Iraq Indian Oil looking for annual deal to buy US oil
Indian Oil (IOC), the country’s top refiner, is looking for an annual deal to buy U.S. crude as it seeks to broaden its oil purchasing options, its chairman said on Wednesday, amid uncertainties over imports from Iran. Washington in November granted a six-month waiver to New Delhi from sanctions against Tehran and restricted India’s monthly intake of Iranian oil to 1.25 million tonnes or 300,000 barrels per day. Sanjiv Singh told reporters IOC has not yet finalised from which company it would buy U.S. oil. “When we go for term, it should have price advantage for us and strategic advantage for us apart from supply sureties. So considering these three we will work out volumes also,” he said. India Oil had previously purchased U.S. oil from spot markets and signed a mini-term deal in August to buy 6 million barrels of U.S. oil between November to January. IOC is the top Indian buyer of Iranian oil with an annual contract for 180,000 bpd in the fiscal year ending March 2019. Singh said his firm buys Iranian oil because of competitive prices and attractive terms and conditions. Iran offers extended credit periods and almost free shipping on oil sales to India. He said IOC was in talks to renew an annual oil contract with Iran but a new any deal would depend on conditions attached to a subsequent waiver from the U.S. sanctions. “The earlier waiver was for the existing contract, (for a new contract) we will have to work it out,” he said. Meanwhile, the refiner has signed a deal with Iraq to buy 360,000 bpd of oil, including up to 500,000 bpd of Basra Heavy, in 2019 compared with 356,000 bpd last year.
Shell’s 2018 profits soar to four-year high
Royal Dutch Shell reported a 36 per cent rise in 2018 profits on Thursday to $21.4 billion, the highest since 2014, beating forecasts as cost savings kicked in. For the fourth quarter of 2018, the Anglo-Dutch company’s net income attributable to shareholders, based on a current cost of supplies (CCS) and excluding identified items, rose 32 per cent on the year to $5.688 billion as deep cost cuts introduced after the 2014 market downturn filtered through. That compared with a company-provided forecast of $5.28 billion for the quarter and $20.98 billion for the full year.
US natural gas demand to hit record high during freeze
US homes and businesses will likely use record amounts of natural gas for heating on Wednesday as an Arctic-like freeze blankets the eastern half of the country, according to energy analysts. Harsh winds brought record-low temperatures across much of the Midwest, unnerving even residents accustomed to brutal winters and keeping them huddled indoors as offices closed and mail carriers halted their rounds. That brutal cold could also temporarily reduce gas production by causing freeze-offs in the Marcellus and Utica shale, the nation’s biggest gas producing region, in Pennsylvania, Ohio and West Virginia, the analysts warned. Freeze-offs occur when water and other liquids in gathering lines freeze, blocking the flow of gas. Overnight lows on Wednesday-Friday will drop to -20 Fahrenheit (-29 Celsius) in Chicago and the single digits along the East Coast from New York to Boston, according to AccuWeather, a weather forecaster. The cold, however, will be short lived with high temperatures in New York and Chicago expected to rise into the 40s F this weekend. The normal high at this time of year is 32 in Chicago and 39 in New York. Financial data provider Refinitiv predicted gas demand in the Lower 48 U.S. states would hit a daily record of 145.2 billion cubic feet per day (bcfd) on Wednesday as consumers crank up their heaters to escape the bitter cold. That would top the current all-time high of 144.6 bcfd set on Jan. 1, 2018. One billion cubic feet is enough gas to supply about five million U.S. homes for a day. In early estimates, gas production in the Lower 48 states will slip about 0.9 bcfd to 85.8 bcfd on Wednesday, according to Refinitiv. That is the lowest daily output since Enbridge Inc started to restore flows through some gas pipes in Ohio following a pipeline explosion there on Jan. 21. “Based on our analysis of historical freeze-offs, temperature conditions forecasted for Jan. 30-31 pose a risk of a freeze-off occurring in the Marcellus/Utica…in the ballpark of 1 bcfd,” said Rishi Iyengar, senior analyst natural gas markets at IHS Markit’s OPIS PointLogic. In early estimates, Marcellus/Utica production was down about 0.7 bcfd to 29.6 bcfd on Wednesday, according to Refinitiv. Iyengar said current forecasts were not cold enough to impact production in the Bakken shale in North Dakota because drillers there have invested in equipment needed to handle extremely low temperatures. In the spot market, next-day prices for Wednesday for power at PJM West in western Pennsylvania and gas in Chicago both rose to their highest in a year as demand for heating spiked. PJM, the electric grid operator for all or parts of 13 states from New Jersey to Illinois, forecast power demand would reach about 142,000 megawatts (MW) on Thursday, approaching the region’s all-time winter peak of 143,295 MW on Feb. 20, 2015. PJM said it has “robust reserves and does not expect to have any capacity issues” in meeting demand. One megawatt can power about 1,000 homes.
