BPCL privatization likely to be completed by March 2022
State-run Bharat Petroleum Corp. Ltd (BPCL) is looking to complete its privatization process this financial year, if all goes well and covid-19 pandemic does not push the process back, said a top company official. The government, which holds a 52.98% stake in BPCL, is in the process of divesting its holdings, as part of its plan to raise a record ₹1.75 trillion from disinvestment proceeds in FY22. On 10 April, the government had given access to BPCL’s data to prospective bidders. So far, mining-to-oil conglomerate Vedanta and private equity firms Apollo Global and I Squared Capital’s arm Think Gas are in the race to buy the government’s stake in BPCL. “There were a few questions which we are in the process of addressing. And then there are a few questions that only the government of India can answer,” said N. Vijayagopal, director, finance, BPCL, after the March quarter earnings call. He said the final bidders will have to visit BPCL’s facilities, which is not possible now due to restrictions on international travel in view of the second wave of the covid-19 infections in India. “If things go as planned, these processes can be completed by July and the interested companies can submit the financial bids by August. If the sale and purchase agreement (SPA) is signed by September, we could take another five-six months to complete the deal,” said Vijayagopal, adding that this is his personal view and not of the government. As part of the privatization process, BPCL sold its 61.65% stake in Assam-based Numaligarh Refinery Ltd (NRL) for ₹9,875 crore to a consortium of Oil India Ltd (OIL) and Engineers India Ltd (EIL) (49%) and the remaining 13.65% to the Assam government in March.
Asia’s LNG demand growth to slow in 2022 as nuclear, coal gain- Woodmac
Liquefied natural gas (LNG) demand growth in Asia will slow down next year as the economic recovery stagnates and the capacity of competing fuels nuclear and coal expand in Japan and South Korea, research consultancy Wood Mackenzie said on Thursday. LNG demand in Asia is expected to rise by 12 million tonnes per annum (mmtpa) in 2022, down from the 19 mmtpa growth in 2021, Robert Sims, head of Woodmac’s LNG short-term, gas and LNG research, said in a note. “LNG demand growth in Asia will slow down as the economic recovery decelerates, coal and nuclear capacity will increase in Japan and South Korea and more offshore domestic supply will be available in India,” he added. At the same time, global LNG supply will grow by 18 mmtpa because of new supply from the Sabine Pass Train 6 and Calcasieu Pass projects in the United States and Indonesia’s Tangguh Train 3, he said. This will mean that there will be about 6 to 7 mmtpa of more LNG available for Europe, which will be 9% more than in 2021. Still, the key to shaping market dynamics in Europe next year will be the ramp up of the Nord Stream 2 pipeline, with capacity of 55 billion cubic metres per year, from Russia to Germany, Sims said, adding that it is expected to be commissioned this winter. “Prices might soften in 2022, but market fundamentals point towards a further tightening of the global LNG market through to 2025,” he said. “With LNG demand in Asia continuing to increase and global LNG supply growth set to slow down, competition for Atlantic LNG will intensify, reducing LNG availability to Europe.” For this year, Wood Mackenzie expects demand for restocking and strong coal-to-gas switching economics to support European gas prices through the summer despite global LNG supply expected to increase by 16 mmtpa in the summer, compared with the same period last year. “Winter will see market dynamics getting increasingly tighter,” Sims said. “Lower winter starting inventory in Europe, combined with high seasonal Asian demand, will result in increased competition for Atlantic LNG, including from the U.S., putting pressure on LNG prices”.
Moody’s flags Big Oil’s rising risk from climate battle
Rating agency Moody’s said on Friday that the credit risk of major oil producers has increased with recent events including Royal Dutch Shell losing a Dutch climate lawsuit this week and Exxon losing a battle with shareholders. Chevron also lost a vote to shareholders demanding it cut emissions further. “These actions represent a substantial shift in the landscape for oil companies, which had previously prevailed in courts, and largely fend off significant shareholder votes, on climate related matters,” Moody’s said. Moody’s said it considered Exxon losing board members to an activist hedge fund over its energy transition strategy the most important development because it “likely presages similar results in future board elections at other U.S. oil companies.” “The increasing potential for ever more stringent investor climate- and emissions-related investment thresholds are likely to lead to higher capital costs and diminished access to capital for oil companies that do not keep pace with investors’ expectations for transitioning to a low carbon business model.”
47 per cent people hold Centre responsible for hike in auto fuel prices
Around 47 per cent people hold the Central government responsible for the rise in petrol and diesel prices, as per the ABP-C Voter Modi 2.0 Report Card. The ABP-C Voter snap poll found that a total 21.2 per cent of people hold the state governments responsible for the price rise. Similarly, 18.4 percent of respondents hold the oil companies responsible for the hike in petrol and diesel prices. In urban areas, 43.9 per cent of people hold the Centre responsible for the rise in auto fuel prices, while 48.3 per cent respondents in the rural areas feel the same. A total 18.6 per cent of the people in the urban areas hold the states responsible for the rise in petrol and diesel prices, while in the rural area, 22.3 per cent hold similar views. The survey further stated that 21 per cent in urban areas hold the oil companies responsible for the price rise, while 17.2 per cent in rural areas feel the same. This survey was carried out between May 23 and May 27 on 12,070 people across the country. The petrol and diesel prices in India are decided by keeping the international fuel prices as a benchmark. A rise in global fuel prices results in a price hike in the domestic market. The state-run oil marketing companies, including Indian Oil Corporation (IOC), Bharat Petroleum and Hindustan Petroleum, align the rates of domestic fuel with that of global crude prices by taking into account any changes in the foreign exchange rates. On Saturday, the state-run oil marketing companies hiked fuel prices with petrol crossing the Rs 100-mark in Mumbai. With an increase of 26 paise, petrol price in Delhi has gone up to Rs 93.94 per litre. On the other hand, the price of diesel in the national capital went up by 28 paise to Rs 84.89 per litre. Another reason behind the price hike is the taxes levied by both the Centre and the state governments. The prices for petrol and diesel differ from state to state depending upon the value-added tax (VAT) and transportation charges.