Reliance slips 59 places on Fortune list, SBI jumps 16 notches
Billionaire Mukesh Ambani’s oil-to-telecom conglomerate Reliance Industries Ltd slipped 59 places to rank 155th on the 2021 Fortune Global 500 list released on Monday. Reliance took a beating on the rankings as revenues dropped owing to the COVID-19 pandemic. This is its lowest ranking since 2017. Walmart continues to top the Fortune list with a revenue of USD 524 billion, followed by China’s State Grid at USD 384 billion. With USD 280 billion revenue, Amazon came in at the third spot, replacing Chinese giants. China National Petroleum was ranked fourth and Sinopec Group fifth. Reliance’s revenue fell 25.3 per cent to USD 63 billion, mostly because oil prices plunged in the second quarter of 2020 when the global spread of the pandemic wiped away demand. Other Indian oil companies on the list too slipped ranks as their revenues tumbled because of the fall in oil prices. State Bank of India (SBI) moved up 16 places to rank 205 but Indian Oil Corporation (IOC) dropped 61 places to 212th rank. This is the second straight year of SBI improving its ranking. It had moved up 15 places last year. Oil and Natural Gas Corporation (ONGC) was ranked 243rd, 53 notches lower than last year’s ranking. Rajesh Exports was another firm that improved its ranking with a massive 114 positions jump to 348th rank. Tata Motors slipped 20 places to rank 357 and Bharat Petroleum Corporation Ltd (BPCL) fell to 394 from 309 last year. Fortune said companies are ranked by total revenues for their respective fiscal years ended on or before March 31, 2021. While SBI had a revenue of USD 52 billion, IOC had revenue of USD 50 billion. ONGC had revenue of USD 46 billion and Rajesh Exports USD 35 billion. “Walmart claimed the top spot for the eighth consecutive year, and for the 16th time since 1995,” Fortune said. Mainland China (including Hong Kong) once again has the most companies on the list at 135, up 11 from last year. Adding Taiwan, the total for Greater China is 143. The US is up one with 122, and Japan held steady with a total of 53 firms. “Fortune Global 500 companies generated revenues totaling more than one-third of the world’s GDP. They generated USD 31.7 trillion in revenues (down 5%), USD 1.6 trillion in profits (down 20%) and employ 69.7 million people worldwide,” it said. Apple (No. 6) netted USD 57 billion in profits, and is the Fortune Global 500’s most profitable company in 2021, ending Saudi Aramco’s (No. 14) two-year reign.
Wabag expands global footprint with oil & gas order worth $165 million in Russia
Va Tech Wabag, a pure-play water technology Indian Multinational Group, on Monday announced that it has secured an Engineering and Procurement (‘EP’) order worth 165 Million US Dollars (about Rs 1,230 Crore) from Amur Gas Chemical Complex LLC., (‘AGCC’) in Russia. This technology dominant breakthrough order in the CIS region, especially in the Russian Federation also marks Wabag’s largest order in the Oil & Gas sector. AGCC is a joint venture of SIBUR Holding Russia and China Petroleum & Chemical Corporation (‘Sinopec’), China. AGCC is set to become one of the world’s largest basic polymer production facilities, the company said in a statement. Wabag shall be the technology and system integrator for the Integrated Treatment Facilities (Waste Water Treatment unit). “This order from a marquee customer in the Oil & Gas sector, re-affirms our technological superiority and execution excellence, built over the years. We are proud to have secured this contract amidst stiff international competition and we are confident that this project will be another landmark reference for Wabag,” Pankaj Sachdeva, CEO – India Cluster said. Wabag shall deploy advanced technologies to treat waste water streams. The facility will have a concentrate evaporator unit to maintain Zero Liquid Discharge (ZLD) and the sludge will be de-watered and dried. The facility will be designed to recycle & re-use the waste water released from the petrochemical unit, substituting about 25% of the raw water intake requirement. The deployment of ZLD and recycle and re-use makes the facility environmentally friendly and meets stringent environmental regulations, the company said. Wabag shall perform the scope of Design, Engineering, Procurement, Supply and Supervision of the facilities during erection and commissioning including process & technology equipment, piping system, electrical, instrumentation / control systems and building & architectural materials.
