Goldman sees oil hitting $80/bbl despite likely return of Iran supply
Goldman Sachs said it expects oil prices to climb to $80 per barrel in the fourth quarter of this year, arguing that the market has underestimated a rebound in demand even with a possible resumption in Iranian supply. “The case for higher oil prices therefore remains intact given the large vaccine-driven increase in demand in the face of inelastic supply,” the bank said in a note dated Sunday. Even “aggressively assuming” a restart of Iranian exports in July, Brent prices would still reach the $80 mark by the fourth quarter, it said. Oil prices fell last week after Iran’s president, Hassan Rouhani, said the United States was ready to lift sanctions on Tehran’s oil, banking and shipping sectors. Crude recouped some of those losses on Monday as a potential snag emerged in reviving the 2015 Iran nuclear deal that could add more oil supply, with indirect talks between Washington and Tehran due to resume this week. Goldman Sachs said a demand recovery in developed markets would offset a recent coronavirus-led hit to consumption and likely slower recovery in South Asia and Latin America. Global demand could increase by 4.6 million barrels per day through year-end, with most of the gains likely in the next 3 months, it said. “Mobility is rapidly increasing in the U.S. and Europe, as vaccinations accelerate and lockdowns are lifted, with freight and industrial activity also surging,” the note said. The bank also expects the Organization of the Oil Producing Countries (OPEC) and allies including Russia, a grouping known as OPEC+, to offset any ramp-up in Iran production by halting for two months an increase in its output in the second half of 2021. This would help offset the perceived bearish impact in the physical market of the release of Iranian floating storage, it said.
LMO from Singapore sourced by IndianOil unloaded at Vizag Port
IndianOil unloaded a consignment of 11 ISO tanks filled with Liquid Medical Oxygen (LMO), carried from Singapore by Indian Navy’s INS Jalashwa, at Vishakhapatnam Port on Sunday. The same vessel also carried two more ISO tanks of LMO, sourced by GAIL and handled by IndianOil. The entire consignment has been sourced by IndianOil from BNF Singapore and filled at Linde at Singapore. The ISO tanks have been taken on lease by IndianOil to handle the supply and logistics of LMO in the fight against the Covid pandemic. This consignment has been earmarked to meet the pressing demand for medical oxygen in the states of Andhra Pradesh and Tamil Nadu, IndianOil said. In the face of a massive surge in demand for LMO and related logistic issues, IndianOil, under the aegis of Ministry of Petroleum and Natural Gas, has been importing ISO tanks suitable for transporting medical oxygen, the precious lifesaver, from across the globe. While over 75 per cent of the filled ISO tanks are brought in by the Indian Navy vessels, the empty containers are airlifted back by the Indian Air Force to the sources of oxygen supply. IndianOil sources LMO supplies from the countries including Singapore, Kuwait, Abu Dhabi and Saudi Arabia from global suppliers including Linde, Air Life and Air Liquide. IndianOil has brought in several consignments of LMO into other southern cities including Mangalore and Bengaluru. The various imports of LMO, oxygen cylinders, and oxygen concentrators being done by ICRS (Indian Red Cross Society) are also being handled by IndianOil, in terms of unloading and transportation. As a responsible corporate citizen, IndianOil continues to leverage its expertise and resources to contribute to the national efforts to combat the second wave of the Covid-19 pandemic sweeping the nation. Other initiatives of IndianOil in the management and logistics support of LMO in India include the Sanjeevani Express, a single window application which is equipped to enable real-time monitoring of LMO supply logistics to help all stakeholders, including the Central and state government agencies to monitor allocation, dispatch and receipt of medical oxygen.
