What is India-Iran oil trade all about?
Iran has always been one of India’s main suppliers of oil, second only to Iraq and Saudi Arabia, with exports that totaled more than 27 million tons last year. The figures make India Iran’s biggest buyer after China, and as a result, a target for the U.S. which has declared a campaign to “isolate Iran” after the Trump administration withdrew from the multilateral nuclear deal. For India, which has been told along with other buyers to take oil imports to “zero” by the cut-off date of November 4, its decisions on procuring Iran oil this point onwards is not so much about securing energy as it is about securing India’s standing in the world. If it rejects U.S. pressure, it risks sanctions as well as incurring the displeasure of its all-powerful friend and defense partner. If it yields, it risks its relationship with traditional partner Iran, access to important trade routes through Chabahar and the International North South Transport Corridor (INSTC), as well as its international reputation. How did it come about? In 2012, when the Obama administration wanted to maximize pressure on Iran in order to secure the nuclear deal or the Joint Comprehensive Plan Of Action, it had sent a similar tough message to New Delhi, albeit more discreetly than the Trump administration has. The then Secretary of State, Hillary Clinton, recounts in her book Hard Choices that when she visited New Delhi in May 2012, the “more loudly we urged [India] to change course, the more likely they were to dig in their heels.” India agreed to cut oil imports by 15% subsequently but asserted its autonomy. Three months later, the then Prime Minister, Manmohan Singh, even visited Tehran to attend the Non-Alignment Summit, despite U.S. objections. Eventually, New Delhi operationalized a ‘rupee-rial’ mechanism, under which half of what it owed Tehran for oil imports would be held in a UCO Bank account and made available to Iranian companies to use for any imports from India, an arrangement the Narendra Modi government is seeking to re-energize. Why does it matter? But 2018 is not 2012, and the stakes are higher for the government. Ties with the U.S. are under strain over several issues, including U.S. trade tariffs and India’s defense procurement from Russia, and a major divergence on Iran will exacerbate the problem with India’s biggest trading partner and fastest growing defense partnership. Moreover, in an increasingly globalized world, where Indian companies compete, any U.S. sanctions will make it hard for refiners, insurers and transport companies to facilitate oil trade, even if India wishes to continue it. On the other hand, India’s investment in the Iranian relationship has increased, making a turnaround much more difficult. Just five months ago, New Delhi rolled out the red carpet for Iran’s President Hassan Rouhani and committed itself to increase its oil off-take by 25% this year, as part of easing negotiations for the Farzad-B gas fields India is keen to buy a stake in. India has also committed itself to invest $500 million to build berths at Chabahar’s Shahid Beheshti Port, and $2 billion to build a rail line through the Zahedan province to Afghanistan, in an effort to circumvent trade restrictions by Pakistan. Iran’s other oil importers, China and Turkey, have said they will not accept the U.S.’s diktat. What lies ahead? In the next four months, one can expect complex negotiations between New Delhi and Tehran, and New Delhi and Washington. A U.S. team is expected in Delhi this month, and while a senior State Department official ruled out “waivers or licences” to any country, he did hold out the hope that some flexibility might be negotiable “case-by-case” for countries that agree to reduce oil intake from Iran. Mr. Rouhani, who is on a European tour discussing ways to retain the JCPOA, has warned of dire consequences if the U.S. succeeds in having Iran’s oil exports cut, as this is a “national security” issue. While India’s oil supplies are diversified, its options in this game of diplomatic brinkmanship are narrowing. Art Shell Womens Jersey
Russian Oil Production Soars To 11.193 Million Bpd
