IOC to make aviation fuel for trainer aircraft in India from next year
In a bid to make flying training more affordable in India, the government has decided Indian Oil Corp (IOC) will produce AvGas under the “atmanirbhar Bharat abhiyan.” Aviation Gas (AvGas) is currently imported for trainer aircraft and increases the operating costs for flying training organisations (FTO) and loss of foreign exchange. This, in turn, leads to higher charges for wannabe pilots. “IOC has taken an in-principle decision to produce AvGas indigenously under the atmanirbhar Bharat abhiyan. They are likely to produce the same at Paradip Refinery, tentatively by March 2022. A detailed technical analysis is currently underway. Domestic production of AvGas will help reduce the cost of flying training, improve the financial sustainability of Indian FTOs and help make India a global flying training hub,” said a senior aviation ministry official.
IOC to expand Chennai refinery in JV with CPCL; to spend Rs 31,500 cr
State-owned Indian Oil Corporation (IOC) will expand its Chennai refinery at a cost of Rs 31,500 crore through a joint venture with its subsidiary and strategic financial investors, Chairman Shrikant Madhav Vaidya said on Friday. IOC and its subsidiary Chennai Petroleum Corporation Ltd (CPCL) will hold a 25 per cent stake each in the joint venture that will set up the 9 million tonnes a year refinery. The remaining 50 per cent equity would be with financial investors, he told reporters here. “The board of the company at its meeting today (Friday) approved setting up a grassroots 9 million tonnes a year refinery at Nagapattinam in Tamil Nadu,” he said adding that the unit will be built in 48 months from investment approval. IOC plans to pull down the 1 million tonnes per year Nagapattinam refinery of its subsidiary CPCL and build a brand new 9 million tonnes unit. Asked about the participation of the National Iranian Oil Company (NIOC) in the project, he said the refinery will be set up as a joint venture of IOC and CPCL and balance with strategic and financial partners. “NIOC continues to be an investor in CPCL,” he said. NIOC holds 15.4 per cent in CPCL and was previously keen to participate in the expansion project. However, US sanctions on Iran had put constraints on that. NIOC’s investment in CPCL had been made several years back and that as such will not draw any impact of US sanctions but the impact of fresh investments in the company need could have risked sanctions. After the US reimposed full economic sanctions against Iran beginning November 5, 2018, and ended waivers six months later, India has stopped buying oil from its third-largest crude oil supplier. Prior to the waivers ending on May 2, India paid Iran for oil purchases in rupees. These rupee payments are made into a UCO Bank account of NIOC. The government had allowed NIOC to use the money it got in the UCO Bank account for paying for commodities Iran buys from India as well as for direct investments in Indian projects. Naftiran Intertrade, the Swiss subsidiary of NIOC, holds a 15.4 per cent stake in CPCL. Whether the same money could be invested by NIOC as its share of the equity portion of the expansion project was debated. IOC holds a 51.89 per cent stake in CPCL. The expansion was to originally cost Rs 27,460 crore but is now estimated to cost Rs 31,500 crore. He said the project will be funded in a 2:1 debt-equity ratio. CPCL also plans to build a petrochemicals plant of about 4,75,000 tonnes per annum capacity. A detailed feasibility report for the expansion project is underway. CPCL, formerly known as Madras Refineries Ltd, was formed as a joint venture in 1965 between the Government of India, AMOCO, and NIOC having a shareholding in the ratio of 74 per cent, 13 per cent, and 13 per cent. In 1985, AMOCO disinvested, following which the government held 84.62 per cent and NIOC 15.38 per cent. The government later disinvested 16.92 per cent of the paid-up capital. The company was listed in 1994. IOC acquired the government’s holding in 2000-01 and holds 51.89 per cent stake in CPCL while NIOC has 15.40 per cent. CPCL has two refineries with a combined refining capacity of 11.5 million tonnes per annum. The Manali refinery has a capacity of 10.5 million tonnes per annum and is one of the complex refineries in the country. Its second refinery is located in Nagapattinam at Cauvery Basin. This unit has a capacity of 1 million tonnes per annum. CPCL refineries produce LPG, petrol, kerosene, aviation turbine fuel (ATF), diesel, naphtha, bitumen, lube base stocks, paraffin wax, fuel oil, hexane, and petrochemical feedstocks.
