India’s crude oil import bill swells 23 per cent despite fall in volumes
The recent rally in international crude oil prices has inflated India’s crude oil import bill by 23 per cent to $8.2 billion in the month of April despite the quantity of imports in the month falling by 5 per cent, fresh data published by Petroleum Planning and Analysis Cell (PPAC) showed. The data from the statistical arm of the oil ministry also shows the country’s total crude oil import bill in the current financial year (2018-2019) is expected to jump 24 per cent to $109 billion from $88 billion last fiscal year. India imported 17.2 Million Tonne (MT) of crude in the month of April, down 5 per cent from 18.1 MT imported in the corresponding month last financial year. The country’s gross petroleum imports including crude oil and petroleum products also decreased to 20.2 MT in April 2018 from 20.8 MT in April 2017. However, due to the rally in the crude oil and petroleum product prices, the country’s gross petroleum import bill grew 24 per cent to $9.4 billion as compared to $7.6 billion recorded in the corresponding month of the last financial year. Crude oil prices have surged since April on the back of tightening crude oil market due to Organization of Petroleum Exporting Countries (OPEC) oil production cuts, drop in Venezuela crude output, geo-political tensions in the Middle-East and economic sanctions imposed by United States on Iran, which is expected to impact the country’s oil exports. Rising crude oil prices may worsen the country’s Current Account Deficit (CAD) to 2.5 per cent in the present financial year from an estimated 1.9 per cent in the last financial year, SBI Capital Markets said in a recent report. Sector analysts expect that this may lead to petroleum subsidy to fall short on the back of steady rise in crude oil prices and revised target of providing 8 crore Liquefied Petroleum Gas (LPG) connections under Pradhan Mantri Ujjwala Yojana (PMUY). The government under Budget 2018 allocated Rs 24,933 crore as petroleum subsidy for the current financial year, a mere 2 per cent increase over the Revised Estimate of Rs 24,460 crore allocated last financial year. Moody’s Investors Service in its latest report expects the country’s fuel subsidy bill to balloon to Rs 53,000 crore in the present financial year on the back of surging crude oil prices. The rating agency also added that state-owned Oil and Natural Gas Corp (ONGC) and Oil India (OIL) may have to bear a large part of the burden impacting their financials. As the oil prices rise, ONGC and OIL face increasing risk that the government will once again require them to share in the country’s fuel-subsidy burden. “Because of the government’s widening fiscal deficit, ONGC and OIL could be asked to bear part of the Indian government’s fuel subsidy for oil, if prices stay above $60 per barrel for the fiscal year ending March 2019,” said Vikas Halan, Senior Vice President at Moody’s. The report estimates fuel subsidies to range between 34,000 crore and Rs 53,000 crore in 2018-19, the highest since fiscal year 2014-15, assuming Brent crude oil prices average $60-$80 per barrel. Rating agency ICRA had also said in February the petroleum subsidy allocation of Rs 21,700 crore for 2018-19 would materially fall short by Rs 11,000-12,000 crore. The price of Brent Crude averaged $71.80 per barrel during April 2018 as against $65.90 per barrel during March 2018. The Indian basket of crude averaged $69.30 per barrel during April 2018 as against $63.80 per barrel during the previous month. Jon Halapio Womens Jersey
Indian Oil to turn to traditional suppliers to meet Iran oil shortfall
Indian Oil Corp (IOC), the country’s top refiner, will turn to its traditional oil suppliers, mostly in the Middle East, if U.S. sanctions against Iran result in supply disruptions, its head of finance said. U.S. President Donald Trump earlier this month pulled out of a 2015 international nuclear pact with Iran, and said he would impose sanctions on Tehran – and companies that continue to work with it – unless it curbed its influence in the Middle East. Other signatories of the pact – France, Germany, Britain, Russia and China – said they would try to salvage the deal and keep Iran’s oil trade and investment flowing. “So far we haven’t cut any volumes from Iran. We have to see how strongly the U.S. takes up sanctions. From our side, we would like to continue. Otherwise we will look to our traditional suppliers,” A.K. Sharma said. IOC, which controls 1.6 million barrels per day (bpd) of refining capacity or about a third of the country’s overall capacity, plans to buy 140,000 bpd of Iranian oil in 2018/19 and has an option to buy an additional 40,000 bpd. State refiners such as IOC have raised imports after Iran agreed to steep shipping discounts. “Iran’s high sulphur oil can be replaced with other crudes. It is just a case of economics. Replacing will mean slightly cost disadvantage,” Sharma added. IOC chairman Sanjiv Singh said the government had so far not directed refiners to cut imports from Iran. “We have to see how situation unfolds in future,” he