Cairn Energy weighs $700 mln in shareholder returns if India row settled
Britain’s Cairn Energy said on Tuesday it plans to return up to $700 million to shareholders via a special dividend and a share buyback this year, provided its lengthy dispute with India over certain tax claims is resolved in the near term. The oil and gas producer, which has major operations in the South Asian country, said it was considering entering into statutory undertakings with the Indian government over changes to a retrospective tax law that is at the heart of the row between them. The news comes a month after India proposed scrapping the controversial 2012 law and said it would refund disputed amounts to companies. Cairn was awarded damages of over $1.2 billion last year by a Dutch court, which was challenged by New Delhi. “Progress in resolving our Indian tax issue and active portfolio management leave Cairn well-positioned to deliver growth from a sustainable business,” Cairn Chief Executive Officer Simon Thomson said in a statement. The company also posted a smaller loss in the first-half of $47.4 million and narrowed its 2021 outlook for production from its British assets to a range of 17,000 to 19,000 barrels per day. London-listed Cairn, though in talks with India, has also been pursuing options to seize Indian assets overseas, including those of national carrier Air India, in the absence of a settlement.
BPCL cooking gas customers to continue getting subsidy, post privatisation
Sell-off bound Bharat Petroleum Corporation Ltd (BPCL) has created a separate platform for its cooking gas operations that runs government’s subsidised LPG cylinder scheme where subsidy amount is transferred directly into the accounts of consumers. Creation of separate platform was mandated as part of the sell-off process to ring fence the new owners from this subsidy scheme that could function uninterrupted with government transferring subsidy to consumers even after privatisation of the BPCL. The government is selling its entire 52.97 per cent shareholding in BPCL to a strategic investor. There were doubts among potential bidders how the subsidised cooking gas scheme would be run post the management of BPCL getting transferred to new private sector owners. If companies were to take the tab of subsidy, it would alter the valuation of BPCL. It has now been decided that cooking gas customers will continue receiving subsidy into their bank accounts post privatisation of PSU oil refiner. The government has clarified that the present system where the oil companies pay the subsidy amount and the government reimbursed such payments would continue. Creation of a separate platform would help keep subsidised cooking gas operation separate. This will allow identification of beneficiaries and transfer of subsidy without the scheme creating confusion for new owners. The LPG price for cooking for consumers under PAHAL is subsidized by the government wherein the subsidy quantum given to the PAHAL (Pratyaksha Hastaantarit Laabh) consumers by way of DBT, is the difference between the market-determined price and the subsidized price. Private oil companies such as Reliance, Nayara Energy do not get any subsidy support from the government for cooking gas. So if these companies were to sell domestic LPG cylinders, it would be priced at market rates. The government has allocated Rs 12,995 crore as petroleum subsidy for FY-22, a drastic cut over Rs 40,000 crore provided in the previous year. With regard to BPCL, the government hopes to invite price bids from prospective investors soon. Besides Vedanta Group, two American funds – Apollo Global and I Squared Capital – have submitted their expressions of interest (EoI) for BPCL.
ONGC’s plan to merge refining subsidiary MRPL with HPCL gets delayed
State-run oil and gas explorers ONGC’s plan to complete merger of its refining subsidiary MRPL with recently acquired HPCL to align its upstream and downstream operations into two verticals has got delayed. The process is now expected to be completed by FY24 as ONGC’s plan to consolidate its refining and petrochemicals business around MRPL first itself is taking a lot of time, government sources privy to the development said. The proposed merger would only follow this consolidation exercise. Sources said that the process of merging ONGC’s two oil refining subsidiaries, Hindustan Petroleum Corp Ltd. (HPCL) and Mangalore Refinery and Petrochemicals Ltd.(MRPL), will be started only after the company completes merging ONGC Mangalore Petrochemical Ltd. (OMPL) with MRPL. “The merger (HPCL and MRPL) under conservative assumptions could happen by FY24-end as MRPL-OMPL merger has to happen first and that business should continue for five years with FY19-end to be the effective date of their merger at the least. This process itself is taking time,” company officials privy to the process said. Replying to shareholders at 33rd annual general meeting of MRPL last week, the company’s chairman Subhash Kumar has reportedly said that MRPL-HPCL merger is definitely the on cards but OMPL’s merger with MRPL, expected to be completed in 2021 itself was taking time. As per the plan finalised earlier, MRPL may, become a subsidiary of HPCL first. Under liberal assumptions, the merger could start in 1-2 years as OMPL gets merged with MRPL by then. OMPL has now become a 100 per cent subsidiary of MRPL. The board of MRPL on October 19 last year had approved acquisition of 49 per cent stake in OMPL from ONGC. This has paved the way for merging OMPL with MRPL. Once this is done, the next stage of merging MRPL with HPCL will begin. OMPL, a subsidiary of MRPL, is a joint venture between ONGC and MRPL, set up for value addition of excess naphtha and aromatic streams available from MRPL refinery. The complex is the largest single stream unit in Asia to produce 914 KTPA Para-xylene and 283 KTPA Benzene. MRPL is a subsidiary of ONGC and schedule ‘A’ Miniratna, Central Public Sector Enterprise (CPSE) under the Ministry of Petroleum & Natural Gas. As of December 31, 2020, ONGC held 71.63 per cent and HPCL held 16.96 per cent stake in MRPL.