EOGEPL dispatches first CNG to Bengal gas and company for Kolkata
Essar Oil and Gas Exploration and Production Limited (EOGEPL), an investee company of Essar Capital, today announced it has dispatched the first Compressed Coal bed Methane (C-CBM) natural gas cascade truck for Bengal gas company’s maiden CNG station to be supplied by state-run gas major GAIL (India) Ltd. The C-CBM natural gas cascade truck was flagged off by Satyabrata Bairagi, CEO, Bengal Gas Company and Santosh Chandra, CEO, EOGEPL from EOGEPL’s gas compressor facility at Durgapur today to the CNG station to be commissioned in Kolkata, the company said in a statement. “This is a momentous occasion for us at EOGEPL. Our CMB gas, clean and green fuel is a turning point towards helping the state in its journey to reduce air pollution amongst the community,” Santosh Chandra, CEO, EOGEPL said. The company said Essar Capital’s investments in EOGEPL are focused on clean energy and CBM gas is seen as a key green fuel. “The GAIL Urja Ganga gas pipeline, when commissioned next month will eventually become the energy lifeline of homes and industries in West Bengal and EOGEPL is committed to provide uninterrupted gas supply to the customers,” Chandra added. The Kolkata city gas distribution network is being developed by Bengal Gas Company which is a joint venture between GAIL India and Greater Calcutta Gas Supply Corporation.
Weak diesel demand signals a slow rebound for industrial India
It’s set to be a slow crawl back to pre-virus levels for Indian energy demand with diesel, the most-used fuel, holding back the recovery. While demand for diesel, which accounts for around 40% of Indian fuel use in a normal year, rebounded quickly after the world’s biggest lockdown was imposed in March, the recovery has since slowed. The annual growth rate for diesel consumption won’t get back to pre-virus levels until the year ended March 2022, said Mukesh Kumar Surana, chairman of Hindustan Petroleum Corp. Used in factories, construction and agriculture as well as powering the truck and bus fleets, diesel is a bellwether of industrial activity in India and its tepid recovery reflects an economy still struggling to shake off the crippling effects of the pandemic. Gasoline demand, by contrast, is being buoyed by people opting to use private cars and motorcycles to avoid being exposed to Covid-19. “The recovery in diesel demand is lagging behind gasoline, and the trend is likely to persist through most of the first half of 2021,” said Senthil Kumaran, head of South Asia oil at industry consultant FGE. “Demand for diesel will average about 5% lower than year-ago levels in the coming months.” Consumption of diesel in the first quarter will be only 3.9% higher from a year earlier, when the national lockdown was imposed, according to FGE. Motor fuel demand will climb 12.5% over the same period. The year got off to a shaky start with fuel sales falling in the first two weeks of January from a month earlier and diesel showing the biggest drop. Farmer protests have affected the movement of vehicles in some states and damped consumption, while record high fuel prices have also dented demand. Only around three-quarters of India’s trucking fleet is operational, according to Naveen Gupta, secretary general of the All India Motor Transport Congress that represents about 10 million truckers. “Operating costs are at an all-time high because of high diesel prices, but freight has not increased,” he said. There are signs, however, that the economy of India — the world’s third-biggest oil importer — is starting to perk up after shrinking by a forecast 7.7% last year. Seven of the eight high-frequency indicators tracked by Bloomberg News held steady in December and one deteriorated. Finance Minister Nirmala Sitharaman is expected to announce generous public spending and measures to put more money into the hands of average Indians when she unveils the federal budget on Monday. Diesel demand should also improve a bit during crop harvesting in March and April, HPCL’s Surana said. After slumping around 15% last year, full-year diesel consumption will exceed that of 2019 by 3.3%, according to Bloomberg calculations based on figures from FGE and the oil ministry. Gasoline demand, meanwhile, will be about 11% higher this year than in 2019. Overall, consumption of major fuels — diesel, gasoline, jet fuel, liquefied petroleum gas, naphtha and fuel oil — should increase by around 14% this year from 2020, FGE’s Kumaran said. Indian oil demand “definitely”recover to 2019 levels by the fourth quarter, he said. However, R. Ramachandran, the former refineries director at Bharat Petroleum Corp., said that greater use of fuels like liquefied natural gas and compressed natural gas in transport means diesel is unlikely to be as dominant in the Indian energy mix as it was before Covid-19. “We are witnessing exceptionally good demand for gasoline,” said Ramachandran, who has almost four decades of experience in the Indian oil industry. “But don’t expect diesel to recover to the growth rates of the past.”