said. Previously, India obtained a waiver from Western sanctions as the country had cut imports from the Islamic Republic. “We are working on a strategy. We are working on alternate plans if those volumes go down, then how do we manage the situation,” Singh said. IOC is Iran’s biggest Indian oil client. The company meets about 70 percent of its oil needs through annual contracts deals, mainly with Middle Eastern producers. It makes sense for IOC to look for alternatives to Iranian oil from other parts of the Middle East, due to geographical proximity and similarities in the oil produced. However, an IOC official said separately the company could also tap the spot market to buy U.S. oil. “There is an option to buy U.S. oil like Mars, but we will do that if arbitrage is favorable,” the official said. IOC recently bought 3 million barrels of U.S oil via a tender. Marcus Martin Jersey
Government should review taxes on petrol, diesel: HPCL chairman
There is a need to review taxation on petrol and diesel to provide relief to consumers after rates touched an all-time high, HPCL Chairman and Managing Director Mukesh Kumar Surana said today. One trigger after another has led to the 10th consecutive day of increase in retail selling price of petrol and diesel, but there is no case for going back on benchmarking domestic rates against international prices, he said. Surana said he was not aware of any meeting called by Oil Minister Dharmendra Pradhan or anyone else in the government to discuss the rising prices. More than a week after the state-owned oil firms ended a 19-day pre-Karnataka poll hiatus on revising fuel prices, petrol and diesel rates have touched record highs. Petrol costs Rs 76.17 per litre in Delhi while diesel sells for Rs 68.34. In the last nine days, petrol price has risen by Rs 2.54 a litre and diesel by Rs 2.41. “We should find methods to handle (such) situation from time to time,” he told reporters here. Oil marketing companies, which are volume driven, operate on a thin margin and as such cannot do much if the international cost of oil rises, he said. “We have to maintain our capex plans and growth plans,” Surana reasoned. The solution has to be found while balancing the budgets of oil companies, the consumer and the government, he said. While the consumer has price sensitivities even though he has not shown any trend of moderating consumption in the face of rise in prices, the government heavily relies on oil revenues to meet its spending budget. “There is need to review taxation on the fuel,” he said without elaborating. A cut in excise duty combined with states being asked to reduce VAT is on the cards. The central government levies Rs 19.48 excise duty on a litre of petrol and Rs 15.33 on diesel. State sales tax or VAT varies from state to state. Unlike excise duty, VAT is ad valorem and results in higher revenues for the state when rates move up. In Delhi, VAT on petrol was Rs 15.84 a litre, and Rs 9.68 on diesel in April. Today, it is Rs 16.41 on petrol and Rs 10.05 a litre on diesel. Every rupee cut in excise duty on petrol and diesel will result in a revenue loss of Rs 13,000 crore. Surana said financial health of oil companies has to be maintained while providing a comfort to consumers. He, however, said going back to a cost-plus method of calculating prices as against the current methodology of pricing fuel at a 15-day moving average of benchmark international product price would be a retrograde move. The long-term solution is bringing petroleum products under the Goods and Services Tax (GST) regime, he said, adding it was not true that oil companies were making big profit with rising prices. They were only passing on the cost of input to consumers, he said. The GST, which subsumed over a dozen central and state levies including excise duty, service tax and VAT, was implemented from July 1 but crude oil, natural gas, petrol, diesel and ATF were kept out of its purview for the time being. The government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre. Subsequent to that excise duty reduction, the Centre had asked states to also lower VAT. Just four of them — Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh — reduced rates while others including BJP-ruled ones ignored the call. In all, duty on petrol rate was hiked by Rs 11.77 and that on diesel by Rs 13.47 a litre in those 15 months that helped government’s excise mop up more than double to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15. Mike Webster Jersey
India to take a ‘long-term” view on fuel pricing – minister
India wants to take a long-term view on pump prices of petrol and diesel to shield consumers from the volatility in global markets, the country’s law minister said on Wednesday, indicating the government could change its fuel pricing mechanism. Prices of diesel and petrol in India have surged to a record high. A liter of petrol costs 77.17 rupees ($1.13) while diesel is sold at 68.34 rupees/ liter. “The government is keen that instead of having an ad hoc measure it may be desirable to have a long-term view which addresses not only the volatility but also takes care of the unnecessary ambiguity arising out of frequent ups and downs,” Ravi Shankar Prasad told a news conference. Opposition leaders have criticised the government for failing to rein in rising fuel prices, a politically-sensitive issue in one of the world’s biggest economies. Mike Webster Womens Jersey
