CPCL MD Arvind Kumar among 10 in race for IOC top job
Chennai Petroleum Corporation Ltd (CPCL) managing director Arvind Kumar is among 10 in the race to become the next chairman of India’s largest oil company Indian Oil Corporation (IOC). Kumar and nine others have been called for an interview by the government headhunter Public Enterprise Selection Board (PESB) on May 16, according to a shortlist notice of the PSEB. PESB will interview and recommend a candidate to replace incumbent chairman Shrikant Madhav Vaidya who superannuates on attaining 60 years of age on August 31 this year. Those shortlisted for the interview include five executive directors of IOC, Container Corporation of India Ltd (Concor) director (finance) Manoj Kumar Dubey and NMDC Ltd director (finance) Amitava Mukherjee. Two Indian Railway Services officers — Yatendra Kumar and Ranjan Prakash Thakur — have also been shortlisted for the interview, the PESB list showed. IOC executive directors called for interview are Sandeep Jain, Anna Durai, Sailendra Kurumaddali, Sanjay Parashar and Gur Prasad. No existing directors of IOC applied as most did not have the requisite two years of service left before retirement. Of the six directors, only director (marketing) Satish Kumar Vaduguri was eligible as his retirement is in July 2025 but he did not apply., Director (human resources) R K Mohapatra superannuates in December this year and director (research and development) S S V Ramakumar retires in July end this year. A month before that director (pipelines) D S Nanaware retires while director (refineries) Sukla Mistry and director (planning and business development) Sujoy Choudhury superannuate in April 2024 and August 2024, respectively. The post of director (finance) is vacant. According to the procedure, the candidate shortlisted by PESB will first go to the parent ministry, the Ministry of Petroleum and Natural Gas. After getting clearance from anti-corruption bodies like CVC and CBI, the candidature would be moved to the Appointments Committee of the Cabinet (ACC) headed by Prime Minister Narendra Modi for approval. The entire process takes anywhere between 3 to 4 months. IOC refines crude oil extracted from below ground, into products like petrol, diesel, liquid petroleum gas (LPG) and aviation turbine fuels. It also makes petrochemicals and retails CNG. Besides being the backbone of Indian fuel supplies, IOC is pivoting India’s energy transition – the shift from fossil-based systems of energy production and consumption -including oil, natural gas and coal, to renewable energy sources like wind and solar, as well as lithium-ion batteries. IOC owns and operates 10 oil refineries with a combined capacity of 80.6 million tonnes, making up for almost a third of India’s 251.2 million tonnes of refining capacity. It also owns 36,285 petrol pumps out of 86,855 pumps in the country. Besides, it owns half of the nation’s 25,386 LPG distributors. It runs 131 out of 283 aviation fuel stations in the country.
Russia To Restart Forex Buying As Oil And Gas Revenues Rebound
Russia’s oil and gas revenues have rebounded from recent lows and the country is gearing up to resume purchases of foreign currency as early as this month, according to Bloomberg Economics. The country’s revenues from energy exports were hurt by Western sanctions and an embargo on oil and fuel exports to the European Union but, according to Bloomberg Economics data, this is beginning to change and revenues are now close to topping the target level set by the government. As a result, the Finance Ministry is expected to announce a restart of foreign currency purchases, which were halted last year following the invasion of Ukraine and the Western response to it. “It will be important for the market that the state is starting to accumulate reserves again instead of spending them,” Natalia Milchakova, an analyst at Freedom Holding Corp., told Bloomberg “This may even positively affect the ruble.” Part of the reason for the recovery of oil revenues is a change in the calculation formula for oil industry taxes implemented earlier this year. The formula is based on an officially set discount for flagship Urals to Brent crude, which was set at $34 per barrel for last month. However, going forward, the base will be a narrowed discount to Brent, reaching $25 per barrel for July, Bloomberg reported. According to the Russian Finance Ministry, the change in the formula could bring an additional $7.46 billion (600 billion rubles) into the federal budget. As a result, Moscow will likely begin buying foreign currency for its sovereign wealth fund again, with analysts expecting the purchases to begin in June and focus on the Chinese yuan. Previously, Russia had been drawing on the sovereign wealth fund to fill the budget gap left by the sanction-driven slump in oil and gas budget contributions. These were down by 45% on the year during the first quarter of 2023.
