Petrobras plan to end refining monopoly in Brazil comes with caveats
Brazil’s Petroleo Brasileiro SA drew plaudits from investors last month for announcing a plan to sell off eight of its refineries in a process the company says could fetch some $15 billion. But analysts and industry experts say that while the divestments will help Petrobras shore up its finances, it may fail to create a competitive refining market in Brazil, an oft-stated goal of regulators and Petrobras executives. That’s because the company is hanging onto its refineries in the states of Sao Paulo and Rio de Janeiro, home to over 60 million Brazilians. They collectively process about 1.1 million barrels of oil per day, according to Brazil’s oil regulator, about half of the company’s total capacity. “I think it’s a little bit for show to make it seem like the refining market is being opened up,” said Alberto Barriga, a former refining executive at Petrobras and a partner at consultancy Bizup. “But it won’t make any difference in terms of competition as the distance between refineries is large and transport will be too expensive (to move fuel between regions).” In response to questions from Reuters, Petrobras said its refineries in Sao Paulo and Rio de Janeiro will be subject to competition from fuel imports and cabotage, or the transport of fuel from other refineries within Brazil. It added that four of the five refineries it will retain are integrated by pipelines and other infrastructure, making the sale of individual assets difficult. In addition, the facilities’ proximity to Brazil’s prolific Campos and Santos offshore oil basins supports its view that they are strategic, Petrobras added. Truckers protesting high diesel prices last year led Brazil’s government, under former President Michel Temer, to demand that Petrobras cut fuel prices, a move that hit the company’s shares and triggered the chief executive’s departure. That intervention and a more recent one by new President Jair Bolsonaro underline how politics often impinge on the Brazilian energy sector. Some analysts have said breaking up Petrobras’ monopoly on refining could help lower prices at the pump by boosting competition and lessen the firm’s exposure to meddling from Brasilia. But the prospect of political interference could dampen investor interest in the refineries. Petrobras’ plan to retain the refineries in the country’s economic sweet spot could also run afoul of antitrust regulator Cade, which in December opened an inquiry into Brazil’s refining market. “Whatever model Petrobras ends up using is going to have to pass through Cade. Does it stimulate competition? Or does it generate regional monopolies?” said Adriano Pires, a consultant for Brazil’s Center for Infrastructure. “It could be that Cade makes them sell something (in Rio or Sao Paulo).” Among the natural buyers for the refineries are national fuel distribution firms such as Raizen and Ipiranga, the fuel distribution unit of Ultrapar Participacoes SA, as well as trading firms that have established a presence in Brazil such as Glencore PLC and Vitol SA, analysts say. Petrobras distribution unit Petrobras Distribuidora SA is also seen as a potential candidate after its planned privatization. But for a successful sale, the government will have to prove its free-market credentials. “The government has to decide if it believes in the market or not,” said Edmar de Almeida, a professor and researcher and the Federal University of Rio de Janeiro.
Gujarat Gas net profit jumps 77 pc in March quarter
Gujarat Gas Ltd Monday reported a 77 per cent jump in net profit for the quarter ended March on the back of higher sales. Its net profit in the January-March period at Rs 116.54 crore, or Rs 1.69 a share, was higher than Rs 65.95 crore, or Rs 0.96 per share, earning in the corresponding period of the previous fiscal, the company said in a regulatory filing. Sales rose to Rs 1,963.26 crore from Rs 1,777.82 crore in January-March 2018. For the full fiscal 2018-19, net profit was up 43 per cent at Rs 417 crore. The company said it added 63 new CNG stations in 2018-19, highest-ever in a year by the company. The firm commissioned its first CNG station in Narmada within four months of receiving city gas distribution licence. Gujarat Gas added close to 1 lakh domestic cooking gas connections and 300 industrial customers during 2018-19. “The National Green Tribunal has ordered on March 6, 2019, to ban the use of coal-based gasifiers in Morbi, Gujarat. As a result of this order, the industrial sales volumes in Morbi have increased from mid-March 2019 and are currently flowing in the range of around 4.50 million standard cubic metre per day (mmscmd),” a company statement said. Currently, Gujarat Gas sells about 8.5 mmscmd of natural gas. It is India’s largest gas distribution company in terms of sales volume, geographical spread and customer base. The company distributes gas to about 13,55,000 domestic and 3540-plus industrial users. It has around 344 CNG retail outlets.
