Gail to borrow up to Rs 7,000 crore domestically to fund Rs 10,000 crore capex plan in FY24
Gail India plans to borrow up to Rs 7,000 crore in FY24 to fund the Rs 10,000 crore capital expenditure plan for this fiscal, a top company official said on Friday. The state-owned company’s chairman and managing director SK Gupta said, “For this fiscal, we plan to spend Rs 10,000 crore”. He added that even though FY23 was not good for internal resource generation, it invested Rs 9,100 crore, which was 15 per cent higher than the budgeted levels. He exuded confidence that FY24 will be robust on the internal resource generation front, and there will not be any problem with continuing with the capex. “We plan to borrow something around Rs 5-7,000 crore,” he added. The company’s director of finance, RK Jain, said that given the present scenario in global finance, the borrowing will be done domestically and not in global markets. Keeping in line with the Sebi mandate, a fourth of the borrowings will be in bonds while the rest will be bank borrowings, he said. At present, the company’s overall long-term debt stands at Rs 9,800 crore, and the new bank borrowings will be for a tenor of over five years. It is in the domestic market to raise a borrowing of Rs 1,500 crore right now, he added. Meanwhile, Gupta said Gail has initiated legal proceedings against Russian energy giant Gazprom for failure to supply Liquified Natural Gas following the complications arising out of Russia’s invasion of Ukraine. “We are taking up legally against them to press for specific performance and to claim the damages, and our request for arbitration has been filed…in the London court,” Gupta said. Without divulging the exact sum that the company is claiming, Gupta said Gail has recommended its representatives for the arbitration, while its supplier is yet to appoint one. He said normal supplies have been on for the last two months, but the price being paid by Gail is higher than the spot market prices because the contract entails a price, which is an average of nine months. Gupta also said that the company is looking seriously at entering the solar energy components space, and will be looking at all the options, including tie-ups. It is also confident of commissioning a green hydrogen production in the calendar year 2023 itself. The company is also contemplating entering into the ethane cracker, but the plans are still on the drawing board. Gupta said it will not be looking at pipeline monetization because oil and gas companies are able to raise necessary resources from the markets.
Oil Prices Set For Their First Weekly Gain In A Month
Crude oil prices look set to record their first weekly gain since mid-April as sentiment about future demand improves amid signs there may be progress on the debt ceiling negotiations in Congress. On Thursday, President Biden and House Speaker Kevin McCarthy said they would negotiate directly on lifting the debt ceiling, sparking hopes that a default would be avoided. “We’re going to come together because there’s no alternative,” President Biden said, as quoted by Reuters. “To be clear, this negotiation is about the outlines of the budget, not about the whether or not we’re going to (pay our debts). The leaders (of Congress) have all agreed: We will not default. Every leader has said that.” As a result, oil prices inched up, with West Texas Intermediate gaining some 3% since the start of the week, according to Bloomberg. At the time of writing, WTI was trading at a little over $72 per barrel, while Brent crude was changing hands at around $76.50 per barrel. Both remain down 10% since the start of the year, however. In addition to debt ceiling optimism, prices got some support from the fact that driving season is around the corner with demand expected to pick up in accordance with usual seasonal variation. Some additional support was also provided by the Department of Energy when it announced it planned to buy 3 million barrels of oil for the strategic petroleum reserve, an IG analyst told Bloomberg. On the flip side, U.S. leading economic indicators suggested the economy is gathering pace, which in turn reignited fears of more rate hikes as it pushed the greenback to the highest in two months. “Good news for the economy is now bad news for the crude demand outlook as economic resilience will force the Fed to kill the economy,” OANDA analyst Edward Moya told Reuters.