LPG subsidy, LNG imports, jet fuel, gas connections and many more – Demands from the oil and gas sector
Budget 2019 predictions: It’s time for Budget 2019! With barely a three days left, there are huge expectations from the upcoming Budget which will be most likely an interim one and presented by interim Finance Minister Piyush Goyal. Many speculations have hit headline, like what will be next big reforms announced by Prime Minister Narendra Modi’s government. This time major reforms are expected in the oil and gas sector from NDA government, considering 80% of India’s import depends on this segment. Many analysts are eyeing reforms in the form of LNG imports, LPG subsidy, jet fuel, GST regime and many more in the oil and gas sector. Firstly taking into consideration the LNG imports, they account 47% share in total consumption. Between April to November of FY19, consumption of natural gas has increased by 15% as against to the same period in the previous fiscal year. CARE says, “ The industry expects LNG customs duty to be waived off completely from the current 2.5%, to benefit domestic regasification terminals.” Next big reform is expected in the case of jet fuels and natural gas which are outside the umbrella of Goods and Services Tax (GST). It is only, LPG, kerosene and naphtha are which are under GST tax bracket. For this CARE said, “Bringing fuel products under the ambit of GST has been deliberated for long. The state and Centre, however, have not been able to build a consensus on revenue sharing.” Moving ahead, in regards to LPG subsidy, CARE says, “the industry expects the government to widen the fuel subsidy and include all cooking fuels such as piped natural gas and bio gas, a move to which will benefit all consumers besides making it attractive for consumers to switch to alternate cooking fuels.” In Budget 2018, the government had allotted Rs 249.32 billion as fuel subsidies where Rs 203.77 billion was earmarked as LPG subsidy and the remaining Rs 45.55 billion was classified as kerosene subsidy in oil and gas sector. Apart from this, CARE also believes that the government will have to increase the petroleum subsidy as they aim to provide LPG connections to all poor households under the Pradhan Mantri Ujjwala Yojana (PMUY). Launched since 2016, the PMUY scheme originally targeted giving LPG connections to mostly rural women members of below the poverty line (BPL) households. The list was later expanded to include all SC/ST households and forest dwellers among others. The scheme is now being extended to all poor households. Hence, whether the NDA government brings in ache din for the oil and gas sector will be keenly watched. “The total length of the two corridors of the Kanpur metro rail project is 32.38km and the completion cost, excluding the land cost and state taxes, is Rs 161.92 billion. The length of the Agra stretch of the metro, which will also have two corridors, is 30km and the completion cost is Rs 122.53 billion,” the report cited a senior official of the UP state urban development department.
India’s crude oil imports from Iran dropped 63% in December, 53% jump in shipments from Saudi Arabia
India’s crude oil imports from Iran dropped 63 per cent to 0.86 Million Tonne in December, the lowest recorded in calendar year 2018, fresh data sourced from Directorate General of Commerce Intelligence and Statistics (DGCIS) showed. India had imported 2.32 Million Tonne of Iranian crude in December 2017. Cumulatively, oil imports from Iran during the April-December 2018 period increased 18 per cent to 19.75 MT, as compared to 16.65 MT imported in the corresponding period a year ago. India’s crude oil imports from Iran have been declining since November after US’ secondary sanctions targeting Iran’s energy sector came in effect. Making good the restrictions on Iranian crude oil exports, India’s oil imports from Saudi Arabia, the largest producer of Organization of Petroleum Exporting Countries (OPEC), jumped 53 per cent 3.02 MT in December 2018. Cumulatively, India’s crude oil imports from Saudi Arabia in the April-December period jumped 13 per cent to 29.39 MT. Sanjiv Singh, Chairman of Indian Oil Corporation (IOC), India’s largest fuel retailer and one of the biggest domestic consumer of Iranian crude, earlier this month said the company is optimistic about getting another waiver from the US and complete halt of Iranian crude is a tough decision to make. India and Iran had on 2 November signed a bilateral agreement to settle oil trades through Indian government-owned UCO Bank in the Indian currency, which is not freely traded on international markets, Reuters reported. According to data sourced from DGCIS, most of the Iranian crude during April-December 2018 came through the Paradip Port which handled around 4.68 MT of Iranian crude during the period as compared to 1.91 MT handled in the corresponding period previous year. New Mangalore port handled 4.50 MT of Iranian crude during the April-December period as against 3.58 MT handled in the corresponding period previous year. Vadinar port handled 4.47 MT of Iranian crude during the period as compared to 5.35 MT handled in the nine months period previous year. Imports from other countries India’s crude oil imports from Iraq declined 3.20 per cent to 3.92 MT in December 2018 on a year-on-year basis. Iraq, one of largest producers of OPEC and the largest crude oil supplier to India in 2017-2018, maintained its position in the first nine months of the current financial year (2018-2019), supplying 34.38 MT of crude oil in the period. Iraq’s crude exports to India in the same period previous year stood at 32.28 MT. India’s oil imports from Nigeria also rose 20.53 per cent to 1.35 MT in December 2018. Crude oil imports from United Arab Emirates (UAE) in December 2018 increased 41.66 per cent to 1.87 MT. Imports from oil-rich Venezuela increased 13 per cent to 0.96 MT in December. Venezuela is one of the top five crude oil suppliers to India. However, the volume of crude sourced from the OPEC member has been erratic on the back of ongoing political and economic crisis as well as under-investment in the upstream sector which is impacting the country’s production. Cumulatively, India’s crude oil imports from Venezuela in the April-December 2018 period decreased 6.28 per cent to 13.42 MT from 14.32 MT imported in the corresponding period a year ago. India’s total crude oil import bill during April-December 2018 increased 40.6 per cent to $86.9 billion as compared to $61.8 billion recorded in the year ago period.
