Significance of U.S Crude Oil Entering Indian Market, IOC upbeat about Deal
A type of U.S. crude pumped in the Gulf of Mexico is proving to be more attractive in the fastest-growing oil market compared with Middle East staples that are on offer. Indian Oil Corp., the nation’s largest refiner, has bought Mars Blend crude for arrival in October to the South Asian nation, according to Arun Kumar Sharma, the company’s finance director. That’s the processor’s first purchase of American supply. About 1.6 million barrels of the grade will be loaded with 400,000 barrels of West Canadian Select on a very large crude carrier, he said. The shipment is set for Asia as arbitrage flows of Mars crude to the world’s biggest oil market become viable versus Middle East oil, supplies of which have been reduced by OPEC’s output curbs aimed at easing a glut. The cuts have turned regional benchmark Dubai crude costlier relative to other markers such as Brent and U.S. West Texas Intermediate, luring rival supplies to India as well as other big consumer nations. “Middle Eastern suppliers are waking up to the growing dominance of U.S. crude in the Asian market,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. “Heavy grades of U.S. crude have become more price competitive compared with those from the Middle East, thanks to OPEC’s oil-output cut, which provided the U.S. an opportunity to boost its own oil production.” Mars crude traded at about 70-90 cents a barrel below WTI on a free-on-board (FOB) shipping basis late last week, according to a Bloomberg survey of four traders. That’s equivalent to a 10 cent discount to 10 cent premium over Dubai crude on a cost and freight (CFR) basis to Japan on a VLCC, according to Bloomberg calculations. The discount of Dubai crude to Brent, the benchmark for more than half the world’s oil, has slumped to about 80 cents a barrel, compared with more than $3.50 a barrel in early July last year, according to data compiled from PVM Oil Associates. Competitive Prices “North American crude has become very competitive to Middle East crude because of narrowing Brent-Dubai differentials and low freight charges,’’ Indian Oil’s Sharma said. The company, which bought the crude via a tender, purchased the U.S. oil at a price “very close to Basrah Light,” he said, referring to Iraq’s flagship grade. U.S. crude prices are competitive relative to OPEC supplies, and the ability of Indian refiners to process different grades is helping the nation take advantage of attractive pricing, Indian Oil Chairman Sanjiv Singh said in an interview in Istanbul. Another state-run Indian refiner, Bharat Petroleum Corp., is also seeking1 million barrels of U.S. crude for delivery in September-October to Kochi on the nation’s west coast, according to a tender document obtained by Bloomberg. Grades including Thunder Horse, Southern Green Canyon, Mars Blend, West Texas Sour and Alaskan North Slope are being sought by the processor. “We are trying to increase our independence from certain crudes,” said R. Ramachandran, the head of refineries at Bharat Petroleum. “Expansion of the Kochi plant gives us the ability to expand our crude basket.” For more, read: Oil From the U.S. and Saudis: Top Buyers Get What They Want India has been considering buying American oil ever since the U.S. reversed a decades-old law that restricted exports of unrefined crude, as the South Asian nation attempts to diversify its supply sources. The country, which imports more than 80 percent of its crude requirements, purchases oil from three primary areas: the Middle East, Latin America and Africa. India’s Oil Minister Dharmendra Pradhan has been haggling with OPEC, which meets about 86 percent of the nation’s oil needs, for a discount by virtue of being a large and loyal customer. “Days of suppliers are gone, consumers are kings now,” Pradhan said at an energy conference in Istanbul. President Donald Trump last month said during a visit by Indian Prime Minister Narendra Modi that the U.S. expects to export more American energy to India, a $2 trillion economy that the International Energy Agency expects will be the fastest-growing oil consumer through 2040. “We will look at sourcing more volumes of U.S. crude going ahead,” Sharma said. Josh Ferguson Womens Jersey
India to boost gas share to 20% in energy mix by 2030
