S M Vaidya takes over as Chairman of Indian Oil Corporation
Indian Oil Corporation (IOC), the country’s largest fuel retailer, today announced Shrikant Madhav Vaidya has taken over as the new Chairman of the company today. He will also be the Chairman of Chennai Petroleum Corporation, a refining subsidiary, and Indian Oiltanking Ltd, a joint venture. He will also be on the board of Hindustan Urvarak & Rasayan Ltd, a joint venture setting up fertiliser plants. Vaidya, who is on the board of Ratnagiri Refinery & Petrochemicals Ltd, will take over as its Chairman and will also be Director on the Board of Petronet LNG Ltd. Prior to his elevation, Vaidya has been Director (Refineries) on the IndianOil Board since October 2019. He succeeds Mr Sanjiv Singh who has superannuated from the services of the Corporation yesterday. Vaidya is a chemical engineer from National Institute of Technology, Rourkela and has over 34 years of experience in refining & petrochemicals operations. He has had a decade-long association with India’s largest cracker plant – the Panipat Naphtha Cracker Complex, a major driver of IndianOil’s petrochemicals business. “Mr Vaidya has always laid emphasis on ensuring smooth supply of products, eco-friendly business operations and healthy refining margins. During his tenure as Director (Refineries) and earlier as Executive Director (Refinery Operations) at IndianOil, he presided over several refinery expansion and petrochemical projects,” the company said in a statement. He is also credited for the timely rollout of BS-VI grade auto fuels across the country and commencing the supply of IMO-compliant bunker fuel with 0.5 per cent Sulphur and a special winter-grade diesel for high-altitude regions of the Himalayas.
Maharashtra: State transport body mulls diesel-LNG shift for buses
The state transport department is considering adopting the public private partnership (PPP) model to convert its fleet of diesel-run buses to LNG (Liquefied Natural Gas) ones. Around 1,200 Maharashtra State Road Transport Corporation (MSRTC) buses are set to be converted in the first phase of the plan. State transport minister Anil Parab told TOI, “A major challenge for us at the moment is to save on the fuel cost of a fleet of almost 10,000 buses. Converting the buses to lower expenditure, all the while adopting a more environment friendly option, is a better way to move forward.” “The centre provides states with funds to take steps and adopt more environment friendly fuel options. If the Centre doesn’t provide the funds, we will subscribe to the PPP model and will rope in a company to convert the buses, as well as construct filling stations. It has been decided that the work will be done in phases and that 1,200 buses will be LNG enabled in the first phase,” Parab told TOI. Since the lockdown, the MSRTC buses have barely been making any trips with inter-district transportation being completely suspended. In some districts intra-district transportation has resumed but the state transport body has been looking at heavy losses with more than 70% of the buses having been non-operational for more than three months. “Diesel cost accounts for close to 40% of our expenditure and with the price of fuel on the rise, things could get even more difficult for the MSRTC. The idea is to cut this cost by converting to LNG. The first phase of conversion should be completed within the next three to four months. When it comes to the conversion of the whole fleet, we are looking at the first half of next year. It depends on whether things get back on track in a proper way,” another official said. The transport department is mulling restarting inter-district transportation from July but a date has not been fixed yet.
Iran’s gas exports rose 3.6 billion cubic metres in year to March, says SHANA
Iran’s gas exports increased by 3.6 billion cubic metres or 26 per cent in the year to March 2020 compared to a year earlier, the oil ministry’s news site SHANA reported. About 270 billion cubic metres of gas was produced in the Iranian calendar year ending in March, National Iranian Gas Company head Hassan Montazer Torbati said, SHANA reported. He said an outbreak of the new coronavirus in Iran had not affected development programmes in the gas industry. Iran has been the country hardest hit by the coronavirus pandemic in the Middle East, with 10,508 deaths reported by Sunday.
