No Petroleum Product under GST
The GST Council has made no recommendation so far to include petroleum products, including petrol, natural gas and aviation turbine fuel (ATF) under the GST. Inclusion of petroleum products will require recommendation of the GST Council. But the council, which also includes representatives of state, has not made any such recommendation, Pankaj Chaudhary, MoS, Ministry of Finance, said in a reply to the Rajya Sabha on Tuesday.
Govt Gets Rs 914 Crore From GAIL As Dividend Tranche
The government has received Rs 914 crore from state-owned GAIL as a dividend tranche, DIPAM Secretary Tuhin Kanta Pandey said on Tuesday. With this, the total dividend receipts of the government from CPSEs stand at Rs 41,240 crore. “Government has received about Rs 914 crore from GAIL as dividend tranche,” Pandey tweeted.
India exports $21,406 million worth petroleum products in 2020-21
India exported around 56,769 TMT (thousand metric tonnes) petroleum products worth $21,406 million in 2020-21 to countries like the United Arab Emirates, Singapore, and China. The minister of state for petroleum and natural gas Rameswar Teli in a written reply to a question in the Rajya Sabha on Monday said that the oil companies after meeting the domestic demand, export surplus production. “Oil companies export major petroleum products viz. high-speed diesel, motor spirit, aviation turbine fuel, naphtha, etc to various countries like United Arab Emirates, Singapore, China, United States of America, Turkey, Nepal, Malaysia, Netherlands, etc,” said the minister. In 2019, oil companies exported 65685 TMT worth $35848 million. Oil demand in India is expected to reach around 11 million barrels per day by 2045 as compared to 4.9 m barrels per day in 2021. “World Oil Outlook 2021′, flagship publication by Organisation of Petroleum Exporting Countries (OPEC), has projected that the oil demand in India is expected to reach around 11 million barrels per day by 2045.”
Adanis bid for oil pipeline in Bengal
The expression of interest submitted by Adani Total Private Limited (ATPL) to the upstream regulator PNGRB to lay, build, operate or expand the natural gas pipeline from Haldia to Panitar faces opposition from H-Energy. H-Energy, which has been awarded the Kanai Chatta Srirampur Pipeline (KSPL) by PNGRB, said the proposed pipeline would be a duplication of infrastructure, thereby raising costs for consumers. Adani in its EoI had stated that the proposed pipeline will be connected to Jagdishpur-Haldia and Bokaro-Dhamra Pipeline (JHBDPL) and supply in demand centres in Bengal (Calcutta, Howrah, Dum Dum, Kolaghat). The end point of the pipeline is Panitar (near Indo-Bangla Border). From here the pipeline may be connected to the gas grid of western Bangladesh facilitating supply of natural gas across borders. However, H-Energy said: “PNGRB had held that there was no requirement for multiple pipelines from Kukrahati to Itinda or Contai-Dattapulia-Jajpur-Dhamra-Cuttack-Paradip, (when) it had invited bids on laying of KSPL pipeline. “Considering the view of the board on an earlier occasion that it would be impractical to have multiple pipelines in the same area and would lead to infructuous investment and suboptimal utilisation of resources, the same logic should apply to the subject EOI by ATPL.” H-Energy said the injection point and delivery point of the indicative route of the natural gas pipeline proposed by ATPl, i.e. Haldia and Panitar, respectively, are proximate to the injection and delivery points of the proposed KIPl, i.e. Kukrahati and Itinda. Further, the natural gas pipeline proposed by ATPl runs parallel to, and even crosses into the tariff zone of the KSPl pipeline being developed by Hooghly Pipelines Private Limited (HPPl), a subsidiary of H-Energy. The JHBDPL natural gas pipeline, which is part of Pradhan Mantri Urja Ganga Gas Pipeline initiative, is being developed to connect the eastern and north-eastern part of India with the national natural gas transmission network.
Reliance Industries & ONGC to auction natural gas at different rates
Reliance Industries and ONGC plan to separately auction small quantities of natural gas with sharply different floor rates. RIL’s floor price is linked to crude oil and at the current rate of crude, would amount to $14 per mmBtu, while ONGC’s domestic gas price-linked floor is set at $4.5. Reliance has sought bidders for 0.65 million metric standard cubic meters per day (MMSCMD) of natural gas from its coal bed methane field in Madhya Pradesh, while ONGC is auctioning 0.15 MMSCMD from a small field in Rajasthan. RIL’s auction is planned for March 1 and that of ONGC is slated for March 7. A global gas crunch has pushed up LNG prices to record levels in the past few months, drying up spot cargoes at India’s gas import terminals and boosting domestic producers’ confidence that they can charge high prices for their produce. Reliance expects the bidders to quote a minimum premium of $1 per mmBtu over the base of 14% of the Dated Brent oil. The Dated Brent is calculated as the three-month average prices preceding the month in which supply is made. At the current Brent price of $93 per barrel, the floor would come to $14 per mmBtu. For the ONGC gas, the bidders will have to quote a premium above the reserve price subject to a floor price. The floor price is $4.5 per mmBtu. The reserve price is the sum of domestic gas price and a mark-up of $0.50 per mmBtu. Domestic gas price is linked to international rates and is revised every six months. Currently at $2.9 per mmBtu, the domestic gas price is expected to sharply rise in the next revision in April. Gas prices in Europe have risen four-fold, precipitating an energy crisis there. Prices in the US and other markets have also sharply risen. Expanding domestic supplies has to some extent shielded Indian consumers from pricey imports.
