Next LNG importing giant Pakistan readies for buying spree
Pakistan LNG Ltd has launched a mid- and a long-term tender to purchase a combined 240 shipments of liquefied natural gas (LNG), the company said on its website, as the country emerges to become a major gas importer. Pakistan, which can only meet around two-thirds of its gas demand, is expected to issue further tenders seeking twice as much supply to fill out remaining capacity at its new import terminal at Port Qasim, in the commercial capital Karachi, according to one Pakistani energy expert. The mid-term tender covers a period of five years and calls for 60 shipments, while the long-term tender is for 15 years and 180 cargoes, according to information presented in the tender documents released on the company’s website on Tuesday. Suppliers must submit bids by Dec. 20. Pakistan has ploughed billions of dollars into LNG infrastructure, including the construction of a second LNG import terminal and pipelines linking Karachi with Lahore in the Punjab region, the nation’s industrial heartland. The current crop of tenders are a small part of Pakistan’s projected demand as the country works to bring two more import terminals online within the next couple of years, making it a potent force in global gas markets. The country first began buying LNG last year and has already contracted supplies from trading firm Gunvor and Qatargas, the world’s biggest LNG producer. Cheap gas is tempting out new importers from the Middle East to Africa and Asia, helping stave off a deeper price rout hurting producers’ bottom lines. Cheaper than fuel oil and cleaner-burning than coal, LNG suits emerging economies racing to bridge electricity shortfalls and support growth on tight budgets. The Port Qasim LNG terminal, which is due to go online in mid-2017, has a capacity of 600,000 million cubic feet per day. “This tender is for 200 million cubic feet. That means another 400 million will need to be tendered out soon,” said the industry source. A Pakistan LNG official in September said the country was working on commercial as well as government-to-government LNG deals. Tom Rathman Womens Jersey
IOCL, FCIL & HFCL roped in to revive three ailing fertilisers units
Indian Oil Corporation (IOCL), Fertiliser Corporation of India (FCIL) and Hindustan Fertiliser Corporation of India (HFCL) were roped into the joint venture to revive Sindhri and Gorakpur urea units of Fertiliser Corporation of India. This joint venture will also revive the Barauni unit of HFCL, it has been recently decided. Initially, NTPC and Coal India formed a 50:50 joint-venture to revive the Sindhri and Gorakpur fertiliser units. Subsequently, on the direction of the government, three new shareholders were inducted into the special purpose vehicle formed which will also revive the Barauni unit along with the Sindhri and Gorakpur units. According to a notice issued by Coal India, the joint venture will have a revised shareholding pattern in which Coal India, NTPC and Indian Oil Corporation will hold 29.67% each while FCIL and HFCL will hold the remaining 10.99% in the special purpose vehicle which has been christened According to sources, three cash rich PSUs, IOCL, CIL and NTPC will cough up around Rs 50 billion in the form of equity in the special purpose vehicle to deliver on promises made by Prime Minister Narendra Modi in Uttar Pradesh, Bihar and Jharkhand. Revival of the three plants will require a total investment of Rs 180 billion. According to the deal the existing defunct units at these locations will be scrapped and new ones would be set up. “Equity infusion in the proposed special purpose vehicle would be around Rs 1600 each by IOC, CIL and NTPC while FCI may cough up Rs 5 billion in the projects which is expected to be ready in three-four years. Each units is expected to cost Rs 60 billion. They would be gas based will be supplied by GAIL India,” a senior official from one of the PSUs said on condition of anonymity. Edinson Volquez Authentic Jersey
Shell beats profit forecasts, targets lower 2017 spending
Royal Dutch Shell reported an 18 percent rise in third-quarter profit on Tuesday, lowering next year’s capital spending to the bottom of the expected range as it grapples with persistently low oil prices and weak refining margins. The Anglo-Dutch oil major, whose acquisition of BG Group transformed it into the world’s top liquefied natural gas producer, has been under pressure from shareholders to cut annual spending to ensure it can maintain its dividend given the slow recovery in the oil prices. “Lower oil prices continue to be a significant challenge across the business, and the outlook remains uncertain,” Chief Executive Officer Ben van Beurden said in a statement. Shell’s “A” shares were up 3.4 percent shortly