In line with its agreement with OPEC to reverse part of the cuts, Russia is boosting its crude oil production, pumping as much as 11.193 million bpd in the first four days of July, up from 11.06 million bpd in June, Reuters reported on Thursday, quoting a source familiar with the data. Last month, Russia and OPEC’s largest producer and de facto leader Saudi Arabia managed to get OPEC and their Moscow-led non-OPEC allies to agree to boost production by unspecified quotas for individual countries part of the pact, to ‘ease market and consumer anxiety’ over the high oil prices. According to Russian Energy Minister Alexander Novak, Russia’s share of the 1-million-bpd total OPEC/non-OPEC increase could be around 200,000 bpd. Before the decision to reverse some of the cuts—or as OPEC and allies put it, to stick to 100-percent compliance rates—Russia’s pledge in the pact was to cut 300,000 bpd of its oil production from the October 2016 level, which was the country’s highest monthly production in almost 30 years—11.247 million bpd. Even before the OPEC and friends meeting, Russia had already started boosting its oil production, and had pumped as much as 11.09 million bpd in the first week of June—143,000 bpd above the country’s then-quota under the OPEC+ production cut deal. Just before the meeting, all signs were pointing to Russia gearing up for a jump in its oil production, with plans for exports and refinery runs in the coming months indicating that Moscow was preparing to increase its oil production as early as this month. Earlier this week, Russia’s Novak and his Saudi counterpart Khalid al-Falih discussed the latest developments on the oil market and exchanged information about their countries’ plans for production to meet summer demand, Russia’s energy ministry said in a statement. The decision to ease the combined OPEC/non-OPEC compliance rate from 147 percent in May 2018 to 100 percent starting July 1 equates to adding around 1 million bpd on the market, the statement said. Taurean Prince Authentic Jersey
GSPC to commission Mundra LNG terminal in 2-3 months
Gujarat State Petroleum Corp (GSPC) will commission a 5-million-tonne a year liquefied natural gas (LNG) import terminal at Mundra in Gujarat in the next two to three months, its Managing Director, Jagdip Narayan Singh, has said. Mundra will be the third import terminal in Gujarat to import super-cooled natural gas (liquefied natural gas or LNG) in cryogenic ships, re-convert the liquid fuel into its gaseous state before transporting it by pipelines to customers. GSPL LNG Ltd, a GSPC Group firm, which is implementing the project in partnership with Adani Group, will look at inducing a partner like Indian Oil Corp (IOC) once the terminal is fully operational, Singh told PTI. “We will commission Mundra terminal by August-end or mid-September. It will operate at 1.5-mt a year capacity for the first one-and-a-half years before scaling up to full capacity,” Singh, who is also the Chief Secretary of the State, said. Mundra terminal, whose capacity will be expandable to 10 mt per annum in future, is designed to have a berth for receiving LNG tankers of sizes 75,000 cubic meters to 2,60,000 cubic meters, two LNG storage tanks of capacity 1,60,000 cubic meters each, and facilities for regasification and gas evacuation. Gujarat already has a 15 mt a year import facility operated by Petronet LNG Ltd at Dahej and another 5 mt terminal at Hazira that is run by Shell. Besides Dahej and Hazira, India currently has two more LNG terminals – Dabhol in Maharashtra and Kochi in Kerala, both with 5 mt a year capacity. More import terminals are planned on the east coast as well as on the west to meet the fast growing energy needs of the country. Singh said the Gujarat Government-owned company has decided to commission the import terminal first and then look at a strategic partner. “We have been in talks with IOC but as the partnership was delayed, we have now decided to first commission the terminal and then see who can we get as a partner,” he said. GSPL LNG is a joint venture of Gujarat State Petroleum Corp and Adani Enterprises. GSPL LNG will hold the remaining 50 percent stake in the LNG terminal. Adani and GSPC are equal partners in GSPL LNG. Singh said Mundra will be connected to Gujarat State Petronet Ltd’s (GSPL) existing pipelines network at Anjaar, Gujarat. Dennis Kelly Jersey
ONGC pushes back KG gas production target date to end 2019; oil delayed by a year
Oil and Natural Gas Corp has pushed back the start of natural gas production from its biggest project in KG basin to December 2019 as it reworked the $5.07 billion development to accommodate new policies like GST and local purchase preference rules. When ONGC Board had on March 28, 2016, approved investing $5.07 billion in bringing to production a cluster of discoveries in Bay of Bengal block KG-DWN-98/2 or KG-D5, the first gas was targeted for June 2019 and first oil was to flow by March 2020. But now, first gas is expected by December 2019 and oil by March 2021, according to the revised dates presented to the company’s board late last month. “These are not new dates. They were out a couple of months back and we gave an update of the project to the board at its meeting on June 29,” ONGC Director (Offshore) Rajesh Kakkar said. The revised dates were set when ONGC spudded the first of the 34 wells under the project on April 8 this year. While the ONGC Board had in March 2016 approved a field development plan for Cluster-II discoveries in the block that sits next to Reliance Industries’ flagging