Brazil’s Petrobras undecided on LPG program
Brazilian state-controlled oil company Petrobras said on Sunday it has not decided to participate in social programs to fund free LPG bottles to families in need. Brazilian president Jair Bolsonaro told a TV show on Friday evening Petroleo Brasileiro SA, as the company is formally known, would spend 3 billion reais ($575.5 million) to pay for free LPG bottles to the low-income population. In the filing, Petrobras said it is part of discussions within the Ministry of Mines and Energy about the issue, but has not defined any participation in programes for vulnerable families. The company also said a decision will be taken according to its governance rules. Petrobras also said it has paid the Brazilian government 3 billion reais in dividends so far this year. The total payment to all shareholders reached 10.3 billion, Petrobras added.
Blending of biodiesel in diesel is less than 0.1 pc: Centre
The present percentage of blending of biodiesel in diesel is less than 0.1 per cent, the government informed the Lok Sabha on Monday and noted that National Policy on Biofuels, 2018 prescribes as indicative target of 5 per cent blending of biodiesel in diesel by 2030. Minister of State for Petroleum and Natural Gas Rameshwar Teli said in a written reply that the government has taken various steps towards achieving 20 per cent blending of ethanol in petrol. These include allowing use of sugarcane and foodgrains (maize and surplus stocks of rice with Food Corporation of India) for conversion to ethanol, administered price mechanism for procurement of ethanol under EBP Programme including the enhanced ex-mill price of ethanol year-on-year from ethanol supply year 2017. The measures also include lowering GST rate to 5 per cent on ethanol for EBP Programme, amending Industries (Development & Regulation) Act for free movement of ethanol, interest subvention scheme for enhancement and augmentation of ethanol production capacity in the country. He said the average ethanol blending percentage in petrol for the ethanol supply year 2020-21 is eight per cent as on July 26 this year. “The present percentage of blending of biodiesel in diesel is less than 0.1 per cent. The National Policy on Biofuels, 2018, prescribes as indicative target of 5 per cent blending of biodiesel in diesel by 2030,” he said. The minister said that availability of biodiesel has been low in the last few years due to the increase of price and non-availability of feedstock for biodiesel. Some biodiesel is also being marketed by agencies other than oil marketing companies. “To increase the supply of biodiesel in the country, OMCs are regularly floating Expression of Interest (EoI) to encourage the production of biodiesel from used cooking oil,” he said.
Are fugitive Sandesara brothers selling oil to India via UK companies?
The Sterling Biotech group, whose promoters Nitin and Chetan Sandesara fled to Nigeria allegedly after siphoning off Rs 15,000 crore of government banks, came up for discussion in a question raised in the Lok Sabha on Monday. In a written question, AIMIM’s Hyderabad MP Asaduddin Owaisi asked the government to confirm how many “oil shipments from Sandesara’s Nigerian business, SEEPCO Nigeria, were re-sold via Glencore, UK” and seized by Indian enforcement agencies since January 2018 till date. In some foreign media reports, it has been speculated that Sandesara, despite being declared ‘fugitive economic offenders’ by Indian courts and having pending non-bailable warrants and Interpol’s Red Corner Notices against them, had been using a UK registered firm supplying oil to some Indian public sector oil companies. “No oil shipments of SEEPCO Nigeria have been seized by Indian enforcement agencies since January 2018 till date,” minister of state for finance Pankaj Chaudhary said in a written reply. The minister, however, did not mention if Indian PSU oil companies were either dealing with Sandesara’s front entities or had any connection directly or indirectly. Chaudhary said that the various agencies have initiated prosecution proceedings against the two Sandesara brothers. “In an order dated June 22, SEBI restrained Nitin and Chetan Sandesara from accessing the securities market for a period of five years and debarred them from holding any management position in any listed company or any intermediary registered with SEBI,” the minister said on actions taken against them. The Enforcement Directorate has already attached assets worth Rs 14,500 crore of Sandesara brothers, which includes oil rigs, private jets and luxury properties in the US, the UK and Dubai worth over Rs 9,700 crore, according to the agency. The total attachments exceed Rs 14,500 crore. However, the attachment orders seem to have made no difference to the finances of the Sandesara brother’s as they continue to operate a global oil supply chain, interestingly with Indian government entities too. Information received here by agencies revealed the two brothers, who fled India in 2017 with family members, shuttle between Nigeria and Albania and have taken citizenship of both the countries. Nigeria, a source said, had in the past refused to entertain India’s request for extradition of the accused.