Petrol, diesel price rise resume after a day
Fuel prices rose on Monday again after a days pause with oil marketing companies increasing the pump price of petrol by 5 paisa and diesel by 13 paisa per litre in Delhi. In the national capital, petrol price on Monday stood at Rs 80.43 per litre while that of diesel at Rs 80.53 a litre. With this increase, fuel prices have moved up on 22 of the last 23 days (with no rise on Sunday). Petrol prices, however, were unchanged for an additional day in between after the daily revision based on dynamic pricing was reinstated by OMCs. Since the daily price revision resumed on June 7, petrol price has increased Rs 9.17 and diesel rose by Rs 11.14 in the national capital. In the other cities the magnitude of increase was similar. During the past 23 days, the quantum of price hike gradually declined from around 60 paise raise for a few days, immediately post the resumption of daily price revision, to less than 20 paise during the past few days and now even less than 10 paisa per litre. In a historic development, the price of diesel surged above that of petrol in the national capital during this period. It continues to remain higher even though on Saturday the quantum of petrol price hike was higher than that of diesel. Officials in oil marketing companies said that it is hard to predict which of the two fuels will be priced higher in the Capital as the gap between the two is almost negligible. But petrol prices have shown more volatility in international markets that may take it ahead once again in coming days. Apart from Delhi, the retail prices of petrol and diesel have followed the traditional path in other metros with petrol being priced at a premium of between Rs 5 and 8 per litre. The difference between the auto fuel prices in Delhi and other metros is because of the taxation structure. While both petrol and diesel are at similar levels of taxes (state and centre) in Delhi, it is higher for petrol in many other Indian cities. Globally diesel is priced a tad higher than petrol. In India too, the base price of diesel is slightly higher than petrol but taxation at central and state levels changed the complexion of retail prices. If the price of petroleum products and crude hold their positions in global markets, then petrol and diesel prices rise may stop for a longer period and we may even see marginal fall in prices. Fuel prices have been increasing since June 7 when oil companies began the daily price revision mechanism after a hiatus of 82 days during the lockdown.
Satellites reveal major new gas industry methane leaks
Last fall, European Space Agency satellites detected huge plumes of the invisible planet-warming gas methane leaking from the Yamal pipeline that carries natural gas from Siberia to Europe. Energy consultancy Kayrros estimated one leak was spewing out 93 tonnes of methane every hour, meaning the daily emissions from the leakage were equivalent to the amount of carbon dioxide pumped out in a year by 15,000 cars in the United States. The find, which has not been reported, is part of a growing effort by companies, academics and some energy producers to use space-age technology to find the biggest methane leaks as the potent heat-trapping gas builds up rapidly in the atmosphere. Kayrros, which is analysing the satellite data, said another leak nearby was gushing at a rate of 17 tonnes an hour and that it had informed Yamal’s operator Gazprom about its findings this month. Gazprom did not immediately respond to requests for comment about the leaks identified by Kayrros. Up to now, estimates of greenhouse gas emissions from industries have relied mainly on paper-based calculations of what’s pouring out of tailpipes and smokestacks, based on the amount of energy consumed by people and businesses. But as satellite technology improves, researchers are starting to stress test the data – and the early results show leaky oil and gas industry infrastructure is responsible for far more of the methane in the atmosphere than previously thought. Such a revelation would heap pressure on energy companies – already targeted by climate activists and investors for their contribution to carbon dioxide emissions – to find and plug methane leaks. The new satellite discoveries of methane leaks could also lead to more stringent regulatory regimes targeting natural gas, once seen as a “clean” fossil fuel, as governments seek to combat climate change, experts say. While scientists generally agree that calculating emissions based on consumption works well for carbon dioxide, it is less reliable for methane, which is prone to unexpected leaks. Methane is also 80 times more potent during its first 20 years in the atmosphere and scientists say that identifying methane sources is crucial to making the drastic emissions cuts needed to avoid the worst impacts of climate change. “What this now shows is that the avoidance of that fossil leakage actually can have a larger impact than what was anticipated earlier,” said Imperial College London climate scientist Joeri Rogelj, who is one of the authors for reports by the Intergovernmental Panel on Climate Change (IPCC). PIVOTAL DISCOVERY A study in February’s Nature magazine reinforced the idea that the oil and gas industry produces far more methane than previously thought as it suggested emissions of the gas from natural causes have been significantly overestimated. The findings don’t let farming off the hook – it’s still responsible for a quarter of the methane in the atmosphere – but they suggest mud volcanoes and natural oil and gas seepages have been taking some of the heat for the energy industry’s leaks. Some big oil and gas companies such as BP and Royal Dutch Shell are tackling the issue by investing in satellite companies or signing monitoring deals so they can find and plug their leaks and stick to pledges to slash emissions. The push to detect emissions from the sky began when US advocacy group Environmental Defense Fund (EDF) and universities including Harvard used aerial measurements to show methane leaks from America’s oil and gas heartland were 60 per cent above inventories reported to the US Environmental Protection Agency. That 2018 report was pivotal, said Christophe McGlade, a senior researcher at the International Energy Agency (IEA). “What they found