Essar, GSPC bag most of RIL-auctioned natural gas
Essar Steel and Gujarat State Petroleum Corporation (GSPC) won two-thirds of the natural gas Reliance Industries offered in an auction, where winning bids were $5.3-5.4 a unit, people familiar with the matter said. Reliance-BP offered 5 million metric standard cubic metres a day (mmscmd) it plans to produce from April next year at its R-cluster field in KG-D6 block. About half a dozen companies participated in the e-auction on Friday. Reliance did not respond to ET’s emailed query. Essar Steel is learnt to have won 2.25 mmscmd, while GSPC got 1.2 mmscmd. State-run Hindustan Petroleum is believed to have won 0.35 mmscmd, while Adani, Mahanagar Gas and GAIL won 0.3 mmscmd each, according to the people. Gujarat State Fertilizer Corp is also said to have won 0.10 mmscmd. Essar Steel, which has been in news lately for its bankruptcy, will likely use the gas in its plant, while Adani and Mahanagar may feed it into their city gas network. RIL-BP sold all the gas offered. The duration of supply could not be ascertained. Buyers had the option to bid for a supply period of two to six years. Bidders were expected to quote a price as a percentage of dated Brent crude. The minimum they could quote was 8.4%. Bidders ended up quoting between 8.4% and 8.6%, the people said. This translates into a price range of $5.29 to $5.41 per million metric British thermal unit (mmBtu) at the current rate of $63 per barrel for dated Brent. Prices will vary during the period of supply as the dated Brent is defined as the average of published Brent prices for three calendar months immediately preceding the relevant contract months in which the gas supply is made. After including the pipeline tariff, the delivered cost of gas would be about $6.5 for buyers, most of which are in Gujarat. Reliance-BP have the marketing and pricing freedom for all the gas they produce from the Rcluster field. The prices, however, cannot exceed the government-set ceiling for the gas from difficult fields, which is currently $8.43 per unit. Prices during the RIL-BP’s gas auction were influenced by a collapse in the global liquefied natural gas (LNG) market and an expected rise in supply from domestic sources over the next few years. This meant the auction ended up with rates that were close to the floor price set by the producer. ONGC is also auctioning 0.75 mmscmd on November 19.
Asian Oilfield to acquire majority stake in joint venture Optimum Oil and Gas
Asian Oilfield Services has entered into a share purchase agreement for the acquisition of 51 per cent of equity share capital in Optimum Oil and Gas from its existing shareholder. The company currently holds 23 per cent of equity share capital in Optimum. “On completion of all closing formalities, Optimum will become a subsidiary of the company with 74 per cent holding,” said a statement issued by Asian Oilfield Services. The company specialises in a geophysical range of onshore seismic and drilling services, including acquisition, imaging and field evaluation. In the second fiscal quarter (Q2 FY20), its revenue from operations grew by 45.9 per cent to Rs 56 crore as compared to Rs 38 crore in Q2 FY19. Its profit after tax totalled Rs 6.3 crore as compared to a loss of Rs 1 crore in Q2FY19. Earnings before interest, tax, depreciation and amortisation (EBITDA) for Q2 FY20 was Rs 12.5 crore as compared to Rs 6 crore in Q2 FY19, posting a growth of 110 per cent. The EBITDA margin of 22.6 per cent was due to better operating performance and focus on cost optimisation, the company said.
Chhattisgarh CM seeks Centre’s permission to make biofuel with surplus paddy
Chief Minister Bhupesh Baghel has requested the Centre to allow Chhattisgarh to make biofuel out of surplus paddy in the state. Speaking to reporters after his arrival from New Delhi, Baghel said that he met and requested Union Minister of Petroleum Dharmendra Pradhan to allow the state to make the biofuel. “I met Union Minister Dharmendra Pradhan and requested him that those states which have extra rice crop should be allowed to make biofuel. This way, farmers will get benefitted and employment will be generated,” he said. The Chief Minister said that Pradhan assured him to consult with Food and Agriculture ministries to move forward on the proposal.