Summit Oil signs pact with Commonwealth LNG for supply to Bangladesh
Summit Oil and Shipping Co Ltd on Monday said it has signed a memorandum of understanding with Commonwealth LNG for liquefied natural gas (LNG) supply to Asia, including Bangladesh. The deal includes 1 million tonnes per year (MTPA) of LNG offtake from Commonwealth’s 8.4 MTPA facility currently under development in Cameron, Louisiana to Summit Oil, a unit of Bangladesh-based Summit Group. Commonwealth can deliver U.S.-sourced LNG, providing diversification of supply for Bangladesh and the pricing stability associated with Henry Hub, said Farid Khan, vice chairman of Summit Group. Summit Oil and Shipping Co. Ltd is the largest private sector importer and supplier of fuel oil to Bangladesh, the company said.
ONGC in talks with Chevron, Total for exploration projects in India: Report
Oil and gas are trading near multi-year highs as fuel consumption has thrown off pandemic losses and natural gas has soared on weather demand. Energy companies Chevron and Total are separately in talks with Oil and Natural Gas Corporation (ONGC) to engage in upstream projects in India, The Economic Times has reported. While foreign energy companies have not shown much interest in India’s energy exploration sector, American company Chevron’s senior executives had discussed such opportunities with ONGC last month, the newspapers cited sources as saying. French company Total has formed a technical committee of key executives to explore such opportunities, the report added. Moneycontrol couldn’t independantly verify the story. ONGC signed a memorandum of understanding (MoU) in 2019 with Exxon Mobil to receive its expertise and technology for developing resources in offshore blocks. It provided for ONGC and ExxonMobil jointly bidding for exploration assets in India. Chevron had reported its highest profit in six quarters and joined an oil industry stampede to reward investors with share buybacks, as rebounding crude oil prices carried earnings and cash flow to pre-pandemic levels. The company last year slashed spending to allow profits to flow at above $50 a barrel. Lower costs and higher prices generated the highest cash flow in two years, enabling the company to pare debt and resume share repurchases. The company had also outlined a plan, in March, to expand oil and gas production through 2025 without spending significantly more and to limit the pace of growth of its carbon emissions. Oil and gas are trading near multi-year highs as fuel consumption has thrown off pandemic losses and natural gas has soared on weather demand. OPEC’s decision to carry production curbs into next year has kept oil trading above $70 per barrel.
The agenda for Petroleum Minister Hardeep Singh Puri
The spread and speed of the destruction caused by climate change in recent weeks present our new Minister of Petroleum and Natural Gas with a policy dilemma, if not a moral one: How to redefine the supply-side priorities of his Ministry in the face of the imperatives of atmanirbharta with the starkest evidence yet of the consequences of continued dependence on fossil fuels. This article offers five suggestions to help crack the conundrum. The events of the past month have caught even the most alarmist of climate scientists by surprise. In China, 1.2 million people were displaced in the province of Henan by what was reported as a “once in a 1,000-year downpour”. In Russia, the Siberian city of Yakutsk, better known for its subzero winter temperatures faced the “worst-ever air pollution” because of smoke from 200 nearby wildfires. In Europe, flash floods killed approximately 200 people in Germany and Belgium. And in North America, city after city was scorched by unprecedentedly high temperatures. These events brought into sharp relief the reality that there was no ducking the consequential implications of the “fossil fuels as usual” scenario. This reality offers, however, cold comfort to the Minister of Petroleum. This is because the Indian economy is dependent on fossil fuels and there is no discernible end in sight to this dependence. Further, India imports approximately 85 per cent of its crude oil requirements and is exposed to the volatility of the international oil market. There is good reason, therefore, for the Minister to rank the harnessing of India’s indigenous petroleum resources by intensifying exploration as a top policy priority. My first suggestion is that he should review