Shell swings into huge profit as oil price recovers
Energy giant Shell surged back into profit last year as oil prices rocketed on recovering demand with economies reopening from pandemic lockdowns. Net profit stood at US$20.1 billion following a loss after tax of US$21.7 billion in 2020, Shell said in a statement on Thursday. “2021 was a momentous year for Shell,” said chief executive Ben van Beurden, noting that the group also simplified its name and structure and outlined plans to slash greenhouse gas emissions. Following the bumper earnings, Shell said it planned a share buyback programme totalling US$8.5 billion (7.5 billion euros). As lockdowns spread in 2020, oil prices dropped off a cliff, even briefly turning negative. Prices have since rebounded sharply, with the benchmark Brent North Sea oil contract trading at almost US$90 per barrel. Gas and electricity prices have also seen massive gains over the past year, boosting income for energy majors but weighing on business costs and individuals’ spending power. Also last year, Shell shareholders backed plans to switch the oil giant’s headquarters from the Netherlands to Britain after a century and to drop Royal Dutch from its name. That has meant also a switch of its tax residence to Britain as well as top executives including Beurden to London. Shell is however keeping 8,500 staff in the Netherlands.
Abu Dhabi’s ADNOC announces a new offshore gas find
Abu Dhabi’s state-owned oil and gas company announced Thursday the discovery of between 1.5 to 2 trillion standard cubic feet of raw gas in an offshore area located in the emirate’s northwest. The discovery comes as Gulf Arab states continue to rely heavily on profits from oil and gas exports, despite rising global temperatures and climate change from burning fossil fuels. The United Arab Emirates, where Abu Dhabi is capital, was the first Gulf Arab state last year to join other countries around the world in pledging “net-zero” emissions targets within its borders — while maintaining fossil fuel exports abroad. The Abu Dhabi National Oil Company, also known as ADNOC, said the discovery came about in partnership with a consortium led by Italy’s Eni and Thailand’s PTT Exploration and Production Company Limited, which were awarded concession rights in the area. The 2019 agreement saw Eni and PTTEP vowing to invest $230 million to explore for oil and gas and appraise existing discoveries in two blocks spanning a total of 8,000 square kilometers (3,000 miles). For their natural gas discovery, the companies relied in part on insights from a massive 3D seismic survey underway in Abu Dhabi, according to ADNOC. ADNOC Managing Director and CEO Sultan Ahmed al-Jaber hailed the discovery. He said it speaks to the company’s commitment to partnerships that help Abu Dhabi explore and develop its untapped hydrocarbon resources. In December, ADNOC announced the discovery of up to 1 billion barrels of oil in another block of Abu Dhabi. The U.S. Energy Information Agency cites figures estimating the UAE holds the seventh-largest proven reserves of natural gas in the world at over 215 trillion cubic feet. The country, which lies on the eastern coast of the Arabian Peninsula along the Persian Gulf, has some 98 billion barrels of proven oil reserves, with about 96% of that located in Abu Dhabi. The United Arab Emirates is among the world’s 10 largest oil producers, with most of the country’s oil and gas wealth concentrated in Abu Dhabi. Despite its large natural gas fields, the UAE also imports natural gas due to its extensive domestic use in operating power plants and desalination plants.
Petroleum Minister blames decisions during Congress Govt for high fuel prices
Amid protests by the Opposition, Hardeep Singh Puri, Petroleum and Natural Gas Minister, replied, “Between 1979-86, prices rose by 126%, 2000-2007 prices went up 60%, last seven years prices have gone up by only 30%.” He further added, “Prices are determined by international price. During the lockdown, prices went down, but when economic activity picked up, the prices also rose.” Talking about the international production cost, he said, “The amount of crude available in the market is less than the demand thus the price is high. Crude oil price is decided by exchange rate, freight rate and dealer price. Government reduced the prices by Rs. 5 and 10 recently.” Dayanidhi Maran, DMK leader asked, whether the government has decreased the fuel prices with the U.P. election in mind. Mr. Puri replied that the State governments should reduce vats to reduce the fuel prices. “We are increasing ethanol blending. Petrol and diesel prices were deregulated by the Congress government. They floated oil bonds, which have resulted in huge repayments we made last year.”