Indian Oil to spend Rs 1,000 crore to double base-oil production from Haldia refinery
Indian Oil Corporation (IOC), the country’s largest fuel retailer, plans to double its base-oil production from Haldia refinery in West Bengal by adding a new 270 Thousand Tonne Per Annum (TMTPA) Catalytic Dewaxing Unit (CDU) at a cost of Rs 1,085 crore, the company said in an application to the environment ministry. “The proposed new plant, which is expected to run on neat-hydrocracked residuum in conjunction with the existing cat-dewaxing plant, should be able to increase the base oil production ex refinery by around 100 percent,” IOC said. Base-oil is a name given to the lubricant grade oil initially produced from refining crude oil or through chemical synthesis. The availability of a hydrocracker unit and the upcoming coker block has led to substantial potential in the refinery for augmenting the base oil production volume by setting up a new base oil production facility, the company said. It added that the base oil market is more stable than auto fuel market and the proposed project will provide additional flexibility to the refinery during major price swings. The company also said the proposed hydroprocessing route for grade II or grade III base-oil production will lead to the capability of producing 100 percent API grade III lube base oil. The project is also expected to provide flexibility in crude selection.
ONGC second quarter net profit falls 37 per cent to Rs 5,487 crore
Oil and Natural Gas Corporation (ONGC), India’s state-owned petroleum explorer, today posted a 37 per cent decline in consolidated net profit at Rs 5,487 crore for the second quarter ended September 2019, on the back of lower production and price realisation. The company had posted a consolidated net profit of Rs 8,731 crore in the corresponding quarter ended September 2018. ONGC’s revenue from operations during the second quarter declined 10.50 per cent to Rs 101,554 crore as compared to the corresponding quarter a year ago. Its overall crude oil production during the quarter dropped 3.9 per cent to 5.84 Million Tonne (MT). Crude oil price realization from nominated fields during the second quarter declined 17. 4 per cent to $60.33 per barrel, while realization from oil fields operated under Joint Ventures declined 13 per cent to $60.99 per barrel. The company’s total natural gas production during the second quarter declined 1.6 per cent to 6.26 Billion Cubic Meter (BCM) while gas price realization during the quarter increased 20.6 per cent to $3.69 million british thermal units as compared to the same period last year.
India’s Oct diesel demand falls the most in nearly 3 years
India’s diesel demand in October fell at its steepest annual rate in nearly three years, provisional government data showed, reflecting subdued industrial and economic activity during the month. Local sales of diesel, which accounts for about two-fifths of overall fuel consumption, slipped 7.4 per cent year-on-year to 6.51 million tonnes. The annual decline was the most since January 2017, according to data posted on the website of Petroleum Planning and Analysis Cell. Demand for diesel in the world’s third biggest oil importer is seen as a measure of industrial vibrancy as it is used, for example, to fuel trucks transporting goods across the country. Declining diesel consumption is forcing refiners to export the fuel, adding to abundant supplies in Asia and weighing on refining margins for 10ppm gasoil. A fall in auto sales over the last year in tandem with a shift by motorists to gasoline powered vehicles, has also contributed to the fall in diesel consumption. Sales of gasoline, or petrol, rose 8.9 per cent in October from a year earlier, to 2.54 million tonnes. However, demand for diesel is expected to recover in the next six months as the longer-than-usual monsoon season that affected transportation and industry has ended, the chairman of top domestic refiner Indian Oil Corp said on Monday. Slowing economic and industrial activity has already led some global agencies to cut their Indian fuel demand forecasts. The International Energy Agency expects oil consumption growth to drop to 170,000 barrels per day (bpd) in 2019, the slowest since 2014. Asia’s third-largest economy expanded by just 5 per cent in the June quarter, its slowest pace since 2013, and the International Monetary Fund has cut its growth forecast for this fiscal year. “We don’t see a significant revival in (GDP growth) for some time. No doubt, the slowdown in consumption has weighed on diesel too,” said Jigar Trivedi, a commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers. Overall refined fuels consumption, a proxy for oil demand, fell 1.4 per cent to 17.41 million tonnes on an annual basis in October, the steepest decline since June. In April-October 2019, the first seven months of this fiscal year, India’s fuel demand grew by 1 per cent from a year ago, the data showed. Growth in fuel demand in India is on course to fall to its lowest in at least six years as the economy slows and after heavy rains impacted gasoil consumption. Fuel demand fell to its lowest in a year in September, revised data shows.