$1.2 bn arbitration award: Govt says no formal proposal from Cairn to settle dispute
Facing a payout of USD 1.2 billion-plus interest after an arbitration award went against it, the government on Monday said it has not received any formal proposal from Britain’s Cairn Energy plc to resolve the issue within the country’s legal framework. A three-member international arbitration tribunal that consisted of one judge appointed by India, had in December last year unanimously overturned the levy of taxes on Cairn retrospectively and ordered refund of shares sold, dividend confiscated and tax refunds withheld to recover such demand. Since then, Cairn has been pressing India to pay while the government has looked for possible solutions within the existing framework. In a written reply to a question in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the arbitral tribunal, which had its seat in the Hague, on December 31, 2020, ruled in favour of Cairn. “It has asked India to pay Cairn an award amount of USD 1.2328 billion-plus interest and USD 22.38 million towards arbitration and legal costs,” he said. With New Delhi refusing to pay and instead challenged the award before a court in The Netherlands, Cairn has got the order registered in several jurisdictions and has begun recovering the money by seizing Indian assets overseas. “An order has been passed by a French court freezing certain Indian Government properties” in Paris, he said. “The same has been communicated through diplomatic channels.” Asked if Cairn has offered any kind of amicable solution to the dispute, Chaudhary said, “No formal proposal for a solution within the country’s legal framework has been received.” He did not elaborate. In the initial months after the award, the government wanted the dispute to be settled under the ‘Vivad se Vishwas’ Scheme. The now-closed scheme provided for settling of a tax dispute if the taxpayer pays 50 per cent of the tax demand upfront in return for waiving of penalty and interest as well as the closing of the case. For Cairn, this would have meant getting about a third of USD 1.2 billion claim. This because the original tax demand that the government sought from it was Rs 10,247 crore – half of this would be Rs 5,123.5 crore. The government had recovered about Rs 7,600 crore by selling shares belonging to Cairn, seizing its dividends and withholding tax refunds. Netting it too, the due amount to be paid to Cairn would have been Rs 2,477 crore or less than USD 400 million. As of present, there is no tax dispute resolution scheme in vogue. Cairn has identified USD 70 billion of Indian assets overseas for the potential seizure to collect the award, which now totals to USD 1.72 billion after including interest and penalty. In June, Cairn brought a lawsuit in the US District Court for the Southern District of New York pleading that Air India is controlled by the Indian government so much that they are ‘alter egos’ and the airline should be held liable for the arbitration award. Similar lawsuits are likely to be brought in other countries, primarily with high-value assets.
IOC may sell some petrol pumps to JV with Petronas
Indian Oil Corporation (IOC), the nation’s biggest oil firm, may sell some of its over 32,300 petrol pumps to a joint venture with Malaysia’s Petronas with a view to monetising the firm’s vast fuel marketing network, its Director (Finance) S K Gupta said on Monday. IOC has an over two-decade-old 50:50 joint venture with Petronas for the import of LPG. The scope of this joint venture, IndianOil Petronas Pvt Ltd (IPPL), is now being expanded to include fuel and natural gas marketing. For one, IPPL will not be governed by the tedious petrol pump allotment rules that require public sector oil marketing companies to appoint dealers through a draw of a lottery. The joint venture can choose a site and operator quickly and on commercial terms. “We have all options open – IPPL can set up new retail outlets, it can set up wayside amenities (at petrol pumps on National Highways) and we can also monetise some of our existing retail outlets by selling them to the joint venture,” Gupta said at an investor call. IPPL can set up petrol pumps that will not just sell petrol and diesel but also have EV charging and battery swapping points as well as CNG/LPG and LNG dispensing stations. This will be roughly on lines of the outlets that Reliance Industries and its partner BP Plc of UK are setting up. Gupta said fuel marketing business is opening up that requires agility in operations. State-owned fuel retailers such as IOC have to allot dealerships through a lottery of all eligible candidates. It does not allow discretion. Also, wayside amenities such as food court can be set up with IPPL, he said. IPPL currently sells LPG to commercial customers who are not allowed to use subsidised cooking gas sold to households by state energy firms. IOC owns 32,303 out of 77,709 petrol pumps in the country. It also has licences to retail CNG to automobiles and piped cooking gas to households in several geographical areas. Last week, IOC Chairman S M Vaidya had said that IPPL will have its own branding and marketing. Asked if IPPL’s foray in retailing will not cannibalise on IOC’s business, he had said India’s energy demand is growing and will have space for all players. “Energy pie is increasing. There is a place for everybody,” he said. “Our (IOC’s) market share is intact and IPPL will capture new opportunities.” IPPL will be the 7th fuel retailer in the country. Besides IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are the other two public sector fuel retailers. Reliance Industries and BP have a joint venture, Reliance BP Mobility Ltd which operates 1,422 petrol pumps in the country. Rosneft-promoted Nayara Energy is the biggest private player with 6,152 petrol pumps while Shell has 270 outlets. BPCL owns 18,766 petrol pumps while HPCL has 18,776. Mangalore Refinery and Petrochemicals Ltd (MRPL) has some 20 outlets. IPPL has import terminals at Haldia in West Bengal and Ennore in Tamil Nadu. It is also one of the leading parallel marketers of propane/ butane / LPG in India.
