BP wins over Greenpeace in North Sea oil court case
A Scottish court handed BP a win over Greenpeace on Thursday after the environmental group tried to void the energy company’s licence to exploit a North Sea oilfield, saying the climate impact of the end-use of oil should not affect permits. Greenpeace had said the emissions from the ultimate consumption of the oil – rather than just the smaller amount of emissions from the extraction process – should be the criterion for granting a licence. It also said there had been errors in the consultation process preceding the granting of the permit. UK regulators approved the 20,000 barrels per day Vorlich field, off the coast of Aberdeen, Scotland, in 2018 and it started producing in late 2020. Judge Colin Sutherland of Scotland’s Court of Session in a ruling on Thursday said Greenpeace had the opportunity to engage in the process before the permit was granted. “The question is whether the consumption of oil and gas by the end user, once the oil and gas have been extracted from the wells, transported, refined and sold to consumers, and then used by them are ‘direct or indirect significant effects of the relevant project’. The answer is that it is not,” the judge said in his decision, seen by Reuters. “It would not be practicable, in an assessment of the environmental effects of a project for the extraction of fossil fuels, for the decision maker to conduct a wide ranging examination into the effects, local or global, of the use of that fuel by the final consumer.” Typically permits are granted according to how emissions-efficient the extraction process itself is. Greenpeace said it would seek an appeal before the Supreme Court of the United Kingdom. “We will not give up the fight for the climate,” Greenpeace UK executive director John Sauven said in a statement. BP’s emissions from operating and powering assets such as oilfields, known as Scope 1 and 2, were 54 million tonnes of CO2 equivalent last year, while those of the end-use of its products, known as Scope 3, were 328 million tonnes. BP has pledged to become a net zero company, including its Scope 3 emissions, by 2050. It had no immediate comment on Thursday’s ruling, which follows a series of legal actions brought by climate campaigners that are increasingly turning to the courts to try cut fossil fuel use. They have scored wins in cases against energy major Royal Dutch Shell and governments such as Germany.
BPCL Privatisation: SEBI unlikely to exempt open offers for Petronet, IGL
India’s capital market regulator is unlikely to give exemption to the company acquiring BPCL from making mandatory open offers for Petronet LNG Ltd and Indraprastha Gas -share purchases which will be countered by other promoters of the two firms such as GAIL to save from going private, officials said. Bharat Petroleum Corporation Ltd (BPCL) holds 12.5 per cent of the shareholding in India’s largest liquefied natural gas importer, Petronet, and a 22.5 per cent stake in city gas retailer, IGL. It is a promoter of both the listed companies and holds board positions. As per the legal position evaluated by the Department of Investment and Public Asset Management (DIPAM) – the department running the process for the sale of the government’s entire 52.98 per cent stake in BPCL – the acquirer of BPCL will have to make open offers to the minority shareholders of Petronet and IGL for the acquisition of 26 per cent shares. To avoid such a scenario, an exemption request was made to the Securities and Exchange Board of India (SEBI). “We have been informally told that the exemption request is unlikely to be acceded as SEBI mandate is to protect minority shareholder interest,” a top government official, who did not wish to be named as the information is not public, said. If the open offers are successful, the acquirer of BPCL would also become the largest shareholder in Petronet (12.5 per cent of BPCL plus 26 per cent from the public) and get a controlling holding in IGL (22.5 per cent of BPCL and 26 per cent from public). “So in essence, the two companies will also get divested alongside BPCL,” the official said. To check this from happening, the other promoters of Petronet and IGL would also launch counter offers to buy an equivalent 26 per cent stake so as to ensure public sector firms retain a controlling stake. PTI had on July 21 first reported on the move by promoters of Petronet and IGL to save the companies. “We have a clear understanding that there is no bar on other promoters from launching share purchase offers and they will do it,” he said. State-owned gas utility GAIL is an equal promoter of IGL alongside BPCL. In Petronet, GAIL, refiner Indian Oil Corp (IOC) and Oil and Natural Gas Corp (ONGC) are joint promoters alongside BPCL, holding 12.5 per cent stake each. The remaining shares in both Petronet and IGL are held by public and institutional investors. Originally, DIPAM had on April 19 made a request to SEBI for a grant of exemption for an open offer in Petronet and IGL. SEBI, however, conveyed that the application needs to be made in the prescribed format by BPCL as the promoter of IGL and Petronet, the official said adding BPCL subsequently made such an application. The other alternative to avoid the new owner being forced to make an open offer was for BPCL to sell a part of its shareholding in Petronet and IGL, thereby shedding its promoter status. However, BPCL is opposed to such an idea as it will be a value destroyer. The government’s 52.98 per cent stake in BPCL is valued at about Rs 51,800 crore at the current share price. The requirement for making an open offer for an additional 26 per cent to minority shareholders of the company will cost an additional Rs 25,400 crore at current prices. On top of it, an open offer for a 26 per cent stake in IGL would cost the acquirer an additional Rs 9,464 crore and a similar offer for Petronet would cost about Rs 9,000 crore. Mining-to-oil conglomerate Vedanta and private equity firms Apollo Global and I Squared Capital’s arm Think Gas are in the race to buy the government’s stake in BPCL. The stake sale in India’s second-largest fuel retailer is crucial to raise a record Rs 1.75 lakh crore from disinvestment proceeds in fiscal 2021-22 (April 2021 to March 2022). BPCL will give the buyer ownership of around 15.33 per cent of India’s oil refining capacity and 22 per cent of the fuel marketing share.