KG-D6 block in Krishna Godavari basin, new policies like local purchase preference rules, including the one that mandates PSUs to source domestic iron and steel for infrastructure projects were formulated last year. The Goods and Services Tax (GST), which made sweeping changes in indirect taxation regime, was rolled out in July 2017. Also, a policy has been formulated to give public enterprises purchase preference if their bid is within 10 per cent of the lowest price, officials said. ONGC is targeting a peak oil output of 77,305 barrels per day within two years of the start of production. Gas output is slated to peak to 16.56 million standard cubic metres per day by 2022. This the second time that target deadlines for KG-D5 production have been pushed back. ONGC had in 2014 announced plans to start gas production from 2018 and oil by 2019 but a final investment decision was made contingent upon government approving a remunerative price for the deep-sea block as the prevalent rates were uneconomical. But, it was not before March 2016 that the government announced a new pricing formula for difficult areas, giving developers of deepsea fields like KG-D5 more than double the domestic rate. Immediately after that ONGC Board approved the investment plan for Cluster-II group of discoveries in KG-D5. The 7,294.6 sq km deepsea KG-D5 block has been broadly categorised into Northern Discovery Area (NDA – 3,800.6 sq km) and Southern Discovery Area (SDA – 3,494 sq km).The NDA has 11 oil and gas discoveries, while SDA has the nation’s only ultra-deepsea gas find of UD-1. These finds have been clubbed in three groups – Cluster-1, Cluster-II and Cluster-III. Gas discovery in Cluster-I is to be tied up with finds in neighbouring G-4 block for production but this is not being taken up because of a dispute with RIL over the migration of gas from ONGC blocks. For now, Cluster-II is being developed at a cost of USD 5.07 billion, officials said, adding that completion of the entire development plans is expected by August 2021. Cluster-2A mainly comprises oil finds of A2, P1, M3, M1 and G-2-2 in NDA which can produce 77,305 bpd (3.86 million tons per annum) and 3.81 mmscmd of gas. Cluster 2B, which is made up of four gas finds – R1, U3, U1, and A1 in NDA – envisages a peak output of 12.75 mmscmd of gas. Peak output is likely to last 7 years. Cluster-3 is the UD-1 gas discovery in SDA. UD-1 lies in the water depth of 2,400-3,200 metres and its development would be taken up after an appropriate technology is found. Daimion Stafford Authentic Jersey
Competition Commission of India dismisses complaint against IOCL, BPCL, HPCL
The Competition Commission has dismissed a complaint alleging unfair business practices against oil marketing companies — IOCL, BPCL and HPCL — with regard to terms and conditions in the tenders for transportation of liquefied petroleum gas through tank trucks. In an order, the fair trade regulator said “no case of contravention under Section 3 or Section 4 of the (Competition) Act” is made out against Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL and Hindustan Petroleum Corporation Ltd (HPCL). While Section 3 pertains to anti-competitive agreements, Section 4 relates to abuse of dominant market position. The complainants, whose identities were not revealed by the CCI, had challenged the alleged anti-competitive terms and conditions in the notice inviting tenders floated “identically/ jointly/ parallelly” in different states by IOCL, BPCL and HPCL (Opposite Parties) for the transportation of bulk liquefied petroleum gas by road through tank trucks from the loading point to the unloading point. Among others, it was alleged that the firms had introduced an identical price band in the tenders within which the bidders were forced to quote. “The OPs (Opposite Parties) clarified that they suggest a price floor to ensure that the bidders do not unnecessarily quote an unviable quotation which may lead to delay or irregular services in future,” the CCI said, adding that it is the prerogative of bidder to quote within the said price band, which gives them enough margin to compete with other bidders. “The Commission finds merit in the justification offered by the OPs,” the CCI said in its order dated July 4. The regulator noted that facts or material on record does not suggest any anti-competitive element involved in the issuance of fleet or loyalty cards by the three oil marketing firms. Mario Addison Womens Jersey
HPCL may use mix of shares, cash & oil bonds to buy MRPL