Soaring fuel prices to lend wheels to CNG adoption in India: CRISIL
The soaring prices of petrol will lead to an increase in adoption of compressed natural gas (CNG) driven vehicles in India as the price differential between the cost of running a petrol-driven car versus CNG has widened to 44%, according to a research report. The price of petrol has breached Rs 85 a liter in New Delhi as excise duty rose by Rs 13 to Rs 32.98 per litre in 2020. In calendar 2021, CRISIL Research expects Brent crude to rise by about 23% year-on-year to an average $50-55 per barrel from $42.3 per barrel in 2020, as economic activity recovers globally. “Tax now accounts for over 60% of the retail selling price of petrol, compared with 47% in 2019. Given that the government has to find the money to ramp up public spending – and is also promoting usage of cleaner fuels – it is unlikely that the tax on petrol will come down to previous levels anytime soon,” said Hetal Gandhi, Director, CRISIL Research. Domestic gas prices are expected to rise similarly by over 20% to $2.5-3.5 per million British thermal unit (mBbtu) in 2021 from $2.45 in 2020. However, the absolute price differential between petrol and CNG retail prices will remain wide because of higher taxes on the former. “CNG was always cheaper than petrol, but the price differential between the two has widened rapidly in the past two years. Today, the cost of running a CNG car is (about) 44% less than a petrol variant, if you consider the CNG price of (approximately) Rs 42.7 per kilogram in New Delhi,” said Mayur Patil, Associate Director, CRISIL Research. The consumption of CNG in India has grown at a compounded annual rate of about 11% over the past three years and is expected to grow at a compounded annual rate of 25% between 2021 and 2923, according to the research agency. The sharp spike in the prices vehicles, especially diesel cars, in 2020 due to upgrade to BS-VI emission norms also pushed commercial car fleet operators towards CNG from diesel. The government is also ramping up city gas distribution (CGD) networks, which would further help increase CNG consumption.
Bharat Petroleum Is Promoting Officers, Managers Before Sell-Off To Private Company: But Why?
Ahead of privatization, Bharat Petroleum Corporation Ltd (BPCL) has promoted officers. Officers who were deputy general manager were promoted to general managers, general managers were made chief general managers while chief general managers were made executive directors. Ahead of privatization, in what seems to be a departure from general practice, the state-run oil company has promoted 64 officers. These include eight as executive directors. Promotions & Transfers: Human Resources Department on December 30, 2020 issued an office note and according to it the promotion is a part of a list of 225 officers. Some of these officers are also transferred. These promotions as well as transfers took effect from January 1. These tasks earlier, for many years, have been carried out in March and took effect from 1 April. Soon, a second list of promotions is expected from managers to senior managers, those from senior managers to chief managers and from chief managers to deputy general managers. Indicating why the promotions were offered earlier this time to the officers, a source said that it was because promotions may not happen immediately after privatization. The oil refining and marketing company did not respond to an email seeking comment. However, after two months of issuing notifications in this regard, BPCL has put on hold promotions of general workmen, two months after notification was issued in this regard. Some general workers who are in the current post for more than three year period. A source said that these workers despite being eligible for the promotion have not been interviewed for the grade up. Govt Plans To Sell Its 52.98% Stake BPCL is India’s second largest fuel retailer as well as third biggest oil refiner and the process of its privatization has been initiated by the government. The government plans to sell its 52.98 per cent stake to a strategic buyer. Expressions of interest to buy the stake of government in BPCL has already been filled by private equity firms Apollo Global Management Inc and I Squared Capital as well as Anil Agarwal’s Vedanta Ltd.
GAIL Gas wins award ‘City Gas Distribution – Established Company of the Year’
GAIL Gas, subsidiary of GAIL (India), has been awarded the ‘City Gas Distribution – Established Company of the Year’ by Federation of Indian Petroleum Industry (FIPI). The award recognises leadership in performance by operating City Gas Distribution (CGD) network for distribution of Natural Gas to consumers in the domestic, industrial, transport and commercial sectors in a Geographical Area (GA) in India during the year of award.