‘Clean Data Room’ with sensitive info on BPCL to open for bidders signing additional pact
Bidders vying to buy government stake in Bharat Petroleum Corporation Ltd (BPCL) will be given access to a ‘Clean Data Room’ containing commercially sensitive information on the firm subject to their signing an additional confidentiality agreement, sources said. A virtual data room, mostly containing financial information on BPCL, was opened in the second week of April and qualified bidders signing Confidentiality Undertaking (CU) have been given access, three sources with direct knowledge of the matter said. Bidders which include mining-to-oil conglomerate Vedanta and private equity firms Apollo Global and I Squared Capital’s arm Think Gas will also be allowed physical inspection of assets such as refineries and depots in the coming weeks as part of the due diligence process. The government will seek financial bids once bidders complete due diligence and terms and conditions of the share purchase agreement (SPA) are negotiated. Sources said certain data which is commercially sensitive will be uploaded in a separate section of the data room referred to as ‘Clean Data Room’ and access shall be extended only to the designated team of lawyers of the qualified bidders in the interest of confidentiality and prevention of misuse of data. A separate agreement restricting use of the data and maintaining confidentiality will have to be signed by the bidders for accessing the ‘Clean Data Room’, they said. The data room access for due diligence is likely to be available for a period of around 8 weeks. As part of the due diligence process, the bidders want to undertake a physical visit to some of the major sites like refineries and depots/plants. While BPCL will facilitate such visits, an approval from the Ministry of External Affairs (MEA) is required in case any foreign passport holder wants to visit sensitive locations like refineries, sources said. Also, representatives of bidders would be allowed to hold virtual meetings with management of BPCL once the silence period till the announcement of annual financial results of the company for 2020-21 are announced. All queries raised by the bidders during the due diligence are being collated by the transaction advisor, Deloitte and they will be answered by the company management or the concerned government department depending on the nature of the issue, sources said. The government’s 52.98 per cent stake in BPCL is valued at about Rs 53,000 crore based on Friday’s closing price of company shares on BPCL. The stake sale in India’s second-largest fuel retailer is crucial to plans to raise a record Rs 1.75 lakh crore from disinvestment proceeds in fiscal 2021-22 (April 2021 to March 2022). Sources said the recent Covid-19 outbreak could still slow down the sale process as physical visits may be hindered. A special purpose vehicle floated by the BSE-listed Vedanta Ltd and its London-based parent Vedanta Resources Plc submitted an expression of interest (EoI) for buying government stake in BPCL before the close of the deadline on November 16, 2020. While I Squared Capital is a private equity firm focusing on global infrastructure investments, New York-based Apollo Global Management, Inc is a global alternative investment manager firm. I Squared Capital invests in energy, utilities, transport and telecom projects in North America, Europe and select high growth economies such as India and China. Vedanta’s interest in BPCL stems from its USD 8.67 billion acquisition of oil producer Cairn India nearly a decade back. The company produces oil from oilfields in Rajasthan which are used in refineries such as those operated by BPCL to turn them into petrol, diesel and other fuels. 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. The buyer of the company will get 35.3 million tonnes of refining capacity — 12 million tonne Mumbai unit, 15.5 million tonne Kochi refinery and 7.8 million tonne Bina unit. BPCL also owns 18,639 petrol pumps, 6,166 LPG distributor agencies and 61 out of 260 aviation fuel stations in the country. The firm also has upstream presence with 26 assets in nine countries such as Russia, Brazil, Mozambique, the UAE, Indonesia, Australia, East Timor, Israel and India. It is also making a foray into city gas distribution and has licences for 37 geographical areas (GAs)
Reliance-BP ‘bubble’ delivers two deep water gas fields despite massive COVID-19 challenge