from actual ground and aerial measurements is that the engineering-based approach can really underestimate total emissions,” he said. “Maybe if emissions were higher in the United States than previous estimates, maybe they were higher in other parts of the world too?” A year later, Canadian greenhouse gas monitoring company GHGSat found another major leak at pipeline and compressor infrastructure near the Korpezhe field in Turkmenistan. In an October report, GHGSat estimated the leak released 142,000 tonnes of methane in the 12 months to the end of January 2019 and said then it was the biggest on record. GHGSat said the leak was plugged in April 2019 after state oil company Turkmen Oil was notified. Turkmen Oil officials could not be reached for comment. The company declined to comment when asked about it in November. “That one emission that we found together represents about one million cars taken off the road per year,” said GHGSat founder Stephane Germain. Now, the more recent Kayrros discovery has added to the evidence that undetected methane leaks from the energy industry are a global issue – and a major one. RUSSIA IN THE SPOTLIGHT Kayrros said its analysis of the satellite data showed concentrations of methane around compressor stations along the pipeline linking Russian gasfields to Europe. The Yamal-Europe pipeline stretches 2,000 km (1,250 miles) from Germany through Poland and Belarus to Russia where it joins the 2,200 km SRTO-Torzhok pipeline to Siberia’s gasfields. Gazprom estimated that about 0.29 per cent of the 679 billion cubic metres of gas it moved through its pipeline network escaped as methane emissions in 2019. Yamal has an annual capacity of about 33 billion cubic metres. “These figures correspond to the best global practices,” Gazprom said in a June 10 statement about its emissions. Kayrros also discovered leaks from oil and gas installations in the Sahara Desert in North Africa. “Early results show that the estimates we have been relying on for the last years and decades are probably too low and we’re finding more methane coming out of various industries and regions than we thought was the case,” said Christian Lelong, director for natural resources at Kayrros. McGlade said the IEA increased the projected contributions of several countries in central Asia and North Africa in its Methane Tracker this year because of the satellite detections. He singled out Russia as one country where official
Fuel demand accelerates but new virus wave may slam on the brakes
Fuel demand is gradually recovering as coronavirus lockdown measures ease around the globe but a second wave of infections could swiftly undermine the trend, industry data showed. Road traffic in some of the world’s major cities in June had returned to 2019 levels, data provided to Reuters by location technology company TomTom showed. But a resurgence of the virus in some places prompted drivers to stay home. Congestion in Shanghai in the past few weeks was higher than in the same period last year. But in Beijing mobility dropped again in June as China’s capital took steps to halt a new outbreak of the coronavirus. Traffic in London and New York rose steadily in recent weeks although it remained well below pre-COVID 19 levels, TomTom data showed, while in Moscow it was back at last year’s levels. US gasoline consumption in the second week of April was half the level a year earlier, according to Oil Price Information Service (OPIS), which tracks weekly same-store gasoline volumes at 15,000 fuel stations, while June demand was down just 22 per cent. Gasoline supplied, a proxy for demand, rose 9 per cent in the week to June 19 but overall, in the past four weeks, fuel demand was down 17 per cent from the same time a year ago, according to data released by the US Energy Information Administration. A resurgence of coronavirus cases in states such as Arizona and Texas held consumption in check. “While gasoline demand is nearing pre-COVID winter demand levels, we’re still down nearly 19 per cent than a year ago,” said Patrick DeHaan, head of gasoline analysis at GasBuddy. US gasoline demand is typically lowest in winter and usually rises towards the summer, during the so-called driving season, when people normally head off on vacations. “Just because we are nearing pre-COVID levels doesn’t mean we are out of the woods,” DeHaan said. In Italy, oil products consumption in May was 3.64 million tonnes, up 36 per cent from April but 28 per cent below levels a year earlier. Britain, Italy and France recorded year-on-year falls in gasoline demand in April of more than 60 per cent, the heaviest decline in the world according to Standard Chartered. In Spain, the country’s leading fuel distributor CLH Group said demand for its gasoline and diesel was rising, based on figures for withdrawals from its storage facilities. In the week to June 21, gasoline and diesel withdrawals were down 29 per cent and 21 per cent respectively from the same period last year, compared to 34 per cent and 25 per cent lower in the previous week, it said. The figures show a sharp rise in demand from April, when gasoline and diesel withdrawals were 79 per cent and 57 per cent lower year on year. In a further indication of rising demand, Northwest European gasoline refining margins picked up on Wednesday to $4.70 a barrel, the highest since late March. “A stronger gasoline market appears to be helping margins, as we see more economies returning to some form of normality,” said Warren Patterson, ING’s head of commodities strategy, but he said margins were still weak compared to pre-COVID 19 levels. Jet fuel consumption has also showed signs of recovery as European and other countries reopen borders to tourists and travel, although the pace of the rebound has been slower than for gasoline. The number of daily flights around the globe rose to 52,000 on Wednesday, compared to a low point on April 12 when the number of flights fell to 24,000, according to global plane tracking website Flightradar24. In February, there were more than 100,000 daily flights. Wood Mackenzie analyst Yuwei Pei said her consultancy expected a slow recovery for jet fuel demand in China, even though economic activity had largely returned to normal. “The recovery to pre-crisis levels will not occur until the beginning of 2021,” she said.