Govt expects Rs 150 billion investments in petrochemical zone
The state government will start allotment of land in the Petroleum, Chemicals & Petrochemicals Investment Region (PCPIR) from July this year and it expects an investment of Rs 150 billion in the area and job opportunities for 1,50,000 people. At a global virtual meeting organised on Wednesday by CII between potential investors from across the world and state government, representatives from nearly 100 companies like Saudi Arabia, the UAE, Oman, Germany, the UK, the USA, Switzerland, Netherland, France, Japan, Singapore, Taiwan, Brazil, Bahrain, Jordan, South Korea, and South Africa participated. Senior ministers and officials of the state assured investors of support and opportunities in the sector. “It is the first global dialogue for investment, however, we wish to hold it as a continuous process for facilitating investments in the region,” said industries minister Parsadi Lal Meena. The PCPIR is being developed by RIICO near the 9 MMTPA HPCL Rajasthan Refinery and Petrochemcial Complex in Barmer district. A range of petrochemical products, including polyethylene, polypropylene, butadiene, benzene and toluene from the refinery will be available for the downstream industries in the region. Situated nearly 9-13km from the refinery, the first phase includes 93 industrial plots spread over 243 hectares. The state government through the dialogue also sought suggestions to improve the investment ecosystem. “New mining policy is being drafted and the suggestions of the participants are most welcome and those would be included for consideration of state government,” said Pramod Jain Bhaya, mines and petroleum minister. The Rajasthan government’s efforts in advance of the global auction also drew appreciation of HPCL chairman Mukesh Kumar Surana. He said that early commencement of work on PCPIR would give investors adequate time before operations of refinery commence next year. He said that there was some impact of Covid on progress of refinery development, however, work has now resumed at normal pace. Principal secretary to CM and RIICO chairman Kuldeep Ranka highlighted the advantages for investment in the PCPIR. During his presentation on opportunities in petroleum sector, MD RIICO Ashutosh Pednekar said that India’s per capita plastic consumption at about 11kg is much less to the world average of 33kg and it offers huge growth potential in products of petrochemicals. Advisor to CM Govind Sharma and Arvind Mayaram also addressed the participants and informed of the investment opportunities.
AG&P Pratham opens first LCNG) Station in Jodhpur
AG&P, the global downstream LNG and gas logistics company, on Thursday announced the opening of its first wholly owned Liquefied & Compressed Natural Gas (LCNG) station in Jodhpur, Rajasthan, under its India City Gas Distribution (CGD) arm – AG&P Pratham. Located at Kalptaru Jodhpur, Rajasthan, the LCNG station comprises of two (2) storage tanks with capacity of 56 MT of LNG storage and gasification. The LCNG station will ensure uninterrupted access of natural gas to commercial, industrial, and residential customers not connected to the gas pipeline, including owners and drivers of any CNG-powered vehicle – from auto-rickshaws to taxis, cars and light commercial trucks. This is the first LCNG station in the entire state of Rajasthan. With the opening of the wholly owned LCNG station, Jodhpur now has six AG&P Pratham CNG stations in operation in the areas of Diesel Shed, Pal Road, Lalsagar Road, Soorsagar Road, Mandore and Salawas. Three more – two on Pali Highway and one on Banar Road are expected to be commissioned next month. AG&P Pratham is also laying pipelines in Jodhpur to deliver Piped Natural Gas (PNG) directly into thousands of homes, businesses, and factories.
Oil tanker market in rougher seas as supply surges, storage sinks
A plunge in the volume of crude oil stored on ships combined with unexpected cuts from top producer Saudi Arabia have created a glut of vessels available for hire, pressuring the outlook for supertankers this year. Earnings for very large crude carriers (VLCCs) in 2020 reached record highs of more than $240,000 a day as the coronavirus battered demand, creating an oil surplus and a scramble for storage on land and sea. Rates have since dropped to $7,000 a day. “Right now, it is really as bad as it gets for the VLCC market. Floating storage has more or less unwound and the return of that tonnage to the spot market has pressured rates,” Aristidis Alafouzos, chief operating officer of Okeanis Eco Tankers, told Reuters. “The loss of 1 million bpd of Saudi production equates to annualised tanker demand destruction of 23 VLCCs.” Clarksons Research Services estimated that as of Jan. 22, 95 vessels – the equivalent of 130 million barrels – were being used for storage versus a peak of over 290 million barrels in May last year. IHS Markit said volumes on ships – also static for 14 or more days – had dropped to 52 million barrels, the lowest level since the peak in mid-2020 when it reached 190 million barrels. “IHS Markit does not expect a repeat of last year’s explosive floating storage growth in 2021,” said principal lead analyst Fotios Katsoulas. “Declining floating storage could further support oil prices in the near-term, as it is considered an indication for demand recovering.” The numbers exclude Iran’s fleet holding oil and non-commercial longer-term storage by companies. Demand for floating storage at the peak of the crisis last year was also driven by a market contango, a price structure whereby cargoes for delivery in the shorter term are cheaper than those for later delivery. It encourages traders to store fuel until prices pick up.