Petronet looks to make foray into petrochemical business, plans LNG terminal in Odisha
Petronet LNG Ltd, India’s largest gas importer, plans to set up a petrochemical complex at Dahej in Gujarat as it looks to make a foray into high margin business to hedge gas trading risks, Oil Secretary Tarun Kapoor said. Petronet, which owns and operates to terminals at Dahej and Kochi in Kerala for import of super-cooled gas in ships, is also looking at setting up a floating terminal at Gopalpur port in Odisha, Kapoor, who is also chairman of the company, said. In the firm’s largest annual report, Kapoor said Petronet “is embarking upon a major diversification drive to broad base its business activity and is exploring to have an ethane/ propane import facility at Dahej terminal.” Petronet “has also planned for setting up of a petrochemical complex based on imported propane at Dahej LNG Terminal”, he said. “The foray into petrochemicals would be a forward integration of our strategy as the same planned to get synchronised with our upcoming third jetty project and available land bank at Dahej.” He, however, did not give details of the planned petrochemical complex including investment and size of the plant. Petrochemicals, made using crude and natural gas as feedstock, form raw material for plastics, packaging material, and personal care products. In terms of volume, the petrochemical market in India stood at 42.50 million tonnes and is estimated to reach 49.62 million tonnes by 2025, expanding at a compound annual growth rate (CAGR) of 6.14 per cent between FY 2021 and FY 2025. Using ethane, plastics and detergents can be made; while propane can give plastic. Petronet is 50 per cent owned by state-owned refiners Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL), gas utility GAIL (India) Ltd and oil and gas producer ONGC. The four companies sit on board of the company, which is headed by the Secretary, Ministry of Petroleum and Natural Gas. Kapoor said Petronet is exploring the possible business opportunities from harnessing the cold energy from its regasification terminals at Dahej and Kochi. “Harnessing LNG’s cold energy not only maximises re-gasification terminals’ potential but also offers an opportunity to cut emissions in cold warehousing chain simultaneously adding value and improving energy efficiency,” he said. After establishing a presence in the southern and western parts of the country, Petronet is now planning to set up a floating LNG terminal at Gopalpur port in Odisha with a view to establishing its presence on the eastern coast of India, he said. “The LNG terminal will help meet the increasing gas demand of the eastern and central part of the country,” he said. He added that Petronet has already completed the pre-project studies and is in process of preparing the Detailed Feasibility Report (DFR) for 4 million tonnes per annum floating storage & regasification (FSRU) terminal followed by a pre-feasibility report for a 5 million tonnes land-based terminal in future. Petronet, he said, “has signed MoU (memorandum of understanding) with Gopalpur Ports Ltd and is in discussion with them to finalise the key technical and commercial terms of the agreements”. Without giving investment details or timelines for the project implementation, he said the firm is in process of obtaining the final investment decision for the project. Dahej terminal is the largest import facility in the country, with a nameplate capacity of 17.5 million tonnes per annum. Kochi terminal is a 5 million tonnes nameplate capacity but it operates at a fraction of capacity in absence of pipelines to take the fuel to customers.
MRPL-HPCL merger will take as much time as required by law: ONGC Chairman
The Chairman of Mangalore Refinery and Petrochemicals Ltd (MRPL) and Oil and Natural Gas Corporation (ONGC), Subhash Kumar, has said that the process of the merger of MRPL with HPCL (Hindustan Petroleum Corporation Ltd) will take as much time as required by law. Replying to a shareholder query on the delay in the merger of MRPL with HPCL at the 33rd annual general meeting of MRPL on Saturday, he said the merger plan is definitely there. MRPL is a subsidiary of ONGC. He said HPCL also happens to be one of the promoters of MRPL. All the three companies – HPCL, MRPL and ONGC — are listed entities, and all the processes will have to go through as per the legal requirement. Stating that merger of OMPL (ONGC Mangalore Petrochemicals Ltd) with MRPL itself is taking time, he said there are certain timelines defined as per the process. The team is working to make it happen at the earliest. On the benefits from the merger of OMPL with MRPL, he said the entire refinery complex can function on an integrated basis with this merger, and there will not be any inefficiencies within the group. Timelines On the timelines for the merger of MRPL with HPCL, he said the process will take as much time as required by the law. Stating that the full-scale merger will help improve value realisation, he said first it will happen through the merger of OMPL with MRPL. To a query by a shareholder on the need for expanding the retail outlet network of MRPL when it is going to merge with HPCL, M Venkatesh, Managing Director of MRPL, said retail outlet will be a value addition to both MRPL and HPCL rather than competition. “We are ensuring that retail outlets will only add value to HPCL, if and when the merger takes place at the right time,” he said. Subhash Kumar said that MRPL has opened 27 retail outlets in Karnataka and Kerala till now. The plan is to take the total number of retail outlets to 40 during this fiscal, he said. When a shareholder suggested that MRPL should have focussed on transporting water by road or rail to meet its requirements rather than setting up a sea water desalination plant in Mangaluru, Venkatesh said refining sector is water intensive and it is practically impossible to transport the kind of water required by road or rail. Stating that the dependence on rainwater is not a good strategy, he said: “We have embarked upon the desalination plant to de-risk one of the main components for MRPL. We will optimise the water consumption from desalination plant to reduce the operating cost.” Subhash Kumar said that MRPL is planning to commission the sea water desalination plant during September 2021.