Indian fuel prices begin to decline on global cues
Domestic fuel prices have begun a slow decline as international rates tumble under the weight of record US crude output and US President Donald Trump’s threat to sharply raise the tariff on Chinese goods. On Monday, petrol sold for Rs 73 a litre and diesel at Rs 66.66 at Indian Oil Corporation pumps in Delhi. Rates of petrol and diesel have fallen 13 paise and 5 paise a litre, respectively, in two days and if the fall in international oil rates continues over the next few weeks, the domestic decline would be sharper. Domestic fuel prices are based on the trailing 15-day average of international oil prices and exchange rates. Sometimes, especially during polls, it’s hard to predict domestic fuel price trajectory as state-run oil companies do not necessarily follow an international trend. Brent crude tumbled to $68.79 a barrel on Monday, its lowest since April 2, before recovering a little above $70 on fears that the US and China may fail to stitch a trade deal, hurting global consumption and demand for oil. A 10% fall in 10 days shows the market isn’t too worried about Iranian supply going out of the market. A fortnight ago, the US had announced that any country importing oil from Iran after May 1would attract secondary sanctions. Higher inventory levels in the US and Trump’s constant pressure on Saudis to boost supply seem to have eased supply concerns. The US is pumping record crude output and is now the largest producer in the world, ahead of Russia and Saudi Arabia. China was said to be considering delaying a trip by its top trade negotiators to the US this week after Trump’s tariff threat, according to media reports. Lower prices are good for India, which imports nearly 84% of its oil needs, as they help keep inflation and current account deficit in control. Higher prices weaken local currency.
Saudi oil output may rise in June, but US may not get the extra exports it wants
Saudi Arabia’s oil output may edge up in June, sources familiar with the kingdom’s policy said, but the extra crude may be used for domestic power generation rather than providing the boost to exports that Washington has been seeking. The sources said any rise in Saudi output would still be within its output quota in a pact on supply cuts agreed between OPEC and its allies, a group known as OPEC+. Production from the world’s top crude exporter in May is expected to be around 10 million barrels per day (bpd), slightly higher than April but still below its quota under the OPEC-led pact of 10.3 million bpd, industry sources said. Riyadh often lifts output in the hot summer months to fuel oil-fired power plants and meet rising electricity demand, which means exports do not necessarily rise. One of the sources said the May output rise was not related to Washington’s push for more OPEC oil after it ended waivers granted to buyers of Iranian oil. The waivers had allowed them to purchase crude from Iran despite U.S. sanctions. U.S. President Donald Trump said last week he had called Saudi Arabia and OPEC and told them to lower oil prices, but he did not say who he spoke to or when the conversations took place. Oil prices rose to a six-month high last week above $75 a barrel, partly due to concerns about falling Iranian supplies. Brent was trading around $70 on Thursday. “The Saudis want oil prices to stay at current levels at least for a month or two. They don’t want to raise their production above the 10.3 million bpd, because they are part of the OPEC+ pact, but they are also being pressured by the U.S. to increase their output,” one of the sources said. “One thing for sure is that if customers asked for more oil they (the Saudis) will then raise output,” the source added. SPENDING NEEDS Saudi Arabia wants oil prices of at least $70 a barrel this year as it seeks to boost the economy with extra spending, finance economic reforms and fund its four-year war in Yemen. The kingdom estimates it will have a budget deficit of 4.2 percent of gross domestic product in 2019. But the International Monetary Fund forecasts a deficit of 7.9 percent based on oil prices remaining in the mid-$60 a barrel range. Another source familiar with Saudi oil policy also said the kingdom did not want to raise output above 10.3 million bpd until the current global supply pact expired in June. “But it is not clear now what will be the demand from the customers. Apart from Iran, there are also some serious concerns about the situation in Venezuela and Libya,” the source said. Oil supplies have also tightened because of U.S. sanctions on Venezuela and another flare-up of fighting in Libya. Outages in Nigeria and the contamination of Russian oil in a major pipeline to Europe have added to supply concerns. The Organization of the Petroleum Exporting Countries and its allies agreed to reduce output by 1.2 million bpd. They meet on June 25-26 to decide whether to extend the pact. Saudi crude exports allocations for June are expected to be issued around May 10. State-run Saudi Aramco is expected to release its official selling prices for Saudi crude next week, industry sources said. The kingdom is expected to raise June prices for all crude grades it sells to Asia to track stronger Middle East benchmarks, trade sources said on Thursday. The move may discourage buyers of Saudi crude to seek more oil and push refiners to draw on inventories, which would support oil prices, delivering on Riyadh’s goal of lower stocks and higher prices while keeping its own production in check. A panel of energy ministers from major oil producers, known as the JMMC, meets on May 19 in the Saudi city of Jeddah to discuss the oil market and make recommendations before the June policy meeting.