after the opening of trade in London. Shell said its 2017 capital spending was expected to be at around $25 billion, at the bottom of the range previously given. This year’s capex will be around $29 billion, down from a combined $36 billion for Shell and BG Group in 2015. Net income in the quarter, based on a current cost of supplies (CCS) and excluding exceptional items, rose to $2.8 billion, beating analysts’ expectations of $1.71 billion. Shell disappointed the market with its second-quarter results, the first full quarter following the completion of the BG acquisition in February, by missing expectations by around 50 percent. Shell’s Integrated Gas division generated $931 million in profits, slightly above last year’s level, while oil and gas production division, known as upstream, was virtually flat. The refining and trading division, or downstream, once again offered support with a profit of $2.01 billion, although this was down from $2.6 billion a year ago. RBC Capital Markets analyst Biraj Borkhataria said there was “room for Shell to outperform its peers in the near term” following the solid results. BP on Tuesday also beat earnings expectations, trimming its 2016 capital spending by another $1 billion. Other rivals, including Exxon Mobil and Chevron, reported sharply lower in quarterly results last week due to lower oil prices and weaker refining margins. Peyton Manning Jersey
India bets on LNG fuelling stations
As part of its strategy to reduce emissions, India is betting on liquefied natural gas (LNG) to fuel its road transportation sector. The clean fuel promotion attempt involves exploring setting up of LNG filling stations. This comes in the backdrop of India’s petroleum and natural gas ministry planning a pilot programme on LNG-run vehicles in Kerala. Going forward, the strategy is to fuel long-haul commercial vehicles and trains with LNG. “We are confident that the pilot project will have desirable results after which we shall begin work on its filing stations across India,” said a petroleum ministry official requesting anonymity. Another government official, requesting anonymity, confirmed the strategy. LNG is transported in ships with a regasification terminal required to convert the fuel to gas. India has a regasification capacity of 25 million tonnes per annum. In order to meet India’s gas demand, the government plans to increase the country’s LNG import capacity to at least 50 million tonne in the next few years. Queries emailed to a petroleum ministry spokesperson on 28 October remained unanswered. India in June launched a programme to run two-wheelers on compressed natural gas. The National Democratic Alliance (NDA) government plans to move towards a gas-based economy, in sync with its commitment made by ratifying the Paris climate change deal to reduce carbon footprint. “This is being done to promote the usage of clean fuel in the country. India has been looking to shift to relatively cleaner sources of fuel and this falls in lie with the same,” said Sanjay Grover, partner at EY, a consultancy. According to a June report by the World Health Organization, half of the world’s most polluted cities are in India, including the capital city of New Delhi. The NDA government has been working towards expanding the country’s gas grid with a target of providing piped domestic cooking gas connections to every household in eastern India by 2020. It is also planning to set up multiple bio-compressed natural gas plants in the country. However, natural gas currently contributes 6.5% to India’s energy mix, though the government plans to raise the contribution to 15%. India’s natural gas demand is expected to grow from 473 million standard cu. metre per day (mscmd) now to 494 mscmd in 2017-18 and 523 mscmd in 2018-19. Brock Osweiler Womens Jersey
IndianOil lines up 1800 billion capital expenditure for 5 years
India’s largest refining and oil marketing company Indian Oil Corporation (IOC) has lined up capital expenditure to the tune of Rs. 1830 billion between FY18 and FY22. A large chunk of the proposed investment would go towards expansion of refineries and marketing-related facilities such as setting up of terminals, the PSU told analysts in a recent conference call. In the current financial year, IOC is spending Rs. 190 billion. In the next five years, Rs. 500 billion would be spent towards ramping up refining capacity, while another Rs. 400 billion would be spent under marketing initiatives, said an analyst present at the conference. Another Rs. 220 billion is earmarked for pipelines expansion, Rs. 300 billion for exploration and production and Rs. 290 billion for petrochemicals business. Currently, IOC is in the process of making a 15 million tonnes per annum greenfield refinery at Paradip in Odisha