Energy firm Total beats quarterly forecasts, lifts dividends despite low oil price
Total beat forecasts on Thursday by keeping net adjusted profit for the fourth quarter steady at $3.2 billion and fulfilled its pledge to boost dividends despite low oil prices, lifting the French energy major’s shares by 3 per cent. Analysts had forecasts net profit of about $2.7 billion. “This performance is better than that of our rivals in terms of resisting to low oil prices,” Total Chief Executive Officer Patrick Pouyanne told journalists. He said the group reported solid fourth quarter 2019 results with debt-adjusted cash flow (DACF) at $7.4 billion, an increase of more than 20 per cent compared with the fourth quarter of 2018. Total’s oil and gas production grew by 9 per cent in 2019 compared with the previous year thanks to start ups and ramp ups of projects, while its liquefied natural gas (LNG) business doubled, boosting its cash flow. Pouyanne said the exceptional production growth was unlikely to continue in the years to come and output growth for 2020 was seen at 2 per cent to 4 per cent, a more typical level in the industry. Pouyanne said the group rewarded shareholders with a 6 per cent increase in the final dividend for 2019 to 0.68 euros per share. It bought back $1.75 billion of its shares in 2019 and plans to buy back $2 billion of its shares in 2020 with oil at $60 per barrel. “Taking into account the strong visibility on cash flow, the group will continue to increase the dividend with the guidance of 5 per cent to 6 per cent per year,” the company said in the statement.
French group Total strikes renewable energy deal with Adani Group
French oil and gas group Total on Thursday signed a new deal with Indian company Adani Group to expand their partnership towards the renewable energy sector. Total said it would create a 50/50 joint venture company with Adani Green Energy Limited, to set up green energy projects in more than 11 Indian states with a cumulative capacity of over 2 GW. Total added that the deal with Adani had a value of around $500 million.
Oil and gas giant Shell restricts travel to Hubei Province on virus
Royal Dutch Shell has banned business travel to and from China’s Hubei province due to the coronavirus, the company said in a statement. Shell has restricted non-essential business travel to mainland China, Hong Kong, Macau and Taiwan.
IOCL signs contract with Rosneft to import 2 million tons Russian oil to India
Indian Oil Corporation Limited (IOCL) on Wednesday signed a contract with Russia’s Rosneft Oil Company for importing two million tonnes per annum of Russian crude oil. The agreement was signed during India-Russia delegation-level talks. While the Indian side was led by Union Minister of Petroleum and Natural Gas Dharmendra Pradhan, CEO of Rosneft, Igor Sechin, headed the Russian delegation. Calling it an important milestone, Pradhan said, “This is yet another important milestone in our efforts to diversify sourcing of crude oil and in enhancing India’s energy security.” The two sides reviewed the ongoing investments between Indian oil and gas PSUs and Rosneft and discussed further enhancing energy cooperation and strengthening the hydrocarbons engagement both on investment front as well as sourcing natural gas and crude oil. Speaking on the occasion, Pradhan said, “Hydrocarbon is an important pillar of the Strategic and Privileged Partnership between India and Russia. Indian oil and gas companies value their association with Rosneft, one of the important companies partnering in our energy security objectives.” The two sides agreed to take forward mutually aligned priorities discussed during Minister Pradhan’s visit to Russia in September last year, including exploring a roadmap for Indian investments in the Vostok (Eastern Cluster) project of Russia. They also explored opportunities for involvement of Indian companies in infrastructure development projects in the Siberian and Arctic regions. CEO, Rosneft, Sechin indicated his readiness to intensify cooperation to further strengthen India’s energy security and work jointly with Indian oil and gas companies. (Source: Livemint) Russia’s Rosneft says India firms agree deal to join Vostok Oil project Russia’s state oil giant Rosneft has agreed a deal in principle for Indian companies to join the Vostok Oil project in the Russian Arctic, it said on Wednesday. In order to negotiate the terms of Indian companies’ entering Vostok Oil in the shortest time possible the parties agreed to create a regular working group of representatives of Russian and Indian companies, the statement said. Rosneft added that it had signed a contract with Indian Oil Corporation Limited to supply up to 2 million tonnes of oil to India via the port of Novorossiisk by the end of 2020. (Source: Reuters)
Adani Gas to start operating all ‘geographical areas’ by FY 21-end
Adani Group’s city-gas distribution (CGD) arm, Adani Gas Limited (AGL), is aggressively expanding its network coverage, as the company looks to operationalise all the 38 Geographical Areas (GAs) by the end of next fiscal. “Currently, work is going on for laying down steel pipeline (for the network) in all the GAs. And, we have simultaneously completed the identification of the CNG stations in these GAs. We are working in full-swing and by next fiscal we will start operating in all GAs,” said Suresh P Manglani, Chief Executive Officer of AGL. Addressing a media-analyst call on Wednesday, Manglani also stated that the company currently has a footprint (with its PSU partner Indian Oil Corporation) in 38 GAs spread across 71 districts in different parts of the country. Volume demand On the gas volumes, Manglani stated that the company aims to penetrate faster in the GAs, where there is faster and higher volume demand. “Our volumes come more from the existing four GAs, while the new GAs are slowly and steadily adding to it. This will be more in the nature of modular process, in which we will keep adding more volumes as we see demand coming in. For now, we are having a steady growth of close to about 9 per cent on year-on-year measure,” he added. So far in the current year, with four GA licenses under the 9th round, AGL has invested close to ₹13 billion, while going forward for the other new GAs, the company plans to have a capex of “a little over ₹50 billion in a five-year horizon,” he said after the company’s financial results announcements. In a statement, Gautam Adani, Chairman, Adani Group, said, “Adani Gas has delivered all round good performance both for third quarter and nine-month period of fiscal 2020 and further aims to expand its footprint in the natural gas sector across the country. The partnership with TOTAL will further enhance Adani Gas capabilities in building the best in class assets and creating a world class organisation”. Q3 net up 150% AGL posted a standalone net profit of ₹1.14 billion for the quarter ended December 2019, which is up about 150 per cent from ₹455 million logged in the corresponding quarter a year ago. Standalone revenues from operations stood at ₹5.19 billion (₹4.85 billion). On consolidated basis, AGL’s net profit for the quarter stood at ₹1.16 billion (₹470 million). Consolidated revenues from operations stood at ₹5.19 billion — up from ₹4.85 billion.