Veterans Plead For Oil And Gas PSUs’ Autonomy For Efficient Decision Making
Oil and gas industry veterans gathered at the World Energy Policy Summit pleaded with the government to grant full autonomy to the public sector undertakings (PSUs) in this sector for efficient decision making and professional business approach. Despite being full-fledged government-owned companies registered under the Ministry of Corporate Affairs (MCA), the board of oil and gas marketing companies contain at least one government nominee, who normally comes from the parent ministry – Ministry of Petroleum and Natural Gas – of a director-cadre bureaucrat. In absence of the government-nominee board member, decision makings get deferred, which means the government takes all day-to-day decisions including investments and divestments. These industry veterans normally get elevated to the chairman and managing director’s (CMD’s) post after dedicating several decades of service to the company. Apparently, they know every bit of industry and understand the business more efficiently than the government nominee. Sometimes, the PSU’s CMD possesses more experience than the cumulative experience of almost half the members of the board. Still, the government-nominee places advice and argues issues pertaining to the company’s business. “You will be surprised to note that sometimes the government-nominee does not know the difference between petrol and diesel, but advise the board in decision-making. Investment decisions are taken based on merits. On multiple occasions, the board needs to convince the government-nominee about the rationale for the new investment. The government-nominee gets in principal nod from the concerned minister which is a time-consuming job. We, therefore, had written to the government on multiple occasions to make the company independent for decision making as the entire company is run by a professional board,” said Subhash Kumar, former chairman of Oil and Natural Gas Corporation (ONGC). In addition to ONGC, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), and Gail India Ltd are the PSUs engaged currently in the oil and gas exploration, import, trading, and distribution businesses. While assuming the office of the chief of their respective organizations, these veterans have recommended the government on several occasions to form one parent ministry to avoid reporting to the multiple ministries. Sometimes, details are sought from the parent ministry – the Ministry of Petroleum and Natural Gas. “On several occasions, we had recommended to the government to form one ministry for the entire oil and gas sector under the banner of – Ministry of Energy. But, the recommendation has not been accepted yet. Currently, these PSUs need to report to several ministries. This kills a lot of time which can be utilized otherwise for productive purposes,” said Kumar. Despite these restrictions, Indian oil and gas PSUs have performed well and yielded a huge dividend for the exchequer. According to an estimate, the oil and gas sector has cumulatively paid Rs 11000 billion so far to the government as a dividend. Speaking on the webinar titled ‘Navigating the tough road ahead’, Bhuwan Chandra Tripathi, former chairman and managing director of GAIL India Ltd, called for a reduction in the government’s stake in oil and gas PSUs which may be called as ‘Golden Share’ and should not be more than 30-35 percent, as seen in the case of government-owned companies in Europe. “Let the remaining shares go to the foreign investors (FIs), foreign institutional investors (FIIs), domestic institutional investors (DIIs), and private companies. Bring in more professionals on the board and let them run the company professionally. Also, the PSUs boards do not follow listing guidelines as set out by the markets regulator – Securities and Exchange Board of India (Sebi). They must follow Sebi guidelines,” said Tripathi. Today, oil and gas PSUs’ cumulative annual investment is estimated at Rs 3000 billion. But, the investment is not exploited yet with their full potential due, primarily, to the delay in decision-making in the parent ministry. The need of the hour is to invest aggressively in the emerging sectors like hydrocarbon, specialty chemicals etc. either in partnership with the existing companies in this field or acquisition of the existing entity. “Several assets are built 50-60 years ago that is still serving the nation. It is, however, yet to be established whether the new investments taking place every year, are future-ready. PSUs also need to invest in the most important sector i.e. human resources which along with technology is very important for energy transition,” Tripathi added. Another former chairman and managing director of ONGC, R S Sharma, lamented, “An autonomy is needed for oil PSUs. The control comes from the parliamentary committee and the parent ministry. Often, explanations are sought from the person who does not know the difference between petrol and diesel. Infructuous time goes on parliamentary questions. There are so many controls on oil PSUs. The concerned officials get into a big problem in case of any difference in facts and figures. All these things do not happen with an autonomous body.” Kumar urged the government to extend financial support to the oil and gas companies, broadly equivalent to the amount distributed through various subsidies and schemes.
Indian Oil raises Iraq oil supplies to offset Mexico cuts: Report
Indian Oil Corp (IOC), the country’s top refiner, will increase crude purchases from Iraq by 11.5% in 2022 to 390,000 barrels per day (bpd), partly to make up for a shortfall from Mexico and a possible supply cut from Kuwait, two sources familiar with the matter said. Iraq is the top supplier of oil to India and its market share there is set to rise as another refiner Hindustan Petroleum Corp will also buy more crude from the Middle Eastern nation. India is the world’s third biggest oil importer. IOC has resorted to buying higher volumes from Iraq as Mexico is curbing supplies as it opens a new refinery, sources said. Indian refiners also expect oil supplies from Kuwait could be cut in the next fiscal year starting in April as Kuwait aims to start its 615,000 bpd Al-Zour refinery this year, the sources said. Last year, Kuwait had initially signed a nine-month oil supply contract with Indian refiners but later extended it by three months to March 2022 due to a delay in the commissioning of Al-Zour refinery. Mexico’s national oil company Pemex has agreed to supply 22,000 bpd (1.1 million tonnes) of oil to IOC, the sources said. Last year, IOC had term deals to buy 350,000 bpd (17.5 million tonnes) from Iraq’s oil marketing company SOMO, and about 40,000 bpd (2 million tonnes) from Pemex, one of the sources said. IOC, SOMO, Iraq’s oil ministry and Pemex did not respond to Reuters requests for comment. As OPEC’s second-largest oil producer, Iraq will be able to boost exports by as much as 250,000 bpd from the second quarter after finishing the installation of pumping stations at its Gulf ports, an Iraqi oil source has said.