operational. “Despite all the initial glitches, the Paradip refinery has finally been commissioned. The second quarter FY17 volume stands at 1.7 million tons and current utilisation is at 65%. By March 2017, quarterly run rate of the refinery would be 3.7 to 4 million tons. Post 90% utilisation level, it would start making positive gross refining margin,” Dhaval Joshi, research analyst at Emkay Global Financial Services said in a note. IOC aggressive expansion strategy comes at a time when India is racing to add capacity to meet increasing fuel consumption. India is poised to surpass Japan as the world’s third-largest oil user this year and will be the fastest-growing crude consumer in the world through 2040, Bloomberg quoted Paris-based International Energy Agency saying. With the government freeing petrol and diesel prices coupled with direct subsidy transfer for domestic cooking gas, IOC has more leg room for investments. Earlier, due to delayed compensation of subsidies, the company’s debt piled up leaving little room for investing in new projects. IOC’s gross debt has come down by nearly 21%to Rs. 418.85 billion as of September 30, against Rs. 534.04 billion on March 30, said A K Sharma, director (finance) of the government-owned firm. IOC controls 11 of India’s 23 refineries. The group refining capacity is 80.7 million tonnes per annum — the largest share among refining companies in India. It accounts for 35% share of country’s refining capacity. IEA estimates sees India’s fuel demand to touch 329 million tonnes by 2030. Currently, India’s total refining capacity stands at 230 million tonnes a year. The total fuel demand in FY16 was 183.5 million tonnes, according to the petroleum ministry. In order to meet the demand, the Prime Minister Narendra Modi government has proposed a mega 60 million tonnes a year refinery in Ratnagiri district of Maharashtra. The project is to be setup by IOC in joint venture with other public sector firms. Cameron Erving Womens Jersey
Infrastructure woes laid bare as roads become gridlocked
Tourists from across Tamil Nadu, Kerala and Karnataka once again thronged The Nilgiris on Saturday and Sunday during the Deepavali weekend, once again leading to infrastructure problems associated with the steep increase in traffic into the district. Due to the lack of parking spaces, most vehicles visiting the Doddabetta Peak and the Ooty Boat House were forced to stop by the sides of the road, leading to traffic snarls and gridlocking in many places. The problems were most pronounced on the road from Khandal to the Ooty Boat House, where traffic came to a grinding halt from around 11.30 a.m. till late afternoon. Furthermore, there were only a few policemen on the route regulating traffic, further exacerbating the problem. V. Prabhakar, Udhagamandalam Municipality Health Officer (Commissioner in-charge) and Special Officer, acknowledged that the infrastructure problems exist, but said that the Tourism Development Board held charge over the boat house and the district police were tasked with traffic regulation. “The District Police, Municipality and Revenue Department understand that traffic problems exist and plan to conduct drives to prevent traffic violations in the future,” Mr. Prabhakar said. The Nilgiris Superintendent of Police, Murali Rambha, said that during peak seasons, the police stop private buses on the city outskirts, and run TNSTC buses that ferry the tourists to popular locations. Aaron Rodgers Jersey
Gadkari urges private ports to cater to cruise tourism
Union shipping minister Nitin Gadkari on Saturday urged private port operators to create necessary arrangements for catering to passengers, pointing out to the prospects of cruise tourism in the country. “We have taken a decision to have passenger terminals at all major ports to cater to cruise tourists. There are over 200 private and minor ports in the country and I would also request them to have such facilities,” Gadkari said at the Mumbai Port Trust. He said the government is very keen to push cruise tourism, given its benefit to the local economy and wants the city port to become among the five best cruise tourism hubs in the world. The government is investing over ?200 crore to build a modern international cruise terminal at one of the oldest ports in the country, the minister informed. A bulk of the ports built in the last 25 years since the country embarked on the liberalisation journey have been privately owned or operated. All of them typically cater to the high-volume and revenue accretive trade segment, handling container, bulk and liquid cargos. A slew of names, including Adanis, Essar, Larsen and Toubro, etc have entered the port segment in the last few years. Referring to the port redevelopment plan, Gadkari said there is a plan