India’s strategic petroleum reserve levels at 55% capacity
India’s strategic petroleum reserves stand at 55% of available underground storage capacity of 5.33 million tonnes, a top government official told Reuters on Monday. He did not wish to be identified as he was not officially authorised to speak on the subject. India has three strategic reserves in the southern cities of Vizag, Mangalore and Padur. “Vizag is currently filled up to 100%,” the official said, and added that Mangalore and Padur are currently around 55% and 25% respectively. Saudi Arabia has assured Indian refiners of continued supply, the Indian government said after an attack on Saudi Arabia’s crude oil facilities over the weekend.
Saudi oil attack: Petrol, diesel rates may increase by Rs 5-6
With global crude oil prices rising due to heightened geopolitical risks after Saturday’s drone strike at Saudi Arabia’s oil facilities, Indian consumers can expect a Rs 5-6 rise in petrol and diesel prices for every $10-per-barrel rise in global crude prices. Such an increase could be effected by oil marketing companies (OMCs), like Indian Oil, BPCL & HPCL, with a lag of a fortnight, a report by Kotak Institutional Equities warned. In reaction to Saturday’s strike at world’s largest oil producer, in early trade on Monday, Brent crude price shot up by nearly 20 per cent to over $71 per barrel, while WTI crude on the New York Mercantile Exchange rose nearly 20 per cent and touched $63.3. However, later in the day the prices of the two types of crude gave up some of their early gains. In the evening, Brent was trading at $66.6 and WTI at $60.5, both up by over $6 per barrel from their respective Friday close. On Monday, retail price of petrol was Rs 77.71 per litre, while in Delhi it was Rs 72.03 and Rs 74.76 per litre in Kolkata and Rs 74.85 in Chennai, Indian Oil’s website showed. Another report by foreign brokerage Jeffries said that with 85 per cent of India’s current oil demand being met from imports, a $10-per-barrel rise in crude prices could add $15 billion to its import bill. This in turn could further hit the country’s already weak economic fundamentals. Replacing crude oil from Saudi Arabia, which made up a fifth of India’s imports in the last few years, would be a challenge. A $10 rise in Brent will lift India’s annualised import bill by $15 billion, which is about 50 basis points (100bps = one percentage point) of the country’s GDP, the Jeffries report said. The Kotak report also noted that a sharp jump in global crude prices may put pressure on refining margins of refiners amid slowing demand and may also increase losses for OMCs. “On the other hand, higher crude prices may be construed positively for upstream PSUs and GAIL,” it said.
Russian, Saudi energy ministers to have phone call on Monday – Russia’s Novak
Russia’s energy minister Alexander Novak said on Monday that he planned to have a phone call with his Saudi counterpart following attacks on Saudi oil facilities. He said there is enough oil in commercial stockpiles worldwide to cover the shortfall of supplies from Saudi Arabia. Novak told reporters that parameters of the global oil output deal have not been changed and there is no immediate need to convene an extraordinary OPEC and non-OPEC meeting.
South Korea will consider release of oil reserves if Saudi situation worsens: energy min
South Korea said on Monday that it would consider releasing oil from its strategic oil reserves if circumstances around crude oil imports worsen in the wake of Saturday’s attack on Saudi Arabia’s oil facilities. The comments came as oil prices surged to four-month highs on Monday after weekend attacks on crude facilities in Saudi Arabia sparked supply fears. South Korea’s energy ministry said in a statement it anticipated no short-term impact on securing crude oil supplies from Saudi Arabia. But if the situation drags on it might disrupt crude oil supplies, the ministry added. U.S. President Donald Trump also authorized the use of the U.S. emergency oil stockpile to ensure stable supplies after the attack, which shut 5% of world production. South Korea, the world’s fifth-largest crude oil importer, currently has about 96 million barrels of crude oil and refined products as strategic stockpiles. Of the total 96 million barrels, the country holds 82 million barrels of crude oil and the rest is refined products such as gasoline, diesel and naphtha. “The government will do its best to stabilize the demand and supply situation and prices, such as considering release of oil reserves if the situation worsens,” the ministry said. The stockpiles cover about South Korea’s 90 days of oil requirement.
