Fidelity, Aberdeen drawn to gas retailers as India cleans up
Fidelity Investments and Morgan Stanley Investment Management have increased exposure to Indian city-gas retailers, as Prime Minister emphasis on clean fuels burnishes the outlook for the industry. The demand from investors has been so strong that Indraprastha Gas Ltd., which supplies to homes and vehicles in New Delhi, raised the cap on foreign ownership to 30 percent from 24 percent, and may increase it again, Managing Director E.S. Ranganathan said. India’s largest city gas distributor Gujarat Gas Ltd., where Aberdeen Asset Management Plc. is the biggest non-state investor, and Mahanagar Gas Ltd. have also seen an increase in offshore holdings. “Foreign investors who were investing in China are now looking more on India,” Ranganathan said. “Everyone has an India fund or an Asia fund or South Asia fund and these funds are investing in Indian city gas networks. When our market cap went above $2 billion, lots of funds started looking at us . .. India’s gas demand is about a fifth of China’s due to weak domestic supply and poor infrastructure, though the government is trying to change this, according to Bloomberg Intelligence. Oil Minister Dharmendra Pradhan said last year the nation will lay 15,000 kilometers (9,320 miles) of gas pipelines over five years. Modi, who championed natural gas as the chief minister of Gujarat state, has stepped up measures to improve air quality in cities by giving priority to distributors such as Indraprastha gas for accessing cheaper local gas. Offshore holdings in Indraprastha Gas climbed to nearly 25 percent as of March 31, from about 21 percent a year ago, according to data available with the exchanges and compiled by Bloomberg. Fidelity acquired 579,367 shares, while Morgan Stanley Investment added 292,598, according to the most-recent exchange filings. Both fund managers didn’t respond to emailed requests for comment. Jarran Reed Womens Jersey
H-ENERGY to invest over Rs 45 billion in the natural gas segment in five years
H ENERGY plans to develop Liquid Natural Gas (LNG) re-gasification units on the west and east coast of India along with pipeline infrastructure. H-Energy is at an advanced stage of setting up an LNG re-gasification unit at Jaigarh port in Maharashtra. As part of its phase-1 plan, the company in 2017 signed an agreement with France-based energy company Engie to charter a Floating Storage and Re-gasification Unit (FSRU). According to Darshan Hiranandani, CEO of H-ENERGY, the company has already acquired land for the onshore receiving facility close to the jetty where the FSRU will be anchored. “At H-ENERGY our prime focus is on providing end-to-end solutions in the natural gas sector. The FSRU has a capacity to process 4 million tonne of natural gas per annum and will be commercially open for business in the third quarter of 2018. We plan to invest more than Rs 45 billion in creating LNG infrastructure on the west and east coast along with end-to-end pipelines for the benefit of customers, “Hiranandani told ETEnergyWorld in an exclusive interview. He added that after phase- 1 of the project stabilises, the company will be setting-up a land based re-gasification plant with an annual capacity of 8 million tonne per annum. Also, the company has already started work on Jaigarh to Dhabhol tie-in pipeline which will carry natural gas to the gas grid of GAIL at Dhabhol. Commenting on the GST council’s decision to keep major petroleum products, especially natural gas, outside the ambit of Goods and Service Tax (GST), H-ENERGY CEO stated that GST is a step in the right direction and will boost investments in the sector. He added that at a time when the country is focussing on shifting to a gas based economy, the government should make natural gas a part of GST. The company had received a letter of award by the Kolkata Port Trust in 2015 to set-up and operate a FSRU offshore Digha. According to the company, the FSRU will be located 115 Km into the sea within the Kolkata Port Trust boundary limits and will be connected to an onshore receiving facility at Contai through a subsea pipeline. The company has also approached Petroleum and Natural Gas Regulatory Board (PNGRB), for laying a 700 Km pipeline to connect the East coast FSRU to major demand centres in West Bengal. Daniel Sedin Jersey
Reliance Industries eyes 10% market share in fuel retail
