisions are taking place on a year-on-year basis.” On crude prices, Madhav said, “As far as crude prices are concerned we are much better placed, as of today we are realizing close to around $56-57 per barrel so far from January 1 onwards the average prices is about $ 55-56 but if we consider crude to remain around $60 for the remaining period till March then our realization will improve maybe around $57-58 per barrel in the fourth quarter. Overall year basis we will still be around $43-44 per barrel realization for the whole year which will be significantly lower than last year.” He added, “Gas prices are revised once in six months so the gas price of 1.79 which is applicable today will continue till March and the new gas price will be known only on April 1”
Govt Should Have Given Relief Of Rs 12-14 On Petrol, Diesel, Says Former Petroleum Secretary
As the fuel prices continued its upward spiral, SC Mishra, former Secretary, Ministry of Petroleum and Natural Gas said the economic situation has improved since 2020 and the central government should have given a relief of Rs 12 per litre on petrol and Rs 14 per litre on diesel to the common man. Mishra underlined the fact that the government had raised the taxes on petrol by Rs 12 per litre and on diesel Rs 14 per litre, twice in March and May 2020, to garner extra revenue. Adding to this, Finance Minister Nirmala Sitharaman levied an additional agriculture Infrastructure and Development Cess (AIDC) of Rs 2.5 per litre on petrol and Rs 4 per litre on diesel in the Union Budget presented on February 1. Talking to ANI, Mishra said the government finds fuel an easy commodity to tax. “Both state governments and central government are quite happy to tax fuel and raise revenues for their various activities. I was, of course, expecting that the increase in tax, which was imposed by the central government in months of March and May, when the crude prices had come down, would be removed once things are normalised. Now that the crude prices have gone up to the earlier position of USD 60 per barrel, the government would have given a relief of Rs 12 per litre on petrol and Rs 14 per litre on diesel,” he said. The former Secretary said since the state taxes are also levied there should have been some decrease in the state taxes also. “So, the net benefit to the consumer would have been in the range of about Rs 15. But unfortunately, the Government of India, maybe due to their own considerations of raising other revenue sources, they have continued to have high taxes on petrol and diesel,” he stated. Elaborating about the taxes levied on petrol and diesel, Mishra said the actual refinery rate price for petrol or diesel is between Rs 30 to Rs 31 per litre. “The tax by Government of India on petrol is about Rs 33 per litre and diesel by about Rs 32 per litre. On top of it, there is Rs 2.5 per litre dealer commission for diesel and Rs 3.5 per litre on petrol. Adding all these prices state governments also imposed their Value Added Tax (VAT), which is in percentage terms and varies from Rs 15 to Rs 25 per litre,” said the former secretary. So, being a commodity, which is available internationally at about Rs 30 to Rs 32 per litre, Mishra said Indians are paying for it between Rs 80 to Rs 90 per litre. He added that the effective rate of tax comes to about 150 per cent to 200 per cent on both petrol and diesel. “This is one commodity, which all finance ministers love to tax. This is a tax, which is very easy to collect. There is no charge of collection, there is hardly any leakage, and consumption is not decreasing because this is an essential item for a developing economy. You need to consume more and more energy resources,” Mishra said. Talking about LPG and kerosene, Mishra said earlier there was no tax on these commodities. “I think the position may be the same or they may tax, but not much. The reason that the prices are going up for LPG is that LPG production in India is not adequate and we are importing fairly large quantities. I think the government can take a look at it and organise a price control on LPG,” he said. Mishra said central and state governments will not bring LPG under GST contrary to “whatever they might be saying in public”. “The economic situation and budget situation of states and Centre, is such that they are unlikely to bring LPG under GST in the near future,” he said. Notably, the Centre in May 2020 has raised excise duties by Rs 10 per litre on petrol and Rs 13 per litre on diesel. Mishra said the duty increase has not led to a fuel price change for retail consumers. Earlier on March 14, 2020, excise duty on petrol and diesel was hiked by Rs 3 per litre. An additional Re 1 per litre was also levied on both petrol and diesel under the road and infrastructure cess. The government roughly gets Rs 130-140 billion annually on every rupee hike in excise duty.