PSU Disinvestment: IOC, NTPC, BPCL, GAIL may go into private hands this fiscal
Stake sales in the Maharatna firms — namely IOC, NTPC, BPCL and GAIL — could happen either through the OFS or ETF route; strategic sale of at least one of them is also on the radar. In all these CPSEs, the Centre’s stake is now below 55%. With its tepid revenue growth resulting in higher reliance on non-tax revenue, the Centre has drawn up a plan to bring down its stakes in a clutch of large central public sector undertakings (CPSEs) to below 51% in FY20. Stake sales in the Maharatna firms — namely IOC, NTPC, BPCL and GAIL — could happen either through the OFS or ETF route; strategic sale of at least one of them is also on the radar. In all these CPSEs, the Centre’s stake is now below 55%. Other CPSEs in which the government might reduce stakes as per the policy laid out in the Budget FY20 are Engineers India, Container Corporation (ConCor) and Nalco. The Centre’s disinvestment target for the current fiscal is Rs 1.05 lakh crore. So far, it has raised only Rs 12,357 crore or 12% of the annual target. Faced with a lack of headroom to garner non-tax revenues from stake sales in listed CPSEs, the Centre announced in the Budget to bring down its direct holding in non-financial firms to below 51%. In many of these firms, the Centre can still can retain a majority stake, inclusive of the stakes held by government-controlled institutions such as LIC in them and CPSE cross holdings. The Centre mobilised a record Rs 1 lakh crore in FY18 and Rs 85,000 crore in FY19 from disinvestment of its stake in various companies, but some of its sheen was taken away by the fact that CPSE-CPSE deals (ONGC-HPCL and PFC-REC) and stake purchases by LIC played a major role in boosting the receipts. FE has estimated that if the government brings down its stake to 26% in seven large CPSEs (see chart), it could garner about Rs 1.2 lakh crore at current market prices. The objective of the change in disinvestment policy is that the government could bring down gradually its stake in many non-strategic CPSEs o 26%. In 1997, the Disinvestment Commission recommended such a strategy (it identified firms in defence equipment, atomic energy, and railways were strategic), which was followed to an extent by the Atal Bihari Vajpayee government (1999-2004). The Vajpayee government sold more than a dozen CPSEs to private companies, the most notable ones being IPCL, which was sold to Reliance Industries, and Bharat Aluminium Company and Hindustan Zinc, both of which went to Vedanta Resources. In the current scenario, the options are not limited to strategic sales alone as other modes such as exchange traded funds (ETFs) are also an effective tool for the government to dilute its stake in the firms. ETFs, which invested in CPSE stocks, contributed a record Rs 45,080 crore or 53% of the disinvestment receipts in FY19.
Central India’s first CNG, LNG mother station opened in Nagpur
Union minister Nitin Gadkari inaugurated the first liquefied natural gas (LNG) and compressed natural gas (CNG) mother station of Central India in the city on Friday. The initiative is a part of efforts to promote green vehicles with an aim to check pollution. The station set up by Rawmatt has come up in Kalamna off the Inner Ring Road. Mayor Nanda Jichkar and Nagpur Municipal Corporation (NMC) transport committee chairman Bunty Kukde were among those present on the occasion. Talking to the media, Gadkari said the use of CNG as an alternative to conventional fuel will play an important role in controlling rising pollution levels in a developing city like Nagpur. With the setting up of the CNG station, the NMC from next week is all set to operate seven of its standard city buses (Aapli Bus) converted to CNG from diesel. The work for conversion of remaining diesel operated standard buses to CNG is under way. Apart from NMC, a city-based engineering college, too, has converted its diesel-run buses to CNG. Gadkari further said that CNG has many advantages over conventional petroleum products as it is a smart and affordable choice for vehicles. “People will save money on fuel, reduce emission levels and extend life of their vehicles,” he said. CNG amounts to 50% savings over conventional products such as diesel fuel, the minister said and explained how both CNG and LNG are cheaper than diesel. “A litre of diesel costs Rs69 per 3km, while a kilo of CNG and LNG cost Rs58 and 46 per 4km,” he said. According to Gadkari, NMC’s move to convert diesel buses into CNG will bring down its expenses by over Rs 600 million per annum. “Apart from Rawmatt, a distillery unit in the region is manufacturing 18 tonne CNG. Many more CNG units will come up in the region,” he said. The NMC will also produce 40-50 tonne bio-CNG from five biodigesters installed at the Bhandewadi sewage treatment plant. The CNG mother station will supply CNG to all stations that will be set up shortly at different localities on Wardha road, Umred road, Wadi etc. Gadkari said that five plants of CNG were also coming in the region, and claimed that around 125 projects for setting up bio-CNG plants are also coming up. These projects will increase farmers’ profit, he said.
Aramco tells Indian refiner it will get oil: source
Saudi Aramco has told one Indian refinery there will be no immediate impact on oil supplies as it will deliver crude from other sources and had adequate inventory, a source with the refinery said on Sunday. Aramco has lost half of its production capacity after attacks on its facilities on Saturday and it remains unclear how long it will take the company to fix the damage.