Just four months in a year are available for construction in Bay of Bengal. Even that window got complicated with constantly changing restrictions on movement of people and material across the globe because of the pandemic. But work bubbles for over 4,000 persons at peak of the project alongside navigating restrictions to source material and people globally helped deliver two deep sea gas fields. Since 2017, Reliance Industries Ltd along with its JV Partner bp had embarked on concurrent development of three deepwater fields in the Krishna Godavari basin block, KG-D6, to monetise 3 trillion cubic feet of resources with an overall capital investment of Rs 35,000 crore. But the outbreak of pandemic early last year disrupted global supply chains and impaired movement of personnel who are essential for executing a complex project that involved installing equipment and pipelines in water depths of almost 2 km. An RIL official said that to execute these complex deepwater projects, teams have been working across 34 countries and at peak more than 4,000 persons were deployed offshore and onshore. Those working on the project were organised into cohorts that interacted only with each other to minimise contact with outside people. Cohorts were organised on the principles that work bubbles should include the least number of people required to do the job and strictly separated from other bubbles in time and/or space to prevent virus transmission between groups. Also, this involved navigating through different and constantly changing restrictions on movement of people and material across the globe, the official said adding the narrow four month in a year offshore construction and installation window on the east coast of India added to these challenges. “Despite the unprecedented challenge, the joint venture successfully commissioned two out of the three deepwater fields: R Cluster field – India’s first ultra-deepwater gas field and Asia’s deepest offshore gas field, in December 2020 and Satellite Cluster in April this year,” he said. “These fields are currently contributing about 20 per cent of India’s domestic gas production.” The third deepwater field – KG D6 MJ field is expected to come onstream in the last Quarter of 2022. The official said until March 2020, all was well on course for commissioning the R Cluster field by mid-2020. But the outbreak of the pandemic, changed it all, affecting all work sites across the globe. There was a nationwide lockdown in the country while air travel from almost all countries stopped. “At RIL and bp, we overcame the challenges and commissioned the field in December 2020,” the official said, adding the duo managed to commission the Satellite Cluster field a couple of months ahead of schedule. “This was possible due to the proactive project management and ‘bubble’ operations that had been implemented prior to the R Cluster field commissioning,” he said. RIL is on course towards reaching 30 million standard cubic meters per day of gas production by 2023 catering to 20 per cent of India’s gas demand. This will position the company as a significant contributor to India’s gas-based economy. Amidst all this, RIL deployed resources to set up a 10 kilolitre oxygen storage plant with a vaporizer unit on a fast track basis at Kakinada General Hospital. Kakinada is the landfall point of the gas that is piped from wells in the Bay of Bengal. The official said RIL is the first industry in East Godavari district to have provided the oxygen plant at a very critical time, responding to the SOS call of the government. The unit assists approximately 1,700 patients requiring oxygen support every day at the Government General Hospital. The oxygen plant can supply to about 200 patients for about 48 hrs continuously.
Tractors, power tillers allowed to be retrofitted with bio-fuel engines
The transport ministry has allowed tractors, power tillers and other agricultural vehicles and equipment that run on diesel and petrol to be retrofitted with CNG, bio-CNG and LNG engines provided their emission standards remain the same. The decision to allow the retrofitting is aimed at promoting the use of cleaner fuels and extending the lifespan of vehicles used in farming. It comes after road transport and highways minister Nitin Gadkari launched India’s first CNG tractor converted from a diesel-based engine. “The emphasis is to promote bio-fuels in agricultural equipment,” said a senior official aware of the development. The conversion can be done by modifying the diesel engines of such vehicles or replacing them with new CNG, bio-CNG or LNG systems. “With this, you extend an option to enhance the life of the vehicle without deteriorating the environment,” a second government official said. Retrofitting is viable in the case of tractors because their idling time is generally high. Structurally, it does not deteriorate a lot through its lifetime, which will ensure that conversion to CNG or bio-fuels will lead to a longer lifespan, the second official explained. CNG availability can be the only roadblock, the official added. In case of tractors, power tillers, construction equipment vehicles and combine harvesters, approvals for retrofitting will be given for specific makes and models. The mass emission standards for tractors, power tillers, construction equipment vehicles and combine harvesters retrofitted with CNG, bio-CNG or LNG engines will be the same as when they operated with diesel engines. The only exception is that hydrocarbons will be replaced by non-methane hydrocarbons when measuring emissions. “Once the fuel type is changed, the emission standards should be the same as it was when the vehicle was purchased. If the limit is higher, retrofitting is not permissible,” the second official said.