Reliance Industries Ltd (RIL) is targeting doubling its market share in fuel retail in the next two-three years as it expands the business, two people aware of the plan said. RIL currently has a 5% share of India’s fuel retail market. “RIL is working on various plans to improve its market share in the fuel retailing segment. It is looking at all the markets it is not currently represented in, and these are areas other than urban markets,” said one of the two officials cited above. This person spoke on condition of anonymity as he is not authorized to speak to the media. An RIL spokesperson declined to comment on the plan. RIL, which had a 12% market share in fuel retailing in 2005, saw its share slip to less than 0.5% in 2014, by when it had shut most of its fuel retail outlets due to spiralling crude oil prices. State-owned Indian Oil Corp. Ltd (IOC), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL), managed to sell fuel below production cost thanks to government subsidies, which were not available to private sector fuel retailers. But after the government deregulated petrol and diesel prices in June 2010 and October 2014, respectively, RIL began reopening its retail outlets in phases, gradually taking its market share to 5%. RIL, Essar Oil and Shell India together have a share of less than 8% of the fuel retail market, analysts say. RIL spent Rs 50 billion in setting up 1,470 retail outlets between 2004 an 2006, of which 1,221 are operational. The company plans to reopen the rest of the outlets by the end of the year. RIL holds licences for 5,000 fuel retail outlets. “RIL might consider a network expansion to 2,500 to 3,000 outlets depending on commercial viability,” analyst Nitin Tiwari of Antique Ltd wrote in a report dated 25 April. In the year ended March, RIL’s fuel retail revenue rose 60.2% from the previous year to Rs 337.65 billion. “Retail business delivered a strong result where segmental Ebit (earnings before interest and tax) increased by 90% year-on-year to Rs2.4 billion (Rs. 2.40 billion) due to higher fuel retail sales during the fourth quarter of the last fiscal,” Sudeep Anand, an analyst at IDBI Capital, wrote in a report dated 25 April. After announcing its earnings in April, RIL said it was bullish on the fuel retail segment and planned to invest Rs. 25 billion in capital expenditure this fiscal year to expand its network of outlets. The second person mentioned above said the only hitch in RIL’s plan could be the process of identifying and acquiring land needed to set up outlets. “Acquiring the land, seeking permission and putting up the outlets take time. Of these, land acquisition is the major issue which RIL is trying to address in the best possible way,” the person said, also on condition of anonymity. RIL has 448 company-owned, company-operated outlets, which it plans to increase beyond 500 this fiscal year. “RIL is primarily a refiner. It not only exports from its twin refineries in Jamnagar but also supplies to fuel retailers domestically,” an analyst from a domestic brokerage who tracks RIL said on condition of anonymity. “Besides, RIL sold its South African retail venture Gulf Africa Petroleum Corp. this year which was an export market as well as supported its retail business. By virtue of this, it is natural for RIL to expand its retail network in the domestic market,” said the analyst. Nik Stauskas Jersey
Oil prices stay weak as US drilling undermines drive to tighten markets
Oil prices remained weak on Monday as a relentless rise in U.S. drilling undermined an OPEC-led push to tighten supply. Brent crude futures were trading at $52.10 per barrel at 0150 GMT, down 5 cents from their last close. U.S. West Texas Intermediate (WTI) crude futures remained below $50, down 8 cents at $49.72. The Organization of the Petroleum Exporting Countries and some non-OPEC producers agreed last week to extend a pledge to cut production by around 1.8 million barrels per day (bpd) until the end of the first quarter of 2018. But the decision did not go as far as many investors had hoped. An initial agreement, which has been in place since January, would have expired in June this year. Despite the ongoing cuts, oil prices have not risen much beyond $50 per barrel. Much of OPEC’s success will depend on output in the United States , which is not participating in the cuts and where production has soared 10 percent since mid-2016 to over 9.3 million bpd, close to top producer levels Russia and Saudi Arabia. U.S. drillers have now added rigs for 19 straight weeks, to 722, the highest amount since April 2015 and the longest run of additions on record, according to energy services firm Baker Hughes Inc. Analysts say that key to reining in ongoing oversupply will be to reduce bloated global fuel inventories. “It’s going to be all about inventories and whether they fall as much as OPEC thinks,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader. While it is hard to come by reliable global oil inventory data, regional stock levels for the United states, Europe and parts of Asia suggest that inventories have dipped in recent weeks, albeit from record levels.