Croatia eyes tender for onshore gas and oil exploration in south
Croatia is preparing a tender for gas and oil exploration in the mountainous areas of central and southern Croatia, Energy and Environment Minister Tomislav Coric said on Tuesday. He did not specify any exact date, but said the tender for concessions should be ready soon. “The exploration works will take between five and seven years and then we will see how to proceed. I believe it is our duty to check what resources we have,” Coric told an energy conference. The exploration will take place in the Dinarides area which is a mountainous range covering a large part of the Balkans, including the areas of central and southern Croatia. “We will, of course, exclude the environmentally sensitive areas and the national parks. We’ve seen some positive signals in the energy community for this exploration move,” Coric added. So far Croatia has been granting concessions for exploration and exploitation of gas and oil in the northern, largely flat, areas of the country. Several years ago there was also a plan to kick off exploration activities in the Adriatic Sea, but it was dropped after protests by environmentalist groups which said such activities would threaten the biodiversity and tourist industry. Close to 20 percent of the Croatian economy is based on tourism almost entirely focused on the Adriatic coast. At the moment Croatia covers some 80 percent of its oil consumption and around 60 percent of its gas needs from imports.
HPCL’s Barmer refinery achieves financial closure
Hindustan Petroleum Corp Ltd’s (HPCL) Rs 43,129-crore refinery project in Barmer district of Rajasthan has achieved financial closure with tying up of a Rs 28,753-crore loan from a consortium of lenders, the company said Monday. HPCL, a subsidiary of state-owned Oil and Natural Gas Corp (ONGC), signed a debt syndication agreement with the consortium of nine lenders led by State Bank of India, a company statement said. “SBI is the lead lender with more than 50 per cent share in the consortium,” it said. “This is one of the largest project debt syndications in India.” The project, where HPCL owns 74 per cent stake and the balance is held by the Rajasthan government, will cost Rs 431.29 billion. Two-thirds of the project cost is being funded through loans and the remaining through equity by promoters. It comprises a 9-million ton a year oil refinery and a 2-million ton per annum petrochemicals unit. SBI Caps was the debt arranger, it added. Prime Minister Narendra Modi on January 16, 2018, started work on the project that will be completed by 2022-23. Originally, then Congress president Sonia Gandhi had laid foundation stone of the refinery on September 22, 2013. The state government is giving Rs 11.23 billion per annum for 15 years as an interest-free loan instead of previously envisaged tax breaks. This has resulted in reducing the financial burden on the state government from Rs 560.40 billion to Rs 168.45 billion. As much as 4,400,40 acres of land is required for the project, out of which, 1,454 acres will be developed as a green belt. Of the total project cost, Rs 8.42 billion has been earmarked towards pollution-control measures.