Clarity sought for budget levy on unblended fuel
The announcement came close to the end of the finance minister’s budget speech on February 1, and it now has stakeholders in the petroleum & gas industry seeking more clarity from the government on its decision to levy an additional excise duty of Rs 2 per litre on unblended fuel. The minister said the levy would become effective from 1 October 2022. While the finance minister says the levy aims to make oil & gas companies to further push the levels of ethanol blending, it will enhance the retail price of most of petrol and diesel currently sold in India. Reacting to the budget proposal, Dr Pramod Chaudhari, Founder-Chairman of Praj Industries, a biofuel technology company said, “Tax on unblended fuel is a great start to promote the transition to greener fuels which is in line with the global practice of differential pricing for ethanol-blended fuel. The budget outlines concerted efforts to conserve the environment by sustainable climate action with a focus on carbon intensity reduction to achieve net zero targets.” A senior executive at a PSU, requesting anonymity, said that while blended petrol is relatively easily available in ethanol-producing states such as Maharashtra, Gujarat, Uttar Pradesh amongst others, it becomes difficult to source in certain other states including in Rajasthan, Bihar where sugarcane production is low or negligible. This also includes the south. Also, logistics-related issues play an important part in its availability at the retail stations. “It will certainly push OMCs to work harder towards achieving its blending goals” the executive added, emphasizing that the increase in excise duty will most likely get passed on to the consumers. The central government, through the National Policy on Biofuels, 2018, aims to increase usage of bio-fuels in the transportation sector towards energy security and climate change mitigation. During the period of 2020-2021 (December-November), 302 crore litres of ethanol was supplied to oil marketing companies by distillers thereby reaching a pan-India average blending level of nearly 8 percent. The government’s mandate is to increase the blending levels to 10 percent this year before doubling it by 2025. The development comes months after a cabinet committee of economic affairs increased the ex-mill price of ethanol to incentivise the millers to divert higher cane towards ethanol and increase its production. Also, the government in December slashed the GST on ethanol meant for blending under the Ethanol Blended Petrol (EBP) programme to 5 per cent from 18 per cent. Even as the ethanol blending program for petrol is on way up, a similar blending in diesel seems to be far behind in comparison. As per industry estimates, the biofuel blending of diesel currently stands at just about 0.1 percent.
Former oil secretary Tarun Kapoor to be new oil regulator
Former oil secretary Tarun Kapoor was on Thursday selected to head India’s oil and gas regulator PNGRB, sources said. Kapoor, who superannuated as secretary of the Ministry of Petroleum and Natural Gas on November 30, 2021, was selected to be chairman of the Petroleum and Natural Gas Regulatory Board (PNGRB) after interviews of over a dozen candidates. His candidature will now go to the Appointments Committee of the Cabinet for ratification and once approved, he would take over. Sources said as many as 13 candidates, including former chairmen of ONGC and a former director of IOC, had applied for the top job at PNGRB. Out of these, the ministry shortlisted seven candidates. Interviews were held by a search-cum-selection committee headed by V K Saraswat, Member (S&T), Niti Aayog on Thursday and Kapoor was picked for the top job. Former Oil and Natural Gas Corporation (ONGC) chairmen Subhash Kumar and Shashi Shanker as well as G K Satish, who superannuated as director for planning and business development from Indian Oil Corporation (IOC) a couple of months back, had applied for the top job. Numaligarh Refinery Ltd (NRL) Managing Director Saumendra Kumar Barua and Indraprastha Gas Ltd (IGL) Managing Director Asit Kumar Jana were among those who had applied. The shortlisted candidates for interview included Kumar, Satish, Barua, Jana, Virendra Nath Datt, OSD to chairman of GAIL (India) Ltd and former CPCL MD Surendra Nath Pandey. Shanker was not shortlisted. Kapoor was selected in response to the government re-advertising the post of chairman, PNGRB, in November. The committee — which also comprises secretaries to the ministries of oil and commerce, secretary legal affairs and economic affairs secretary — had in June 2021 picked up former power secretary Sanjeev Nandan Sahai. But, that appointment was not confirmed and so the post was re-advertised. Other candidates interviewed on June 2 included retired bureaucrat Avinash Kumar Srivastava, former ONGC chairman Shashi Shanker and former ONGC director Sanjay Kumar Moitra. The post of chairman, PNGRB, has been lying vacant since December 4, 2020, when Dinesh K Sarraf completed his three-year term. The Board, which comprises four members besides the chairman, is almost defunct with just one serving member. Former GAIL directors Gajendra Singh and A K Tiwari are currently the two members of the PNGRB.