Indian Govt: Ethanol mixed petrol to be available in most parts of India within 6 months
In a move to promote cleaner mobility, the Central Government is all set to promote ethanol as an alternative fuel in coming times. According to a statement made by Mr Nitin Gadkari, Union Minister of Road Transport and Highways in SIAM annual convention 2021, the ministry will be expanding the network of ethanol pumps across the country in the next six months. For this move, the Central Government has already ordered the petroleum companies of the public sector to start ethanol pumps in the regions where ethanol is already available. Adding to the development, Mr Tarun Kapoor, Secretary, Ministry of Petroleum and Natural Gas, said that 100 per cent ethanol (E100) is already available at three retail outlets. After this announcement, the number of outlets is only going to expand in upcoming times. To match the progress, automakers should also start developing new vehicles with flex-fuel engines. Roadmap for the strategy of ‘ethanol-ification’: Earlier, the ministry had set a deadline of 2030 to introduce E20 for vehicles, which is petrol mixed with 20 per cent of ethanol. However, with time, the deadline was preponed to 2025 and then eventually 2023. Currently, 80 per cent of the petrol available in the country today is E10 (petrol blended with 10 per cent ethanol). The E10 is available in most of the prominent and populous zones, except remote areas like those in the North East and parts of Jammu and Kashmir. However, the availability of E10 is expected to be 100 per cent throughout the country by 2022. Following this, the rollout of E20 will be done in a gradual manner, which will ultimately lead to that of E100 down the lane as well. Mr Gadkari has previously said that India is capable of producing ethanol from the surplus amount of rice, corn, maize and wheat produces, which will promote the faster rollout of vehicles that can run on E20 fuel. The move towards ethanol is also seen as a strategy of the Government of India to phase out small capacity diesel engines for passenger vehicles. Currently, there is not a single vehicle in India that is powered by a flex-fuel engine. Back in 2019, TVS had showcased an ethanol-powered version of the Apache RTR 200. However, that model is still not confirmed for series production and availability. One of the key reasons behind the absence of vehicles with flex-fuel engines is the lack of availability of ethanol. However, the new strategy of the Government of India will certainly give motivation much needed for the automakers.
Trafigura, PetroChina place lowest offers in Pakistan LNG tender
Trafigura and PetroChina International have placed the lowest offers in a tender by Pakistan LNG seeking five liquefied natural gas (LNG) cargoes for delivery in October and November, a tender document showed on Friday. Trafigura placed the lowest offers ranging from $19.8477 per million British thermal units (mmBtu) to $20.9677 per mmBtu for four of the cargoes to be delivered over Oct. 8-9, Oct. 23-24, Oct. 28-29 and Nov. 12-13. PetroChina offered the lowest price of $20.3888 for a cargo to be delivered over Nov. 6-7. Asian spot LNG prices are trading at their highest for this time of the year since at least 2010 as a hot summer has drawn down gas inventory levels around the world. It was not immediately clear if the tender has been awarded. Other companies which took part in the tender are Gunvor Singapore, Vitol Bahrain and Total Gas & Power.
Almost all Russian oil firms interested in energy resources supply to India, says minister
Almost all large Russian oil companies, such as Gazprom Neft, Rosneft, Novatek, Zarubezhneft, are interested in developing joint projects with Indian oil and gas firms in the field of production and supply of energy resources, Russian Energy Minister Nikolai Shulginov said at a working meeting with Indian Minister for Petroleum and Natural Gas, Housing and Urban Affairs Hardeep Singh Puri on the sidelines of the Eastern Economic Forum, the Russian Energy Ministry reported on Thursday. “We are interested in the implementation of current and promising joint projects, attracting Indian investments in the Russian oil and gas sector and expanding the distribution network with the participation of Russian companies in India. We see prospects of cooperation in all areas of the fuel and energy complex,” Shulginov said. The sixth Eastern Economic Forum organized by the Roscongress Foundation, is taking place in Vladivostok on September 2-4 in a hybrid format. The main topic of this year’s business program is “New Opportunities for the Far East in a Changing World.” TASS is the general information partner and the official photo hosting agency of the forum.