World’s second-biggest LNG tanker class vessel to transit Panama Canal for first time
A vessel in the world’s second-largest liquefied natural gas (LNG) tanker class is set to pass through the Panama Canal for the first time, the canal’s chief executive said, expanding the Americas to Asia trade route for the fast growing commodity. The ‘Al Safliyah’, a ‘Q-flex’ tanker able to carry about 210,000 cubic metres of LNG, is currently in the North Pacific and on its way to Panama after discharging a cargo from Qatar into Korea Gas Corp’s (KOGAS) Tongyeong terminal on April 21, shipping data in Refinitiv Eikon showed. “This is the first Q-Flex to transit the Panama Canal,” Jorge Quijano, chief executive of Panama Canal Authority told Reuters. The Panama Canal was expanded in mid-2018 to handle larger oil and gas tankers, but this is the first time an LNG tanker of this size will pass through it. “This size of vessel can use the Panama Canal and could be deployed to carry LNG from the natural gas liquefaction plants in the U.S., Trinidad and Tobago and Peru,” Quijano said. The ship’s charterer is Qatargas, according to LNG trading and broker sources. Qatargas did not respond to a query for comment.
Cutting household fuel may improve India’s air quality standards
Eliminating emissions from dirty household fuels such as wood, dung, coal and kerosene without any changes to the industrial or vehicle emissions could improve India’s air quality standard, claim researchers. According to the study published in the Journal of Proceedings of the National Academy of Sciences, mitigating the use of household fuels could also reduce air pollution-related deaths in the country by approximately 13%, which is equivalent to saving about 270,000 lives a year. “Household fuels are the single biggest source of outdoor air pollution in India. We looked at what would happen if they only cleaned up households, and we came to this counterintuitive result that the whole country would reach national air pollution standards if they did that,” said co-author of the paper, Kirk R. Smith. Americans usually associate air pollution with smokestacks and car exhaust pipes. But in many rural areas of the world where electricity and gas lines are scarce, the bulk of air pollution originates from burning biomass, such as wood, cow dung or crop residues to cook and heat the home, and from burning kerosene for lighting. As of early 2016, nearly half of the Indian population was reliant on biomass for household fuel. In addition to generating greenhouse gases like carbon dioxide and methane, these dirty fuels kick out chemicals and other fine particulate matter that can stick in the lungs and trigger a whole host of diseases, including pneumonia, heart disease, stroke, lung cancer and chronic obstructive pulmonary disease. “There are 3,000 chemicals that have been identified in wood smoke, and taken at a macro level, it is very similar to tobacco smoke,” Smith said. In 2015, India’s average annual air pollution level was 55 micrograms per cubic meter (ug m-3- micrograms per cubic meter of air) of fine particulate matter. New Delhi by many estimates is the most polluted city in the world, often soared beyond 300 ug m-3. By comparison, fine particulate matter in the San Francisco Bay Area peaked at around 200 ug m-3 during the 2018 Camp Fire. Complete mitigation of biomass as fuel could be achieved through widespread electrification and distribution of clean-burning propane to rural areas. This action would cut India’s average annual air pollution to 38 ug m-3, just below the country’s National Ambient Air Quality Standard of 40 ug m-3. “While this is still far above the World Health Organization (WHO) standard of 10 ug m-3, it could still have dramatic impacts on the health of the country’s residents”, Smith said. “You can’t have a clean environment when about half the houses in India are burning dirty fuels every day. India has got to do other things to fix air pollution — they’ve got to stop garbage burning, they’ve got to control the power plants, they’ve got to control vehicles and so forth. But they need to recognize the fact that households are very important contributors to outdoor air pollution, too”, he added. “We’ve realized that pollution may start in the kitchen, but it doesn’t stay there, it goes outside, it goes next door, it goes down the street and it becomes part of the general outdoor air pollution.