Russia’s Rosneft keen to bid for BPCL
Russia’s largest oil producer Rosneft is keen to bid for acquisition of Bharat Petroleum Corp Ltd (BPCL), sources said after the Russian firm’s CEO Igor Sechin met Oil Minister Dharmendra Pradhan on Wednesday. Rosneft, which is the majority owner of India’s second biggest private oil refinery, is keen to expand in the world’s third largest and the fastest growing energy market. Sechin first met Pradhan over breakfast, and then in delegation-level talks expressed interest in bidding for acquisition of government stake in Bharat Petroleum Corp Ltd (BPCL), an official privy to the discussions said. The government is selling all of its 53 per cent stake in BPCL in the country’s biggest privatisation plan. The official said the government is expecting national oil companies from the Middle East, such as Aramco of Saudi Arabia and ADNOC of UAE, to join the bidding for BPCL.
Rosneft, IOC sign pact for crude supply; Pradhan discusses BPCL sale with Sechin
Russian oil and gas giant Rosneft today signed a contract with India’s largest fuel retailer Indian Oil Corporation (IOC) for supply of 2 million tonne (MT) crude oil to India by end 2020, Rosneft said in a statement. “Rosneft Oil Company and Indian Oil signed a contract to supply up to 2 MT of oil to India via the port of Novorossiysk by the end of 2020,” it said. This would be the first such contract signed by a state-owned oil marketing company with Rosneft. Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) are also interested in signing annual crude deals with Rosneft, ET reporter earlier this month. The signing took place during the visit of Igor Sechin, Chief Executive Officer (CEO) of Rosneft to New Delhi. Sechin also held a meeting with oil minister Dharmendra Pradhan. The Rosneft CEO expressed his company’s interest in acquiring BPCL, a news report said. Rosneft and Trafigura led consortium already own 49.13 per cent stake in Nayara Energy (formerly Essar Oil Limited). Nayara owns and operates 20 million tonnes per year refinery at Vadinar in Gujarat and also owns more than 5,600 petrol pumps in the country. “An important subject of talks between Sechin and Pradhan was the issue of providing Indian consumers with quality crude and petroleum-based products, including the increase in Russian oil supplies to India. During the meeting, the parties discussed the ongoing joint projects of Rosneft and Indian companies, including Sakhalin-1, Taas-Yuryakh, the Vankor cluster (a consortium of Indian companies owns 49% in the Vankor cluster field), Far East LNG, and Nayara Energy,” Rosneft said in a statement. According to Rosneft, a separate topic of discussion was held regarding Indian companies’ participation in implementing the Vostok Oil project located in the North of Russian Krasnoyarsk Territory. “In order to negotiate the terms of Indian companies’ entering Vostok Oil in the shortest time possible the parties agreed to create a regular working group of representatives of Russian and Indian companies,” Rosneft said. Vostok Oil’s competitive advantage lies in its proximity to the Northern Sea Route, a unique transport corridor. The route provides an opportunity to supply crude from the project’s fields in two directions at once – to European and Asian markets.