ONGC’s hi-tech pipeline to prevent oil theft, leakages in Ahmedabad
The Oil and Natural Gas Corporation (ONGC), which for years has been suffering heavy financial losses due to theft from its crude oil pipeline, has gone hi-tech to prevent pilferage as well as leakages. ONGC has laid a new pipeline from its desalter at Nawagam in Ahmedabad district for transporting crude oil produced in its Ahmedabad and Mehsana assets to Indian Oil’s Koyali Refinery in Vadodara. “The 80-km pipeline has been laid at a cost of Rs1970 million. It is equipped with LDS (Leak Detection System) and PIDS (Pipeline Intrusion Detection System) technologies with fibre optic cables. The two systems would not only help in accurately identifying the spot of leakages, but also in detecting any intrusion activity taking place on the pipeline route,” Debasis Basu, asset manager of ONGC’s Ahmedabad Asset, told DNA. While the new oil pipeline was commissioned in January, officials said that the LDS and PIDS too are in advanced stages of completion, and are likely to be put to use by July. Basu said that they are also looking at ways to tackle theft from its producing as well as non-producing wells. ONGC said in a statement that it has adopted PIDS for the first time in its history. While exact numbers related to the financial loss to the energy behemoth due to leakages and pilferage are not available, it is pegged at several millions in a year. A number of cases of oil theft from its pipeline have been reported with the police. According to officials, the earlier pipeline was laid in the year 1990. However, being in operation for more than a quarter of a century, it was leaking frequently and had become a major source of loss of production. Additionally, there were frequent shutdowns, besides environmental degradation, loss of crop for farmers, and was also a potential safety hazard. Basu said that laying of the Nawagam-Koyali pipeline was a major challenge as its route ran through three river crossings, and had to be completed using the Horizontal Directional Drilling. The pipeline also crossed five railway crossings, two national highway crossings, besides numerous roads and canal crossings, he added. PROGRESS REPORT While new oil pipeline was commissioned in January, officials said the LDS and PIDS too are in advanced stages of completion, and are likely to be put to use by July. Matt Skura Womens Jersey
ONGC, OIL face risk of fuel subsidy sharing: Moody’s
State-run exploration and production companies Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Limited (OIL) face the increasing risk that the government of India will once again require them to share in the country’s fuel-subsidy burden, said Moody’s Investors Service in a note released on Tuesday. “Because of the government’s widening fiscal deficit, ONGC and OIL could be asked to bear part of the Indian government’s fuel subsidy for oil, if prices stay above $60 per barrel for the fiscal year ending March 2019,” said Vikas Halan, a Moody’s senior vice president. The two companies have since 2015 not contributed to fuel subsidies. They had, however, in previous years paid for more than 40% of the country’s annual subsidy bill. “The net impact of the subsidy sharing will be manageable for ONGC and OIL, even if the two companies are required to bear the entire shortfall between budgeted and actual amounts for the fiscal year ending March 2019,” added Halan. Moody’s added that if ONGC and OIL are obligated to contribute the entire subsidised amount exceeding the government’s budgeted figure for the fiscal year ending March 2019, such a requirement would constrain their net realised prices to $52-$56 per barrel. This is only marginally lower than or equal to the $56 for fiscal 2018. Moody’s estimates that fuel subsidies could total Rs340-530 billion in fiscal 2019, the highest since fiscal 2015, assuming Brent crude oil prices average $60-$80 per barrel. The government has budgeted for Rs250 billion of fuel subsidies in fiscal 2019, leaving a shortfall of Rs90-280 billion. This could be met by ONGC and OIL entirely, or in part, if the government increases the budget allocation for these subsidies. According to Moody’s, the oil marketing companies—Indian Oil Corporation Ltd, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Ltd—have been asked to share less than 1% of the total fuel subsidies since fiscal 2012 and it is unlikely that the proportion will rise. The rating agency says that the government is unlikely to reverse fuel pricing deregulation because it remains committed to reforms. However, it could intervene to address record high prices of petrol and diesel by reducing the excise duty on these products, especially if oil prices stay high. These taxes make up more than 20% of the retail selling prices and were increased in 2016 when oil prices fell. Most petroleum products are sold at market-linked prices in India, except liquefied petroleum gas and kerosene. Malcolm Smith Womens Jersey