Capacity utilisation at IOC slips to 84% due to restrictions
Capacity utilisation at Indian Oil Corp. Ltd (IOC), the country’s largest refiner, had dropped to about 35% at the start of the lockdown during the first wave of the pandemic last year amid a sharp drop in demand for fuel products. Indian Oil Corp. Ltd (IOC) on Wednesday said its capacity utilisation has fallen to 84% currently from 100% last November as the deadly second wave of Covid-19 has forced most states to impose lockdowns. This has crimped fuel demand in India, which is the world’s third-largest oil importer and the fourth-largest buyer of liquefied natural gas. Energy consumption, especially electricity and refinery products, tends to be linked to overall demand in the economy. Capacity utilisation at IOC, the country’s largest refiner, had dropped to about 35% at the start of the lockdown during the first wave of the pandemic last year amid a sharp drop in demand for fuel products. India had imposed the world’s largest and strictest lockdown last year to contain the virus that originated in Wuhan, China. Meanwhile, IOC announced a net profit of ₹87.8130 billion for the March quarter, compared with a net loss of ₹51.8532 billion a year earlier. This was largely due to inventory gain and increased petrochemical margins. Following the Covid outbreak, the cost of the Indian basket of crude had plunged to $19.90 in April last year during the first wave of the pandemic before recovering to $63.40 a barrel in April this year, showed data from the Petroleum Planning and Analysis Cell. India’s largest fuel retailer posted a huge jump in annual net profit to ₹218.36 billion for the financial year ended 31 March, from ₹13.13 billion in 2019-20 due to higher inventory gains and improved petrochemical margins. Annual revenue, however, declined 9.08% to ₹5140 billion during 2020-21 from ₹5660 billion in the previous year. The cost of the Indian basket of crude, which comprises Oman, Dubai and Brent crude, was at $68.69 a barrel on Tuesday. Brent crude had dropped to a 21-year low while US oil futures slumped to negative for the first time in April last year as the glut induced by global lockdowns overwhelmed the world’s limited storage facilities, triggering massive selling by traders. Addressing a news conference, IOC chairman S.M. Vaidya said, “IndianOil sold 81.027 million tonnes of products, including exports, during the year April 2020 to March 2021. Our refining throughput for FY2020-21 was 62.351 million tonnes and the throughput of the corporation’s countrywide pipelines network was 76.019 million tonnes during the year.” The state-run company also posted higher refining margins.
ULFA-I to release abducted ONGC employee after Himanta Biswa Sarma’s appeal
Banned United Liberation Front of Asom-Independent (ULFA-I) on Thursday said it will release Ritul Saikia, an employee of Oil and Natural Gas Corporation (ONGC) abducted from Assam last month, within the next four days. The outfit’s move came minutes after Assam chief minister Himanta Biswa Sarma made an appeal at a Press conference to ULFA-I chief Paresh Baruah. “Saikia’s parents, his wife and infant son are very distressed since his abduction. As an Assamese, it is my humble request to Paresh Baruah to release him at the earliest,” Sarma said. ULFA-I chief responded minutes later. “I heard the CM’s responsible appeal on TV and in response, ULFA-I assured the release of Saikia in a matter of days. It should take 3-4 days for him to be reunited with his family,” Baruah told NEWSLIVE, an Assamese news channel, over phone from an undisclosed location. Saikia, a junior engineer assistant, was abducted along with two colleagues, Mohini Mohan Gogoi (junior engineer assistant) and Alakesh Saikia (junior technician), from ONGC’s workover rig site in Sivasagar district of Assam on April 21. Alakesh Saikia and Mohini Mohan Gogoi were rescued three days later by security forces from Nagaland, close to the Indo-Myanmar border, in a joint operation. On Tuesday, Baruah had confirmed that Saikia was still in the outfit’s custody and was safe. Himanta Biswa Sarma has said Saikia was being kept at a location in Myanmar close to the border with India. Chief minister Sarma said he considers reports of ULFA-I chief’s promise as a positive step. “But I will be able to give a formal response only after I hear what Baruah has said,” he said. Soon after the abduction, ULFA-I had issued a seven-point list of demands to three major oil companies, ONGC, Oil India Limited and Indian Oil Corporation Limited that included a demand for 95% quota in jobs for indigenous residents of Assam.
