I see great partnership in energy sector between India, Russia: Oil minister Pradhan
Union Petroleum and Natural Gas Minister Dharmendra Pradhan on Wednesday said he sees a great partnership in the energy sector between India and Russia. “I see a great partnership in future, especially in the energy sector between the two countries (India and Russia). Russia is the most favoured overseas investment destination for India,” he told reporters here. Earlier in the day, Pradhan held a “productive meeting” with First Deputy Minister for Development of the Russian Far East and Arctic Sergey Tyrtsev. “Had a productive meeting with H.E. Sergey Tyrtsev, First Deputy Minister for Development of the Russian Far East and Arctic. We discussed about furthering energy cooperation between India and Far East Russia particularly on sourcing coking coal and other minerals,” the minister tweeted. Representatives of Indian steel and coal companies held separate meetings with their Russian counterparts. “Long-term cooperation with Russian Far East in the coal sector will help India bridge the demand gap of coking coal in the country,” Pradhan said in a follow-up tweet. Pradhan met with senior management of Vostochny intermodal container port in the Russian Far region where he discussed ways to secure more coking coal for the steel industry in India. “Met with senior management of Vostochny intermodal container port. One of the oldest and year-round operation port in the Russian Far East specialised in coal handling and suitable for handling large-tonnage ships. Discussed with Port authorities about their expansion plans and also on ways to secure more coking coal for the domestic steel industry,” he tweeted. Pradhan on Tuesday visited the Zvezda Shipbuilding Complex. The shipyard deals in manufacturing various kinds of vessels, including LNG carriers, offshore vessels and passenger ships. The minister is currently on a four-day visit to Russia and Japan from October 22 to 26. His visit comes as a follow up to the visit of Prime Minister Narendra Modi to Vladivostok for the Eastern Economic Forum in September. The minister, who is accompanied by an official and business delegation, is in Vladivostok from October 22 to 25.
In Brazil, Norway’s Equinor eyes natural gas infrastructure
Norway’s Equinor ASA is scouting locations on Brazil’s coast to install new natural gas infrastructure, the company’s Brazil chief said, as the firm’s gas-heavy offshore fields come on-line in the coming years. Natural gas is considered both a promising opportunity and a vexing problem in Brazil. The Latin American oil powerhouse is rapidly developing a prolific oil area off the nation’s southeastern coast known as the pre-salt. Many of the region’s assets have significant amounts of natural gas, but consumption is low among Brazilians and the nation has few pipelines and terminals to facilitate exports. As a result, firms have largely opted to “re-inject” the gas, in a process that increases crude output. That will only work for so long. Some fields coming on-line in the pre-salt have too much gas to re-inject. Two massive government auctions in early November in a gas-rich zone are likely to add to the conundrum. In an interview, Executive Vice President Margareth Ovrum estimated Equinor’s gas condensate Pao de Acucar field would come online in the mid-2020s, making it “probably the first field coming on-line (in Brazil) that needs a gas export solution onshore.” Other firms will be watching Equinor’s experience closely. “We are assessing different opportunities for landfall,” Ovrum told Reuters on Monday at the company’s office overlooking Rio de Janeiro’s Guanabara Bay. “Should we extend a terminal? Do we build a new one? What do we do on the (natural gas liquids) side?” The firm is having similar conversations at its Carcara field. It expects to begin “first phase” production there in 2023 or the first half of 2024, she said. Equinor has not decided on when it will begin phase two, she added, but that could involve constructing natural gas infrastructure as well. “FIGHTING FOR VALUE” Equinor is one of 14 firms signed up for the so-called transfer-of-rights oil bidding round on Nov. 6, in which Brazil’s government expects to rake in around $26 billion in signing bonuses. While the transfer-of-rights assets are considered one-of-a-kind as state-run Petroleo Brasileiro SA has already done exploratory work in the region, some major oil companies has raised concerns about the prices of the assets. Ovrum said Equinor was studying the potential profitability of the areas, adding that Brazil was competing against other basins. “Obviously, it’s a very high signature bonus,” she said. “You are fighting with other shelves, whether it’s Argentina, or the Gulf of Mexico, or Norway or wherever. And you’re not fighting for the volume, your fighting for the value.”
