Gail to borrow up to Rs 7,000 crore domestically to fund Rs 10,000 crore capex plan in FY24
Gail India plans to borrow up to Rs 7,000 crore in FY24 to fund the Rs 10,000 crore capital expenditure plan for this fiscal, a top company official said on Friday. The state-owned company’s chairman and managing director SK Gupta said, “For this fiscal, we plan to spend Rs 10,000 crore”. He added that even though FY23 was not good for internal resource generation, it invested Rs 9,100 crore, which was 15 per cent higher than the budgeted levels. He exuded confidence that FY24 will be robust on the internal resource generation front, and there will not be any problem with continuing with the capex. “We plan to borrow something around Rs 5-7,000 crore,” he added. The company’s director of finance, RK Jain, said that given the present scenario in global finance, the borrowing will be done domestically and not in global markets. Keeping in line with the Sebi mandate, a fourth of the borrowings will be in bonds while the rest will be bank borrowings, he said. At present, the company’s overall long-term debt stands at Rs 9,800 crore, and the new bank borrowings will be for a tenor of over five years. It is in the domestic market to raise a borrowing of Rs 1,500 crore right now, he added. Meanwhile, Gupta said Gail has initiated legal proceedings against Russian energy giant Gazprom for failure to supply Liquified Natural Gas following the complications arising out of Russia’s invasion of Ukraine. “We are taking up legally against them to press for specific performance and to claim the damages, and our request for arbitration has been filed…in the London court,” Gupta said. Without divulging the exact sum that the company is claiming, Gupta said Gail has recommended its representatives for the arbitration, while its supplier is yet to appoint one. He said normal supplies have been on for the last two months, but the price being paid by Gail is higher than the spot market prices because the contract entails a price, which is an average of nine months. Gupta also said that the company is looking seriously at entering the solar energy components space, and will be looking at all the options, including tie-ups. It is also confident of commissioning a green hydrogen production in the calendar year 2023 itself. The company is also contemplating entering into the ethane cracker, but the plans are still on the drawing board. Gupta said it will not be looking at pipeline monetization because oil and gas companies are able to raise necessary resources from the markets.
Oil Prices Set For Their First Weekly Gain In A Month
Crude oil prices look set to record their first weekly gain since mid-April as sentiment about future demand improves amid signs there may be progress on the debt ceiling negotiations in Congress. On Thursday, President Biden and House Speaker Kevin McCarthy said they would negotiate directly on lifting the debt ceiling, sparking hopes that a default would be avoided. “We’re going to come together because there’s no alternative,” President Biden said, as quoted by Reuters. “To be clear, this negotiation is about the outlines of the budget, not about the whether or not we’re going to (pay our debts). The leaders (of Congress) have all agreed: We will not default. Every leader has said that.” As a result, oil prices inched up, with West Texas Intermediate gaining some 3% since the start of the week, according to Bloomberg. At the time of writing, WTI was trading at a little over $72 per barrel, while Brent crude was changing hands at around $76.50 per barrel. Both remain down 10% since the start of the year, however. In addition to debt ceiling optimism, prices got some support from the fact that driving season is around the corner with demand expected to pick up in accordance with usual seasonal variation. Some additional support was also provided by the Department of Energy when it announced it planned to buy 3 million barrels of oil for the strategic petroleum reserve, an IG analyst told Bloomberg. On the flip side, U.S. leading economic indicators suggested the economy is gathering pace, which in turn reignited fears of more rate hikes as it pushed the greenback to the highest in two months. “Good news for the economy is now bad news for the crude demand outlook as economic resilience will force the Fed to kill the economy,” OANDA analyst Edward Moya told Reuters.