Brazil first post-pandemic oil auction finds very few buyers
Brazil’s oil auction ended in disappointment on Thursday, with the government selling offshore drilling rights in only five out of 92 blocks on offer. The dismal results reflected the weakened state of the oil industry during the Covid-19 pandemic as well as environmental concerns, according to experts. The auction brought in just 37.14 million reais ($6.7 million) compared to the $2 billion raised at the previous auction held in October 2019, before the pandemic started. Crucially, in a win for environmental activists, no offers were made for the blocks in the northeastern Potiguar Bay, which is close to the Fernando de Noronha and Rocas Atoll archipelagos, the former a UNESCO World Heritage site and the latter a biological reserve. Around 50 protesters demonstrated in front of a hotel in Rio de Janeiro where the auction took place, notably against the projects’ risks to traditional fishing. One demonstrator carried an iconic AFP photograph of an oil-stained Brazilian boy following an oil spill off the coast of northeast Brazil in 2019. All the five blocks were bought by Royal Dutch Shell. They are located in the southeastern Santos Bay, close to the oil-rich pre-salt layer on Brazil’s coast. Brazil’s state oil company Petrobras, usually very active at auctions, made no bids. Rodolfo Saboia, the director of the National Oil Agency, which organized the auction, insisted the result was “positive” given how hard the industry has been hit by the coronavirus pandemic. “We cannot call it a failure, we couldn’t expect all the blocks to find a buyer,” he said. But Fernanda Delgado, a researcher at the Getulio Vargas Foundation, told AFP that “everyone expected there to be interest in more areas.” The lack of bids was because companies “did not want to take the political risk or environmental risk,” Delgado added.
India’s investment in new gas infrastructure must be a balancing act: IEEFA
India’s strategy to meet unmet energy requirements by creating dual connections of gas and electricity requires a balancing act to ward off environmental and capital loss, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA). This comes in the backdrop of volatility in global gas prices which increases urgency of pushing clean alternatives for cooking and mobility. Given the Indian government’s commitments to increase the share of gas in the country’s energy mix, IEEFA’s report says vital questions emerge about fiscal risks of such a move, particularly with the volatility of global gas prices, as well as the fossil fuel’s place in the scheme. At the same time, judicious investment in renewable energy looms as a means of leapfrogging legacy technology, delivering economic benefits and limiting emissions. The government is planning to expand gas’s share of the energy scene to 15% by 2030 from the current 6%, with particular focus on increasing use in the cooking and transport sectors. Major investments have begun in rapidly increasing the availability of this largely imported fossil fuel via infrastructure for importing, transport and distribution. Domestic production is tipped to rise thanks to new gas discoveries, even if the domestic price cap reduces the incentive for Indian producers to take on this risk. The recent amendment in the domestic gas price ceiling for new deep-sea discoveries to $6.13 mmBtu from $3.92 mmBtu may temporarily incentivise private investment, but this may not be sustainable in the long-term considering the increasing volatility in gas prices globally, based on which the domestic prices are revised with a lag. As other countries commit to net zero carbon emissions in the longer term, India’s bridging measure to meet the goal of lowering carbon emissions with a push for gas may not be the best long-term strategy. In effect, the IEEFA report says that prioritising new gas infrastructure over the infrastructure cost advantage of distributed clean solar and wind, particularly in rural areas, may lead to stranded asset risks for the country. Report author, energy analyst Purva Jain said that optimising the use of available gas and investing in greening the electricity grid can reap greater long term results for the country. “Top priority should go to the existing commitment to achieve 450 gigawatts of renewable energy by 2030,” says Jain.