Hindustan Petroleum Corporation Limited (HPCL) may use a mix of shares, cash and oil bonds to pay for acquiring and merging Mangalore Refinery and Petrochemicals Ltd (MRPL) with itself, according to people familiar with the merger plan that’s in the works. The final nature of the deal and the payment plan will be worked out once the boards of HPCL and MRPL approve the proposal to merge. The board of the two companies, majority-controlled by Oil and Natural Gas Corp, are set to meet in two months to consider the merger. The HPCL-MRPL deal may put off the planned merger of ONGC Mangalore Petrochemicals Ltd (OMPL) with parent MRPL due to some tax benefit consideration, executives with knowledge of the matter said. OMPL is a 51:49 joint venture between MRPL and ONGC. The plan of merging OMPL with MRPL has been approved by the boards of the three companies as well as the government, but may finally get shelved as the tax gain accompanying a merger is not available twice to a group in five years, and ONGC would want to claim the tax gain on an HPCL-MRPL deal rather than OMPL merger, executives said. On Friday, the board of ONGC gave an in-principle approval for exploring options for a restructuring of ONGC group companies. The restructuring proposal would be firmed up after factoring in the synergy of group companies, and MRPL’s obligation to meet the minimum public shareholding requirement, the company said in public filing. ONGC owns 71.63%, and HPCL 16.96% in MRPL, with the balance 11.41% held by the public. ONGC owns 51% in HPCL. MRPL has a market value of Rs 13,700 crore while HPCL is valued nearly thrice of that at Rs 39,600 crore. Both refiners have lost nearly 40% in six months as crude oil prices have surged. At current share prices, HPCL will need about Rs 11,500 crore to buy nearly 83% of MRPL that it doesn’t already own. The acquisition can be funded by new shares in HPCL, cash and oil bonds, in roughly equal proportion, executives said. HPCL owns oil bonds worth about Rs 5,000 crore, which were issued by the government a few years ago to compensate state fuel retailers for selling fuel below market rates. The deal would have less role for cash since HPCL has a limited cash reserve and a heavy CapEx programme lined up, an executive said. HPCL plans to invest Rs 96,000 crore in five years on expanding its refining and marketing capacity. The steps of the deal and the funding plan haven’t been finalized yet although it’s almost certain that ONGC wouldn’t want just more of HPCL shares in the deal since it already owns a majority in the company, executives said. Getting the downstream business of MRPL and HPCL under one roof would trigger several operational advantages to the group, executives said. MRPL owns 15 million tonnes a year refinery in Mangalore while HPCL controls 27 million tonnes of refining capacity spread across the country. While MRPL doesn’t have fuel retailing facility, HPCL operates a network of 15,000 filling stations and 5,000 cooking gas distributors. MRPL has petrochemical facilities while HPCL too has large petrochemicals plans. Bud Dupree Womens Jersey
Oil slips towards $77 as Saudi production, trade tensions weigh
Oil slipped towards $77 a barrel on Friday, under pressure from higher Saudi production and trade tensions between the United States and China, although oil supply disruptions lent support. Top exporter Saudi Arabia told Opecit raised oil output by almost 500,000 barrels per day last month, Opecsources said, a sign Riyadh wants to make up for shortages elsewhere and dampen prices. Brent crude, the global benchmark, was down 19 cents at $77.20 a barrel by 0910 GMT. US crude slipped 2 cents to $72.92. “On the bearish side both Saudi Arabia and Russia are living up to their promise to increase output,” said Tamas Varga of oil broker PVM. “Looming US sanctions on Iran, however, are causing serious concerns amongst market players.” US tariffs on $34 billion in Chinese imports took effect as a deadline passed on Friday and Beijing has vowed to respond immediately in kind, setting the two world’s biggest economies on a path towards a full-blown trade conflict. “The oil market is in the hands of global politics,” said Norbert Ruecker, head of macro and commodity research at Julius Baer. “China’s reciprocation will in a first tranche include agricultural commodities and in a second tranche most likely oil products and crude oil.” A US government report also weighed on prices this week, by crude stockpiles rose 1.3 million barrels and showing unexpectedly ample supplies after analysts had forecast a decline. The potential trade war between the United States and China comes amid a tight oil market. Oil output cuts by the Organization of Petroleum Exporting Countries and allies including Russia since January 2017 have reduced a glut of crude. Involuntary drops in supply in Venezuela, Angola and Libya have made the cutbacks even bigger, although Opechas now started to ease those curbs with Saudi Arabia pumping more. Even so, renewed US sanctions on Iran against its oil exports look set to tighten supply further. South Korea, a major buyer of Iranian oil, will not lift any in July for the first time since August 2012, three sources familiar with the matter said on Friday. Johnthan Banks Jersey