Tamil Nadu: Indian Oil bottling plant to enhance storage soon
The Madurai LPG bottling plant of the Indian Oil Corporation (IOC) in Mattaparai village in Dindigul district, will soon enhance its storage capacity from the current 900 (3 x 300) metric tonne (MT) by another 1,800 (3 x 600 MT). The plant is awaiting regulatory clearance. Speaking to reporters in Madurai on Thursday, DGM K S Shankar, DGM (LPG), Tamil Nadu, and general manager R Chidambaram, southern region said the 37-acre campus has state-of-the-art security measures including fire safety equipment and caters to Madurai, Dindigul, Virudhunagar, Tuticorin, Tirunelveli and Kanyakumari districts through a network of 115 distributors. The plant has a capacity to fill and distribute 19,000 cylinders per day. While the annual capacity is the delivery of 60,000 cylinders, in 2018-19, it produced 93,000 cylinders, as the demand went up. The electronic carousel fills 24 cylinders per minute and 1,400 cylinders per hour. The filled cylinders are checked for valve leaks and o-ring leaks, through remote monitoring. The defective valves are replaced immediately. The plant fills domestic cylinders of 14.2 kg, commercial use cylinders of 19kg, nano cut cylinders for commercial applications, besides the smaller 5kg cylinder. It has also started supplying jumbo LPG cylinders weighing 425kg for commercial use. The officials said that the plant is equipped with a 100KW solar plant, while an organic waste converter helps deal with the waste generated by the canteen. Safety measures are given utmost importance and is covered by a fire water hydrant network and gas monitoring system, to tackle emergencies.
Delhi to soon start trial of hydrogen-run CNG buses
The Supreme Court has suggested looking into hydrogen-run vehicles as a solution for NCR’s poor air quality and while the technology will take some time to appear in the capital, buses running on hydrogen-enriched CNG (HCNG) are going to hit the city’s roads very soon. As part of a pilot project, 50 buses of the cluster scheme will be run using HCNG, which is much cleaner as compared to Compressed Natural Gas (CNG). “A four-tonne per day compact reformer-based HCNG production plant at Rajghat-1 bus depot of Delhi Transport Corporation (DTC) is going to be commissioned next month and trial run of HCNG-run buses would start soon,” an official said. In July, Indian Oil Corporation Limited (IOCL), which developed the technology to create HCNG, and Indraprastha Gas Limited (IGL) laid the foundation stone of the plant. Compared to physical blending of hydrogen with CNG, the use of compact reforming process is 30% more cost effective, according to IOCL. For using HCNG, separate buses are not required and the present CNG-run buses can be easily used with a little tuning. “We are aiming to commission the plant by December, subject to statutory clearances,” an IGL spokesperson said. After the commissioning, buses will be operated using HCNG on a trial-run for six months, the official added. It was, in fact, a directive of SC in July 2018 had led to IOCL and IGL collaborating to put up the first semi-commercial plant as a pilot project for conducting the study on the use of HCNG fuel in 50 BS IV compliant CNG-run buses in Delhi. Mixing hydrogen with CNG physically is a difficult proposition and that is why IOCL came up with the compact reforming process, which reforms CNG and the need for mixing is eliminated. For the pilot project, around 50 buses of Anthony Road Transport Limited (a cluster scheme concessionaire) will be fed with HCNG and their efficiency and emissions will be recorded during the six-month trial run and then submitted to the Supreme Court. Four tonne of hydrogen-enriched CNG will be produced at the plant daily and the excess fuel generated will be used to run generators, which will produce electricity. To begin with, it is likely that HCNG might cost a few paise more than CNG per unit but once production is scaled up, the costs are expected to come down.