Govt nominates ONGC to operate Panna-Mukta fields
The government has nominated Oil and Natural Gas Corp to operate the Panna-Mukta oilfields after the contract with Reliance Industries and Shell runs out in December, according to an ONGC executive. Reliance and Shell each own a 30% participating interest in Panna, Mukta and Tapti (PMT) fields, while ONGC holds the balance 40%. Tapti stopped production three years ago while the other two fields have been sharply declining, prompting Reliance and Shell to decide on exiting the fields at the end of the 25-year lease in December. The government has, therefore, directed ONGC to operate Panna and Mukta fields after the two private companies exit on December 21. ONGC is preparing to take over facilities of the two fields and put in place teams that will operate the fields, the executive said. Once it takes over, ONGC will reassess the fields and figure out their investment needs, he said. The output from these fields will attract royalty and cess as are applicable to production from any nomination field, the executive said. Panna and Mukta produced 0.84 million barrels of crude oil and 11.2 billion cubic feet of natural gas in the April-June quarter, as per Reliance’s earnings report. Some of Tapti’s facilities have already been handed over to ONGC. The PMT fields, located close to Bombay High fields, were discovered by ONGC but the government, under its privatisation drive, handed over its operation to a consortium of Reliance Industries and Enron in 1994. Enron’s stake is now owned by Shell. Reliance and Shell are engaged in an arbitration with the government over the state’s share of revenue from the PMT fields. ONGC is not party to the arbitration, but will have to honour the arbitration award. Last year, the oil ministry ordered Reliance, Shell and ONGC to together pay $3.8 billion as the increased share of the government’s earnings from the PMT fields, following an arbitration award in government’s favour. Reliance and Shell challenged the award in a UK court, which upheld the arbitration panel’s decision on most counts but referred the matter over how much development cost the companies could recover back to the tribunal, which is again hearing it. Exit of Reliance and Shell from these fields will have no bearing on the final arbitration award.
Tension over Kashmir not to affect TAPI: Pak assures Turkmenistan
Pakistan has assured Turkmenistan that rising tensions with India will have no effect on TAPI gas pipeline project, a media report said on Sunday after doubts were raised over the future of the USD 10 billion trans-national project in the wake of fresh tension between New Delhi and Islamabad over Kashmir. Some Pakistani experts raised doubts about the future of the the Turkmenistan-Afghanistan-Pakistan-India (TAPI) and other offshore gas pipeline projects following tensions between India and Pakistan after India scrapped Jammu and Kashmir’s special status. “However, Pakistan has assured Turkmenistan that rising tensions with India will have no effect on the mega project,” a government official was quoted as saying by the Express Tribune. The TAPI pipeline project seeks to build connectivity in the South and Central Asian regions through gas pipelines and will help ease energy shortages in South Asia. The TAPI will pass through war-torn Afghanistan and Pakistan to India to boost economic activity and to ensure peace and stability in the region. This project would also help connect two regions through road, rail and fiber cable network. The construction work has already started in Turkmenistan and is expected to start soon from Turkmen-Afghan border to Herat section, the official said, adding that construction activities in Pakistan are set to kick off during the first quarter of 2020. “There has been tension between Pakistan and India over Kashmir. However, this will not affect TAPI pipeline project,” the official was quoted as saying. “Tapi Company is responsible for the execution of this project. However, Pakistani companies are assured to get maximum share in the work within Pakistan,” said Mobin Saulat, Managing Director of Interstate Gas Systems (ISGS), which is working on Pakistan’s some big pipeline projects. He said a delegation of Tapi Company would visit next month to review the progress of the project and finalise the plan for construction. Each Pakistan and India would receive 1.3 billion cubic feet per day (bcfd) gas. Tensions between India and Pakistan spiked after New Delhi abrogated provisions of Article 370 of the Constitution to withdraw Jammu and Kashmir’s special status and bifurcated it into two Union Territories. Pakistan downgraded its diplomatic relations with India and expelled the Indian high commissioner following the revocation of Article 370 in Jammu and Kashmir on August 5. Asserting that the abrogation of Article 370 was its “internal matter”, India has defended imposition of restrictions in the Kashmir Valley on the grounds that they were put to prevent Pakistan from creating more mischief through proxies and terrorists.
Govt may sell stake in BPCL to overseas oil firm
India is considering a plan to sell the nation’s second-largest state refiner and fuel retailer to a global oil company as it explores options to give up its controlling stake in Bharat Petroleum Corp., people with knowledge of the matter said. The government is keen to lure multinational companies in the domestic fuel retailing to boost competition and shake up a sector that’s long been dominated by state-run firms, the people said, asking not to be identified as the plan is not public.The Business Standard newspaper reported on Sept. 2 government’s plan to sell a majority stake in the company. It holds 53.3% in BPCL Prime Minister Narendra Modi’s government has set a record target of raising 1.05 trillion rupees ($14.8 billion) in the current fiscal year from sale of state firms. The government’s budget gap goal of 3.3% of GDP is at risk due to sluggish revenue collections on the back a growth slowdown, limiting the government’s ability to spend on infrastructure and welfare programs. Offloading its holding in Bharat Petroleum can help meet more than 40% of the aim based on the closing price on Sept. 12. Finance ministry spokesman Rajesh Malhotra could not be immediately reached for comment.