Government may raise foreign investment limit to aid BPCL sale
India is considering making it easier for foreign investors to acquire control of Bharat Petroleum Corp., according to people familiar with the matter, as the government tries to sell the state firm and bridge a widening budget deficit. If the cabinet clears the proposal, overseas funds would no longer need government approval to purchase a 100% stake in state-run refiners cleared in-principle for disinvestment, the people said, asking not to be identified as the deliberations are private. The limit will stay 49% for firms not lined up for asset sales. India needs to find a buyer for its 53% stake in BPCL, one of two major state firms — the other being Air India Ltd. — identified by the government to help shore up its finances following a deadly second wave of coronavirus infections. The government has budgeted $23 billion from divestments in the financial year that started April 1.
IOCL Awards McDermott Two EPCC Refinery Contracts
McDermott International, Ltd today announced it has received two separate engineering, procurement, construction and commissioning (EPCC) contract awards from Indian Oil Corporation Limited (IOCL) for the Haldia Refinery and the Barauni Refinery. The first award is an EPCC contract for a new diesel hydrotreating unit and associated facilities for the Barauni Refinery Expansion Project in Bihar, India. The second award is an EPCC contract for the catalytic dewaxing unit and associated facilities at the Haldia Refinery in West Bengal, India. The catalytic dewaxing unit will help produce base oil which can be utilized in finished lubricants. India is the world’s third-largest user of finished lubricants but is also, with a deficit of base oil, one of the world’s largest importers of base oil. Both projects contribute to greater independence for India’s domestic energy needs. “These awards demonstrate our commitment to advancing India’s long-term energy market,” said Samik Mukherjee, Executive Vice President and Chief Operating Officer. “We look forward to working with Indian Oil Corporation Limited on these prestigious downstream projects, showcasing our dedication to world-class project execution and sharing our leading health and safety protocols.” In line with India’s Make in India initiative, McDermott’s Senior Vice President, Asia Pacific, Mahesh Swaminathan, emphasized the strength of the local team. “Our 2,000 personnel in India bring global experience with high levels of technical and project management expertise,” said Swaminathan. “These individuals continue to demonstrate the strength of McDermott’s vertically-integrated solutions and the positive impact these bring to the Indian downstream market.” The scope of work across the projects includes project management, residual process design, detailed engineering, fabrication, procurement, construction, transportation, mechanical completion and commissioning. Work will commence in quarter two 2021. Both projects will largely be executed by the McDermott team in Gurgaon, India, with some support from Perth, Australia and Brno, Czech Republic.
Undeveloped oil fields: Govt plans monetisation amid low recovery, shift to renewables
Low recovery of oil and gas from domestic fields and growing sentiment against fossil fuels have led to the government deciding to move ahead to monetise undeveloped fields and mature fields with falling output, according to government officials. Last Thursday, Petroleum Minister Dharmendra Pradhan said that government companies cannot hold on to undeveloped resources indefinitely and suggested that these companies should seek to find technology partners or investors who can bring the expertise to monetise such fields quickly. India imports more than 85 per cent of its crude oil requirements. “There is a sentiment developing against fossil fuels if you look at the latest report by the IEA (International Energy Agency) and the judgment against Shell. So people will be reluctant to invest in oil and gas (in the future) and what may happen is that the resource in the ground might remain there unless we monetise it quickly,” said a government official who wish to be anonymous. The IEA had last month published a report recommending a halt on all new oil and gas investments to reach a goal of net-zero carbon emissions by 2050. Separately, a Netherlands court has ruled that oil and gas major Shell must cut its carbon dioxide emission by 45 per cent by 2030 relative to 2019 levels. The output of two of the country’s major upstream players, ONGC and Oil India, have fallen over the years, even as India aims to lower its dependence on imports. To ensure their resources are utilised more, the Centre has proposed finding technology partners or investors who can bring the expertise to monetise such fields. “Whatever resource we identify underground, hardly 30-40 per cent are recoverable (by state-owned companies), why not 50-60 per cent?” said the official, noting that the Centre wanted to expand oil and gas development activity in the country and bring in more players so that new technology is brought into the domestic hydrocarbon production sector to increase the recovery factor of fields. “If there is good management and execution, the recoveries can be increased,” he said, adding that even relatively new fields such as ONGC’s KG-DWN-98/2 field could benefit from expertise of large private players in recovering reserves in ultra deepwater fields. Crude oil production by both state-owned upstream players ONGC and Oil India has fallen over the past five years, with natural gas production remaining stagnant despite both companies reporting net additions to their crude oil and natural gas reserves through new discoveries and acquisitions. India’s crude oil production has fallen from a peak of 38.1 million metric tonnes in FY15 to 30.5 million metric tonnes in 2020-21.