India’s Oct diesel demand falls the most in nearly 3 years
India’s diesel demand in October fell at its steepest annual rate in nearly three years, provisional government data showed, reflecting subdued industrial and economic activity during the month. Local sales of diesel, which accounts for about two-fifths of overall fuel consumption, slipped 7.4 per cent year-on-year to 6.51 million tonnes. The annual decline was the most since January 2017, according to data posted on the website of Petroleum Planning and Analysis Cell. Demand for diesel in the world’s third biggest oil importer is seen as a measure of industrial vibrancy as it is used, for example, to fuel trucks transporting goods across the country. Declining diesel consumption is forcing refiners to export the fuel, adding to abundant supplies in Asia and weighing on refining margins for 10ppm gasoil. A fall in auto sales over the last year in tandem with a shift by motorists to gasoline powered vehicles, has also contributed to the fall in diesel consumption. Sales of gasoline, or petrol, rose 8.9 per cent in October from a year earlier, to 2.54 million tonnes. However, demand for diesel is expected to recover in the next six months as the longer-than-usual monsoon season that affected transportation and industry has ended, the chairman of top domestic refiner Indian Oil Corp said on Monday. Slowing economic and industrial activity has already led some global agencies to cut their Indian fuel demand forecasts. The International Energy Agency expects oil consumption growth to drop to 170,000 barrels per day (bpd) in 2019, the slowest since 2014. Asia’s third-largest economy expanded by just 5 per cent in the June quarter, its slowest pace since 2013, and the International Monetary Fund has cut its growth forecast for this fiscal year. “We don’t see a significant revival in (GDP growth) for some time. No doubt, the slowdown in consumption has weighed on diesel too,” said Jigar Trivedi, a commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers. Overall refined fuels consumption, a proxy for oil demand, fell 1.4 per cent to 17.41 million tonnes on an annual basis in October, the steepest decline since June. In April-October 2019, the first seven months of this fiscal year, India’s fuel demand grew by 1 per cent from a year ago, the data showed. Growth in fuel demand in India is on course to fall to its lowest in at least six years as the economy slows and after heavy rains impacted gasoil consumption. Fuel demand fell to its lowest in a year in September, revised data shows.
Qatar plans change in crude oil official selling prices in Q1 2020
Qatar Petroleum (QP) has told some term crude buyers in Asia this week that it plans to change the way it prices its oil early next year to align with other Middle East producers, sources with knowledge of the matter said on Thursday. The change follows the Abu Dhabi National Oil Company (ADNOC) saying on Monday that it plans to build a new international exchange for its flagship Murban crude which will start pricing its oil on a forward pricing basis. QP currently prices two of its grades – Qatar Land and Qatar Marine – on a retroactive basis but will move this to forward pricing, a more popular approach used by other Middle East crude exporters such as Saudi Arabia that better matches the trading cycle of crude, the sources said. For example, QP announced OSPs for October earlier this month while Saudi Arabia has set its prices for December. Middle East sour crude grades are typically traded two months forward in the Asia market, meaning that January-loading crude cargoes are currently being traded in the November spot market. By moving prices for Qatari grades forward, it allows traders to compare prices among Middle East supplies, traders said. QP aims to implement the pricing formula change in the first quarter and will set the prices at differentials to the monthly average of Platts Oman and Dubai quotes, the sources said. One of the sources said QP will set dummy prices for a few months to obtain feedback from customers before the change. The producer has released its first set of dummy prices for December, he said. The company did not immediately respond to a request for comment. As part of its efforts to determine market value for its crude, QP offered one 500,000-barrel cargo of January-loading Qatar Marine crude in a rare tender, traders said. Bids can be priced based on Dubai quotes.