ONGC Videsh sells December Russian Sokol crude at lower premium after exports rise
India’s ONGC Videsh (OVL) has sold a cargo of Russian Sokol crude for December loading at a lower premium than its previous deal after supplies of the oil rose, three trade sources said on Thursday * The oil producer sold the cargo for loading on Dec. 6 to 12 at a premium of about $5.40 a barrel to Dubai quotes to Shell, they said * ONGC last sold a cargo loading on Nov. 29 to Dec. 5 at a premium of $5.85 a barrel * Sokol crude exports are expected to rise by 200,000 tonnes per month to 1.3 million tonnes per month from October, according to loading schedules
Govt will not ask OMCs to further subsidise petrol, diesel prices: Official
Allaying concerns about the return of fuel subsidy regime, a top Finance Ministry official on Thursday said the government asking oil PSUs to subsidise petrol and diesel prices by Re 1 per litre was a “one-time thing” and it does not intend to ask them to do it again. While oil marketing companies (OMCs) will continue to enjoy marketing freedom, upstream oil producers like ONGC would not be asked to share fuel subsidy burden, he added. Just last week, the government had cut excise duty on petrol and diesel by Rs 1.50 per litre and asked state-owned oil marketing companies (OMCs) to subsidise the two fuels by another Re 1 a litre. But most of the Rs 2.50 per litre reduction in rates effected from October 5 has been lost in increases in selling prices on subsequent days, giving rise to the suspicion that the government may again ask OMCs to subsidise fuel. “The Re 1 absorption by OMCs in their pricing was a one-time thing,” the official said. The government, he said, has no intention of asking them to do that again. Following the comments, shares of OMCs surged by as much as 19 per cent intra-day, defying the broader market trends. Shares of HPCL surged 19 per cent to hit a high of Rs 215.40, BPCL jumped 7 per cent to Rs 284.80 and IOC gained nearly 8 per cent to Rs 134 in intra-day trade. The benchmark BSE Sensex fell 759.74 points to close at 34,001. The cut in excise duty and OMCs absorbing some prices had led to a drop in the price of petrol from a record high of Rs 84 per litre to Rs 81.50 in Delhi and that of diesel from an all-time high of Rs 75.45 to Rs 72.95 a litre on October 5. But rate hikes on subsequent days have pushed prices up. Petrol has risen by 86 paise per litre since then and diesel by Rs 1.67, negating the entire excise duty reduction in less than a week. Petrol price in Delhi Thursday stood at Rs 82.36 per cent while diesel was priced at Rs 74.62. The official said the government is also not looking at bringing back the subsidy sharing mechanism where upstream firms like ONGC subsidised cooking fuels LPG and kerosene by giving discounts on crude oil they sold to refiners. Oil and Natural Gas Corp (ONGC) shares surged to Rs 159.60 during intra-day trade on the BSE before ending at Rs 152.90, up 2.86 per cent. Oil producers ONGC and Oil India Ltd had till June 2015 made good as much as 40 per cent of the under-recoveries or subsidy arising out of selling fuel at below market price. It was speculated that the same subsidy sharing in some form may be brought back. According to Moody’s Investors Service, share prices of state-owned oil companies have declined around 20 per cent on average since the government on October 4 announced a reduction in the country’s fuel prices. The aggregate market capitalisation of the six largest listed government owned/linked oil companies had fallen by Rs 1.2 lakh crore since then, it said. “The share price decline is credit negative for the oil companies because of the high level of cross-shareholdings in one another. The market values of their respective investments have declined, reducing their financial flexibility,” it said in a report Thursday. Shares of HPCL closed up 14.70 per cent at Rs 207.15. BPCL was up 5.11 per cent at Rs 278.65 and IOC ended 5.39 per cent higher at Rs 131 on the BSE.