City gas distribution companies oppose bid to change network exclusivity
A recent proposal of the Petroleum and Natural Gas Regulatory Board (PNGRB) which could change the rules for exclusivity in a city gas distribution (CGD) network has been opposed by incumbent and new entrants to the sector, including foreign investors. The move, if implemented, could give easy access to third-party companies and derail planned investment in the sector by existing CGD companies. The regulator came out with a public notice a month ago, where it sought the views of stakeholders on the interpretation of network exclusivity, establishment and operation of LNG stations as well as supply of natural gas including LNG by any entity through virtual mode, by cascades or any other mode other than pipeline, in an authorized geographical area. An open house in this regard was held on July 29 where various stakeholders opposed the move, said sources privy to the development. Many CGD companies that have submitted their response to the regulator are of the view that supply of CGD including LNG can only be done by authorized CGD entities according to the PNGRB Act and Regulations.
Chevron, Total in talks with ONGC for upstream projects in India
Chevron and Total Energies are engaged in separate partnership talks with ONGC for upstream projects in India in a sign of growing interest in the country’s exploration sector that has barely received attention from foreign energy firms in recent years. Senior executives of Chevron of the US and ONGC discussed opportunities in the Indian exploration sector last month, while ONGC and France’s Total have formed a technical committee comprising key executives to consider various opportunities, people familiar with the matter said. Conversations with the two energy giants were initiated after ONGC reached out to a dozen international oil companies a few months ago for possible alliances that could range from joint exploration and inducting foreign players as partner-investors in the Indian firm’s discovered and mature fields, to sharing of technology and teaming up in the international arena. Policy reforms of recent years appear to be driving up Chevron’s interest in India, people cited earlier said. The two companies are likely to go in for more rounds of discussion before taking a final call, they said. With a market value of about $190 billion, Chevron is among the top oil and gas producers in the world. It is also part of the shrinking tribe of the oil majors willing to place big bets on oil and gas exploration despite rising pressure from climate activists. Talks between ONGC and Total Energies are also progressing at a fast clip. Executives of the two firms have interacted at least twice in two months and discussed opportunities in joint exploration, development of discovered resources, and international collaboration, the sources said. More discussions will follow before the two companies agree to a deal, they said. Total, with a market value of $110 billion, already has a presence in India in the natural gas sector where it’s building a liquefied natural gas (LNG) terminal and a large city gas distribution network in partnership with the Adani group. ONGC already has a preliminary agreement with US-based ExxonMobil for partnership in the exploration sector. ExxonMobil is currently studying Indian geological data to finalise exploration opportunities. Instead of driving in alone, foreign players appear to be seeking a stable and dominant partner in ONGC that has decades of industry experience, deep knowledge of Indian geology, and a strong talent pool. Three decades after the sector was opened to the private sector, ONGC still accounts for more than 60% of the domestic oil and gas output.
US, Caribbean emerging as new hotspots for crude oil imports by India
The US and Caribbean are emerging as new hotspots for crude oil imports by India as the country looks at newer markets to diversify its energy sourcing basket and insulate itself from pricing and supply shocks. As part of this, the country’s largest public sector oil refiner, IndianOil, has bought its first crude oil cargo from Guyana in July 2021 and has also entered into a term contract with Washington for optional purchase of US grade crude oil. The company has signed a term contract with Rosneft, National Oil Company of Russia, to source Urals grade crude. A look at past years data makes things clearer on how US oil is increasing in India’s oil import basket. Crude oil imports from the US increased to 1.9 mt in 2017-18, 6.2 mt in 2018-19, and 10.3 mt in 2019-20, based on Petroleum Ministry data. It had reached close to 15 mt in FY21. Replying to a question on country’s oil import basket in Lok Sabha on Monday, Petroleum Minister Hardeep Singh Puri also said that to ensure security of crude supplies and to mitigate the risk of dependence on crude from single region, Oil Public Sector Undertakings (PSUs) procure crude from countries located at various geographical locations viz. Middle East, Africa, North America, South America, etc. He also indicated that since the Organization of Petroleum Exporting Countries (OPEC) started with production cuts in May last year, the share of Middle East in the country’s oil import basket has been shrinking. During FY 2019-20, before OPEC imposed a cut, import of crude oil by Oil PSUs from Middle Eastern countries was 69.02 per cent (88.9 mt out of total import of 128.8 mt). But during FY 2020-21, import of crude oil from the Middle East reduced to 63.49 per cent (69.9 mt out of total import of 110.1 mt). This reduction in import of crude from Middle East is mainly on account of crude oil production cut by OPEC since May 2020, as the countries which are members of OPEC, produce and export crude oil to buyer nations as per their agreed modified quota of OPEC plus.