Petroleum products to be brought under GST in stages, says Hasmukh Adhia
Finance Secretary Hasmukh Adhia on Friday said the all powerful GST Council will consider bringing petroleum products under the goods and services tax (GST) and it could happen in phases. Speaking on the issue, Central Board of Indirect Taxes and Customs Chairman S Ramesh said although there is demand for bringing petroleum products under GST, the GST Council will have to finalise modalities. Currently, diesel, petrol, crude oil, natural gas and aviation turbine fuel are outside the purview of goods and services tax, and states have the right to impose value added tax on these items. “One of the demands that is there before us, we will see… everything will happen in stages,” Adhia said at an event here. The civil aviation ministry has time and again voiced its concern on the high rate of taxes on aviation turbine fuel, which accounts for a significant chunk of an airline’s operational costs and also has a bearing on air fares. Earlier, the civil aviation ministry had also written to the finance ministry seeking the inclusion of jet fuel under the indirect tax regime with full input tax credit at the earliest. The finance ministry has expressed its intention to include natural gas and ATF within the purview of the goods and services tax soon. “We have done a lot but that it does not mean that there is no scope for betterment of the existing system. We still believe that we need to do a lot more and we are working in that direction,” Adhia said. On the issue of automation of refund, he said it was meant to be automated right from day one but unfortunately people made so many mistakes in filing return that the income-tax department had to get into manual mode at the last moment. “We are again trying to make it completely automatic, the entire refund process. This is next thing. In terms of simplification of rates, slabs, we do understand need for it but we did what was best in the given scenario. “We could not have done anything other than this because we had to take care of revenue, we had to take care of concern of poor. Certainly we must move in that direction of something better than that,” the secretary said. The GST currently has four slabs –5 per cent, 12 per cent, 18 per cent and 28 per cent. The GST Council, in November, had reduced the tax rate on 178 items from 28 per cent to 18 per cent. Alex Cappa Womens Jersey
LNG, world’s fastest growing fossil fuel, is bracing for a direct hit from US China trade war
The world’s fastest growing fossil fuel is bracing for a direct hit from increasing global trade tensions. U.S. President Donald Trump’s tough talk on trade with China is looming over his country’s efforts to become the world’s largest exporter of liquefied natural gas. In Europe, a potential pipeline project from Russia has been imperiled by possible U.S. sanctions, while the sales practices of Qatar, the world’s biggest LNG seller, are under investigation as being anti-competitive. The friction risks disrupting global trade of gas worth almost $300 billion last year, threatening to distort flows of the commodity just as demand for the cleaner-burning fuel explodes. It’s also casting a shadow over multi-billion dollar export projects in the U.S. while creating opportunities for countries untouched by the wave of protectionism. “Populism has come back and with it a form of economic nationalism, and that’s occurred at the same time as the emergence of global gas,” said Trevor Sikorski, head of natural gas and carbon research at Energy Aspects Ltd. in London. “The former is leading to trade wars, and as soon as that happens everything is on the table.” The complications arising from trade disputes and geopolitical tensions could distort the global gas market, although it’s unlikely to derail its growth, Sikorski said. For instance, if China levies tariffs against U.S. LNG, traders could re-route cargoes to Japan and South Korea while selling Australian gas to China. Or a drop in Qatari shipments to Europe could be replaced by fuel from Nigeria or Angola. The end result will be extra fees for traders and slightly higher costs for end consumers, said Nicholas Browne, an analyst with Wood Mackenzie Ltd. in Tokyo. He pointed to the example of Russia’s gas pipeline to Europe, which just celebrated its 50th anniversary, as how trade can endure despite disputes. True Trade Wins? “Even at the height of Soviet tensions or the worst days of the Ukraine crisis, they continued to export gas to the West,” Browne said. “When it’s in the economic interest of both parties, trade will continue.” That’s being tested anew by Russian efforts to boost European sales. President Vladimir Putin recently claimed U.S. trade interests are at the heart of