Uptick in Qatari LNG contributes to higher LNG imports in India, Pakistan in April: GECF
Qatar – Uptick in LNG imports from Qatar contributed to higher LNG imports in India and Pakistan in April this year, GECF’ latest data show. In April 2023, Asia Pacific’s LNG imports continued to recover and increased by 5% (1.05mn tonnes) y-o-y to 20.50mn tonnes, which was slightly lower than the imports in April 2021. China, India, Thailand, and Pakistan contributed to the bulk of the incremental increase in LNG imports and offset weaker imports in Japan. Asia Pacific’s cumulative LNG imports from January to April this year rose by 3% (2.6mn tonnes) y-o-y to 89.12mn tonnes, Doha-headquartered Gas Exporting Countries Forum said. China’s LNG imports continued to recover in April and recorded the highest year-on-year increase since September 2021. The rebound in economic and industrial activity boosted gas consumption, driving LNG imports higher. Pipeline gas imports to the EU increased by 3% month-on-month, to reach 14 bcm in April. Global LNG imports surged by 10% y-o-y to 34.4mn tonnes, setting a new record high for imports in April. The increase was driven by stronger LNG imports across all regions, especially in the Asia Pacific and Europe. In Europe, the rise in LNG imports continues to compensate for the lower pipeline gas imports into the region. Meanwhile, the rebound in gas consumption in China, opportunistic buying in India due to lower spot LNG prices, and declining gas production and pipeline gas imports in Thailand contributed to the increase in the Asia Pacific’s LNG imports. Furthermore, Philippines joined the ranks of LNG importers in April, GECF noted. As of April, the restocking of gas storage sites has commenced. In the EU, the average level of gas in underground storage was 59.4bcm, which amounts to 57% of the region’s storage capacity. In the US, the level of underground gas storage increased to 55.6bcm, representing 42% of its capacity. A slower stock build is expected in both the EU and US this summer due to the high levels of gas already in storage. The combined LNG in storage in Japan and South Korea was estimated at 9.8bcm. According to GECF, gas and LNG spot prices in Europe and Asia continued their downward trend for the fourth consecutive month. In April, the Title Transfer Facility (TTF), which is the main reference virtual market for gas trading in Europe and Northeast Asia (NEA) LNG spot prices, averaged $13.69/MMBtu and $12.10/MMBtu, respectively, representing a 1% and 9% decrease compared to the previous month. The TTF spot price was 57% lower y-o-y, while the NEA LNG spot price experienced a decline of 58% y-o-y. With the arrival of the shoulder season, the market witnessed a decrease in tightness as a result of ample storage levels and strong LNG supply. However, in Asia, there was some emerging buying activity in anticipation of the summer season, which helped limit the decline in spot LNG prices, GECF said.
Former Russian unit resumes regular LNG supplies to India
A former unit of Russian energy giant Gazprom has resumed supplying LNG to Indian state gas utility GAIL a year after it halted supplies due to Ukraine war Sefe Marketing and Trading Singapore Pte Ltd (SMTS), erstwhile Gazprom Marketing and Trading Singapore Pte Ltd, supplied two liquefied natural gas (LNG) cargoes each in March and April and has committed 4 shiploads each in May and June, GAIL (India) Ltd chairman and managing director Sandeep Gupta said on Thursday. ‘Hopefully, similar volumes will be nominated for future months also,” he said. Sefe will decide on volumes on a month-to-month basis. GAIL had in 2012 signed a 20-year deal with Gazprom Marketing and Singapore (GMTS) to buy 2.85 million tonnes per annum of LNG. Supplies started in 2018 and the full volume was to reach in 2023. GMTS had signed the deal on behalf of Gazprom. GMTS was moved to Gazprom Germania, now called Sefe. But in early April last year, Gazprom gave up the ownership of the German unit without giving a reason and placed parts of it under Russian sanctions. This followed the West slapping sanctions on Russia for its February 24 invasion of Ukraine. It invoked force majeure and stopped supplies to India from June 2022. Gupta said normal supplies have resumed and hope they will continue. Sefe, formerly GMTS, ”in its annual delivery plan and in their latest communications have maintained their alleged force majeure stance citing various reasons such as Russian sanctions on its LNG source/portfolio and mandate from German authorities (BnetzA) for ensuring energy security for Europe for their inability to deliver LNG cargoes,” Minister of State for Petroleum and Natural Gas Rameswar Teli had told Lok Sabha in a written reply to a question on March 23 this year. However, ”while SMTS maintains its force majeure stance, as on date SMTS has informed that they shall be able to supply two cargoes (shipload) in March 2023 and two in April 2023,” he had added. To mitigate the shortfall in Russian supplies, GAIL imposed supply cuts to users from mid-July 2022 to mid-March 2023. In order to meet the shortage, GAIL sourced spot LNG volumes from the domestic/international market and also partially/fully stopped its petrochemical complex at Pata in Uttar Pradesh for fulfilling supply obligations to the customers. Gupta said all the supply cuts have been restored with effect from March 16. Under the deal, GMTS was to progressively increase supplies to GAIL. It shipped 2 million tonnes of LNG in 2021 and was to supply 2.5 million tonnes or a minimum of 36 cargoes in the calendar year 2022. The full volume of 2.85 million tonnes is to be reached in 2023.