India ready to deal with impact of US sanctions on Iran: Govt spokesperson
India is ready to deal with the impact of US sanctions against Iran and will get extra supplies from other oil producing countries to compensate for loss of Iranian oil, foreign ministry spokesman Raveesh Kumar told a news conference on Thursday. India was Iran’s top oil client after China. However, New Delhi has stopped purchases of Iranian oil from May after the United States ended six months of waiver that had allowed Opec member Iran’s eight top customers including India to import limited volumes.
Indonesia 2019 biodiesel exports to rise in best-case scenario -association
The Indonesia Biodiesel Producers Association (APROBI) estimates the country may export up to 2 million kilolitres (kl) of unblended biodiesel in 2019 in an “optimistic scenario”, Vice Chairman Paulus Tjakrawan told reporters on Thursday. In a “pessimistic scenario”, he said biodiesel exports this year would be around 1 million to 1.2 million kl. This compares with exports of 1.78 million kl of biodiesel last year. The “pessimistic scenario” takes into consideration the European Union (EU) setting countervailing duties on Indonesian biodiesel this year, Tjakrawan said, after it launched an anti-subsidy investigation on the Indonesian biofuel in late 2018. Indonesia resumed exports of biodiesel to Europe early last year, after the World Trade Organization (WTO) had ruled in its favour on several challenges Jakarta made on previous anti-dumping duties imposed by the EU on its biodiesel shipments. In the first quarter this year, Indonesia’s overall biodiesel exports were 173,542 kl, association data showed, up 78 percent from the same period last year. The shipments were mostly headed to the EU and China. In Indonesia’s domestic market, first-quarter consumption of biodiesel more than doubled to 1.5 million kl from 659,813.51 kl a year earlier, APROBI data showed on Thursday. Consumption of the palm oil-based fuel jumped after Indonesian government made the use of B20 fuel mandatory. That’s diesel with a 20 percent biodiesel component. Indonesia estimates 6.2 million kl of domestic biodiesel consumption in 2019. APROBI Chairman M.P. Tumanggor said the government aims to soon conduct a road test for B30 biodiesel, containing a 30 percent bio component. “According to schedule, (the test) will go on until September, but we want to speed it up to (finish) in July,” Tumanggor said. APROBI estimated that B30 implementation would increase domestic consumption of biodiesel to as much as 10 million kl. According to government regulations, road vehicles will have to start using B30 fuel from 2020, although an energy ministry official has said the implementation schedule will depend on the results of the road test.
Singapore’s Pavilion Energy marks first ship-to-ship LNG refuelling operation
Pavilion Energy has performed the first commercial ship-to-ship (STS) liquefied natural gas (LNG) refuelling operation in the port of Singapore, the company said. The operation included loading 2,000 cubic metres of LNG onto a small-scale tanker at the Singapore LNG (SLNG) Terminal, followed by an STS transfer to a receiving heavy-lift commercial vessel, Pavilion Energy said in a statement on Thursday. The use of LNG as a marine or bunker fuel has grown amid tightening regulations on global shipping emissions. “We strongly believe that LNG will become the worldwide fuel of choice for bunkering in the long term,” said Tan Soo Koong, chief executive officer of SLNG. “We are keen to work with all stakeholders and invest in infrastructure as necessary, to help grow LNG bunkering here,” Tan said. Pavilion Energy is a Singapore-based LNG company incorporated by state-owned Temasek Holdings to invest in clean energy. From 2020, International Maritime Organization (IMO) rules will ban ships from using fuels with a sulphur content above 0.5 percent – compared with 3.5 percent now – unless they are equipped to clean their sulphur emissions. Using LNG to power ships instead of traditional fuels like fuel oil or gasoil can reduce polluting emissions of nitrogen oxides and sulphur oxides by 90 to 95 percent, according to industry estimates. Singapore is the world’s largest bunkering hub with sales of 49.8 million tonnes of fuel in 2018. Other major bunkering ports like Rotterdam in the Netherlands have also encouraged the use of LNG bunkers. In Rotterdam, demand for cleaner-burning LNG rose more than sixfold in 2018 to 9,500 tonnes, up from 1,500 tonnes in the year before.
UAE’s ADNOC launches second exploration bid round for oil, gas blocks
Abu Dhabi National Oil Company (ADNOC) said on Wednesday that it has launched the second exploration bid round for five new oil and gas blocks. The bidding will be for both conventional and unconventional resources, and the successful bidders will enter into agreements granting them exploration rights, ADNOC said in a statement. The new blocks are three offshore and two onshore.