Analysis: India could provide Iranian crude with stable outlet at least in near term
Indian refiners could offer Iran some respite at least for the next few quarters as the South Asian crude oil importers are keen to adhere to their term supply contract obligations with the Persian Gulf producer, undeterred by Washington’s efforts to restrain Tehran’s oil sales. The US’ re-imposition of sanctions on Iran has exerted little impact on the trade flows between India and the OPEC producer so far. India’s state-run Bharat Petroleum Corp. Ltd., for one, is set to receive its regular monthly term crude oil cargo from National Iranian Oil Company in the coming days. BPCL’s 190,000 b/d Kochi refinery on the west coast of India will receive 130,000 mt of its monthly term Iranian crude oil for May, trade sources with knowledge of the matter told S&P Global Platts last week. Indian state-run refiners typically source their crude oil requirements through term contracts with a host of suppliers, including Iran. BPCL currently holds a term contract with NIOC to buy 1 million mt for its Kochi refinery over April 2018-March 2019. In April, the refinery received two cargoes totaling 260,000 mt of Iranian crude oil. The impact of US sanctions could be felt after six months, but “not immediately,” a New Delhi-based trade source said. India’s flagship state-run refiner Indian Oil Corp. also holds a term contract with Iran to receive 180,000 b/d in the current fiscal year ending March 2019. IOC is keen to maintain its trade relationship with NIOC as “Iran offers a longer credit period than the usual 30 days offered by other oil exporting nations,” a company official said. India, Asia’s second biggest energy consumer, had received regular supply of crude oil from Iran during the previous international sanctions against its unclear nuclear program. Among the top 10 suppliers to India, Iran occupied the third spot with around 18.4 million mt of crude oil imported during the first 10 months of the fiscal year over 2017-2018 — from April 2017 to January 2018 — according to the Indian oil ministry’s provisional data. MIXED RESPONSE IN ASIA India’s stable imports from Iran comes in stark contrast to other major Iranian crude oil buyers in Northeast Asia, with South Korea already well on its way to limit its crude intake from the OPEC producer. Latest trade data from Seoul showed that South Korea’s crude oil imports from Iran fell 24.9% year on year in April to 9.09 million barrels, marking the sixth straight month of declines since November last year, when imports fell 26.8% year on year to 10.37 million barrels. On the contrary, India’s crude oil imports from Iran are forecast to increase by around 31% year on year to 500,000 b/d in fiscal 2018-2019, as both the countries pledged for enhanced engagement in the oil and gas sector. In April, India offered a fresh $4 billion development plan for the Farzad B gas field to Iranian oil minister Bijan Namdar Zangeneh during the latter’s visit to the South Asian nation. India’s oil ministry officials said it is still early to assess what would be the fallout of US President Donald Trump’s move to restore sanctions on Iran, and its implications on India’s next term contracts with NIOC. “As a crude buyer, we have all options open that include imports from the US. But the main determinant will be a competitive price,” a senior official with an Indian state-run refiner said. Earlier this month, NIOC had raised the June OSP for Iranian Heavy crude bound for Asia by 85 cents/b from May, to a discount of 65 cents/b to the average of Platts Oman/Dubai crude assessments in June. The latest monthly price tag puts the Iranian grade’s OSP differential 60 cents/b cheaper than its rival Saudi Arabia’s crude. Saudi Aramco has set the June OSP for Arab Medium grade bound for Asia at Platts Oman/Dubai average minus 5 cents/b. Marreese Speights Jersey
ONGC, OIL face risk of fuel subsidy sharing: Moody’s
State-run exploration and production companies Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Limited (OIL) face the increasing risk that the government of India will once again require them to share in the country’s fuel-subsidy burden, said Moody’s Investors Service in a note released on Tuesday. “Because of the government’s widening fiscal deficit, ONGC and OIL could be asked to bear part of the Indian government’s fuel subsidy for oil, if prices stay above $60 per barrel for the fiscal year ending March 2019,” said Vikas Halan, a Moody’s senior vice president. The two companies have since 2015 not contributed to fuel subsidies. They had, however, in previous years paid for more than 40% of the country’s annual subsidy bill. “The net impact of the subsidy sharing will be manageable for ONGC and OIL, even if the two companies are required to bear the entire shortfall between budgeted and actual amounts for the fiscal year ending March 2019,” added Halan. Moody’s added that if ONGC and OIL are obligated to