Hardeep Puri Reviews 11th Round Bidding for City Gas Distribution
Minister for Petroleum & Natural Gas Hardeep Singh Puri on Wednesday chaired a meeting of the Petroleum and Natural Gas Regulatory Board to review bidding for the City Gas Distribution. Taking to Twitter, Puri said, “Took a meeting of Petroleum & Natural Gas Regulatory Board to review the 11th Round of bidding for City Gas Distribution.” Puri along with Delhi Bharatiya Janata Party (BJP) chief Adesh Gupta and his team had distributed 107 LPG connections under Ujjwala 2.0 scheme at Kirby Place area in Delhi Cantonment on the occasion of Gandhi Jayanti on Saturday. During the event, he said that the LPG connections will help in smoke-free cooking, which in turn will lead to Mahatma Gandhi’s dream of Swacch Bharat. Addressing media later he said that under the Pradhan Mantri Ujjwala Yojana, BJP had since the year 2016 distributed around 80 million LPG connections. “Due to COVID-19 pandemic, we could not distribute enough connections in past one year. Therefore, now under Seva and Samarpan campaign, we are going to different areas and distributing connections,” Puri said.
Crude oil futures dip on weak spot demand
Crude oil prices on Thursday fell Rs 154 to Rs 5,662 per barrel after participants cut their positions. On the Multi Commodity Exchange, crude oil for the October delivery dropped by Rs 154, or 2.65 per cent, to Rs 5,662 per barrel with a business volume of 8,389 lots. Analysts said the fall in crude oil futures was mostly due to trimming of positions by traders amid a weak spot demand. Globally, West Texas Intermediate crude oil was trading 2.23 per cent lower at USD 75.70 per barrel. Meanwhile, Brent crude, the international benchmark, fell 1.66 per cent to trade at USD 79.73 per barrel in New York.
Shell flags $400 mln hurricane hit, but boost from soaring prices
Royal Dutch Shell warned on Thursday of a $400 million hit to third-quarter earnings from the damage caused by August’s Hurricane Ida. However, in an update ahead of quarterly results this month, the oil major also flagged a boost to cashflows from soaring natural gas and electricity prices. Gas and power prices have been surging as tight gas supplies have collided with strong demand in economies recovering from the COVID-19 pandemic. Shell is the world’s top seller of liquefied natural gas (LNG), accounting for about 20% of global demand, though its sales have declined in recent months because of production problems. The company said third-quarter cashflow at its LNG division “is expected to be significantly impacted by large variation margin inflows on the back of the prevailing gas and electricity price environment”. Shell will be holding more cash from buyers as deposits in the face of the large fluctuations in gas prices. The cash will eventually flow back out as prices cool. Liquefaction in the quarter is expected to be between 7 and 7.5 million tonnes, the lowest since 2016, “reflecting feedgas constraints and additional maintenance”, Shell said. LNG earnings will, however, receive a boost from stronger trading results, it added. Shell’s upstream oil and gas production fell in the quarter to between 2.025 and 2.1 million barrels of oil equivalent per day (boed) owing to a prolonged outage of about 90,000 boed at some of its offshore fields in the Gulf of Mexico after Hurricane Ida. Shell, the world’s largest fuel retailer, said sales volumes were expected to be between 4.3 and 5.3 million barrels per day, the highest since the first quarter of 2020 but still well below pre-pandemic levels. Refinery utilization rates will be impacted by outages due to Hurricane Ida. In the second quarter, Shell boosted its dividend by 38% for a second consecutive quarter and launched a $2 billion share buyback programme following the sharp rise in oil and gas prices.
Saudi Aramco hits $2T valuation on back of higher oil prices
Saudi Arabia’s oil company Aramco reached a $2 trillion valuation as it hit near record levels Wednesday during trading hours. Its market cap value puts Aramco just behind Microsoft and Apple as the world’s most valuable company. It comes as crude oil prices climb to over $82 a barrel, the highest in seven years. Demand for energy is picking up, despite the ongoing coronavirus pandemic’s continued toll on travel and other key gas-guzzling sectors. Aramco is mostly owned by the government of Saudi Arabia, with just under 2% of the company publicly listed on the Saudi Tadawul stock exchange. Aramco was trading at around 37.6 riyals a share, or a few cents over $10 a share, by midday Wednesday before dipping to 37.2 riyals a share, or around $9.92 a share. It remains to be seen whether it can hold this rally until trading closes. Saudi Crown Prince Mohammed bin Salman was the architect behind the effort to publicly list a sliver of Aramco in late 2019, touting it as a way to raise capital for the kingdom’s sovereign wealth fund to then develop new cities and mega-projects across the country that create needed private sector jobs for young Saudis. The crown prince has long sought the mammoth $2 trillion valuation for Aramco. Despite fluctuations in Aramco’s yearly earnings, the company has stuck to its promise to pay an annual dividend of $75 billion until 2024 to shareholders, the biggest of which is the government. Aramco produces the kingdom’s vast oil and gas products, and receives directives on supply production each month from the Energy Ministry of Saudi Arabia, OPEC’s lynchpin nation. The oil carter and other allied major oil producers this week are maintaining a gradual approach to restoring production levels that had been slashed during the pandemic, agreeing to add only 400,000 barrels per day in November. Demand for oil is forecast to hit 99 million barrels per day by the end of the year, and a little over 100 million per day next year. Aramco raked in a net income of around $47 billion in the first half of 2021, double what it earned over the same period last year when the coronavirus grounded travel and pummeled global demand for oil. This put Aramco back squarely where it was before the pandemic struck and sunk earnings.