to make the city port better than those in Dubai and Singapore as well. The minister was quick to point out that while carrying out such projects, jobs will be protected and there will in fact be a growth in employment through such initiatives. Mumbai Port Trust (MbPT) chairman Sanjay Bhatia said catering to domestic tourists can also be a lucrative business opportunity and the ministry has appointed an international consultant to study the same both on the coastal and inland waterways front. The MbPT, which has a dedicated berth for cruise tourism, hosted its largest passenger ship yet on Saturday. Genting Dream anchored at the berth in her maiden voyage and will be carrying 1,900 passengers from the city till Singapore, via Colombo. A senior official from the shipping company said it has been serving the market for the last decade and saw a 36 per cent growth in Indian tourists in the last fiscal 2015-16 to over 1.25 lakh. Jessie Bates III Authentic Jersey
GSTN to borrow ₹800 cr to meet infra building cost
GSTN, the company that is building the world’s biggest and most complex tax system, will borrow ?800 crore from banks to fund infrastructure costs to support Goods and Services Tax rollout from April 1 next year. The Goods and Services Tax Network (GSTN), a not-for-profit, non-government, private limited company promoted by the Central and State governments, is borrowing ?250 crore for working capital needs and another ?550 crore as long-term loan from domestic lenders, its chairman Navin Kumar told PTI here. The Centre has 24.5 per cent stake in GSTN and the state governments an equal share. The remaining 51 per cent is with private financial institutions. “The total authorised and paid-up capital is ?10 crore. So, ?4.90 crore has come from Central and State governments and ?5.10 crore from private institutions,” he said. Kumar said the cost of infrastructure to support the GST will be ?1,380 crore. “We will be borrowing ?550 crore for infrastructure. We have also sought some working capital limit, that we will see if there is any default in payment,” he said. Since its incorporation on March 28, 2013, the GSTN had used ?64 crore towards payments to its vendors and employees out of the central government’s sanctioned grant of ?315 crore for the first three years. “The government has released ?120 crore from the grant, and we have used ?64 crore, rest of the money we have to refund to the government,” he said, adding this year the entire expenses would be met through borrowing. Kumar said after receiving Letter of Guarantee from the government, the GSTN will raise a five-year term loan of ?550 crore from various Indian banks. “We have also requested for a ?250-crore working capital loan. So, if there is any delay by any government in making payment, then we will borrow money. We have selected the banks,” he said. Explaining how the working capital and term loans would work, he said the working capital loan works like a credit and at the end of the year the borrower has to square up the loans. But the payment of term loan has to be made every month. GSTN is a non-government, private limited company promoted by the central and state governments with the specific mandate to build the IT infrastructure and the services required for implementing Goods and Services Tax (GST). Zay Jones Authentic Jersey
KG-D6 gas dispute may cost Reliance Ind over $1.2 billion
Reliance Industries Ltd and one of its partners in the KG-D6 block — Niko Resources — may end up paying the government about $1.25 billion as compensation for benefits they derived from the natural gas that allegedly migrated from ONGC’s adjacent fields in the Krishna-Godavari Basin off the Andhra Pradesh coast. Officials remain tight-lipped about the monetary compensation payable by RIL. However, the buzz is that Mukesh Ambani’s company and its partner in the block may be asked to pay compsnation of that magnitude. Sources said the Directorate-General of Hydrocarbons (DGH) had, in its first draft, given the indicative number of $1.25 billion to the Ministry for Petroleum and Natural Gas. The DGH has been working on the monetary compensation based on the recommendations and model suggested by the single-member Justice AP Shah Committee. Indications are that the figures have been derived based on calculations in respect of gas price and volume done on a monthly basis, and after deducting the royalty, cess and profit petroleum that the contractors have paid the government on the produce so far. A tough call Sources told BusinessLine that the government will not find it easy to determine the precise amount of compensation, which in any case will be open to challenge by the contractors. For instance, between April 2009 and March 2015, the royalty calculations rose from 5 