HPCL acquires balance 50 per cent stake in Chhara LNG Terminal
Hindustan Petroleum Corporation Limited (HPCL) has acquired the balance 50 per cent equity stake in HPCL Shapoorji Energy Private Limited (HSEPL) from SP Ports Private limited company. Post acquisition, HPCL’s stake in HSEPL gets enhanced to 100 per cent, making HSEPL a wholly-owned subsidiary of HPCL. HSEPL is constructing a five million tonnes per annum (MTPA) LNG terminal (with provision for expansion to 10 MTPA) at Chhara in Gujarat’s Gir-Somnath district, at an estimated cost of about Rs 4,300 crores, which is likely to be completed by end of 2022. The terminal will have all facilities for receipt of LNG through ocean-going tankers, marine unloading, storage, LNG road tanker loading, regasification, and supply of regasified LNG to the gas grid. The acquisition is in line with the overall future strategy of HPCL to diversify its product portfolio and is an important step in the direction of having a strong presence in the total natural gas value chain. The percentage of natural gas in the overall energy basket of India is expected to grow from six per cent at present to 15 per cent by 2030 which makes it one of the important growth drivers in the future. HPCL, along with its joint venture companies, has a presence in CGD (City Gas Distribution) business in 20 Geographical Areas (GA) in 34 districts covering nine states in the country. HPCL, on its own, operates 674 CNG (Compressed Natural Gas) stations as of the date which it plans to expand further. It is also foraying into setting up LNG dispensing stations. These, together with the focus on enhanced use of natural gas in refineries of HPCL and its joint ventures/subsidiaries add to the strategic value of the acquisition.
BPCL acquires OQ’s stake in Bina refinery
Privatisation-bound Bharat Petroleum Corporation Ltd (BPCL) on Wednesday said it has acquired partner OQ’s entire stake in the Bina refinery project in Madhya Pradesh for Rs 2,400 crore. BPCL signed a sales purchase agreement with OQ, formerly known as Oman Oil Company Ltd, to acquire its 36.6 per cent stake in Bharat Oman Refineries Limited, the company said in a statement. With this, BPCL now has full control over BORL, which runs a 7.8 million tonnes per annum capacity oil refinery at Bina in Madhya Pradesh. “Bharat Oman Refineries Limited was incorporated in 1994 as a public limited company with equal equity participation of BPCL and OQ. Since March 2020, BPCL has been holding 63.4 per cent and OQ 36.6 per cent equity in the company. The Government of Madhya Pradesh has a minor stake in the company through compulsorily convertible warrants,” the statement said. For OQ’s stake, BPCL will pay about Rs 2,400 crore, it said. Commenting on the occasion, N. Vijayagopal, Director (Finance) of BPCL said, “With the acquisition of OQ’s entire stake in BORL, BPCL will establish control over BORL. This is expected to bring immense advantages to both the companies in terms of synergies and optimization of returns and will facilitate any future expansion or diversification in Bina.” BPCL is India’s second-largest oil marketing company, with refineries in Mumbai, Kochi and Bina having a combined capacity of around 37 million tonnes per annum. Its distribution network comprises around 18,000 petrol pumps, 6,600 LPG distributorships, 52 LPG bottling plants, 58 aviation service stations, and 4 cross-country pipelines. The government is selling its entire stake in BPCL.
IGL signs long-term agreement with DTC for supply of CNG
Indraprastha Gas Ltd, India’s largest CNG retailer, on Wednesday signed a long-term agreement to supply compressed natural gas to Delhi Transport Corporation (DTC) buses. The 10-year compressed natural gas (CNG) supply deal was signed by IGL Managing Director A K Jana and DTC Managing Director Vijay Kumar Bidhuri, a company statement said. The gas supply agreement is valid till December 2030, it said. DTC is the largest CNG-powered bus service operator in the world with a fleet size of 3,762 buses and is also in the process of procuring 1,000 new CNG buses which would shortly be plying on the roads of the national capital. “It consumes around 2.80 lakh kgs of CNG per day for its buses which constitute around 11 per cent of daily CNG sale of IGL. The consumption of CNG is expected to increase further after the addition of new buses,” the statement said. In 2010, IGL had signed a long-term gas supply agreement with DTC. As part of the agreement, dedicated CNG filling facilities have been set up at 44 depots of DTC across Delhi and Noida to cater to the fleet of DTC buses being used for public transport with a total compression capacity of 10 lakh kgs per day. “These state-of-the-art CNG filling facilities have helped in timely CNG fuelling of the fleet. The initiative has resulted in optimization of time, finances, and resources for DTC apart from ensuring timely commute of the buses on their respective routes,” it said. In addition, DTC has provided 19 plots adjacent to its depots to IGL for the creation of hybrid facilities, which are used as retail outlets for serving the public. “The relationship between IGL and DTC dates back to the inception of IGL and has been mutually beneficial for both organisations and DTC has been one of the largest customers of IGL,” the statement added. IGL retails CNG to automobiles and piped natural gas to households for cooking purposes and industries as fuel in 10 cities including Delhi, Noida, Greater Noida and Ghaziabad (in Uttar Pradesh). It sells fuel to over 12 lakh vehicles in the national capital region (NCR) through a network of 560 CNG stations. Besides, it supplies piped natural gas to nearly 16 lakh households in these cities.