Stake in Gujarat Gas good for valuation
Gujarat State Petronet (GSPL) has come out of its two-year consolidation range of Rs 232 recently and if history is to repeat, then the stock is expected to give a decent return over the medium term. Analysts are bullish on the stock given its healthy, free cash flows and compelling valuation considering its stake in Gujarat Gas. GSPL has 54.17 per cent controlling stake in Gujarat Gas which has rallied 50 per cent in the last three months compared to an 11 per cent rise in GSPL shares. “GSPL’s controlling stake in Gujarat Gas offers a less risky exposure to the latter’s healthy growth prospects in PNG and CNG within Gujarat and the new licence areas won in the recent bidding rounds” said Amit Agarwal, research analyst, Nirmal Bang Equities. “We are bullish on the stock based on sustained long-term growth outlook in transmission volume, supported by India’s booming natural gas market and compelling valuation that offset concerns over tepid growth over FY21-22 as well as regulatory / policy issues and execution risk” he added. GSPL stock declined 2 per cent to close at Rs 244.8 on Tuesday. The company has been consistently delivering good numbers and in its latest quarterly result, the company’s profit has shot up to Rs 933 crore, driven by a deferred tax write-back and strong growth in Gujarat Gas. The company has reduced its debt from Rs 5,386 crore in March 2018 to Rs 3,383 crore in September 2019. Stake in Gujarat Gas good for valuation “At 10 times FY22 estimated earnings, valuations look attractive considering improving volume visibility,” said Rohit Ahuja, analyst, BOB Capital Market.
Coronavirus to hit oil demand by around 0.5% in 2020: BP CFO
The global economic slowdown in the wake of China’s coronavirus outbreak is set to reduce global oil demand in 2020 by up to 0.5%, BP’s Chief Financial Officer Brian Gilvary said on Tuesday. The drop in industrial activity and flight cancellations has so far hit oil demand by around 200,000 to 300,000 barrels per day (bpd), Gilvary told Reuters, after BP reported its fourth quarter results. For the whole year, the slowdown will reduce consumption by 300,000 to 500,000 bpd, roughly 0.5% of global demand, according to Gilvary. The impact in China has been more pronounced, reducing demand by around 1 million bpd, he added. Oil prices have dropped by over 20% from their early January peak to hit a one-year low this week.
Common man suffers high fuel prices even as world oil market slides
The high retail price of petrol and diesel continues to impact the common man even though global market has thrown enough cues for a sharp cut in the price of auto fuels. While the Coronavirus scare and continued flat demand for oil has pushed down the global crude price that has fallen sharply by over 24 per cent to $53 a barrel over last one month, there has been less than proportional decrease in retail price of petrol and diesel with oil companies building a cushion for possible increase in oil prices later this year. Petrol is being retailed at Rs 72.98 a litre while diesel at Rs 66.04 a litre in Delhi when crude oil price of Indian basket is about $55 a barrel. At this level of crude in September-October 2017 (crude price between $ 54-56 a barrel), petrol was being retailed between Rs 69 and Rs 70 a litre and diesel between Rs 57 and Rs 58 a litre in Delhi. Again on a crude price of $57-59 a barrel in December-January FY19, petrol prices remained close to Rs 71 a litre while diesel at Rs 64 a litre. And the continuing high price of auto fuels now is despite the government having reduced excise duty on the two petroleum products by Rs 2 a litre and Rs 1.50 a litre in the year 2017 and 2018 respectively after increasing the duty on two products on nine occasions in the past. The duty also moved up last year in Budget by Rs 2 a litre. “It seems state-owned oil marketing companies are making up for the losses they have incurred in earlier months when there was a momentary spike in prices. This is gross injustice for consumers who have braved historically high levels of auto fuels when global oil prices were rising in late 2018. Ideally, petrol and diesel prices should have been lower by at least Rs 3-5 a litre than current levels,” said a top official of an oil producing company asking not to be named. Officials of OMCs, however, disagree over higher cuts in retail price of petrol and diesel saying that the current scenario should also be viewed in the context of fall in rupee against dollar that makes oil purchases expensive. But rupee has remained strong in last one month only to fall marginally lately. In the last one year, rupee has depreciated from about Rs 68 to a dollar to about Rs 71 now. Even if this depreciation is taken into account, experts say the retail price gets impacted by about Rs 1-2 per litre. This still means current petrol and diesel are higher by at least Rs 3 per litre. Under daily price revision mechanism, OMCs have reduced the price of diesel and petrol by just about Rs 3 per litre from Rs 76.01 a litre and Rs 69.17 a litre respectively to Rs 72.98 and Rs 66.04 a litre now. Interestingly, even this period when global oil prices have dropped consistently, OMC have held back retail price revision on few occasions to make up any earlier losses and build buffer for future when oil prices jump again. The benchmark Brent oil prices have fallen below $55 a barrel now but analysts expect prices to rise again if the oil cartel OPEC decides to extend production cuts while the unrest in the Middle East continues to disrupt supplies. But in all this, the spread of Coronavirus and impact on demand would weigh heavily on global oil prices. Oil prices have fallen by over 20 per cent in last one month due to continuing flat demand conditions and the spook Coronavirus has created. But analysts believe that once the current problems get resolved, there could be a rise in crude prices but in may remain range bound around $60-70 a barrel putting lesser pressure on oil importing nations like India which imports more than 80 per cent of its needs.