India will increase the share of natural gas to 20 percent in its energy mix by 2030, the Indian petroleum minister said Tuesday in Istanbul. Speaking at a ministerial session of the 22nd World Petroleum Congress in Istanbul, of which Anadolu Agency is the global communication partner, India’s Minister of Petroleum Dharmendra Pradhan said India is supporting investments to increase the share of natural gas in its energy mix. “We will increase the share of natural gas in our energy mix to 20 percent. We will also raise our natural gas pipelines from 15,000 kilometers to 30,000 kilometers for this aim,” the minister said. The world’s second-most populous country will have new liquefied natural gas (LNG) liquefaction facilities to enhance natural gas supply and expand natural gas consumption via LNG-fuelled buses and trains, Pradhan said. “Our demand for refinery products will rise 5-7 percent in several years. The three biggest Indian energy companies will build an oil refinery to generate 60 million metric tons of oil to meet the country’s demand,” he said. India ranks number four in refinery capacity after the U.S., Russia and China. Marshon Lattimore Womens Jersey
Aramco CEO sees oil supply shortage as investments and discoveries drop
The world might be heading for an oil supply shortage following a steep drop in investments and a lack of fresh conventional discoveries, Saudi Aramco’s chief executive said on Monday. Unconventional shale oil and alternative energy resources are an important factor to help meet future demand but it is premature to assume that they can be developed quickly to replace oil and gas, Amin Nasser told a conference in Istanbul. “If we look at the long-term situation of oil supplies, for example, the picture is becoming increasingly worrying,” Nasser said. “Financial investors are shying away from making much needed large investments in oil exploration, long-term development and the related infrastructure. Investments in smaller increments such as shale oil will just not cut it,” Nasser said. About $1 trillion in investments have already been lost since a decline in oil prices from 2014. Studies show that 20 million barrels per day of new production will be needed to meet demand growth and offset natural decline of developed fields over the next five years, he said. “New discoveries are also on a major downward trend. The volume of conventional oil discovered around the world over the past four years has more than halved compared with the previous four,” Nasser said. State oil giant Aramco, which is preparing to sell around 5 percent in itself next year in an initial public offering, is continuing to invest in maintaining its oil production capacity of 12 million barrels per day. “We plan to invest more than $300 billion over the coming decade to reinforce our pre-eminent position in oil, maintain our spare oil production capacity, and pursue a large exploration and production program centering on conventional and unconventional gas resources,” Nasser said. Nasser said that one of Aramco’s priorities was “direct conversion of crude oil into petrochemicals” while adding the company was also focusing on solar and wind projects. Giovanni Fiore Authentic Jersey
LNG exports to India, China, others not affected by Gulf rift, says Qatar
Qatar’s exports of liquefied natural gas (LNG) to Japan, India, South Korea and China have not been affected by a boycott of Doha by four Arab states, Energy Minister Mohammed al-Sada said in a statement on Monday. He said Qatar’s exports to the four Asian countries accounted for nearly three-quarters of the country’s total exports. Exports to the United Arab Emirates, Saudi Arabia and Bahrain accounted for less than eight percent, the statement said, citing comments made by the minister at an energy conference in Istanbul. Qatar remains “committed to all its agreements with its partners and is determined to maintain this status despite the illegal and unjust embargo imposed on it,” the statement said, referring to LNG exports. Magic Johnson Jersey
BPCL plans to buy first U.S. crude via tender Document
Indian refiner Bharat Petroleum Corp Ltd plans to buy its first ever cargo of crude oil from the United States, a tender document showed on Monday. BPCL is seeking at least 1 million barrels of crude either for loading on Aug. 16-Sept.5 or delivery on Sept. 26-Oct. 15, it said. Part 1 of the tender closes on July 11 and part 2 on July 14. Offers will remain valid until July 14. Orlando Pace Jersey
Reliance Industries pulls the plug on Peru oil block, trims overseas assets