Petrol price crosses Rs 80-mark in Delhi for first time since 2018, diesel at new high
Petrol price in the national capital on Friday crossed Rs 80 per litre mark, for the first time in more than two years, as oil companies continue to raise petrol and diesel prices in line with costs. Oil companies hiked petrol price by 21 paise per litre and diesel by 17 paise a litre, according to a price notification of state oil marketing companies. Petrol price in Delhi was hiked to Rs 80.13 per litre from Rs 79.92 while diesel rates were increased to Rs 80.19 a litre from Rs 80.02. Rates have been increased across the country but the final retail selling price differs from state to state depending on the incidence of local sales tax or VAT. In Mumbai, petrol is priced at Rs 86.91 per litre and diesel at Rs 78.51. Petrol price has crossed Rs 80-mark for the first time in more than two years, while diesel rate is at an all-time high. Petrol had last crossed Rs 80 mark in September 2018. While diesel price has been hiked for the 20th straight day, petrol price has been raised on 19 occasions in less than three weeks. The cumulative increase since the oil companies started the cycle on June 7 now totals to Rs 8.87 for petrol and Rs 10.8 in diesel. Diesel had for the first time become costlier than petrol in Delhi on Wednesday. However, diesel is costlier than petrol only in the national capital where the state government had raised local sales tax or VAT on the fuel sharply last month. It costs less than petrol in other cities. On June 7, oil companies restarted revising prices in line with costs after ending an 82-day hiatus during which they adjusted steep excise duty hikes by the government against the fall in benchmark international oil rates.
Norway proposes large expansion of Arctic oil exploration
Norway plans to offer up to 136 new oil exploration blocks in a major new licensing round, of which 125 lie in the Arctic Barents Sea, the country’s Ministry of Petroleum and Energy said on Wednesday. Norway’s 25th licensing round would open eight new regions of the Barents Sea that have so far been unavailable for exploration, each consisting of a range of blocks, and one region of the Norwegian Sea, the ministry added. “A steady supply of new acreage is crucial in order to maintain activity on Norway’s continental shelf,” Minister of Petroleum and Energy Tina Bru said in a statement. “We need new discoveries to uphold employment and value creation,” she said. Oil firms, which must commit to a certain level of drilling activity, tend to pick fewer blocks than the overall acreage made available by the government, however. A hearing on the scope of the licensing round will be held until Aug. 26, after which the number of available permits could be cut, followed by awards some time in the second half of 2021, the ministry said. The 25th round had been postponed by a long-running debate over how far north Norway’s oil industry should be allowed to drill, culminating earlier this year in a compromise that left significant room for additional Arctic licenses.
With contracts canceled and debts mounting, offshore oil drillers face another shakeout
The companies that operate offshore drilling rigs for major oil producers face a second wave of bankruptcies in four years amid a historic drop in energy prices that likely will leave surviving drillers more closely tied to big oil firms. A collapse of the offshore industry will have broad impact. Drillers and their suppliers have driven innovation that has helped shale and offshore wind companies by pioneering remote monitoring and control, and last year directly generated about 25 per cent of global oil production. The offshore services business is the worst performing of the oilfield services sector, with shares of the 10 largest publicly traded down 77 per cent since the start of the year. Four of the seven largest offshore drillers – Diamond Offshore Drilling Inc, Noble Corp, Seadrill Ltd and Valaris Plc – have sought protection from creditors or begun debt restructuring talks that could lead to bankruptcy. Two others are reaching out to their creditors. Pacific Drilling last month said it may need to modify terms of its debt, and was seeking alternative funding in the event creditors would not accept new terms. Shelf Drilling, the ninth largest by revenue, is seeking talks with creditors over loan covenants that take effect next year, executives said. The latest offshore industry’s turmoil “is going to change things in many ways,” Odfjell Drilling Chief Executive Simen Lieungh said in an interview. “Existing players and the existing structures will probably not be there as today,” he said referring to companies scrapping rigs. EARLY OPTIMISM FADES The sector had limped along as exploration fell due to high costs and the advent of cheaper U.S. shale. Then, a flurry of giant discoveries off the coasts of South America and Africa rekindled oil majors’ interest in deep water projects and led to a boom in offshore leases two years ago. Drillers began the year predicting a recovery with oil prices at $60 per barrel. But optimism soured as the pandemic crushed demand and oil prices fell below $20 in April. This month, the number of floating rigs at work is expected to hit the lowest level since 1986 