Gas price for ONGC remains at decade low of $1.79, falls 11% for Reliance-BP
The government on Wednesday left the price of natural gas produced by companies such as ONGC unchanged at a decade-low rate of USD 1.79 while the same for difficult fields like the one operated by Reliance-BP was cut by 11 per cent. The Oil Ministry’s Petroleum Planning and Analysis Cell (PPAC) announced the bi-annual revision in the price of gas, which is used to generate electricity, make fertiliser and convert into CNG for automobiles and cooking gas for households. The rates paid for gas produced from fields given to Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) were left unchanged at USD 1.79 per million British thermal unit for the six-month period beginning April 1, PPAC said in a notification. Simultaneously, the price for gas produced from difficult fields such as deepsea, which is based on a different formula, was cut to USD 3.62 per mmBtu from the current price of USD 4.06. This is the maximum price that Reliance Industries Ltd and its partner BP plc are entitled to for gas they produce from deepsea blocks they won under New Exploration Licensing Policy (NELP). While the government sets the price of gas produced by ONGC from fields given to it on a nomination basis, it bi-annually announces a cap or maximum price that operators who won exploration acreage under NELP can get. The operators are supposed to do a market price discovery by seeking bids from users but that rate is subject to the price ceiling announced by the government, sources said. Reliance-BP had in recent price discovery for new gas from their Krishna Godavari basin block, got rates of over USD 6 per mmBtu but they would get USD 3.62 as per the pricing formula. “The price of domestic natural gas for the period April 1, 2021, to September 30, 2021, is USD 1.79 per mmBtu on Gross Calorific Value (GCV) basis,” PPAC said. Similarly, “the price ceiling” for gas produced from “discoveries in deepwater, ultra-deepwater and high pressure-high temperature areas” is USD 3.62 per mmBtu, it said. Natural gas price is set every six months — on April 1 and October 1 — each year based on rates prevalent in surplus nations such as the US, Canada and Russia in one year with a lag of one quarter. So the price for April 1 to September 30 is based on the average price from January 2020 to December 2020. The sources said gas prices had fallen when the pandemic broke out but recovered later and so the price for ONGC remains unchanged. At the last revision, the price was cut by 25 per cent to USD 1.79 per mmBtu for six months beginning October 1 from USD 2.39. This was the third straight reduction in rate in one year. The price was cut by a steep 26 per cent to USD 2.39 in April last year. The USD 1.79 rate is equivalent to the price paid to ONGC and Oil India Ltd (OIL) prior to May 2020 when formula-based pricing was first introduced. ONGC, the sources said, had posted Rs 4,272 crore loss on gas business in 2017-18, which is likely to widen to over Rs 6,000 crore in the current fiscal (April 2020 to March 2021). ONGC has been incurring losses on the 65 million standard cubic meters per day of gas it produces from domestic fields shortly after the government in November 2014 introduced a new gas pricing formula that had “inherent limitations” as it was based on pricing hubs of gas surplus countries such as the US, Canada, and Russia. The sources said ONGC in a recent communique to the government has stated that the break-even price to produce gas from new discoveries was in the range of USD 5-9 per mmBtu. In May 2010, the government had raised the rate of gas sold to power and fertiliser firms from USD 1.79 per mmBtu to USD 4.20. ONGC and OIL got USD 3.818 per mmBtu price for the gas they produced from fields given to them on a nomination basis and after adding a 10 per cent royalty, the fuel cost USD 4.20 per mmBtu for consumers. The Congress-led UPA had approved a new pricing formula for implementation in 2014 that would have raised the rates but the BJP-led government scrapped it and brought a new formula. The new formula takes into account the volume-weighted annual average of the prices prevailing in Henry Hub (US), National Balancing Point (the UK), Alberta (Canada), and Russia with a lag of one-quarter. Prices are set every six months — on April 1 and October 1 each year. The rate at the first revision, using the new formula, came to USD 5.05 but in the subsequent six-monthly reviews kept falling till it touched USD 2.48 for April 2017 to September 2017 period. Subsequently, it rose to USD 3.69 in April 2019-September 2019 before being cut by 12.5 per cent in October 2019 to USD 3.23