Predictions Of An Oil And Gas Decline Are Overblown
The end of oil and gas is nigh. In a decade or so, demand will begin to ebb as electrification takes giant strides toward a cleaner, more reliable energy system. This is the leitmotif repeated by proponents of the energy transition from fossil fuels to low-carbon energy sources such as wind, solar, and hydrogen. These include many high-profile people, from prime ministers and presidents to the head of the International Energy Agency and the chief executives of the biggest asset managers in the world. Last year, investment in wind, solar, and other transition tech hit a record high of $1.1 trillion. This, Bloomberg reported at the time, was the first time investment in low-carbon energy was on par with investment in oil and gas production. Even so, this year, the IEA expects oil demand to hit a record high. Fossil fuels still have a good few decades in them. Forecasts of peak oil demand have become something of a sports discipline among forecasting agencies of all sorts. Those with a stronger leaning towards the “Keep it in the ground” crowd tend to project oil demand peaks sooner than others, with weaker leanings towards groups that are calling for the immediate end of oil and gas production. Yet both oil and gas continue to surprise with strong and rising demand. And that is because demand for energy does not depend entirely on government policies—unlike the transition away from these most popular sources of energy. A lot of the end-of-oil-and-gas projections are based on expectations that government policies will continue to gradually stifle the oil and gas industry or at least push it to transform into a renewable energy industry. BP tried to do that over the past two years, but, according to its CEO, it didn’t go as well as expected in the profitability department. But these government policies also look for—and find—ways to ensure the continued use of some fossil fuels, namely natural gas, for a longer period because they are sane enough to see that without gas, the economy stops. This was made perfectly clear last year in Europe, most notably in Germany. For all its already massive capacity of wind and solar generation, when gas prices spiked, the German economy shrunk. Not all energy forecasters are of the radical sort, however. Some with a more measured approach to the future of energy suggest oil and gas will continue to be around but in a much-reduced capacity, mostly used for the production of petrochemicals and plastics, which the world will continue to need in substantial volumes for decades to come. Indeed, the biggest killer of oil is seen to be the electrification of transport, while the biggest killer of gas would be wind and solar for electricity generation. But both these hydrocarbons would remain in some demand because both electric vehicles and wind and solar installations are heavy users of petroleum derivatives such as plastics, oils, and chemicals. But that suggests a much-reduced consumption of oil and gas compared to current levels. That would be consumption that a lot of transition proponents would be fine with. If all those forecasts for the electrification of transport and the superfast buildout of wind and solar pan out. And they don’t look like they will. The International Renewable Energy Agency recently estimated that the world needs to invest $35 trillion in changing its energy mix in such a way that renewables collectively account for 89.8% of total generation. This means that we need to accelerate the expansion of wind and solar capacity at a galloping pace. And this is not happening. Not only is it not happening, but capacity additions are showing signs of a slowdown. Last year, new wind capacity additions in the EU were 40% higher compared to 2021 but much lower than what was needed to meet the Paris Agreement goal of limiting global temperature rises to an average of 1.5 degrees from pre-industrial times. In the United States, solar developers are struggling with higher costs and tariffs on Asian panel imports targeting China. The White House recently waived the tariffs to stimulate more solar activity, but Congress just voted against the waiver to bring back the tariffs. EV production, meanwhile, is facing the same raw material squeeze that wind and solar are facing. A copper shortage is looming large over the transition’s clear skies, with no new mines being put into operation and ore grades falling across existing mines. The energy transition that should spell the end of oil and gas is not moving in leaps and bounds as hoped but is rather lurching along with difficulty. Until such times as this lurching can turn into a measured, fast step, demand for oil and gas is guaranteed. And because of inherent problems with the way policymakers have gone about implementing the transition, with almost exclusive reliance on low-density, low-reliability energy sources, chances are oil and gas will be around for a very long time yet. We might yet face another round of peak oil supply doomsaying.
TotalEnergies To Buy LNG From ADNOC In $1B Deal
ADNOC Gas Plc, a listed subsidiary of Abu Dhabi National Oil Co, has reached an agreement with France’s TotalEnergies SE (NYSE:TTE) to supply the latter with liquefied natural gas (LNG) in a $1B deal, Bloomberg has reported. The deal is one of the latest by a European gas buyer as Europe once again scrambles to fill its gas stores ahead of the next winter season. Last year, Europe managed to fill its gas stores well ahead of winter and has seen storage levels remain above historical levels thanks to mild weather, with higher temperatures curbing gas demand for heating in many countries. The continent is currently going through its second mildest winter on record with the high temperatures attributed to man-made climate change. The unusually mild winter has offered short-term relief to governments that have been struggling with high gas prices after Russia slashed fuel deliveries to Europe last year. Last month, Putin warned Europe of a fresh gas crisis, with Gazprom, Russia’s state-owned gas supplier, telling Europe there “is no guarantee that nature will make such a gift” in reference to the favorable weather. Although the continent was able to avert a crisis, it paid a heavy price: the cost of replenishing natural gas stocks is estimated at over 50 billion euros ($51 billion), 10 times more than the historical average for filling up tanks. Luckily, gas prices have plunged due to lower demand. Still, at almost €40 a megawatt-hour, they’re still above historical averages with many analysts predicting they will rise again ahead of Europe’s next winter. To get around this conundrum, the European Commission is aiming for EU countries to start buying gas jointly “well before summer”, in a bid to help countries refill their storage and avoid a supply crunch next winter, European Commission Vice-President Maros Sefcovic has told Reuters. The EC will require EU countries to ensure their local companies take part in the aggregation of gas demand with volumes equivalent to 15% of the gas needed to fill that country’s storage facilities to 90% of capacity. This requirement amounts to ~13.5 billion cubic meters of gas– a relatively miniscule amount considering the bloc used up 338 bcm in 2021. Sefcovic has urged member states to swiftly engage with market players in their countries to estimate purchase volumes after meeting EU country representatives to coordinate the planned purchases.