Essar to expand Hazira port capacity
Essar Group’s Hazira Port in Gujarat’s capacity is investing $20 million or about Rs 1.425 billion to ramp capacity to 95 million metric ton per annum (mmtpa) by mid of this year. The company plans to invest $70 million, or around Rs 4.98 billion, in two phases to increase Hazira Port’s capacity to 110 mmtpa. “Work is going on and a major component of the expansion project will be done in March and the entire first phase is expected to be done a few months after that,” a source said. Under the first phase, $20 million is being financed through internal accruals as well as debt. This phase includes construction of jetty. In FY2018, Hazira Port handled 41 million ton cargo. The second phase would be put into works a year before saturation of port’s capacity. As per the earlier plans, the second phase was to be completed by September 2020. At the moment, Ruias promoted Essar Ports has an operational capacity of 35 mmtpa for dry bulk and general cargo at this terminal in Gujarat. The company is also developing liquefied natural gas project at Hazira. For the second phase of the expansion, another $50 million planned to be invested is yet to be arranged. This phase includes ship unloaders, conveyor belt system, etc. In Gujarat, Essar Ports has another port at Salaya. Its 58-million ton Vadinar Port was divested in 2017 along with Essar Oil to a group led by Russian oil major Rosneft for Rs 861 billion. For Vadinar Port the company received Rs 133 billion. Last year, the cargo loading capacity at its Visakhapatnam Port facility was upgraded to handle 24 mmtpa from the earlier 12.5 mmtpa. This modernisation plan included dredging for the all-weather deep draft facility, high capacity tipplers, high capacity reclaimers, conveyor systems (9.5 km), etc at a cost of Rs 8.30 billion.
BPCL: In New Horizons
Bharat Petroleum Corporation Ltd. (BPCL) is among the leading players in the oil and gas sector, with many diverse feathers in its cap. It has for instance, been featured in the Asia Book of Records for running the largest corporate brand engagement programme in Asia. During the floods in Kerala in 2018, BPCL’s donation to the state was Rs 40 million, when the total donation of all of the petroleum industry was Rs 250 million. The Kochi refinery of BPCL has recently launched a specialty product, the food- grade Quality Hexane (FGQ Hexane) that aims to promote agro-processing. The product could turn out to be a boon for the agriculture sector. The public sector undertaking is a Maharatna with a market share of 23.8 per cent in petroleum products. In the 2017-18 financial year (FY 2018) BPCL had earned a net profit of Rs 79.1934 billion on a gross revenue of Rs 277162.23 billion. Like its peers in the oil and gas industry, BPCL too is foraying into the renewable energy space. As Urvisha H. Jagsheth, an oil and gas industry expert from CARE Ratings points out, “State-owned PSUs have been able to foray into the renewables space and have been able to expand their natural gas business, especially where gas is replacing liquid fuels.” Assuming that renewable energy (RE) will overtake fossil fuels in the long run, oil and gas majors will have to find ways to improve their performance to survive. Sabyasachi Majumdar, ICRA Group Head for Corporate Ratings says, “We expect to increase the share of RE in the all-India (power) generation to 10 per cent by FY 2020 and further to 13 per cent by FY 2022, based on capacity addition forecasts.” Being a smart player BPCL has already begun focusing on its gas resources. It has drawn up ambitious plans to become a significant player in the gas business, establishing its footprints across the entire gas value chain. In the long term BPCL is expected to have a focused presence in the downstream gas business and ensure demand security in the sector. Announcing the incorporation of Bharat Gas Resources Limited (BGRL) into the company as a subsidiary in June 2018, BPCL Chairman & Managing Director D. Rajkumar had said, “Formation of BGRL is, indeed, a significant milestone on the journey of BPCL, proving yet again, that the company will continue to create and surpass unparalleled benchmarks and accelerate into the realm of exceptional performers.” “BPCL has also decided to diversify into petrochemicals in a big way to tap the immense potential in the market,” he went on to say. “As a strategy, all future expansion plans of BPCL Group refineries are oriented towards production of petrochemicals, both commodity and niche derivatives. I am confident that soon BPCL will be a frontrunner in this space to deliver enhanced performance,” Rajkumar had said, spelling out the company’s strategy to diversify simultaneously into gas and petrochemicals. Bharat Petroleum has had a global presence for a long time. In FY 2018 it added to its portfolio a high-quality asset in the UAE. The integrated development of the 12.88 MMTPA LNG project in Mozambique was a critical milestone for BPCL too, positioning the consortium as a strategic global LNG supplier. The BPCL’s Numaligarh Refinery (NRL) earned a profit after tax of Rs 20.42 billion in 2017-18. Bharat Oman Refineries Limited is now on a growth trajectory as well and earned a profit after tax of Rs 9.84 billion, which is a phenomenal increase of 22 per cent over the previous year. At the company’s annual general meeting, Rajkumar had said, “I had shared with you last year that BPCL’s upstream subsidiary, Bharat Petro Resources Ltd. (BPRL) has established itself as a revenue generating company, with assets in all phases of upstream, ranging from exploration to production.
BP’s Whiting, Indiana refinery shuts HTU due to steam supply problems
BP shut a hydrotreater on Monday due to steam supply problems at its 413,500 barrel-per-day (bpd) Whiting, Indiana, refinery, sources familiar with plant operations said. The 24,300 bpd Catalytic Refining Unit was shut on Monday morning due to the problem, the sources said. A steam supply system malfunction forced a cut in production at the refinery earlier this month, but had been repaired.