India’s September oil imports at three-year low, Saudi regains top spot
India’s oil imports fell to their lowest in more than three years in September to 3.82 million barrels per day (bpd), data obtained from industry and shipping sources showed, as some refiners cut purchases due to shutdowns for maintenance and fuel upgrades. Last month, Saudi Arabia replaced Iraq as top oil supplier to India after a gap of about 13 months, the data showed. September oil imports, which dropped below 4 million bpd for the first time since June 2016, were about 18.7% lower than in August and down 8.4% from a year ago, the data showed. The fall in oil imports limited India’s fiscal deficit for September, but it also potentially points to a general economic and industrial slowdown. “Lower imports were largely due to refinery turnarounds as refiners have to supply Euro VI fuels in the country from an April 1 deadline. Heavy rains and slower industrial and construction work drain down the demand for refined fuels,” said Ehsan Ul Haq, an analyst with Refinitiv. For a table on shutdowns at Asian refineries see: Falling industrial demand dragged India’s fuel demand to its lowest in more than two years in September. “Due to weakening fuel demand there was an inventory build up of refined products so we had to cut crude processing and restrict imports,” said an official at one of the refiners. Indian refiners’ crude processing declined about 7% in September from a year ago, government data showed on Tuesday. SAUDI OUTSHINES IRAQ Saudi Arabia supplied about 830,500 bpd oil to India in September, compared with 821,000 bpd supplied by Iraq, the data obtained from sources showed. The sources declined to be identified. India restricted imports from Iraq in September as it had imported record volumes of Basra oil in August. “By reducing their official selling price (OSP) Saudi attracted more buyers compared to others, they continue to meet the demand even after outages due to attacks on its two fields,” Haq said. Saudi Arabia has cut its September OSP for its Arab Light grade for Asia by $0.75/barrel compared to a $0.40/barrel reduction in Iraq’s Basra Light. The United Arab Emirates emerged as India’s third biggest supplier in September after a gap of seven months, knocking Nigeria into fourth place, a position held by Venezuela in August. The UAE was fifth biggest oil supplier in August. Venezuela was in sixth place behind Angola as private refiner Nayara Energy did not ship oil from the Latin American country in September and instead discharged old cargoes, the data showed. Lower imports by Nayara had also dented India’s overall purchases in September, the data showed. “Any sustained decline in India’s oil imports and fuel demand might prompt global agencies to revise down their oil demand growth forecast,” Haq said. OPEC and the International Energy Agency (IEA) have trimmed their global oil demand growth forecast for 2019. The IEA expects 2019 global oil demand growth to be the weakest since 2016, following evidence of a slowdown in economies including Europe, India, Japan, Korea and the United States. The IEA said India’s oil consumption rose by 235,000 bpd on average during 2014-18, nearly a fifth of the global total. The growth could moderate to 170,000 bpd in 2019, the slowest since 2014, due to an economic slowdown, the IEA said. Asia’s third-largest economy expanded by just 5% in the June quarter, its slowest pace since 2013. The country’s central bank has also cut its growth forecast for 2019-20 to 6.1% from prior projection of 6.9%.
L&T wins over Rs 7,000 crore contract from HPCL
Engineering and construction major Larsen & Toubro on Wednesday said its arm LTHE has won a mega project from Hindustan Petroleum Corporation. As per the company’s scheme classification, the mega project bagged by L&T Hydrocarbon Engineering Ltd (LTHE) is worth over Rs 7,000 crore. The project has to be completed on engineering, procurement, construction and commissioning (EPCC) basis. According to a statement by L&T, the project is for setting up a residue upgradation facility for Visakh Refinery Modernisation Project at Hindustan Petroleum Corporation Ltd’s (HPCL) Vizag Refinery. The residue upgradation facility is licensed by Chevron Lummus Global with a capacity of 3.55 MMTPA. This plant will enable HPCL to convert the heaviest oils into high-quality Euro 6 diesel while simultaneously eliminating fuel oil production, as well as increasing feedstock and product flexibility. This kind of facility is being set up for the first time in India, the company said. The contract is awarded through an international competitive bidding on lump sum turn key basis and is part of HPCL’s ongoing Visakh Refinery Modernisation Project wherein LTHE is already executing two packages. “L&T has a proven track record of over 25 years in refinery and petrochemical sector and bagging this contract from HPCL reinforces our integrated capabilities in executing critical plants for the sector,” Subramanian Sarma, MD and CEO, LTHE said. L&T is an Indian multinational engaged in technology, engineering, construction, manufacturing and financial services with over USD 21 billion in revenue. It operates in over 30 countries.