Uptick in Qatari LNG contributes to higher LNG imports in India, Pakistan in April: GECF
Qatar – Uptick in LNG imports from Qatar contributed to higher LNG imports in India and Pakistan in April this year, GECF’ latest data show. In April 2023, Asia Pacific’s LNG imports continued to recover and increased by 5% (1.05mn tonnes) y-o-y to 20.50mn tonnes, which was slightly lower than the imports in April 2021. China, India, Thailand, and Pakistan contributed to the bulk of the incremental increase in LNG imports and offset weaker imports in Japan. Asia Pacific’s cumulative LNG imports from January to April this year rose by 3% (2.6mn tonnes) y-o-y to 89.12mn tonnes, Doha-headquartered Gas Exporting Countries Forum said. China’s LNG imports continued to recover in April and recorded the highest year-on-year increase since September 2021. The rebound in economic and industrial activity boosted gas consumption, driving LNG imports higher. Pipeline gas imports to the EU increased by 3% month-on-month, to reach 14 bcm in April. Global LNG imports surged by 10% y-o-y to 34.4mn tonnes, setting a new record high for imports in April. The increase was driven by stronger LNG imports across all regions, especially in the Asia Pacific and Europe. In Europe, the rise in LNG imports continues to compensate for the lower pipeline gas imports into the region. Meanwhile, the rebound in gas consumption in China, opportunistic buying in India due to lower spot LNG prices, and declining gas production and pipeline gas imports in Thailand contributed to the increase in the Asia Pacific’s LNG imports. Furthermore, Philippines joined the ranks of LNG importers in April, GECF noted. As of April, the restocking of gas storage sites has commenced. In the EU, the average level of gas in underground storage was 59.4bcm, which amounts to 57% of the region’s storage capacity. In the US, the level of underground gas storage increased to 55.6bcm, representing 42% of its capacity. A slower stock build is expected in both the EU and US this summer due to the high levels of gas already in storage. The combined LNG in storage in Japan and South Korea was estimated at 9.8bcm. According to GECF, gas and LNG spot prices in Europe and Asia continued their downward trend for the fourth consecutive month. In April, the Title Transfer Facility (TTF), which is the main reference virtual market for gas trading in Europe and Northeast Asia (NEA) LNG spot prices, averaged $13.69/MMBtu and $12.10/MMBtu, respectively, representing a 1% and 9% decrease compared to the previous month. The TTF spot price was 57% lower y-o-y, while the NEA LNG spot price experienced a decline of 58% y-o-y. With the arrival of the shoulder season, the market witnessed a decrease in tightness as a result of ample storage levels and strong LNG supply. However, in Asia, there was some emerging buying activity in anticipation of the summer season, which helped limit the decline in spot LNG prices, GECF said.
Former Russian unit resumes regular LNG supplies to India
A former unit of Russian energy giant Gazprom has resumed supplying LNG to Indian state gas utility GAIL a year after it halted supplies due to Ukraine war Sefe Marketing and Trading Singapore Pte Ltd (SMTS), erstwhile Gazprom Marketing and Trading Singapore Pte Ltd, supplied two liquefied natural gas (LNG) cargoes each in March and April and has committed 4 shiploads each in May and June, GAIL (India) Ltd chairman and managing director Sandeep Gupta said on Thursday. ‘Hopefully, similar volumes will be nominated for future months also,” he said. Sefe will decide on volumes on a month-to-month basis. GAIL had in 2012 signed a 20-year deal with Gazprom Marketing and Singapore (GMTS) to buy 2.85 million tonnes per annum of LNG. Supplies started in 2018 and the full volume was to reach in 2023. GMTS had signed the deal on behalf of Gazprom. GMTS was moved to Gazprom Germania, now called Sefe. But in early April last year, Gazprom gave up the ownership of the German unit without giving a reason and placed parts of it under Russian sanctions. This followed the West slapping sanctions on Russia for its February 24 invasion of Ukraine. It invoked force majeure and stopped supplies to India from June 2022. Gupta said normal supplies have resumed and hope they will continue. Sefe, formerly GMTS, ”in its annual delivery plan and in their latest communications have maintained their alleged force majeure stance citing various reasons such as Russian sanctions on its LNG source/portfolio and mandate from German authorities (BnetzA) for ensuring energy security for Europe for their inability to deliver LNG cargoes,” Minister of State for Petroleum and Natural Gas Rameswar Teli had told Lok Sabha in a written reply to a question on March 23 this year. However, ”while SMTS maintains its force majeure stance, as on date SMTS has informed that they shall be able to supply two cargoes (shipload) in March 2023 and two in April 2023,” he had added. To mitigate the shortfall in Russian supplies, GAIL imposed supply cuts to users from mid-July 2022 to mid-March 2023. In order to meet the shortage, GAIL sourced spot LNG volumes from the domestic/international market and also partially/fully stopped its petrochemical complex at Pata in Uttar Pradesh for fulfilling supply obligations to the customers. Gupta said all the supply cuts have been restored with effect from March 16. Under the deal, GMTS was to progressively increase supplies to GAIL. It shipped 2 million tonnes of LNG in 2021 and was to supply 2.5 million tonnes or a minimum of 36 cargoes in the calendar year 2022. The full volume of 2.85 million tonnes is to be reached in 2023.