contribute the entire subsidised amount exceeding the government’s budgeted figure for the fiscal year ending March 2019, such a requirement would constrain their net realised prices to $52-$56 per barrel. This is only marginally lower than or equal to the $56 for fiscal 2018. Moody’s estimates that fuel subsidies could total Rs340-530 billion in fiscal 2019, the highest since fiscal 2015, assuming Brent crude oil prices average $60-$80 per barrel. The government has budgeted for Rs250 billion of fuel subsidies in fiscal 2019, leaving a shortfall of Rs90-280 billion. This could be met by ONGC and OIL entirely, or in part, if the government increases the budget allocation for these subsidies. According to Moody’s, the oil marketing companies—Indian Oil Corporation Ltd, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Ltd—have been asked to share less than 1% of the total fuel subsidies since fiscal 2012 and it is unlikely that the proportion will rise. The rating agency says that the government is unlikely to reverse fuel pricing deregulation because it remains committed to reforms. However, it could intervene to address record high prices of petrol and diesel by reducing the excise duty on these products, especially if oil prices stay high. These taxes make up more than 20% of the retail selling prices and were increased in 2016 when oil prices fell. Most petroleum products are sold at market-linked prices in India, except liquefied petroleum gas and kerosene. Alexander Nylander Authentic Jersey
Australia’s Santos gets sweetened $10.8 bln bid from Harbour Energy
U.S.-based Harbour Energy raised its bid for Australia’s Santos Ltd to $10.8 billion on Monday, hiking its offer for a fifth time in nine months after a steep rise in oil prices and potentially deterring any rival bids. Shares in the oil and gas producer rose on the back of the sweetened bid but remain below the offer price amid uncertainty over whether the government will approve what would be the biggest takeover of an Australian resources company. “You’ve got to think the new bump is going to make it more likely the board will approve it…But there are risks,” said Andy Forster, senior investment officer at Argo Investments, a top 10 shareholder in Santos. Analysts have said the government might raise concerns that a takeover could dent gas supply on Australia’s east coast and could even raise questions about foreign companies not paying enough tax in Australia. A successful bid would give Harbour access to a recently revived company with a low cost of gas production and stakes in liquefied natural gas (LNG) in the Asia-Pacific, where demand is soaring. Harbour’s latest offer, raised twice over the past five days, is equivalent to A$6.95 a share at an exchange rate of 75 U.S. cents to 1 Australian dollar and is at an 11-percent premium to the last close of Santos shares on Friday. “The new higher bids underline Harbour’s desire to receive the board recommended it needs and in our view staves off any ambitions from an interloper,” Royal Bank of Canada analysts said in a note on Monday. Argo’s Forster said the prospect of receiving a special dividend with Australian tax credits attached as part of the bid was attractive. The special dividend would take the total bid value for local investors to around A$7.15 a share. The latest proposal, up 4.6 percent from an earlier offer, is conditional on Santos increasing its hedging of oil-linked production in 2018 and changing its hedges for 2019, Santos said in a statement. Harbour said the offer price would be increased slightly to a U.S. dollar amount equivalent to A$7.00 per share if Santos agreed to hedge 30 percent of oil-linked production in 2020, too. The requirement for Adelaide-based Santos to step up hedging on its oil-linked contracts is tied to securing funding for the deal, as Harbour will be taking on a lot of debt for the acquisition on top of Santos’ net debt, expected to be around $2 billion by the end of 2018. Hedging would lock in today’s higher oil prices and ensure cash flows needed to pay down debt. Harbour wants Santos to line up the hedges as the Australian company can do it more cheaply than Harbour can, which then gives Harbour the ability to make a higher offer, a person close to the transaction said. Oil prices have risen about 17 percent since Santos received Harbour’s $4.98 per share offer in April. Independent directors of Santos will consider the revised Harbour proposal, the company said. Marcus Cooper Authentic Jersey
BP back on its feet but CEO senses no respite