India Deal-making Could Shake Up Asian LNG Markets
Royal Dutch Shell the world’s largest liquefied natural gas (LNG) producer, said last month it had installed an LNG loading facility for trucks at its 5 million tonnes per annum (mtpa) LNG import terminal at Hazira, a major port on India’s east coast. India’s oil minister, Dharmendra Pradhan, said the unit would create natural gas availability in the country’s off-grid areas where no gas pipelines exist. He added that it would promote the use of LNG in the country’s long-haul trucking sector. India’s LNG development plans Shell’s move comes as India tries to pivot from an economy largely based on coal to more gas, including a major LNG infrastructure build-out. New Delhi recently earmarked gas to make up at least 15 percent of the country’s energy mix by 2030 from just 6.2 percent currently. India bypassed legacy LNG importer Taiwan several years ago to become the world’s fourth-largest importer of the fuel. In 2019, India imported 1.2 trillion cubic feet worth of LNG – around seven percent of global trade – and a 25-percent increase over 2017 levels, according to the U.S. Energy Information Administration. After initial procurement contraction in early 2020 due to the onset of the COVID-19 pandemic and subsequent lockdowns, India took advantage of multi-year low spot prices – coming from both a prolonged overhang of the fuel, due to ramped-up production in the U.S. and Australia, as well as continued demand destruction from the pandemic. India commissioned its sixth LNG import terminal last year, and it has four more under construction that are expected to come online by 2023. Its terminal expansion coincides with the country trying to put in place a major gas pipeline grid to cover around two-thirds of the country. India’s LNG and gas development has also given it considerable bargaining power with producers as it tries to move away from pricing based on oil-indexation to term deals based on spot prices – a new development in LNG contracting. However, a challenge for India’s plan to change LNG pricing dynamics came in January when LNG spot prices in the region breached the US$30 per million British thermal unit (MMBtu) price point. Colder winter temperatures slammed north Asia, creating a gas supply crunch in top LNG importers Japan and China. Going forward, India will have to decide whether it wants term supply deals using an industry standard oil-indexation formula, or a mix of oil and spot price indexation as well as shorter-term flexible pricing against other benchmarks. India’s largest importer, Petronet LNG (NSE: PETRONET), has already been trying to renegotiate prices reached under long-term deals with Qatar. Lower spot prices over the past two years made such long-term deals unattractive. In 2019, Petronet signed a memorandum of understanding to buy a US$2.5 billion stake in Tellurian’s proposed Driftwood project in Louisiana, including importing 5 mtpa of LNG. However, a deal could not be reached before its terms expired at the end of December, prompting some analysts to concede that India’s inconsistency in LNG markets could tarnish its reputation in future deals. Given the ongoing supply overhang in LNG markets that will now be extended even further due to demand destruction from the COVID-19 pandemic, India still has a plethora of producers to choose from as well as a growing list of LNG trading houses that are now starting to also offer term deals. Timely domestic production Production at India’s first ultra-deep water gas field that could help the country reduce its dependence on energy imports got underway in December. Mumbai-based Reliance Industries Ltd. and oil and gas major BP started producing first gas at the country’s initial ultra-deep water gas field, the R Cluster in block KG D6, some 37 miles (60 kilometers) off the country’s east coast. The field, the first of three in the same block, is expected to produce 12.9 million standard cubic meters per day (MMscmd) of gas this year. The first field by itself will meet around 10 percent of India’s gas needs. At peak production, all three KG D6 fields are expected to produce around 30 MMscmd (1 billion cubic feet per day) by 2023, representing 25 percent of India’s domestic gas production and meeting around 15 percent of the country’s projected gas demand by that time period.
Cairn Oil & Gas seeks bids for gas from Rajasthan block