Petrol sales top pre-virus level for first time in 17 months, diesel 11% short
India’s petrol consumption topped the pre-virus level for the first time in 17 months and diesel sales, a key indicator for economic activities, stood just 11 per cent short of the pandemic year in July as the country got back to business after a second Covid wave. Market data for the month shows state-run fuel retailers, who control 90 per cent of the market, sold 3.5 per cent more petrol than the same period of 2019. Diesel consumption also rose to 89 per cent of the pre-pandemic level. Compared to last year, petrol sales were 17 per cent higher and diesel consumption 12 per cent. On a monthly basis, July petrol sales was nearly 9 per cent higher than June, while diesel sales fell less than 1 per cent short. IndianOil chairman Shrikant Madhav Vaidya expects diesel sales to reach the pre-pandemic level by Diwali but says jet fuel sales will take more time to recover fully. Jet fuel consumption did show signs of recovery in July, climbing to 53 per cent of the same period of 2019. Sequentially too, July sales were 21 per cent higher than June as more people took to flying. Compared to last year, the sales were 29.5 per cent higher. Consumption of LPG, or cooking gas supplied in cylinders, too was back on the usual growth track, clocking 7.5 per cent more sales than July 2019. Sequentially too, July sales rose 4 per cent over June and 7.5 per cent from the pre-pandemic year. The robust recovery in fuel demand in the India, the world’s third-largest oil consumer, will support bullish sentiment in the international crude market.
Chevron, Total in talks with ONGC for upstream projects in India
Chevron and Total Energies are engaged in separate partnership talks with ONGC for upstream projects in India in a sign of growing interest in the country’s exploration sector that has barely received attention from foreign energy firms in recent years. Senior executives of Chevron of the US and ONGC discussed opportunities in the Indian exploration sector last month, while ONGC and France’s Total have formed a technical committee comprising key executives to consider various opportunities, people familiar with the matter said. Conversations with the two energy giants were initiated after ONGC reached out to a dozen international oil companies a few months ago for possible alliances that could range from joint exploration and inducting foreign players as partner-investors in the Indian firm’s discovered and mature fields, to sharing of technology and teaming up in the international arena. Chevron, Total in talks with ONGC for upstream projects in India Policy reforms of recent years appear to be driving up Chevron’s interest in India, people cited earlier said. The two companies are likely to go in for more rounds of discussion before taking a final call, they said. With a market value of about $190 billion, Chevron is among the top oil and gas producers in the world. It is also part of the shrinking tribe of the oil majors willing to place big bets on oil and gas exploration despite rising pressure from climate activists. Talks between ONGC and Total Energies are also progressing at a fast clip. Executives of the two firms have interacted at least twice in two months and discussed opportunities in joint exploration, development of discovered resources, and international collaboration, the sources said. More discussions will follow before the two companies agree to a deal, they said. Total, with a market value of $110 billion, already has a presence in India in the natural gas sector where it’s building a liquefied natural gas (LNG) terminal and a large city gas distribution network in partnership with the Adani group. ONGC already has a preliminary agreement with US-based ExxonMobil for partnership in the exploration sector. ExxonMobil is currently studying Indian geological data to finalise exploration opportunities. Instead of driving in alone, foreign players appear to be seeking a stable and dominant partner in ONGC that has decades of industry experience, deep knowledge of Indian geology, and a strong talent pool. Three decades after the sector was opened to the private sector, ONGC still accounts for more than 60% of the domestic oil and gas output.
Govt permits 100% FDI in oil PSUs approved for disinvestment; to aid BPCL sale
The government on Thursday permitted 100 per cent foreign investment under the automatic route in oil and gas PSUs which have received in-principle approval for strategic disinvestment. The move would facilitate privatisation of India’s second biggest oil refiner Bharat Petroleum Corp Ltd (BPCL). The government is privatising BPCL and selling its entire 52.98 per cent stake in the company. According to a press note of the Department for Promotion of Industry and Internal Trade (DPIIT), a new clause has been added to the FDI policy for oil and natural gas sector. “Foreign investment up to 100 per cent under the automatic route is allowed in case an ‘in-principle’ approval for strategic disinvestment of a PSU has been granted by the government,” it said. The decision regarding this was taken by the Union Cabinet last week. Two out of the three companies that have put in an initial expression of interest (EoI) for buying out the government’s entire 52.98 per cent stake in BPCL are foreign entities. The FDI limit in PSU-promoted oil refineries will continue at 49 per cent — a limit that was set in March 2008. As of now, the government is selling the stake in only BPCL. Indian Oil Corporation (IOC), the nation’s largest, is the only other oil refining and marketing company under direct government control. Hindustan Petroleum Corporation Ltd (HPCL) is now a subsidiary of state-owned Oil and Natural Gas Corporation (ONGC). The government had in March 2008 raised the FDI limit in oil refineries promoted by public sector companies from 26 per cent to 49 per cent. The firm acquiring the government’s 52.98 per cent stake in BPCL will also have to make an open offer to buy an additional 26 per cent stake from other stakeholders at the same price, as per the takeover rules. Mining-to-oil conglomerate Vedanta and US-based 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.