this ranking and that the government should scale back its emphasis on domestic exploration. I make this suggestion because I believe the resources earmarked for exploration can be deployed more productively elsewhere. A review of the public sector’s exploration and production (EP) track record suggests that whilst India may well be sitting on substantial hydrocarbon reserves, as is claimed by our petroleum scientists, these reserves are not easy to locate and, even when located, difficult to develop and produce on a commercial basis. There have been few substantive commercial discoveries in recent years, in large part because the bulk of the reserves are in complex geological structures and harsh terrain (Himalayan foothills or deep waters offshore). They are difficult to find but even when found, the costs incurred are often so high that except in market conditions of high prices, the discovery is not commercially viable. The government has often compounded this economic challenge by placing administrative limits on marketing by companies and their pricing freedom. The fundamental point is that EP in India is a high-risk activity, and this risk is even greater today because of the longer-term structural softness of the petroleum market. There is good reason to question the expending of public resources on wildcat exploration. Flowing from this contrarian thought, my second suggestion is that ONGC allocate increasing resources to improving the productivity of its producing fields. Years ago, when I was part of the petroleum industry, the average oil recovery rate in India was around 28 per cent. That is, for every 100 molecules discovered, only 28 were monetised. This number did not compare well with the global average of around 45 per cent for fields of comparable geology. The recovery rate may be better today but if there is still a wide gap, the application of enhanced oil recovery (EOR) technology offers a relatively low-risk avenue for increasing domestic production. ONGC might have to shed a part of its equity in its ageing crown jewel, Mumbai High, to get the best technology service partner. The consequential increment in production from EOR will not materially reduce our vulnerability to unexpected supply disruptions. Pre-Covid, we imported approximately 4.5 million barrels of oil, of which 50 per cent or so came from the Middle East, predominantly Saudi Arabia, Iraq and Iran. This region faces deep political and social fault lines and there is no knowing when our supply lines might get ruptured. We would, therefore, be well-advised to build contingency safeguards. We hold currently strategic reserves equivalent to 12 days of imports. The government has approved plans to increase this buffer to 25 days. By comparison, China, the EU, South Korea and Japan hold between 70-100 days of reserves. We do not need to create such a large buffer, but I would suggest we increase it to around 35 days equivalent. This should be done by constructing a cavern in Jamnagar, the entrepôt that receives approximately 60 per cent of our crude oil imports and is well connected through tanks and pipelines to the hinterland refineries. My fourth suggestion is to restructure and reorganise the public sector petroleum companies. In the first instance, the upstream assets should be consolidated under ONGC (the upstream assets of BPCL, IOC, HPCL, and GAIL should pass onto ONGC) and GAIL should be unbundled into a public utility gas pipeline company (its non-pipeline assets should be allocated to the upstream company and/or one of the downstream entities). Thereafter, these companies should be encouraged to look beyond hydrocarbons to build an “energy” enterprise. I believe this restructuring will help cut back the “avoidable” costs of intra public sector competition, reduce the inefficiencies of “sub scale” operations and provide a focused platform for balancing the shorter-term need to provide secure and affordable hydrocarbons with the medium and longer-term imperative of developing clean energy. My final thought: The petroleum minister should not, in the current context, see his responsibility through the siloed prism of oil and natural gas. He should broaden the aperture and become the progenitor of the energy transition. The dilemma referred to in the opening sentence will be easier to resolve if he develops his priorities within the framework of clean energy and in collaboration with his cabinet colleagues.