Consortium plans to develop $5bln UAE-Oman-India undersea pipeline
South Asia Gas Enterprise (SAGE), a consortium of companies in deepwater pipeline projects, is planning a $5 billion undersea liquefied natural gas pipeline. The consortium has sought help from India’s Ministry of Petroleum to develop the pipeline, Financial Express reported, citing SAGE director Subodh Kumar Jain. The project’s technical and financial feasibility has been carried out successfully, he said, seeking diplomatic and political support to take it forward. The proposed 2,000-km energy corridor connecting the Middle East and India will lead to an annual saving of about Rs 70 billion ($849.60 million). The route will run via Oman and UAE through the Arabian Sea, allowing import from Oman, UAE, Saudi Arabia, Iran, Turkmenistan and Qatar, a region with 2,500 trillion cubic feet of gas reserves. Last month, Raj Kumar Singh, Indian Union minister for power and new and renewable energy, said the country plans to link its power grid with the UAE and Saudi Arabia through undersea cables. Once approved by the cabinet, bilateral agreements will be signed with Saudi Arabiaand the UAE for the mega projects, he told Mint, an Indian financial news outlet. SAGE is promoted by the New Delhi-based Siddho Mal Group, in joint venture with a UK-based Deepwater Technology Company, according to its website.
India eyes refill of strategic oil stockpiles as US replenishes
India is considering refilling its strategic hoard of crude oil, joining the US as the world’s top guzzler begins to rebuild its depleted stockpiles after a period of drawdown. The South Asian nation plans to import about 1.25 million tons (9.2 million barrels) of oil to fill empty reserves, said people with knowledge of the matter, who asked not to be identified as the information isn’t public. The grades and timing are still under discussion, one of the people said. It’s unclear if India, which has emerged as a major buyer of Russian crude since the Ukraine invasion, will choose to buy cargoes from the OPEC+ producer, or its traditional suppliers in the Middle East. The US and India are making plans to beef up reserves — the back-up for emergencies such as acute global outages or price spikes — as benchmark prices trade near the lowest in more than a year. Brent is around 45% lower from its 2022 high as demand concerns hang over the market. An oil ministry spokesman didn’t immediately reply to phone call and text message seeking comments. The South Asian nation plans to fill about one-quarter of its reserve spread across two sites in Visakhapatnam facility on east coast and Mangalore on west coast. India has strategic storage in three locations with capacity to hold about 5.33 million tons. The capacity is not much considering India imported 232.4 million tons crude in the year ended March 31. India allocated Rs 5,000 crore ($606 million) in its budget earlier this year toward filling strategic stockpiles. The International Energy Agency said in February that the funds could cover purchases of about 10 million barrels of Russian crude, or around 7 million barrels of non-sanctioned oil. It last added to its strategic stockpiles in 2020 after oil crashed due to Covid lockdowns, buying crude at an average price of $19 a barrel. Scant Interest The Asian nation initiated a plan early last year to allow local and foreign companies to lease space that could accommodate around 8 million barrels at two underground locations. However, India’s refiners were unwilling to pay what the government was asking to rent the space, one of the people said. Discussions about leasing storage were also held with Saudi Aramco and Abu Dhabi National Oil Co., but they didn’t progress, according to Parliament documents. Adnoc signed a deal in 2017 to lease some space, enough for almost 6 million barrels. India is seeking to increase its reserve capacity by 6.5 million tons, but progress has been slow due to issues related with land acquisition. The feasibility of storage caverns near Bharat Petroleum Corp.’s Bina refinery and the use of salt caverns at Bikaner near Hindustan Petroleum Corp.’s Barmer plant is also being assessed.