Petrobras, Brazil’s government near oil marketing deal: official
Brazil’s Petrobras could take over marketing of the government’s share of crude from offshore oilfields, a government official told Reuters, adding significantly to the state-run oil firm’s trading operations. In an interview on Monday, the head of Pre-Salt Petroleum, better known by its Portuguese acronym PPSA, said it is close to inking a deal in which Petrobras’ trading desk will manage the oil that Brazil’s government receives from private sector firms. The potential deal, being discussed ahead of a blockbuster season for oil bidding rounds in the South American nation, would significantly boost the volume of crude traded by Petroleo Brasileiro SA, as the firm is formally known. Petrobras declined to comment on the negotiations. On Nov. 6, a who’s who of international oil firms will compete to snap up prolific offshore oilfields in Brazil in a process expected to fetch some $25 billion for the government. The following day, firms will compete in a separate process expected to bring another $2 billion into state coffers. Following significant exploration work in the area, the fields are known to hold billions of barrels of untapped crude. All winners will hand a significant chunk of that oil over to the government, via the PPSA, as is standard practice within Brazil’s so-called “pre-salt” oil producing region. Due mainly to the upcoming rounds, the oil that the PPSA manages could soar from just a few thousands barrels per day (bpd) last year to around 500,000 bpd by 2028 according to preliminary estimates, PPSA head Jose Eduardo Gerk said in an interview. That compares with Petrobras’ current exports of 583,000 bpd in the September quarter. Last year, the PPSA sold its oil on the spot market and via auctions. But that is set to change as the agency closes in on the outsourcing contract with Petrobras, Gerk said. “Since I got here (in April), the negotiations … with Petrobras have gone forward and we hope to be able to come to an agreement by the end of the year,” he told Reuters. With the oil it receives set to skyrocket in the coming years, the PPSA is also set to grow. Currently a relatively sleepy agency of 44 employees located in downtown Rio de Janeiro, Gerk said the agency hopes to hire another 50 in-house employees by 2021.
IOC keen to open another oil terminal in Karnataka
In an attempt to cater to the demands of petroleum products including Petrol, Diesel, Kerosene and Liquified Petroleum Gas (LPG) from north Karnataka, Indian Oil Corporation (IOC) is planning to open another terminal in the state. Speaking to TOI, DL Pramodh, executive director of IOC (Karnataka), said they were looking for 120-150 acres of land in Davanagere-Chitradurga region to set up another terminal as the demand for their products are growing day by day. “We are planning to invest around Rs 400-500 crore and already in talks with Karnataka Industrial Areas Development Board (KIADB). This will not just cater better but also will lessen the burden on Bengaluru’s Devanagonthi terminal located near Hoskote which sells around five million tonnes annually,” he said. According to IOC, the 92 acre terminal situated on the outskirts of Bengaluru caters to 30% of the Karnataka’s demand for petroleum products. The company said, “Presently, we sell about five millions tonnes of fuel in Karnataka annually and have a market participation of 44%. The terminal in Bengaluru has a product coverage of 10 days for petrol and diesel, 14 days for Kerosene and five days for aviation fuel.” During 2019-20, Indian Oil has released new connections to the tune of 2.38 lakhs out of which 1.47 lakh were under Ujjwala scheme, which is highest for the industry, the company said. IOC terminal to go eco-friendly. With Supreme Court directing union government to implement Bharat Stage VI (BS VI) emission norms before April 2021, the IOC said that they are going to replace BS IV with BS VI from early 2020 to make the petroleum products more eco-friendly.