Mining magnate Anil Agarwal’s Vedanta Ltd on Monday invited bids for the sale of natural gas from its prolific Rajasthan block at rates equivalent to the price of imported LNG from the spot market or Brent oil price. Cairn Oil & Gas, Vedanta’s oil and gas arm, produces about 3.5 million standard cubic meters per day of gas from its largely oil-bearing block in Rajasthan, the firm said in a notice. The output is being ramped-up to more than 5 mmscmd. “The company invites Expression of Interest (EoI) from interested parties with proven capabilities and demonstrated presence in the natural gas business to participate in the national competitive e-auction process for the purchase of natural gas produced from our flagship block in Barmer, Rajasthan,” it said. It invited bids for 4.5 mmscmd of gas for two years from the RJ-ON-90/1 block. The price of gas will be lower of the previous month’s average of DES West India spot liquefied natural gas (LNG) prices or 14 per cent of the average Brent crude oil price. Platts West India Marker (WIM) is the LNG price assessment for spot physical cargoes of delivered ex-ship (DES) into ports in India and the Middle East region. The rate currently is USD 6.2 per million British thermal unit. Brent crude oil price is over USD 63 and at the current rate, the gas price would come to USD 8.8 per mmBtu. “The sales gas price for any month shall not be lower than the government of India declared gas price,” the notice said. The government every six months announces a price for the gas produced by state-owned gas produces ONGC and Oil India Ltd. That rate currently is USD 1.79 per mmBtu for the period up to March 31, 2021. The gas sales price of Platts LNG WIM for any month or average Brent price will be exclusive of all applicable taxes, duties, transportation tariffs and marketing margin which may be payable by the buyer, the company said. This is the first time a producer is seeking bids linked to the imported price of LNG from the spot or current market. All previous price discoveries for gas produced within the country have either been linked to crude oil or to a gas marker. Reliance Industries and its partner BP Plc of UK earlier this month sold 7.5 mmscmd of gas from their KG-D6 block off the east coast, at a price linked to JKM or Japan/Korea LNG import price. The price bid came to JKM minus 0.18. They had sold the first 5 mmscmd of gas from the new discoveries in the block in November 0219 at the price linked to Brent price. Essar Steel, Adani Group and state-owned GAIL had bought the majority of the initial 5 mmscmd of gas planned to be produced from R-Series in the KG-D6 block by bidding between 8.5 and 8.6 per cent of dated Brent price. Reliance had in 2017 sold coal gas from its Sohagpur CBM block in Madhya Pradesh at a benchmarked rate at 12.67 per cent of JCC, or Japan Customs-Cleared Crude, plus a fixed component. Cairn Oil & Gas produced 132,174 barrels of oil and oil equivalent gas from the Rajasthan block in the October-December quarter, the company had said last month. This was 9 per cent lower than the output in the previous year. Raageshwari – the gas field in the Barmer block – averaged 130.0 million standard cubic feet per day (mmscfd) in Q3 FY21, with gas sales post captive consumption at 105.0 mmscfd, it had said.
PM Modi to launch key projects of oil and gas sector in Tamil Nadu
Prime Minister Narendra Modi will dedicate to the nation and lay the foundation of key projects of the oil and gas sector in Tamil Nadu on February 17. An official release said Prime Minister will dedicate Ramanathapuram – Thoothukudi natural gas pipeline and Gasoline Desulphurisation Unit at Chennai Petroleum Corporation Limited, Manali. He will also lay the foundation stone of Cauvery Basin Refinery at Nagapattinam. The release said these projects will result in substantial socio-economic benefits and will boost the country’s march towards ‘Urja Aatmanirbharta’. Governor and Chief Minister of Tamil Nadu, and Union Minister for Petroleum and Natural Gas will also be present on the occasion. The Ramanathapuram-Thoothukudi section (143 km) of the Ennore- Thiruvallur- Bengaluru- Puducherry- Nagapattinam- Madurai- Tuticorin Natural Gas Pipeline has been laid at the cost of about Rs 700 crore. It will help utilise gas from ONGC gas fields and deliver natural gas as feedstock to industries and other commercial customers. The Gasoline Desulphurisation Unit at Chennai Petroleum Corporation Limited (CPCL), Manali has been constructed at the cost of about Rs. 500 crore. It will produce low sulphur (less than 8 ppm) environment-friendly gasoline, help reduce emission and contribute towards a cleaner environment, the release said. The Cauvery Basin Refinery to be set up at Nagapattinam will have a capacity of 9 million metric tonnes per annum. It will be set up through a Joint Venture of IOCL and CPCL at an estimated project cost of Rs 31,500 crore. It will produce motor spirit and diesel meeting BS-VI specifications and polypropylene as a value-added product. The Prime Minister will address the event at 4:30 pm on Wednesday via video conferencing.