Reliance Industries has pulled out of the last oil block it held in Peru, trimming its overseas assets to just two properties in Myanmar. The billionaire Mukesh Ambani-led firm had in 2007 set up Reliance Exploration and Production (REP) DMCC primarily for acquiring overseas assets. It had steadily acquired 16 conventional oil and gas assets, including four in Peru, three in Yemen (one producing and two exploratory), two each in Oman, Kurdistan and Colombia and one each in East Timor and Australia. It last bagged two oil and gas exploration blocks in Myanmar in 2014. But the company slowly exited most of its international assets. In its latest annual report for 2016-17, RIL says it has “withdrawn from Block 39” in Peru. RIL held 10 per cent interest in the block. Anglo-French oil and gas company Perenco held 55 per cent stake in the block while PetroVietnam of Vietnam held the remaining 35 per cent. RIL said it is awaiting formal assignment of its interest to the existing partners. The company now is left with just two exploration blocks in Myanmar — M17 and M18. RIL holds 96 per cent stake in each of the two blocks with the remaining 4 per cent being with a local company. For Block M17, the company has sought an “extension for study period” from Myanma Oil and Gas Enterprise or MOGE, the annual report said. RIL’s domestic oil and gas business portfolio, which at one point of time comprised of 42 blocks or fields, has shrunk to five conventional oil and gas assets and two coal-bed methane (CBM) blocks. As part of its upstream (hydrocarbons exploration and production) portfolio rationalisation, the company has been exiting those assets which it feels are not going to give good return on investment. According to the annual report, the company’s present domestic portfolio comprises the flagging KG-D6 block in the Krishna Godavari basin, Mahanadi basin block of NEC-25, CB-10 in Cambay and GS-01 in Saurashtra basin. Besides, it also has stake in Panna/Mukta and Tapti oil and gas fields in the Arabian Sea. However, Mid and South Tapti fields have been abandoned after production tapered, it said. Also, it has two CBM blocks in Madhya Pradesh. RIL had in February 2011 announced a “transformational” deal when UK’s BP picked up 30 per cent stake in its 23 oil and gas blocks for USD 7.2 billion. However, in August that year the government allowed them to form a partnership in only 21 blocks. Since 2012, RIL and BP have been pruning their portfolio, shedding not so viable acreage. They are now left with just three blocks — the producing KG-DWN-98/3 or KG-D6 block in Bay of Bengal, gas discovery areas of NEC-OSN-97/2 (NEC-25) and CB-ONN-2003/1 in Cambay basin. In US, it also has stake in three shale gas producing properties. Kyle Emanuel Womens Jersey
ONGC Videsh gets 2-year extension for exploring Vietnamese oil block
ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corp (ONGC), has got a two-year extension to explore a Vietnamese oil block in the contested waters of the South China Sea. This is the fifth extension for OVL to explore Block-128, the licence for which is now valid till June 15, 2019, sources said on condition of anonymity as the information is not public yet. While India wants to maintain its strategic interest in the South China Sea, Vietnam wants an Indian firm to counter China’s interventions in the contested waters. Sources said OVL had in May applied to the Vietnamese authorities for a fifth extension of the exploration licence for the deepsea block. Vietnam’s national oil company PetroVietnam last week granted the extension, they said. OVL had signed Production Sharing Contract (PSC) for the 7,058 square km Block 128 in offshore PhuKhanh Basin, Vietnam on May 24, 2006. Ministry of Planning and Investment (MPI), Vietnam issued investment licence for the block on June 16, 2006, being effective date of the PSC. The company has not found any hydrocarbon in the block but is continuing to stay invested to maintain India’s strategic interest. OVL first took a two-year extension of the exploration period till June 2014 and then another one year. A third extension was granted on May 28, 2015 and a fourth last year. The company has so far invested USD 50.88 million in the block. The block lies in the part of South China Sea over which China claims sovereignty. In 2011, Beijing had warned OVL that its exploration activities off the Vietnam coast were illegal and violated China’s sovereignty, but the company continued exploring for oil and gas. OVL forayed into Vietnam as early as 1988, when it bagged the exploration licence for Block 6.1. The company got two exploration blocks – Block 127 and Block 128 – in 2006. While Block 127 was relinquished due to poor prospectives, the other Block was retained. The first extension followed China putting the area under Block 128 for global bidding. China claims sovereignty over most of the South China Sea where the two Blocks are located and had warned the Indian arm from drilling in the region. OVL continues to own 45 per cent stake in Vietnam’s offshore Block 6.1 and its share of production was 2.023 billion cubic metres of gas and 0.036 million tonnes of condensate. Ron Hextall Jersey