Reliance slips 59 places on Fortune list, SBI jumps 16 notches
Billionaire Mukesh Ambani’s oil-to-telecom conglomerate Reliance Industries Ltd slipped 59 places to rank 155th on the 2021 Fortune Global 500 list released on Monday. Reliance took a beating on the rankings as revenues dropped owing to the COVID-19 pandemic. This is its lowest ranking since 2017. Walmart continues to top the Fortune list with a revenue of USD 524 billion, followed by China’s State Grid at USD 384 billion. With USD 280 billion revenue, Amazon came in at the third spot, replacing Chinese giants. China National Petroleum was ranked fourth and Sinopec Group fifth. Reliance’s revenue fell 25.3 per cent to USD 63 billion, mostly because oil prices plunged in the second quarter of 2020 when the global spread of the pandemic wiped away demand. Other Indian oil companies on the list too slipped ranks as their revenues tumbled because of the fall in oil prices. State Bank of India (SBI) moved up 16 places to rank 205 but Indian Oil Corporation (IOC) dropped 61 places to 212th rank. This is the second straight year of SBI improving its ranking. It had moved up 15 places last year. Oil and Natural Gas Corporation (ONGC) was ranked 243rd, 53 notches lower than last year’s ranking. Rajesh Exports was another firm that improved its ranking with a massive 114 positions jump to 348th rank. Tata Motors slipped 20 places to rank 357 and Bharat Petroleum Corporation Ltd (BPCL) fell to 394 from 309 last year. Fortune said companies are ranked by total revenues for their respective fiscal years ended on or before March 31, 2021. While SBI had a revenue of USD 52 billion, IOC had revenue of USD 50 billion. ONGC had revenue of USD 46 billion and Rajesh Exports USD 35 billion. “Walmart claimed the top spot for the eighth consecutive year, and for the 16th time since 1995,” Fortune said. Mainland China (including Hong Kong) once again has the most companies on the list at 135, up 11 from last year. Adding Taiwan, the total for Greater China is 143. The US is up one with 122, and Japan held steady with a total of 53 firms. “Fortune Global 500 companies generated revenues totaling more than one-third of the world’s GDP. They generated USD 31.7 trillion in revenues (down 5%), USD 1.6 trillion in profits (down 20%) and employ 69.7 million people worldwide,” it said. Apple (No. 6) netted USD 57 billion in profits, and is the Fortune Global 500’s most profitable company in 2021, ending Saudi Aramco’s (No. 14) two-year reign.
Wabag expands global footprint with oil & gas order worth $165 million in Russia
Va Tech Wabag, a pure-play water technology Indian Multinational Group, on Monday announced that it has secured an Engineering and Procurement (‘EP’) order worth 165 Million US Dollars (about Rs 1,230 Crore) from Amur Gas Chemical Complex LLC., (‘AGCC’) in Russia. This technology dominant breakthrough order in the CIS region, especially in the Russian Federation also marks Wabag’s largest order in the Oil & Gas sector. AGCC is a joint venture of SIBUR Holding Russia and China Petroleum & Chemical Corporation (‘Sinopec’), China. AGCC is set to become one of the world’s largest basic polymer production facilities, the company said in a statement. Wabag shall be the technology and system integrator for the Integrated Treatment Facilities (Waste Water Treatment unit). “This order from a marquee customer in the Oil & Gas sector, re-affirms our technological superiority and execution excellence, built over the years. We are proud to have secured this contract amidst stiff international competition and we are confident that this project will be another landmark reference for Wabag,” Pankaj Sachdeva, CEO – India Cluster said. Wabag shall deploy advanced technologies to treat waste water streams. The facility will have a concentrate evaporator unit to maintain Zero Liquid Discharge (ZLD) and the sludge will be de-watered and dried. The facility will be designed to recycle & re-use the waste water released from the petrochemical unit, substituting about 25% of the raw water intake requirement. The deployment of ZLD and recycle and re-use makes the facility environmentally friendly and meets stringent environmental regulations, the company said. Wabag shall perform the scope of Design, Engineering, Procurement, Supply and Supervision of the facilities during erection and commissioning including process & technology equipment, piping system, electrical, instrumentation / control systems and building & architectural materials.