After the near collapse of his company following the 2010 Gulf of Mexico disaster and a three-year slump in oil prices, BP Chief Executive Officer Bob Dudley is hardly relaxed. “It doesn’t feel like we are in a serene time for any energy company,” Dudley told Reuters in an interview. BP is stronger today than at any other time since the 2010 Deepwater Horizon rig accident. With oil prices at their highest since late 2014 and BP shares back to levels not seen in more than 8 years, it is once again in a position to contemplate boosting dividends and acquiring, Dudley said. Sitting in his office in BP’s central London headquarters in St James Square, Dudley, 62, said he intends to carry on leading the company into 2020 and navigate it through a phase of expansion and new uncertainty following a tumultuous eight years at the helm. The oil and gas sector is looking to retain its relevance as economies battle climate change by weaning themselves from their dependence on fossil fuels, a major source of greenhouse gas emissions. For BP, it is a two-speed race. The 110-year old company is undergoing its fastest growth in recent history with new oil and gas fields from Egypt and Oman to the U.S. Gulf of Mexico, riding a tide of higher oil prices following the 2014 downturn. It is gradually paying off more than $65 billion in penalties and clean-up costs for the Deepwater Horizon accident which left 10 employees dead. Regarding the danger of the company going bankrupt at the time, Dudley said: “The worst moment was when I heard that our debt was untradable back in the summer of 2010… To me that was a moment of the unthinkable was possible.” Dudley says he no longer sees BP as an acquisition target after facing years of speculation it could be bought out. The company is focused on increasing production and cash flow while reducing its large debt pile, after which it will consider boosting shareholder returns such as dividends although “we’re not at that point yet”, Dudley said. Longer-term challenges also loom. Investors are increasingly pressing energy companies to find ways to adapt to the energy transition, and Dudley is looking to strike a balance between reducing a large carbon footprint while securing revenue. “This is the great dual challenge that the industry and BP faces: how to supply the world’s energy on multiple fronts of growing population and doing it with less emissions,” said Dudley, who was appointed to the helm of BP months after the April 2010 spill. BP, like rivals such as Royal Dutch Shell, is betting on natural gas, the least polluting hydrocarbon, to sustain an expected surge in demand for electricity as economies grow and transportation is electrified. Gas is also playing a key role as a back-up to renewable energy such as wind and solar in power generation. To that end, BP is expanding its gas production through new projects in Oman, Egypt and Trinidad and Tobago. Gas already accounts for over 55 percent of its production. “I am optimistic about the climate change if you can combine renewables wind and solar and natural gas. To me that’s part of the big answer,” Dudley said in an interview with Reuters. In the early 2000s BP introduced the slogan “Beyond Petroleum” and adopted a sunburst logo after launching an $8 billion expansion into renewables. The company was forced to write off its solar business 10 years later, but still retains a large U.S. onshore wind business and biofuels plants. Now, Dudley is taking a cautious approach, investing in smaller start-up companies in renewables, clean fuels and battery charging docks. “We have to go slow and pick the right low carbon fuels,” he said. BP “will be a broad-based company that supplies all forms of energy that are needed that can be done economically.” The company will invest $500 million per year in low-carbon energy and technology in the coming years out of a total spending of $15 to $17 billion, a range which Dudley said the company could stay within. “If a shareholder or someone else came to BP tomorrow and said here is $10 billion to invest in low carbon energies for us, we would not know how to do that yet.” BP is also expanding its vast global network of petrol stations and investing in convenience stores and charging spots, hoping to retain its dominant brand as electric vehicles become more popular. “I’m not worried about BP in this area. The most strategic thing we can do is to get our balance sheet strong so that when we have the firepower we can do anything in these areas.” LESSONS BP expects demand for oil to peak in the late 2030s, after which it will plateau and gradually decline. For BP, whose roots go back to 1908 with the discovery of Iran’s first oil field, the days of the black gold are far from dead. While oil prices in recent weeks have hit their highest levels since late 2014 at $80 a barrel, BP are working on an assumption that prices will remain at a range of $50-$65 per barrel due to surging U.S. shale output and OPEC’s ability to crank up output. Mega projects involving complex, multi-billion facilities such as huge offshore platforms that came to symbolise the technological prowess of the world’s top oil companies are most likely a thing of the past, Dudley said. Instead, BP is opting for phased developments that require less capital and less time to construct, which make them easier to control at a time of uncertainty over oil prices. “Many of the companies in the industry are remembering the lesson learnt during the $100 oil era (which) is take it in phases,” Dudley said. BP is applying this approach in many of its main production hubs such as Egypt and Gulf of Mexico, where it can continue raising production into the early 2020s, Dudley