IOC to invest Rs 5,463 crore in city gas network in 7 districts
State-owned Indian Oil Corp (IOC) on Thursday said it will invest Rs 5,463 crore in setting up city gas distribution network for retailing CNG to automobiles and piped cooking gas to households in seven districts. IOC had, in the recently concluded 9th bid round for city gas licences, won permits for seven cities on its own and another nine in a joint venture with Adani Gas. The company, in a regulatory filing, said its board in a meeting Wednesday approved investments in seven cities it has won on its own. “IOC has won the bidding for implementation of city gas distribution (CGD) for seven geographical areas viz Coimbatore district, Salem district (Tamil Nadu), Bokaro district (Jharkhand), Rewa district (Madhya Pradesh), Aurangabad district (Maharashtra), Guna district (Madhya Pradesh) and Jagtial district (Telangana). The Board has approved the estimated total capital investment of Rs 5463 crore on the implementation of the CGD projects. The investment in CGD business will help IOC to expand and consolidate its gas business,” it said. The company, however, did not specify the investments to be made in the nine cities it had won in the joint venture with Adani. IOC said its board also approved a Rs 520 crore investment for production of ethanol using LanzaTech gas fermentation technology at Panipat refinery in Haryana. The proposed ethanol plant is designed to produce 33.5-kilotonnes per annum of anhydrous ethanol for use in automotive fuel. “The project has the potential of greenhouse gas reduction required to limit global climate change,” it said. The board approved “installation of facilities for production of ethanol from PSA Off Gas of Hydrogen Generation Unit (HGU) at Panipat refinery using gas fermentation technology of LanzaTech USA at an estimated cost of Rs 520 crore,” it said. The board also approved a Rs 1,332 crore investment in laying a pipeline from Paradip in Odisha to Haldia in West Bengal. The Paradip-Somnathpur-Haldia pipeline “would enable placement of products from Paradip Refinery, Odisha to Somnathpur, Odisha for meeting the local demand as well as to Haldia, West Bengal for onward movement through other pipelines,” the company said.
Natural gas here to stay beyond energy transition, Big Oil says
Energy companies are betting demand for natural gas will rise at break-neck pace for decades, undermining warnings that tackling climate change would require a rapid switch to renewable energy. Top oil companies including Royal Dutch Shell, BP and Total are adapting with growing urgency to the need to develop cleaner energy sources, investing more and more in solar and wind power, electric vehicle technology and even forestation. Still, they see oil, and specially natural gas, the least polluting fossil fuel, playing a major role throughout the decades of transition and beyond as demand for electricity and plastics grows. “Shell’s core business is, and will be for the foreseeable future, very much in oil and gas and particularly in natural gas,” Shell Chief Executive Officer Ben van Beurden said in a speech at the Oil & Money conference. By 2035, Shell expects global gas demand to grow annualy by 2 percent, twice the pace of worldwide energy demand, van Beurden said. The United Nations said in a report earlier this week that limiting Earth’s temperature rise to 1.5 degrees Celsius means making rapid, unprecedented changes in the way people use energy to eat. That will include the tripling of renweables energy to supply 70-85 percent of electricity by 2050. Technology to capture and store carbon emissions would further reduce the share of gas-fired power to 8 percent, the report said, while making no mention of oil in this context. It is unclear how the global economy will reach such goals. Natural gas is today around 22 percent in the global energy mix. But many energy company executives prefer to see it as part of the shift to low-carbon economies. Qatar, one of the world’s largest gas suppliers, is set to grow its liquefied natural gas (LNG) capacity by over 40 percent by the next decade to around 110 million tonnes per year, as demand for the super-chilled fuel is set to soar, particularly in fast-growing economies such as China and India. “We believe that natural gas will continue to play a key role, not as a so-called transition fuel but rather as a destination fuel,” Qatar Petroleum CEO Saad Al Kaabi said. Shell is investing more than any other of its peers in clean energy, spending $1 billion to $2 billion a year on renewables and low-carbon energy. That compares with a total annual spending budget of $25 billion-$30 billion. The investments “might even make people think we have gone soft on the future of oil and gas. If they did think that they would be wrong,” van Beurden said.