Cooking gas users may get to switch service providers
Cooking gas users may be able to seamlessly switch service providers soon just like they do with their mobile phone numbers, three people aware of the development said, with the government working to bring the household gas supply business of state-owned fuel marketers on the same platform. Under the plan, a liquified petroleum gas (LPG) connection from Indian Oil Corp. Ltd can be transferred to Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL), or vice versa. The three fuel retailers are jointly developing software to bring their entire LPG business data on the same platform, the people cited above said on condition of anonymity. This assumes significance given that India has 291.1 million LPG customers as of 1 July. Presently, the fuel retailers allow their customers to choose the LPG distributor for cylinder refills and online transfer of the connection to another distributor serving in the same area of their own network. “A common database for LPG connection portability is being created,” said a senior government official, one of the three people cited above. While portability within a fuel retailer’s network is online and seamless, that’s not the case if one needs to switch to another provider. The process involves a physical surrender of the connection first and then going for a connection with the LPG distributor of another retailer, which at times becomes tedious and time-consuming. “In case of inter-company connection transfer, both parent and destination distributor get advance intimation about consumer’s transfer request with tracking options for customers. However, the customer needs to visit the parent distributorship for surrendering of LPG equipment as accounting of equipment and security deposit is involved,” the oil ministry said in a 24 June 2019 statement.
Wärtsilä looks to invest in hydrogen engines, energy storage in India
Energy and marine technology solutions provider Wärtsilä is now looking to diversify into newer fuels such as hydrogen, apart from providing grid-level energy storage solutions. Speaking with Business Standard, Sushil Purohit, President, Wartsila Energy and EVP, Wärtsilä Corporation, said post Covid, economies across the globe are looking at a decarbonised future and there will be upsurge in investment in renewable energy, storage and balancing technologies. In India since the 80s, Wärtsilä has delivered 250 power plants to India with a total output of over 3,500 MW. It also operates and manages 35 power plants (including Boiler Turbine Generation stations) with a total output of over 1,300 MW. As the country accelerates the renewable energy deployment, Purohit said grid-level energy storage is the need of time and they are in active discussions in India to deploy the same. Wärtsilä along with Lappeenranta-Lahti University of Technology LUT, a Finnish public university studied the prospect of a carbon neutral or 100 per cent renewable energy run power system in India by 2050. “This would require 4,000 Gw of renewable capacity. Along with it is needed a balancing capacity – both in form of energy storage and gas engines which would run on future green fuels. These two technologies are where Wärtsilä is a market leader,” said Purohit. He said the company is in discussions with the Load Despatch Centres and power distribution utilities (discoms) in India to explore integration of renewable energy. “India will see a business activity in the space of green fuel-based storage and balancing technologies 2030 onwards,” he said. For preparing power systems towards increased share of renewable energy in the grid, Purohit said storage should be part of the transmission assets at the grid level. “The grid needs to be balanced. So, a green fuel based quick start-up and energy storage is needed in the power system. These two needs to be incentivised so as to attract the interest of the private players in the segment,” he said. The company is in discussions with several stakeholders in India for grid-level balancing and storage tech, Purohit said, but did not disclose any names. India currently awards energy storage projects as part of solar and wind power projects. Few utilities such as Tata Power Delhi Distribution ltd has invested in standalone battery storage systems, in order to balance the grid as more green energy gets infused. Wärtsilä recently won a contract from Oil India ltd (OIL) to construct a 30 Mw power plant at the company’s bottling cum extraction facility in Assam. The power plant will operate with Wärtsilä’s W20V34SG gas engines running on natural gas fuel from OIL’s captive gas fields. The company also recently acquired Greensmith Energy Management Systems Inc., a market leader in grid-scale energy storage software and integrated solutions. This acquisition has enabled us to rapidly expand our footprint in the energy storage market globally and position us as a premier energy system integrator. Purohit said they are testing their power generation engines for using Hydrogen. “Our engines can currently run on up to 2 per cent hydrogen blend in the fuel. We are testing to increase the share of hydrogen in our engines further and run on 100 per cent in the future,” he said. In the hydrogen segment, the company would look at business prospects in both the energy and transport market. “We are the largest provider of engines to the Shipping sector. We are working on building engines which can run on 100 per cent green fuel, such as synthetic gas, methanol, ammonia etc,” he said, adding that they are working technologies and engines which will accelerate the decarbonisation of sea transportation.