Trump’s threats of sanctions against the Nord Stream 2 pipeline between Russia and Germany because its success could reduce Europe’s demand for U.S. gas. Meanwhile, Europe is also trying to give its utilities greater flexibility and weaken Qatar’s grip on the market. The European Commission last month said it would check “problematic territorial restriction clauses” in LNG contracts with the Middle East nation that may prevent importers reselling the gas. That probe comes a month after the regulator for the 28-nation bloc settled a 7-year investigation into how Russia’s Gazprom PJSC’s set prices for its pipeline gas supply to Europe. “It’s been a European policy goal for quite a long time to increase market liberalization,” Wood Mackenzie’s Browne said. “They want open access to European gas markets, and that doesn’t work if you have a lot of supplier concentration.” Despite being at the center of trade tensions, the U.S. and China are a natural fit in the global gas market. China’s booming demand pushed it past Japan this year as the world’s biggest importer. Meanwhile, the U.S. is vying with Qatar and Australia to become the largest exporter of LNG, the super-chilled form of the fuel that’s shipped around the world on special tankers. That explains why LNG has been conspicuously absent as a target of China’s retaliatory levies after Trump announced duties on $34 billion worth of Chinese exports, which are scheduled to go into effect Friday. The country’s blazing gas demand growth– part of an effort by President Xi Jinping to cut coal use and smog — means it can’t be picky about where it gets its supply, Browne said. “Security of supply is still paramount for China at the moment,” Browne said. “It’s in the best interest for both countries to continue to trade.” Even though LNG has so far eluded direct tariffs, trade tensions are still having an effect on the market. Greg Vesey, head of the Australian company developing the $4.35 billion Magnolia LNG project in Louisiana, said a number of parties he’s talking to have indicated they want to see how the trade tiff shakes out before signing on the dotted line. Projects to export America’s ample shale gas are vying with developments from Qatar and Russia to East Africa and Papua New Guinea to sign up long-term buyers that underpin billions of dollars in financing. It would be naive to think that competitors weren’t trying to find a way to take advantage of concerns about trading with the U.S., according to Charlie Riedl, head of the Washington-based Center for Liquefied Natural Gas. “They are absolutely, 100 percent trying to figure out how to capitalize on this,” Riedl said. Gilbert Perreault Jersey
Essar Oil’s net drops 4.2% on lower processing at Stanlow
Essar Oil (UK) Ltd, a subsidiary of Essar Energy, which owns and operates the Stanlow refinery has reported a 4.2% year-on-year decline in its net profit during fiscal 2018 to $161 million. The company said the drop was on account of lower processing as the refinery was closed for about two-and-a-half months for upgradation. In a conference call to disclose the financial results, S Thangapandian, company CEO, said the refinery has completed the execution of all project upgrades during the turnaround and he expected the margin improvements will yield an incremental margin of $75 million to $80 million annually in the prevailing market. Essar has invested over $850 million in Stanlow since its acquisition in July 2011. The company’s gross revenue grew 10.2% year on year during the last fiscal. It earned $9.4 on turning every barrel of crude oil into fuel as compared to a GRM of $8.4 in the previous fiscal. “We operated for only nine-and-a-half months of the year as compared to 12 months in the previous fiscal,” he said, adding profits would have been around $275 million if the refinery was operated for full year. Thangapandian said the one of the key priorities was to increase the market share in direct supply of aviation fuel to leading carriers, with agreements now in place with airlines at a number of UK airports. According to Thangapandian, jet fuel is a stream of petroleum that has a longer life in comparison to automobile fuel, whose demand may dwindle with the increasing usage of electric vehicles (EVs). Sampath P, CFO at Essar Oil UK, said, “Despite the significant capex and planned reduction in throughput due to the turnaround, the company still posted an Ebitda of above $300 million for the third consecutive year. The major optimisation improvements implemented during the year will deliver increased margins going forward on the back of higher throughputs, reduced crude costs and enhanced higher value product yields.” Essar Oil UK chairman Prashant Ruia in a statement said that Stanlow has a 16% market share in the UK and a growing presence in the retail and aviation sectors. Lance Alworth Jersey