Total signs deal to supply LNG to ArcelorMittal’s plants in Gujarat
French energy giant Total on Thursday said it has signed a deal to supply imported LNG to ArcelorMittal Nippon Steel’s (AMNS) steel and power plants in Gujarat. Under the deal, Total will supply up to 0.5 million tonnes of liquefied natural gas (LNG) per year until 2026, a company statement said. “The LNG will be sourced from Total’s global portfolio and offloaded either in Dahej or Hazira LNG terminal, on the west coast of India,” it said. “AMNS will use the LNG to run its steel and power plants located in Hazira, Gujarat state.” AMNS India is a joint venture between ArcelorMittal (60 per cent) and Nippon Steel (40 per cent) that acquired Essar Steel in bankruptcy proceedings in 2019. “We are pleased to partner with AMNS and to supply the growing industrial LNG demand in India, a country that aims to more than double the share of natural gas in its energy mix by 2030 compared to today,” said Thomas Maurisse, Senior Vice President LNG at Total. “The supply of LNG will contribute to the reduction of AMNS’s carbon emissions, in line with Total’s ambition to offer its customers energy products that emit less CO2 and to support them in their own low-carbon strategies.” While the pact strengthens Total’s relationship with AMNS, the supply of gas in its liquid form (LNG) will contribute to the decarbonisation of the steel industry, which still relies heavily on coal. Total is the world’s second-largest privately owned LNG player, with a global portfolio of nearly 50 million tonnes per year by 2025 and a global market share of around 10 per cent. It has interests in liquefaction plants in Angola, Australia, Egypt, the United Arab Emirates, the United States, Nigeria, Norway, Oman, Russia and Qatar, and markets LNG globally.
Iran wants to rope in India later for gas project: Government
After losing the ONGC-discovered Farzad-B gas field in the Persian Gulf, the government said on Thursday that Iran wanted India to get involved in the project at a later stage. “Last July, Iran had decided to develop the Farzad B gas field on its own and wanted to involve India appropriately at a later stage,” said MEA spokesperson Arindam Bagchi, adding that the Indian consortium remained in touch with Iranian authorities on the issue. “The involvement of the Indian consortium is underway and we are in touch with them. The latest development is, of course, part of Iran’s own efforts to develop the gas field and our consortium is in touch with Iranian authorities,” he added. The Iranian oil ministry’s official news service Shana reported three days ago that the National Iranian Oil Company (NIOC) signed a contract worth nearly $1.8 billion with Petropars Group on May 17 for the development of the Farzad B gas field in the Persian Gulf. ONGC Videsh Ltd (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), had in 2008 discovered the gas field in the Farsi offshore exploration block.
Alternate day fuel price revision rolls on, pause after hike a day ago
Under the new found preference for revising fuel prices every alternate day, the Oil marketing companies (OMCs) kept the pump price of petrol and diesel unchanged on Wednesday. Accordingly, the price of petrol continues to remain at Tuesday level of Rs 92.85 a litre and diesel Rs 83.51 per litre in Delhi. Across the country as well the petrol and diesel prices remained static on Wednesday but its actual retail prices varied depending on the level of local levies in respective states. The OMCs are following the practice of changing petrol and fuel rates every alternate day rather than undertaking changes on a daily basis for past few days. Accordingly, the Wednesday’s price hold came after there was an increase in prices on Tuesday. There was no price increase on Monday as well. Also, on Sunday while petrol and diesel prices were raised by 24 and 27 paise per litre respectively, there was no price revision on Saturday. Similarly, while fuel prices were raised on Friday, it remained unchanged in the previous day. “It seems oil companies are giving a sense of relief to consumers as fuel prices are not being raised on a daily basis. But still prices are not actually falling but being raised on every alternate day too this month,” said a oil sector expert not willing to be named. He said that the practice of daily price revision, started after deregulation of petrol and diesel prices few years back. This has now been done away by OMCs for past several months giving clear indication that administrative price regime is still working for the sector. Under daily price revision, OMCs revised petrol and diesel prices every morning benchmarking retail fuel prices to a 15-day rolling average of global refined products’ prices and dollar exchange rate. However, in a market where fuel prices need to be increased successively, alternate day price revision seems to be the flavour. It is worth noting that with 10 price increase in May, the retail price of regular petrol has already reached over Rs 99 a litre in Mumbai. Petrol prices are already over Rs 100 per litre in several cities in Madhya Pradesh, Rajasthan and Maharashtra. Premium petrol has been hovering above that level for quite some time now. Petrol prices have increased by Rs 2.30 a litre in Delhi in May in the 10 increases so far. Similarly, diesel prices have risen by Rs 2.78 per litre in capital this month. IANS had written earlier that OMCs may begin increasing the retail price of petrol and diesel post state elections as they were incurring losses to the tune of Rs 2-3 per litre by holding the price line despite higher global crude and product prices. With global crude prices at around $69 a barrel mark, OMCs may have to revise fuel prices upwards again if there is any further firming up.