UBS, Simmons Energy pare bankers as shale M&A slows – sources
UBS Group AG and the energy arm of Piper Jaffray Companies have cut staff in their oil and gas investment banking teams, three people familiar with the matter said on Monday, as U.S. dealmaking continues to dry up. Mergers and acquisitions activity within the shale business is at its lowest level in a decade, excluding Occidental Petroleum Corp’s purchase of Anadarko Petroleum Corp, as shareholders squeeze producers to focus on returns and develop existing acreage rather than expansion. The decline has left investment bankers that advise on such transactions without enough work. UBS declined to comment. Simmons Energy, which is a division of Piper Jaffray, did not reply to requests for comment. Those departing UBS and Simmons Energy were focused on sales of acreage and smaller assets, known in the industry as the acquisitions and divestitures (A&D), and left in the last couple of weeks, according to the sources, who spoke on condition of anonymity as the information is not public. Among those departing the Swiss bank are Managing Directors David Edwards and Miles Redfield, among the most senior names in the unit. Around half of the A&D team at UBS was dismissed, which previously consisted of around a dozen bankers, according to one of the sources. A second source said the number who left was fewer than 10. Edwards and Redfield were among a 15-person team that joined UBS from Bank of Montreal’s investment banking arm in 2015. The move was acrimonious with both men, along with two others, subject to a lawsuit from the Canadian bank over their switch. At Simmons, around two-thirds of their upstream A&D team was laid off, including Phillip Ream, a managing director who joined the firm in 2018 from Barclays . Piper Jaffray did not reply to requests for comment. In total, around seven people at Simmons are set to leave, two of the people said. The head of A&D for Simmons, Jay Boudreaux, has been asked to retire at the end of the year, according to one of the sources. Boudreaux has been with Simmons since 2005, according to his biography on the company’s website. He did not reply to requests for comment. These job cuts are the latest in the Houston investment banking community: Last month, Jefferies Financial Group laid off 15 people, mostly focused on A&D, while Wells Fargo & Co. cut 7% of its energy investment banking team in the city.
Singapore fuel oil inventories hit four-month high despite sinking net imports
Residual fuel oil inventories in the Singapore fuel oil trading and storage hub inched to a near four-month high in the week ended Oct. 16 despite sharply lower net import volumes, according to official data. – Onshore fuel oil stocks climbed by 208,000 barrels (about 31,000 tonnes), or 1 per cent, from the previous week to 22.11 million barrels, or 3.3 million tonnes, data from Enterprise Singapore showed on Thursday. – This came despite weekly net fuel oil import volumes which were 53 per cent lower from the prior week at 405,000 tonnes, well below the 2019 weekly average of 684,000 tonnes. However, such weekly figures are volatile. – The lower net imports were pressured by weak import volumes totalling 773,000 tonnes, a six-week low. – Compared with year-ago levels, onshore fuel oil inventories came in 25 per cent higher. – Singapore’s net exports of fuel oil to South Korea topped the week at 42,000 tonnes, followed by Hong Kong and China at 38,000 tonnes each, and Bangladesh at 20,000 tonnes. – The largest net imports into Singapore originated from the United Arab Emirates at 213,000 tonnes, followed by Malaysia at 94,000 tonnes, Iraq at 83,000 tonnes and Russia at 76,000 tonnes. – Fuel oil inventories in Singapore have averaged 21.1 million barrels a week, or 3.15 million tonnes, so far in 2019, compared with 18.93 million barrels, or 2.83 million tonnes, in the previous year.