Sri Lanka wants India to put a Oil and Gas pipeline to help its economy to recover
Sri Lankan High Commissioner in India Dr Milinda Moragoda today disclosed that his country had floated a proposal to the Indian government to lay an Oil & Gas pipeline through Trincomalee and claimed it had received favourable response from the leadership of the country. Speaking to foreign correspondents here this evening at the Foreign Correspondents Club of South Asia (FCC), Dr Moragoda, who has previously held several ministerial portfolios in the Lankan cabinet , said such a pipeline would help his country’s economic growth to receive petroleum products ranging from petrol, diesel, lubricants etc which it had to import at prohibitive costs. Thanking the Indian government under PM Narendra Modi for the extraordinary support it had extended at the dark hour in his country of an unprecedented economic crisis, he said his country was thankful for the $1.6 billion credit it was extending to resurrect the island nation’s shattered economy. On the economic crisis, he said the external debt was about $15 billion of which India was due to get $1.6 billion, $2.6 billion to the Paris Club of European nations and a huge chunk to China. China has also extended a $1.6 billion credit line but nothing concrete had been achieved so far , but negotiations were on , he said. On the controversy if the businessman Gautam Adani was favored to construct a multipurpose port in Sri Lanka, Dr Moragoda said, “he was among the first to arrive with a concrete proposal to construct the port. There is no politics in this. It’s purely an investment decision the government of Sri Lanka made. We are not competent to comment on the businessmen relations with the government in India. As far as Srilanka is concerned, we welcome investment decisions. “ The project is on and will be completed, he said. The Adanis are also the first to arrive in Israel and they are going to construct the Haifa port, he pointed. When it comes to geo-politics interests conflicting with geo-economic interests, every nation will choose the latter for economic development. He said as far as Sri Lanka was concerned it realized its geo-political situation and its proximity to India and knows its security concerns are best served by India than any other country.
GAIL shuts Ratnagiri LNG terminal till September, cuts imports: Sources
GAIL (India) Ltd has stopped importing liquefied natural gas (LNG) at its 5 million tonnes/year Ratnagiri plant since mid-May as it has shut the facility until end-September, two company sources said. GAIL annually shuts the plant in the western Maharashtra state during monsoon season as rain and high tides make operations difficult without a breakwater. However, a breakwater is expected to be ready next year that would obviate the need to shut the terminal during monsoons, one of the sources said. The company received its last LNG cargo at the Dabhol port on May 11, according to Refinitiv Eikon data. The Maharashtra Maritime Board has ordered restricted operations by inland vessels during ‘four weather season’ from May 26 to Aug. 31, citing ‘safety of life and environment’, according to a notice seen by Reuters. GAIL delays the import of LNG to October as seas remain rough during September, the two sources said. GAIL did not respond to a Reuters email seeking comment.
Bharat Petroleum unveils Rs 490 billion petrochemical and capacity expansion project at Bina Refinery
Bharat Petroleum Corporation Limited (BPCL), a oil and gas company in India, has announced its ambitious expansion plans worth Rs. 490 billion, further increasing the Company’s footprints in petrochemical segment and renewable energy, together with augmenting marketing infrastructure. The core component of the expansion projects is the Ethylene Cracker Project, which will drive the production of essential petrochemicals. The project encompasses the establishment of an Ethylene Cracker (EC) Complex, downstream Petrochemical Plants, as well as the expansion of the existing Refinery capacity from 7.8 MMTPA to 11 MMTPA and associated facilities at Bina Refinery. With a capital expenditure of approximately Rs. 490 billion, this initiative marks a significant milestone for BPCL and energy sector as a whole. Bina refinery expansion will meet the growing demand of petroleum products in central and northern India while also providing necessary feedstock to EC complex. While Petrochemical Plant will cater to the growing domestic demand for petrochemical products. G Krishnakumar, C&MD, BPCL, said, “BPCL has leapfrogged into the world of Petrochemicals as we embark upon the ₹49000 Ethylene Cracker project in our Bina Refinery, in step with the expansion of Refining capacity to 11 MMTPA. Combined with our investment in Wind Energy and new age Petroleum Oil Lubricants installations built for sustainable processes, this is a watershed moment in our strategic endeavor to be at the forefront in meeting the rapidly growing demand for energy and Petrochemical products in India.” “We are steadfast in aligning our strategic imperatives with the Government’s Atmanirbhar Bharat mission to make India a self-reliant and globally competitive petrochemical powerhouse,” G Krishnakumar said.