Ground breaking ceremony of Rs 6,000 crore Dhamra LNG Terminal held
Ground breaking ceremony of the Rs 6,000 crore LNG Terminal was held at Dhamra port in Odisha’s Bhadrak district. Petroleum Minister Dharmendra Pradhan performed the Bhumi Pujan in the absence of Odisha Chief Minister Naveen Patnaik. The 5 MMTPA capacity LNG terminal would play a major role in accelerating the process of development and economic growth in eastern India, Pradhan said. Construction of the LNG import terminal would involve an investment of Rs 6,000 crore, while a 2539 km long network of pipeline to transport gas would be laid at a cost of Rs 13,000 crore, the petroleum minister said. The network would connect 13 districts of Odisha and states like Jharkhand and Uttar Pradesh, Pradhan said. Stating that the country now has only one gas terminal in Gujarat, Pradhan said that natural gas would now be brought to Bhadrak from countries like America, Canada and Qatar. The natural gas from the terminal would also be supplied to various city gas distribution networks in the eastern India. While households in various cities would get piped gas, motor vehicles and industries would get cheaper and clean fuel, the Petroleum Minister said adding it would create vast employment opportunities for the the youth of Odisha. Odisha Chief Minister Naveen Patnaik, who was supposed to perform “Bhumi Pujan”, skipped the programme. So did the BJD MP and MLAs from the area. In Patnaik’s absence, Pradhan conducted the “Bhumi Pujan”. Pradhan said the chief minister had been invited to the function but it was learnt last night that he would not be attending it. Since the gas infrastructure project is set to boost economic growth in Odisha and the entire eastern region, the chief minister’s presence would have been proper, Pradhan said. BJD spokesperson and MP Pratap Keshari Deb said the chief minister had given consent to attend the function as it was a government programme. However, he decided to stay away when it was understood that it would become a political event. Teemu Selanne Jersey
GST Bill: Allow input tax credit on five products, oil ministry says
Oil ministry has urged finance ministry to put in place a temporary system to allow oil companies to claim input tax credit until crude oil, natural gas, diesel, petrol and jet fuel are covered under the goods and services tax (GST) regime. GST, which came into effect this month, covers most goods and services across the country but temporarily excludes the five key oil products that are the biggest source of revenue for oil companies. Other oil products such as cooking gas, kerosene and naphtha are part of GST. Oil companies, therefore, are dealing with two parallel systems of taxation. While they pay GST on equipment and services they use for operations, they cannot set this off against excise duty and value added tax they pay on output such as crude oil, gas, petrol, diesel and jet fuel, resulting in stranded taxes, which, according to one estimate, could be nearly Rs 25,000 crore a year. Following a representation by the oil industry, oil ministry has told finance ministry that stranded tax would become a major burden on oil companies and must be addressed quickly, an oil ministry official said. Finance ministry has been asked to offer some means to set off input tax credit against tax liability of products not yet part of GST, the official said. At present, tax credit cannot be transferred between the old and the new taxation system. The GST Council is aware of stranded taxes, but couldn’t do much earlier as it was busy launching the new tax regime, the official said. However, these issues will now get the attention they need, the person said. Another issue the oil ministry has raised is that of tax on equipment such as rigs used in exploration and production. GST has been proposed on the value of service a rig provides, instead of the full value of rig, which is currently the case, leading to huge tax burden on oil companies, the official said. Similarly, tax implication on the movement of rigs between states has also been flagged. GST has raised tax burden on offshore contracts. Earlier, service tax was applicable on only 40% of the total contract value but GST is applicable on 100% of the contract value in an offshore contract. Torry Holt Jersey
Vietnam renews India oil deal in tense South China Sea