India shifts oil imports from Middle East to Africa, North America due to OPEC cuts
India’s refiners are turning to spot oil from Africa and North America as long-term suppliers in the Middle East cut output and as demand for gasoline jumps amid the Covid-19 pandemic. Spot crude imports into the world’s third-largest oil market will rise by 10 per cent to 15 per cent this year from 2020, according to industry consultant FGE. The increased purchases are coming as India’s top suppliers, including Saudi Arabia and Iraq, curtail output as part of the OPEC+ pact. The shift underscores how other producers are benefiting from the cuts as consumption returns in markets like India. It’s been especially good to exporters like the U.S. and Nigeria, whose crude produces more gasoline that’s in high demand as the pandemic pushes people to private cars instead of public transport. “The pullback from traditional term suppliers came when refiners maximized throughput to align with the robust domestic demand recovery,” said Senthil Kumaran, FGE’s head of South Asia oil. “They were forced to scramble for spot supplies to bridge the shortfall.” Bharat Petroleum Corp., India’s second biggest state-owned refiner, has increased the proportion of spot crude purchases to about 45 per cent from about 30 per cent normally, according to Finance Director N. Vijayagopal. The company plans to keep spot about 40 per cent of supply in at least the medium term. “We are trying to increase the proportion of spot in the overall basket,” Vijayagopal said. BPCL boosted refinery runs to 113 per cent in January, and the other major state-owned refiners, Indian Oil Corp. and Hindustan Petroleum Corp. are also operating above capacity, company officials said. While demand for gasoline and liquid petroleum gas for cooking has surged, diesel’s rebound has been slower and jet fuel consumption is still half of what it was a year ago as most international routes remain shut. That’s leading to a shift in where India is sourcing its barrels. Middle East oil tends to yield more diesel, while crude from the North Sea, West Africa and U.S. shale fields usually produce more LPG and gasoline. Crude imports from Nigeria in December jumped 68 per cent from the previous year, while U.S. oil purchases surged almost 77 per cent, according to government data. “Gasoline demand growth is expected to sustain, because once you are used to private commuting, it’s difficult to shift back to public transport,” Hindustan Petroleum Chairman Mukesh Kumar Surana said. “Refineries will explore all possibilities to increase gasoline production.” The Organization of Petroleum Export Countries and partners like Russia began a record output cut of 9.7 million barrels a day last year after the coronavirus pandemic battered demand. Some of that production has returned, but Saudi Arabia is making additional cuts in February and March to add stability to the market. India, one of the biggest buyers of OPEC crude, has already expressed displeasure at the cuts. The policy is “creating confusion for the consuming countries,” India’s Oil Minister Dharmendra Pradhan told OPEC Secretary-General Mohammad Barkindo last month. OPEC+ members are unlikely to change its production policy at their next meeting on March 4, and will probably agree to keep output steady in April, Iraq’s Oil Minister Ihsan Abdul Jabbar said. And as long as people in India want to travel in private cars and cook at home, the strong spot purchases should continue, according to FGE. “They will continue to import lighter grades as long as the economics allow them to do so,” Kumaran said.
ONGC to scale up KG basin gas output this year
India’s top oil and gas producer ONGC on Monday said it will scale up natural gas production from a KG basin block to 2.5-3 million standard cubic meters per day by May this year and will hit the peak output sometime in 2023-24. Oil and Natural Gas Corporation (ONGC) last year started gas production from the USD 5.07 billion KG-DWN-98/2 project in the Krishna Godavari basin, off the east coast of India. “Gas production from Cluster-II has started as it is currently producing 320,000 standard cubic meters per day. May onwards, it will ramp up to 2.5-3 mmscmd,” ONGC Director (Finance) Subhash Kumar said in an investor call. The output in the fiscal year beginning April (2021-22) is projected to average 3.4 mmscmd and 8.5 mmscmd in the following year. “We are cautious in committing to any targets but 2023 or 2024 is a likely scenario for peak production,” he said. ONGC is investing USD 5.07 billion in bringing to production a clutch of discoveries in the deep-sea block, also known as KG-D6. The block sits next to the KG-D6 discovery area of Reliance Industries Ltd and BP Plc. The project will cumulatively produce around 25 million tonnes of oil and 45 billion cubic meters of gas with peak production of 78,000 barrels per day of oil and 15 million standard cubic meters per day. ONGC started gas production from the project on schedule in early 2020 but the start of oil production has been delayed due to the outbreak of pandemic which disrupted global supply chains, he said. Crude oil production would start once a floating oil production unit, called an FPSO, is mobilised. Associated natural gas from Cluster 2A of this project will have a peak production of 3 mmscmd of gas and 78,000 barrels of crude oil per day with a 15-year profile; non-associated natural gas from Cluster 2B will have a peak free gas production of 12.25 mmscmd with a 16-year profile. Oil production from the block is expected to start in the next financial year. The project KG-DWN-98/2 involves some of the most advanced oil field technologies in drilling and completion of 34 subsea wells, laying about 425 km of pipeline and 150 km of control umbilical in water depths varying from 300 to 1,400 meters. On prices, Kumar said ONGC’s breakeven cost for oil production is USD 50 per barrel and for gas is USD 3.50-3.70 per million British thermal unit. The firm can pay dividends to its shareholders if it realises a price upwards of USD 55 a barrel for oil and USD 5 per mmBtu for gas, he said. While currently, the company gets international rates for oil, the government fixes the price for natural gas. The gas price for six months to March 31 is USD 1.79 per mmBtu. Gas prices, he said, are at a record low and the company makes losses on the gas business. ONGC will produce 22.97 million tonnes of crude oil in the next fiscal as compared to 22-22.5 million tonnes in the current financial year ending March 31.