as oil companies cancel or defer contracts, said industry executives and analysts. The last downturn was cushioned by help from oil producers. Between 2014 and 2016, as crude fell to $26 per barrel from over $100, oil majors spread work among drillers to keep exploring off the coasts of Brazil, Mozambique and in the Mediterranean. That allowed drillers whose rig contracts were canceled to pick up some jobs, albeit at lower lease rates. The offshore industry was financially stronger then. Many had entered that downturn with large order backlogs and held contracts with lease rates higher than today’s, said Jorn Madsen, CEO of Maersk Drilling. But with oil majors this year slashing their own spending by between 30 per cent and 50 per cent to preserve cash and pay dividends there is no safety net. Winners will be those companies that get debts refinanced and get through the next two years, said industry officials. Offshore service firms may need to scrap up to 200 of the about 800 existing floating rigs to regain profitable lease rates, said David Carter Shinn, head of analysis for rig brokerage Bassoe Offshore. There is little hope for a rebound in the next few years. Many oil producers are withdrawing from projects that require $60 per barrel to earn a profit, concluding it could be years before they see that price again. Chevron, Exxon Mobil , Petronas and Royal Dutch Shell ended drilling contracts early this year to save money. “Higher cost production in our industry will be shut in and projects will be delayed,” said Rick Fowler, chief operating officer at U.S. offshore oil producer LLOG Exploration. Chevron said it will limit offshore work to fields that connect to existing infrastructure rather than start new exploration. Exxon, BP, Total and Shell declined to comment or did not reply to requests for comment on the impact on their drilling plans. The abrupt halt of exploration has been devastating to drillers. They are writing down billions of dollars on the value of their fleets. Finding new money will be difficult, said Basil Karampelas, a managing director at SierraConstellation Partners who advises companies on financial restructurings. Bankruptcy investors evaluate companies on 13-week or 26-week cash flows in making decisions, he said. But for many drillers, there will be little to show. Creditors, he said, “will have to decide if they want to ante up to get past that period.” THE PATH AHEAD Many of the offshore drillers are scrapping or retiring vessels, having concluded it may be years before they are needed again. Valaris plans to scrap 11 rigs and put aside nine others, estimating it may take two years before they are needed again. Seadrill, which slipped into bankruptcy in 2017 after the last oil price downturn, pioneered a model for sharing costs that might prove a path forward, said analysts. It formed joint ventures with customers including a Qatar Petroleum spinoff and Sonangol Group that have survived the last downturn. The joint ventures focused on oil fields that have long lives and gave drillers a way to lower their contract risks. The Seadrill ventures “have delivered increased fleet utilization and incremental access to markets that are expected to show significant growth over the coming years,” Seadrill spokesman Ian Cracknell said. “It could be one of the few options to move forward,” said William Turner, a vice president at Welligence Energy Analytics. “There is not a lot more folks can do to lower costs, especially in deepwater. They are going to have to get creative to survive,” he said.
Government aims to develop indigenous, low carbon transport system: Nitin Gadkari
Union Road Transport & Highways Minister Nitin Gadkari on Tuesday said that the Central government has prioritised the development of indigenous, low carbon, sustainable and economically viable transportation system. In his address at the launch of ‘India Roadmap on Low Carbon and Sustainable Mobility (Decarbonisation of Indian Transport Sector)’ report by Ficci, he said that the priority of the government is to develop such a pollution-free and cost-effective transportation system, which also provides comfort to the poor people of the country. Gadkari also said the government will play the role of a facilitator and support the private sector in its initiatives for developing a sustainable transportation system. He said that the industry should consider various aspects of sustainable transportation system which comprises of low carbon fuels, electric vehicles, water transportation, conversion of diesel vehicles to LNG and CNG, and use of ethanol, methanol and hydrogen fuels for vehicles. Subsequently, industry should then reach out to state governments and ministries concerned and suggest changes in the policies for developing implementable and economically viable projects, he said. Besides, Gadkari said that the industry should look at public private partnerships and adopt an integrated approach for developing new models of transportation. He also pointed out the need to decongest metro cities and urged industry to create industrial clusters and smart cities. He added that to decrease migration of rural population to urban areas, there is a need to concentrate on upliftment of agriculture sector, tribal and village population.