Centre slashes windfall tax on crude oil to Rs 4,100 per tonne
India Monday slashed windfall tax on domestically produced crude oil to ₹4,100 per tonne from ₹6,400 per tonne. The export duty exemption for petrol, diesel and aviation turbine fuel will continue. The duty will be effective May 2, according to a notification issued by the Central Board of Indirect Taxes and Customs. In the previous revision, the government had reimpose the windfall profit tax on domestically produced oil from zero to ₹6,400 per tonne and scrapped export duty on diesel. The latest revision comes on the back of softening in oil prices. The tax rates are reviewed every fortnight based on the average oil prices in the previous two weeks. Starting July 1, 2022, India imposed the windfall profit tax, joining a growing number of nations that tax super normal profits of energy companies. While duties were slapped on the export of petrol, diesel and jet fuel (ATF), a Special Additional Excise Duty (SAED) was levied on locally produced crude oil. New Delhi had then introduced export duties of Rs 6 per litre on petrol and ATF and Rs 13 a litre on diesel. Windfall profit tax is calculated by taking away any price that producers are getting above a threshold. The levy was expected to compensate for the reduction in the excise duty on petrol and diesel to provide relief to consumers. But the reduction in the windfall cess from the initial levels is expected to reduce the realization for the government. Private refiners Reliance Industries Ltd and Rosneft-based Nayara Energy are the primary exporters of fuels like diesel and ATF. The windfall levy on domestic crude aims producers such as state-run Oil and Natural Gas Corporation (ONGC) and Vedanta Ltd.
Turkmenistan starts supplying liquefied natural gas to Pakistan through Afghanistan
Turkmenistan started supplying liquefied natural gas to Pakistan through the territory of Afghanistan. The official opening ceremony of the transit route took place on April 29 in southern Afghan province Kandahar, which borders Pakistan, TOLOnews reported. The transit route will run from the Afghan city of Torgundi on the border with Turkmenistan to the Spin-Boldak border crossing (Kandahar). The task of transporting gas from Turkmenistan to Pakistan through Afghan territory was undertaken by a private company. The first transit convoy that crossed Afghanistan en route from Turkmenistan to Pakistan consisted of 50 LNG carriers. Ashgabat has not been able to implement the ambitious project to build the TAPI gas pipeline (Turkmenistan-Afghanistan-Pakistan-India) in Afghanistan so far, although it agreed on the construction of the Afghan section both with the previous government in Kabul and with the Taliban government that seized power in August 2021. TAPI is a strategically important project for the Turkmen authorities. Ashgabat hosted a summit of the heads of states participating in the project in 2010, following which a framework agreement on the gas pipeline and an intergovernmental agreement on the implementation of TAPI were signed. The gas pipeline should run from the Turkmen Galkynysh field in Mary region, which is 150 km from the border of Afghanistan, through the Afghan provinces of Herat, Farah, Helmand and Kandahar and further to Pakistan and India. Annual volumes of deliveries through the TAPI pipeline are planned at the level of up to 33 billion cubic meters of gas. The construction of the Afghan section was solemnly launched in 2018, but due to the inability of the Afghan government forces to ensure the safety of the construction, it was frozen. The Taliban have repeatedly promised to begin construction of the Afghan section of TAPI over the past year, but, according to the latest information, construction has not yet begun.
Centre hikes domestic gas prices for May; CNG, PNG prices may remain unchanged
The price of domestic natural gas for May has been set at $8.27 per metric million British thermal units (mmBtu), up from April’s $7.92, as per a notification by the Petroleum Planning and Analysis Cell. This adjustment follows last month’s introduction of a new domestic gas pricing formula. “The price of domestic natural gas for the period of 1st May 2023 to 31st May 2023 is notified as $8.27 per MMBTU on gross calorific value (GCV) basis,” said the notification dated 30 April. However, the price revision is not expected to affect piped natural gas (PNG) and compressed natural gas (CNG) prices, as gas produced by state-run ONGC and Oil India from their nomination fields, primarily used for PNG and CNG supplies, will remain at the ceiling price of $6.5 per mmBtu. “For the gas produced by ONGC/OIL from their nomination fields, the APM shall be subject to a ceiling of $6.5/MMBTU in GCV basis for the same period,” it said. The Cabinet Committee on Economic Affairs (CCEA) last month approved new gas pricing guidelines, linking domestic natural gas prices in India to global crude prices. Under the guidelines, natural gas prices will be 10% of the monthly average of the Indian crude basket, which is a weighted average of Dubai and Oman (sour) and Brent Crude (sweet) oil prices. CCEA also approved a floor price of $4 per mmBtu and a ceiling of $6.50 per mmBtu under the Administered Price Mechanism (APM) gas pricing. The move aims to expand natural gas consumption, increase its share in India’s primary energy mix from 6.5% to 15% by 2030, and reduce the impact of rising international gas prices on Indian prices.