Canada pipeline blast risks Washington natural gas shortage
A pipeline explosion in British Columbia risks cutting off the flow of Canadian natural gas to Washington State, and companies are urging customers to conserve. The blast Tuesday evening shut down the Enbridge natural gas pipeline about 600 miles northeast of Vancouver. Doug Stout of Fortis BC said Wednesday that 85 percent of the gas his company feeds to homes and businesses is carried by the twinned pipeline that runs from northern British Columbia to the United States border south of Vancouver. “There is a potential impact on Seattle and north of Seattle,” Stout said. The damaged Enbridge pipeline connects to the Northwest Pipeline system, which feeds Puget Sound Energy in Washington State and Northwest Natural Gas in Portland. Washington State-based Puget Sound Energy is urging its 750,000 customers to lower their thermostats and limit hot water use at least through Wednesday. No one was hurt when the fireball lit up the sky near the community of Shelley, British Columbia and forced about 100 members of the nearby Lheidli T’enneh First Nation from their homes. Witness Terry Teegee said the blast shook the area at about 5:30 p.m. “We thought it might have been a train crash or a low-flying jet,” he said. Zachary Semotiuk said he saw a “huge flash,” followed by a “raging fire,” that was easily visible above the tree line from several kilometers away. Chief Dominic Frederick with the Lheidli T’enneh First Nation said Enbridge contacted him shortly after the blast. “They had told me there was gas building up in the underground. For some reason or another the gas had stopped flowing and it built up and it just exploded,” Frederick said. As many as 700,000 customers in northern British Columbia, the Lower Mainland and Vancouver Island could be directly affected by a shortage, Stout said. Stout urged another 300,000 customers in the Okanagan and southeastern British Columbia, to conserve even though their natural gas comes from Alberta. Currently Fortis has reserves still in the pipeline south of Prince George, in its liquefied natural gas storage tanks in the Lower Mainland and on Vancouver Island, and there is some gas flowing from Alberta through a pipeline in southern British Columbia, Stout said. Fortis expected to receive updates on the situation as Transportation Safety Board investigators and National Energy Board inspectors arrived to assess the damage and attempt to determine a cause. The company will update its customers as soon as it is in a position to offer something new, Stout said.
BPCL refinery to make India less reliant on other countries for crude oil: Pradhan
Union Petroleum Minister Dharmendra Pradhan on Wednesday said that refinery plant under Bharat Petroleum Corporation Limited (BPCL) will make the country less reliant on other for crude oil and will also fulfill Prime Minister Narendra Modi’s promise of doubling farmers’ income. Earlier on Wednesday, Odisha Governor Ganeshi Lal laid the foundation of the BPCL ethanol bio-fuel refinery plant in Bargarh. “The refinery will be completed in upcoming two years. We are coming up with different strategies to fulfill the promise of Prime Minister Modi’s for doubling the farmer’s income,” he said. “Two things will happen because of the refinery plant is that nation’s self-sufficiency will increase and secondly farmers’ income will be doubled,” he added.
Tokyo Gas not considering to raise US LNG purchase
Tokyo Gas Co is not considering raising U.S. liquefied natural gas (LNG) purchase volumes as it seeks to diversify procurement portfolio, its President Takashi Uchida told reporters on Thursday. * The company has started receiving long-term U.S. LNG from Dominion Energy Inc’s Cove Point export plant in Maryland earlier this year, and it also has signed agreements to buy LNG from Cameron project in the United States. * Following the recent agreements to buy LNG from Mozambique and Canada, the company is beginning to fill up the room for required gas volumes in the 2020s, and that it would look to diversify procurement conditions further by seeking non-U.S. LNG supplies, he added.