per cent to 10 per cent; the variance could influence the determination of the compensation. Second, it’s not clear what the gas price will be taken as. The prevailing gas price — $4.2/unit (gas is measured in million British thermal units) — is in dispute. Whether the government will work within the terms of the production sharing contract (PSC) or outside it is not known, sources said. Devil in the details Both Reliance Industries and ONGC will want to read the fine print of any government formulation before respoding to it. ONGC believes that the Shah panel has been unfair to it. Confirming the continuity of reservoirs, the committee had said that independent consultant DeGoyler & MacNaughton’s report must form the basis for the migration of gas up till 2015, and that migration of gas post-2015 has to be inquired into by the government. Quantifying the migration It had quantified the amount of gas that migrated from Godavari PML and D1 discovery area of ONGC’s KG-DWN-98/2 to RIL’s Block of KG D6 from April 2009 to March 2015. It also quantified the amount of gas that is likely to further migrate from April 2015 to March 2019. The D&M report found that up to 15 per cent of the gas could belong to ONGC. It calculated that from April 2009 till March 2015, about 7.009 billion cubic metres and 4.116 billion cubic metres of gas had migrated from the Godavari PML and D1 discovery of ONGC’s acreage to RIL’s block. Of this, 5.968 billion cubic metres and 3.015 billion cubic metres, respectively, were produced. The reserves in the D-1 and D-3 fields of the Reliance-BP-Niko KG D6 block total 2.9 trillion cubic feet, of which 2.1 trillion cubic feet or more have been extracted. Brandon Marshall Womens Jersey
Target of 25,000km road project awards unlikely to be met in FY17
The target of awarding 25,000km of road projects in the current fiscal year is unlikely to be met going by the data of the first half, analysts say. The target, set by the ministry of road transport and highways and the National Highways Authority of India (NHAI), was announced in April. It was seen as ambitious goal from the very start, given that the central government is already building roads at the fastest pace ever. The Nitin Gadkari-led ministry is also taking several other measures to make it easier for companies to win and execute these projects. Last fiscal year, the government awarded 10,000km of projects. The execution record in the first half of this fiscal year makes achieving the 25,000km target appear unlikely, Jefferies India Pvt. Ltd analyst Ankit Fitkariwala wrote in a 24 October report. “Looking at current pipeline of projects, we expect that previous year awards of 10,000km would probably be repeated for full year FY17 as well. We do not expect overall FY17 awards to be anywhere close to 25,000km that the ministry was expecting at the beginning of the year,” Fitkariwala wrote. While the September quarter is typically weak for road projects in terms of execution and traffic, a stronger-than-expected monsoon this year has also likely impacted execution of road projects. According to the NHAI website, it had awarded 764km of projects from April to July. It is yet to report data for August and September. India awards road projects under three models: engineering, procurement, and construction (EPC); build, operate, and transfer (BOT); and the hybrid annuity model (HAM). NHAI, the road ministry and states together have likely awarded projects of about 6,000km in the first half of the year across the three models, according to Devam Modi, an analyst at Equirus Securities Pvt. Ltd. While he does not expect the current fiscal’s target to be met, he expects awards to be significantly higher than the 10,000km achieved last fiscal year. Projects of about 2,200km each have been awarded by NHAI and the ministry up to September this fiscal, totalling to about 4,500km, according to Jefferies. Another brokerage analyst expects the ministry and NHAI to award 12,000-15,000km in total this fiscal. He asked not to be named as he is not authorized to speak to reporters. NHAI alone has active tenders of 1,200km to be bid out over the next month, largely based on the EPC and HAM models, according to a report last week by ICICI Securities. India has the world’s second largest road network, running to about 4.8 million km, but major highways constitute a small percentage of that. Gadkari has set a long-term target of building 100km of roads a day, as against last year’s target of 30km. India currently constructs roads and highways at a rate of 21km per day. Road companies including PNC Infratech Ltd, Sadbhav Engineering Ltd, IRB Infrastructure Developers Ltd and Ashoka Buildcon Ltd have been benefiting from the increased pace of awards. Victor Antipin Womens Jersey