IOC to set up new R&D centre in Faridabad
Oil major Indian Oil Corporation Ltd (IOC) will set up a new research and development (R&D) centre at an outlay of Rs 3,200 crore in Faridabad in Haryana, a senior official said pn Wednesday. The official also said that the oil major is focusing on converting its refineries into integrated complexes where differentiated petrochemicals are made while going ahead with development of alternative fuels. Speaking to reporters here, S.S.V. Ramakumar, Director, R&D and Business Development, IOC, said the company will invest Rs 3,200 crore to set up the new R&D centre. He said the new centre will be ready by 2023. It will have five centres of excellence and the total R&D headcount will double to 1,000. According to Ramakumar, the proposed centre will do research on areas like alternative and renewable energy, nanotechnology etc. Spending about Rs 500 crore annually on R&D, IOC has monetised its research outcome. One such technology is INDMAX, a novel technology which produces high yield of light olefins and high octane gasoline from various petroleum fractions. The technology has been licensed to a Russian oil company. Ramakumar said that discussions with six more refineries in the Asia Pacific region are on for licensing of the technology. The R&D investments over the last one decade has resulted in a notional income of Rs 5,000 crore (savings in expenditure and others) for IOC, he said. With regard to asset monetisation plans of IOC, he said the company may hive off some of its hydrogen plants. During the run-up to BS VI fuel production, IOC had set up hydrogen plants and there is surplus now. To start with, the hydrogen plant at its refinery in Gujarat may be monetised, Ramakumar said. IOC also plans to convert 10 per cent of its hydrogen consumption to green hydrogen and its Mathura refinery will become green by 2024. Ramakumar said the green hydrogen can be converted to ethanol. The IOC also has plans to set up a pilot plant to make biofuel with ethanol to power aircraft. Ramakumar said the Central government may mandate refining and fertiliser industries to use green hydrogen, i.e., hydrogen made from non-fossil sources. Queried about IOC’s plans to run hydrogen fuel cell buses in Kerala, he said the company has asked the state government to provide land to locate its unit at the Kochi airport and Thiruvananthapuram. The Kerala government plans to ply hydrogen powered buses between Kochi airport and Thiruvananthapuram, he said. Ramakumar said IOC ran 50 Ashok Leyland buses in Delhi mixing small quantities of hydrogen with CNG and the report will be submitted to the Supreme Court. The oil major is also looking at investing in coal bed methane blocks and integrating all its refineries with petrochemical products.
Asia LNG spot price surges by 40 per cent to record high of $56 per mmbtu
Asia liquefied natural gas (LNG) spot prices surged by 40% to a record high of over $56 per million British thermal units (mmBtu) on Wednesday, amid a global energy crunch, low gas inventories and mounting supply concerns. Price agency S&P Global Platts’ Japan-Korea-Marker (JKM), which is widely used as a spot benchmark in the region, climbed to $56.326 per mmBtu on Wednesday for a cargo delivered into North Asia in November, recording the largest single-day price increase of $16.65 from Tuesday, its data showed. This works out to roughly over $320 per barrel of oil equivalent. Brent crude oil futures is currently trading at about $81 per barrel. Prices for spot LNG cargoes delivered in December rose to above $57 per mmbtu, according to the data. “Surging European gas prices exerting upward pressure on Asia-pacific LNG cargo prices as trading houses and portfolio majors raised bids to attract volumes into Asia,” said Kenneth Foo, head of Asia LNG Pricing at S&P Global Platts. Foo added that other reasons behind the increase included fresh concerns in Asia over production issues at the Sakhalin 2 LNG project in Russia and some maintenance works ongoing for one train at Indonesia’s Tangguh project. Asian LNG prices followed an earlier rally by Dutch and British wholesale gas prices amid forecasts of lower wind and cooler weather. By Asia market’s Wednesday close at 16:30 Singapore time (0830 GMT), the Dutch wholesale gas price for December delivery jumped over 40% to 159.50 euros per megawatt hour. The price rally comes at a time when the winter season is just starting in the northern hemisphere and as gas demand for heating is expected to go up, especially from top LNG buyers, China and Japan. Temperatures in Seoul, Beijing and Shanghai are expected to dip below average over the next 45 days, weather data from Refinitiv Eikon showed. After hitting fresh highs in the morning, Dutch and British wholesale gas prices fell on Wednesday afternoon in a highly volatile market, partially on profit-taking amid concerns of regulatory intervention from the European Commission and comments from Russian President Vladimir Putin that Russia is shipping more gas, he added.