India still a bright spot for LNG in a subdued market
The recent drop in the Platts West India marker to a near two-year low, expectations of a ramp-up in operations at Dhamra LNG terminal and the hot weather will likely keep spot LNG procurement supported in India, despite a rise in domestic natural gas production, industry sources told S&P Global Commodity Insights. “LNG procurement should mostly not be that much affected by domestic gas production because demand has also grown,” a domestic Indian-gas source said. According to S&P Global seaborne data, India’s LNG imports rose to 2.02 million mt in April from 1.94 million mt in March and from 1.70 million mt in April 2022. The International Energy Agency, or IEA, in May revised upwards India’s natural gas consumption for 2023, with the agency predicting a 4% year-on-year increase due to a modest recovery in the power sector and continued growth in industrial activity and city gas sectors. “Out to 2030, we expect gas demand to grow by 3.4% on an annual basis. This will be primarily led by gas demand growth in the city gas sectors, industries and feedstock for fertilizer plants,” Zhi Xin Chong, Director, Gas, Power, and Climate Solutions at S&P Global said. With the CGD rounds now covering 98% of India’s population, many companies are now investing in developing new infrastructure to reach out to this customer base. “We expect gas demand in this sector to continue its rapid growth especially with the expansion of pipelines in the East Coast of India,” Chong said. Gas production increases Gas supply continues to grow as Reliance Industries Limited-BP start up production from the MJ gas fields, developed in the KG-D6 block. In an operational update in April, RIL said that production from KGD6 rose 13.8% year on year to 42.9 Bcfe in January-March. With incremental gas production from MJ field, along with ongoing production from R Cluster and Satellite Cluster fields, output at KG-D6 is expected to reach about 30 MMSCMD in FY24, it added. ONGC, which contributes two-thirds of the country’s oil and gas output, has stepped up discussions with ExxonMobil, Equinor, the American oil services conglomerate Baker Hughes, and French research organization Instituted Français du Pétrole on various issues such as technology and deepwater collaboration. “Energy security is geography dependent…ONGC invests $ 3.5 billion to keep up production,” ONGC Chairman and CEO Arun Kumar Singh said in February. Meanwhile, sources noted that softer WIM LNG prices were also likely to spur demand in India even as other Asian countries reel from excess stock amid muted demand. Platts assessed WIM for June slipped below $10/MMBtu this month. The marker reached a near two-year low on May 5, when it was assessed at $9.638/MMBtu and was last assessed at $9.775/MMBtu May 11. “India can buy cargoes as the price is now below the Brent-linked prices. We have an old contract with Brent slope that is higher…so the price range currently makes sense for us,” an industry source said, adding that $10.5/MMBtu could be a key level for most of the Indian importers, given the current crude oil prices. The forward curve for JKM suggests that weakness in LNG prices will continue to sustain, with the August derivative price assessed at $11.25/MMBtu and September derivative at $12.35/MMBtu on May 11 at Singapore close. Surge in tender activity Bharat Petroleum Corporation Limited, or BPCL, has recently awarded its LNG tender for delivery on June 14 to Dahej. Most of the volume is expected to be used in its refinery, industry sources said. An industry source said that BPCL may bring out a RLNG tender to market some volume from the tender that it awarded. The source added that if such a RLNG tender is successful, more LNG buy tenders may be in the plans. Meanwhile, the Reliance-BP consortium carried out an e-auction for sale of 6 MMSCMD on April 12. “The entire volume was sold and Gas sale purchase agreement (GSPA) under execution with successful bidders,” RIL said in a statement. Domestic gas market participants are also eyeing the Reliance-BP auction on May 19 that seeks bids for up to 6 million standard cu m/day for a tenure of three to five years. In April, Petronet LNG awarded a mid-June cargo tender and Indian Oil Corp. awarded two cargoes for delivery in May-June and end June-early August.