Vietnam has extended an Indian oil concession in the South China Sea and begun drilling in another area it disputes with China in moves that could heighten tensions over who owns what in the vital maritime region. The moves come at a delicate time in Beijing’s relations with Vietnam, which claims parts of the sea, and India, which recently sent warships to monitor the Malacca Straits, through which most of China’s energy supplies and trade passes. Vietnam granted Indian oil firm ONGC Videsh a two-year extension to explore oil block 128 in a letter that arrived earlier this week, the state-run company’s managing director Narendra K. Verma told Reuters. Part of that block is in the U-shaped ‘nine-dash line’ which marks the vast area that China claims in the sea, a route for more than $5 trillion in trade each year in which the Philippines, Brunei, Malaysia and Taiwan also have claims. A senior official of ONGCBSE 0.03 % Videsh, who asked not to be named because of the sensitivity of the matter, said interest in the block was strategic rather than commercial, given that oil development there was seen as high-risk with only moderate potential. “Vietnam also wants us to be there because of China’s interventions in the South China Sea,” the official said. Vietnam’s state-run PetroVietnam declined to comment on the concession, which was first granted to India in 2006 but had been due to expire in mid-June. Conflicting territorial claims over the sea stretch back many decades but have intensified in recent years as China and its rivals have reinforced their positions on the rocks and reefs they hold. Far to the south of block 128, drilling has begun in a block owned jointly by Vietnam’s state oil firm, Spain’s Repsol and Mubadala Development Co of the United Arab Emirates. Deepsea Metro I, operated by Odfjell Drilling Ltd. , has been drilling in the region since the middle of last month on behalf of Spain’s Repsol SA, which also has rights to neighbouring block 07/03, Odfjell said. Odfjell declined to comment on the specific location of its vessel, but shipping data from Thomson Reuters Eikon showed it was in oil block 136/3, which also overlaps China’s claims. Odfjell’s Eirik Knudsen, Vice President for Corporate Finance and Investor Relations, referred further queries to Repsol, which declined to comment. PetroVietnam made no comment. COMPETING MARITIME CLAIMS When asked about the activity, Chinese foreign ministry spokesman Geng Shuang said China opposes anyone “carrying out unilateral, illegal oil and gas activities in waters China has jurisdiction over”. “We hope the relevant country can act on the basis of maintaining regional peace and stability and not do anything to complicate the situation,” he told a briefing in Beijing. Chinese General Fan Changlong cut short a visit to Vietnam and a friendship meeting at the China-Vietnam border was cancelled around the time the drilling began. The centuries-old mistrust between China and Vietnam is nowhere more evident than in their competing maritime claims, despite their shared communist ideology and growing trade. Asked about the most recent drilling, Vietnamese officials said their Chinese counterparts have started raising concerns about cooperation with both Repsol and ExxonMobil Corp. of the United States, which is developing the $10 billion “Blue Whale” gas concession off central Vietnam. They said Chinese officials also expressed concern at Vietnam’s evolving security relationships with the United States and Japan, both of which have offered moral support for its South China Sea claims and help for Vietnam’s coastguard. Tensions with China were being contained, however, and had not yet reached crisis proportions, they said. “We know they are unhappy again, but we are resisting the pressure – it is a traditional part of our relations with Beijing,” one official said privately. “Other parts of the relationship remain strong.” Underlining the relationship between India and Vietnam, Vietnamese deputy prime minister Pham Binh Minh told a forum in New Delhi this week that India was welcome to play a bigger role in Southeast Asia – and specifically the South China Sea. Hanoi’s growing defence and commercial ties with India are part of its strategy of seeking many partnerships with big powers while avoiding formal military alliances. The pace has picked up since Indian Prime Minister Narendra Modi’s administration took office in 2014 and sought to push back against China’s expanding presence in South Asia by raising its diplomatic and military engagement in Southeast Asia. India is providing naval patrol boats, satellite cover to monitor Vietnam’s waters and training for its submarines and fighter pilots – more military support than it is giving to any other Southeast Asian country. On the agenda are transfers of naval vessels and missiles under a $500 million defence credit line announced last year. Next week, the navies of India, the United States and Japan will hold their largest joint exercises in the Bay of Bengal. KJ McDaniels Womens Jersey