US LPG entrenches itself as regular supply source to India: traders
LPG is being shipped to India from the US in November, making it a regular supplier to Asia’s second-largest importer since flows began in April, as traders widen sources to meet spot or term commitments after the attacks on Saudi Arabia’s oil facilities in September disrupted supply, market sources said. In contrast, as trade tensions persisted, China continues to diversify away from US LPG, taking more from the North Sea, traders said. Up to five VLGCs are on their way to India and China, from the US and North Sea, sources said. The buyers are state-run Bharat Petroleum Corp. Ltd. and Indian Oil Corp. “Anything is possible. Indian buyers have done spot tenders on a CFR basis and it’s up to the sellers to source the cargoes from the Arabian Gulf, the US or anywhere else,” a source familiar with the matter said. Among the traders moving Western cargoes to India are Equinor and Trafigura, who have term contracts with Indian buyers, market sources said. The VLGCs include Crystal Sunrise, which sailed from Houston on October 13, and due to reach Dahej on India’s west coast on November 21, according to cFlow, Platts trade flow software. Others include Sakura Gas and Pampero, both carrying US cargoes and heading to India in November, a Western trader said. Pampero is an Avance vessel fixed on spot basis to Equinor, a ship broker said. It is currently in the Caribbeans and due to arrive in Dahej November 22, cFlow showed. The trader said Equinor is working on bringing one more Western cargo to India in November. The Breeze is China-bound with a North Sea cargo, the trader added. It is currently in the Mediterranean, cFlow showed. “Breeze is an Avance vessel fixed to Equinor on spot business duty. That one goes to China as she is loaded with full propane in Norway,” the ship broker said. VLGCS Loading More Butane Than Normal BW Gemini also loaded in North West Europe and could head for India, the ship broker said. It is en route to Egypt’s Port Said after departing Denmark, cFlow showed. “Until vessels load and sail, as you know, there is no certainty where they will end up. I believe up to September from early this year, India probably has imported from the US about 500,000 mt,” another ship broker said. He said there are delays at Indian ports and until Saudi Arabia sort things out after the production disruptions, some of the proposed Western shipments would not be finalized. Some of the VLGCs were loading more butane than normal, a US-based source said. “Sometimes instead of loading all propane, they will load one tank of butane, but we have seen some in the past month or so, loading up to two tanks of butane,” he said. “In September and October we see 25%-30% of all LPG exported from the US being butane. At the very start of the year it was 15%-17%, then around 20% during summer,” he said, adding that the butane arbitrage to Asia has widened despite rising freight costs, on worries about Saudi production constraints which lifted Asian prices. VLGC moves to North America and Europe for long journeys to Asia have boosted global freight, with Persian Gulf-Japan rates at more than four-year highs of around $81/mt. Houston-Japan rates are at the highest in close to four years at $125/mt. Platts assessed CFR Japan propane at $435/mt Wednesday, after hitting a five-month high of $456/mt on October 11, while CFR Japan butane was assessed at $453/mt after hitting a six-month high of $473/mt on October 11. Since flipping to a premium against propane in early August, butane has been $8/mt and $20/mt above propane, Platts data show. BPCL and IOC turned to buying evenly split cargoes via spot tenders for October and November deliveries after their October-loading Saudi term cargoes were delayed or deferred after the attacks. Indian lifters are waiting for the acceptances of November-lifting nominations — expected by end-week — before deciding on alternative supply for the end-year, a source said. Industry sources said the incident at Saudi Aramco’s 305,000 b/d SASREF refinery during a turnaround, added to uncertainties, though there were no reports of supply disruption as maintenance continues. Sources said even if LPG from the refinery is affected, the volume is small and meant for the domestic retail market. India’s first lifting of US cargoes early this year was prompted by pre-election stockpiling in April and May. China’s rising imports of Middle Eastern LPG as the country halted US shipments, led to higher costs for Indian buyers, forcing them to seek cheaper alternatives. India traditionally sources about 98% of LPG from the Middle East, comprising 45% propane and 55% butane, market sources said.
Shell aims to operate Egypt concessions in H2, 2020
Royal Dutch Shell is aiming to start operating in its concession areas in Egypt in the second half of 2020, a senior executive said. Shell won three oil and two gas concessions in Egypt in February. Eni, BP and Exxon Mobil also won some of a total of 12 tenders as Egypt looks to sustain an investment upswing spurred by major discoveries. Shell has also applied to take part in a bidding round in Egypt for oil and gas drilling in the Red Sea, Gerald Schotman, executive vice president upstream JVs at Shell, told Reuters. The company would be also interested in any bidding for oil and gas drilling in the Mediterranean Sea should it open as Shell wanted to expand in Egypt, Schotman said in an interview in Alexandria. He said the Egypt did not owe Shell any arrears. Arrears to foreign oil companies accumulated after the 2011 uprising that toppled President Hosni Mubarak and reached $6.3 billion in the 2011/2012 fiscal year. Petroleum Minister Tarek el-Molla said in July that Egypt’s arrears to foreign oil companies had declined to $900 million. Eni’s discovery of the giant Zohr field in 2015, the largest in the Mediterranean and estimated to hold about 30 trillion cubic feet of gas, has raised interest in exploration in Egypt. The country has reached maritime demarcation agreements with several countries in its push in recent years to increase oil and gas exploration.