Oil India finds gas in two wells in Assam in Q2
Oil India Limited (OIL) said it found hydrocarbons in two exploratory wells in Assam in the July-September quarter. The first one, in Dibrugarh, produced natural gas at the rate of 0.115 million cubic meters per day, while the second one, in Tinsukia, produced gas at 0.1 milion scmd. These numbers are at the higher end of production for gas wells. In fact, many new-generation, shale-gas wells produce as little as 5,000 cubic meters per day, though they can also go up to 50,000 cubic meters. “These discoveries are envisaged to open up new areas for further exploration in Assam and would help in enhancing the gas production with future appraisal & development activities,” the Eastern-India focused oil and gas producer said. The first well, West Lohali -1, encountered gas in 13 meters of Barail sand at a depth of 2,357 m. The second well, Dhakuwal-l, encountered oil and gas at 15 meters of “LK+TH sand” at a depth of 3,875 meters, it added. The second well also produced condensate (or liquids) at the rate of 22 cubic meters per day
India may receive 4 billion barrels of extra crude oil from Saudi Arabia in Nov
Saudi Arabia, the world’s biggest oil exporter, will supply Indian buyers with an additional 4 million barrels of crude oil in November, several sources familiar with the matter said on Wednesday. The extra cargoes indicate a willingness by Saudi Arabia to increase crude supply to make up the shortfall once sanctions by the United States on oil exports from Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), start up on Nov. 4. India is Iran’s top oil client after China, though several refiners have indicated they will stop taking Iranian barrels because of the sanctions. Reliance Industries Ltd, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemicals Ltd are seeking an additional 1 million barrels each in November from Saudi Arabia, the sources said. Three of the companies did not immediately reply to an email from Reuters seeking comment. MRPL replied “no comments” when contacted by email. State-owned oil producer Saudi Aramco was not immediately available for comment. Given their dependence on Iranian oil supplies, the Indian refiners are concerned about the loss of Iranian crude once the sanctions start and are seeking exemptions. Refiners in the country have placed orders to buy 9 million barrels from Iran in November. One of the reasons for the additional demand for Saudi oil is that the crude arbitrage from the United States is shut so the Indian buyers have to turn to Middle Eastern barrels, said one of the sources. India, the world’s third biggest oil importer, is grappling with a combination of rising oil prices and falling local currency, which makes imports of dollar-denominated oil more expensive. Retail prices for gasoline and diesel fuel in India are at record highs and the government has cut its excise tax on fuel to ease some of the pain for consumers. Indian Oil Minister Dharmendra Pradhan said on Monday that he spoke with Saudi Energy Minister Khalid al-Falih last week and reminded him that OPEC and other major oil producers had promised to raise their output at a meeting in June. India imports an average of 25 million barrels per month from Saudi Arabia. Reuters last week reported that Russia and Saudi Arabia, the world’s two biggest oil producers, struck a private deal in September to raise output to cool rising prices and had informed the United States about the decision.
Undue enrichment to Reliance Industries in KG D-6 field at $3 billion, say govt sources
The value of Reliance Industries’ (RIL) alleged “undue enrichment”, owing to migration of gas from state-run ONGC block to its KG D-6 field off the Andhra coast, has doubled to $3 billion from $1.5 billion estimated in March 2015, according to government sources. With much at stake, the government has asked attorney general K K Venugopal to personally monitor its challenge to an arbitration award in favour of RIL. India’s largest private sector oil company had initiated the arbitration proceedings after the government had slapped a recovery notice for $1.5 billion. The government is set to move the court, seeking refund of the undue benefit seen to have been derived by RIL. RIL declined to comment on the issue. “The order by the arbitration tribunal in favour of RIL has negated Indian laws, which will be the main focus of the A-G’s contention in the appeal,” a source said. The government is also relying on the fact that RIL-led consortium of RIL-Niko-BP was aware that extraction of gas from its KG D-6 will lead to migration of gas from ONGC’s block and that it failed to bring this to the notice of the authorities. This was also highlighted by the Justice A P Shah Commission, which was set up by the government in December 2015 after ONGC moved the Delhi High Court in 2014 on the gas migration issue. RIL’s partner in the venture Niko had obtained a report from the US-based oilfield consultancy firm DeGolyer MacNaughton (D&M) in 2003, where the latter had said that if they extract gas from KG-D6 field, gas from ONGC’s block will migrate as well, the source said. ONGC had in 2014 dragged RIL and the government to the Delhi high court, seeking appointment of an independent agency to verify its claims as RIL wells were too close to ONGC’s block and that migration of its gas had taken place. D&M again gave its report in 2015, confirming what it had said earlier.