$1.2 bn arbitration award: Govt says no formal proposal from Cairn to settle dispute
Facing a payout of USD 1.2 billion-plus interest after an arbitration award went against it, the government on Monday said it has not received any formal proposal from Britain’s Cairn Energy plc to resolve the issue within the country’s legal framework. A three-member international arbitration tribunal that consisted of one judge appointed by India, had in December last year unanimously overturned the levy of taxes on Cairn retrospectively and ordered refund of shares sold, dividend confiscated and tax refunds withheld to recover such demand. Since then, Cairn has been pressing India to pay while the government has looked for possible solutions within the existing framework. In a written reply to a question in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the arbitral tribunal, which had its seat in the Hague, on December 31, 2020, ruled in favour of Cairn. “It has asked India to pay Cairn an award amount of USD 1.2328 billion-plus interest and USD 22.38 million towards arbitration and legal costs,” he said. With New Delhi refusing to pay and instead challenged the award before a court in The Netherlands, Cairn has got the order registered in several jurisdictions and has begun recovering the money by seizing Indian assets overseas. “An order has been passed by a French court freezing certain Indian Government properties” in Paris, he said. “The same has been communicated through diplomatic channels.” Asked if Cairn has offered any kind of amicable solution to the dispute, Chaudhary said, “No formal proposal for a solution within the country’s legal framework has been received.” He did not elaborate. In the initial months after the award, the government wanted the dispute to be settled under the ‘Vivad se Vishwas’ Scheme. The now-closed scheme provided for settling of a tax dispute if the taxpayer pays 50 per cent of the tax demand upfront in return for waiving of penalty and interest as well as the closing of the case. For Cairn, this would have meant getting about a third of USD 1.2 billion claim. This because the original tax demand that the government sought from it was Rs 10,247 crore – half of this would be Rs 5,123.5 crore. The government had recovered about Rs 7,600 crore by selling shares belonging to Cairn, seizing its dividends and withholding tax refunds. Netting it too, the due amount to be paid to Cairn would have been Rs 2,477 crore or less than USD 400 million. As of present, there is no tax dispute resolution scheme in vogue. Cairn has identified USD 70 billion of Indian assets overseas for the potential seizure to collect the award, which now totals to USD 1.72 billion after including interest and penalty. In June, Cairn brought a lawsuit in the US District Court for the Southern District of New York pleading that Air India is controlled by the Indian government so much that they are ‘alter egos’ and the airline should be held liable for the arbitration award. Similar lawsuits are likely to be brought in other countries, primarily with high-value assets.
IOC may sell some petrol pumps to JV with Petronas
Indian Oil Corporation (IOC), the nation’s biggest oil firm, may sell some of its over 32,300 petrol pumps to a joint venture with Malaysia’s Petronas with a view to monetising the firm’s vast fuel marketing network, its Director (Finance) S K Gupta said on Monday. IOC has an over two-decade-old 50:50 joint venture with Petronas for the import of LPG. The scope of this joint venture, IndianOil Petronas Pvt Ltd (IPPL), is now being expanded to include fuel and natural gas marketing. For one, IPPL will not be governed by the tedious petrol pump allotment rules that require public sector oil marketing companies to appoint dealers through a draw of a lottery. The joint venture can choose a site and operator quickly and on commercial terms. “We have all options open – IPPL can set up new retail outlets, it can set up wayside amenities (at petrol pumps on National Highways) and we can also monetise some of our existing retail outlets by selling them to the joint venture,” Gupta said at an investor call. IPPL can set up petrol pumps that will not just sell petrol and diesel but also have EV charging and battery swapping points as well as CNG/LPG and LNG dispensing stations. This will be roughly on lines of the outlets that Reliance Industries and its partner BP Plc of UK are setting up. Gupta said fuel marketing business is opening up that requires agility in operations. State-owned fuel retailers such as IOC have to allot dealerships through a lottery of all eligible candidates. It does not allow discretion. Also, wayside amenities such as food court can be set up with IPPL, he said. IPPL currently sells LPG to commercial customers who are not allowed to use subsidised cooking gas sold to households by state energy firms. IOC owns 32,303 out of 77,709 petrol pumps in the country. It also has licences to retail CNG to automobiles and piped cooking gas to households in several geographical areas. Last week, IOC Chairman S M Vaidya had said that IPPL will have its own branding and marketing. Asked if IPPL’s foray in retailing will not cannibalise on IOC’s business, he had said India’s energy demand is growing and will have space for all players. “Energy pie is increasing. There is a place for everybody,” he said. “Our (IOC’s) market share is intact and IPPL will capture new opportunities.” IPPL will be the 7th fuel retailer in the country. Besides IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are the other two public sector fuel retailers. Reliance Industries and BP have a joint venture, Reliance BP Mobility Ltd which operates 1,422 petrol pumps in the country. Rosneft-promoted Nayara Energy is the biggest private player with 6,152 petrol pumps while Shell has 270 outlets. BPCL owns 18,766 petrol pumps while HPCL has 18,776. Mangalore Refinery and Petrochemicals Ltd (MRPL) has some 20 outlets. IPPL has import terminals at Haldia in West Bengal and Ennore in Tamil Nadu. It is also one of the leading parallel marketers of propane/ butane / LPG in India.