KG Basin to see $30 billion investment in 10 years: Oil minister Dharmendra Pradhan
India’s gas output and refining capacity is poised to jump in the decade ahead, oil minister Dharmendra Pradhan said. In an interview to ET, Pradhan said Indian refineries would easily switch from transportation fuels to petrochemicals if needed. The minister also spoke about the proposed merger of state firms and how India was driving a hard bargain with oil cartel OPEC to extract better deals. Edited excerpts: It’s been three years as minister. How has it been? The vote in 2014 was of hope and aspiration. People had voted against the previous system of governance. They expected Prime Minister Narendra Modi to give an outcome-oriented, performance-oriented, transparent, accountable and corruption-free government. It has been a privilege for me to be part of such a government. In three years, we are satisfied that we have been able to make many humble efforts. We still need to do many things in the rest of the term. When you took over as minister, did you come across anything that was perplexing or shocking that needed to be reformed? See, this was my first experience in administration. I had worked in the predominantly rural economies of Orissa and Bihar and had political understanding of such states. But only after I became a minister that I understood the wider scope of the oil sector and its linkage with the country’s economy, diplomacy and the essential role it plays in the daily lives of common people. Therefore, I had come with no baggage. That I should reform the sector was also not much on my head. We kept taking reform measures, and we continue to do so now. As a social worker, I had fundamental understanding of a few things. One that energy access and poverty alleviation are linked, that energy security can help a person shake off poverty. So it was learning the ropes? I had no link with this sector before. I had never studied economics or international relations. I was a student of sociology. I am fundamentally a political organiser. So, for me everything was new. I had to read basic economics and international relations. For a country that imports 80% of its crude requirement, it is important for the minister to understand international relations. So, I have been studying these things as a student because I had the target to pass the exam with distinction. It’s been a very thrilling experience for the last three years. You are being very modest, calling yourself a student. In Vienna, you spoke like a professor to OPEC members. In Vienna, OPEC strongly praised India’s two key economic reforms: demonetisation and goods and services tax. They also praised the Prime Minister’s decisive leadership. They will have to listen to India now. OPEC will have to give us a better deal now. How OPEC views this? This is going to be a hard bargaining. OPEC decided to extend supply cut by nine months but prices fell. OPEC alone can’t control prices. They make up just 40% of the global production. Producer, financial markets as well as the consumer have a role in determining prices. Therefore, this time round I told them that if consumers need to worry about supply security, producers also needs to think about their market security. Do you think technology would change the energy sector beyond recognition in the next 15 years? This is what people have begun to say. There is no doubt that innovation and technology are going to be biggest disrupter in the energy business. This will provide India with an opportunity to leapfrog. Our Prime Minister often says that in the last industrial revolution, Indians worked for others, but in this round of global industrial and scientific revolution, we will work for the benefit of our country. This time, PM says, we can’t miss the bus. Energy will be the ground for experiment. We have just seen power tariff of 4 cents a unit. And this will not stop here. How will this disruption affect our refineries? Today, transportation fuels are the primary output of our refineries, but there will come a time when the primary produce of our refineries will be petrochemicals. Our per capita petrochemicals consumption is 10 kg while the world average in 30 kg. And we will continue to need clothes, furniture, plastic and industrial goods, which require petrochemicals as input. So, there is huge scope for petrochemicals. Today we have a refining capacity of about 230 million tonnes per annum. We will add about 150 million tonnes capacity in the next 7-8 years, including 50-60 million tonnes of brownfield expansion. After 15 years, the primary produce of these refineries may be petrochemicals. We are trying to synchronise scientific innovation, business model and market requirement to make sure India develops into an industrial hub. How would this pan out into the upstream sector? In the next 10 years, $20-30 billion will be spent in KG Basin alone. Should we not leverage this to turn our east coast into a petroleum manufacturing hub? Should we not turn our east coast into another Houston or Aberdeen? Before the NDA government came to power in 2014, even a rickshaw-puller had a view on the natural gas price. A 50 paise increase in diesel prices would lead to public protests. But controversies have now ceased. How did you achieve this? We did nothing new. A government can find a solution by making transparent decision while keeping public interest in mind, which is what we did. Government should provide a policy framework and not indulge in pickand-choose with respect to businesses — this is what we did. When will the proposed investments in the KG Basin start reflecting in gas output? Gas production increased in April. This is a trend and the production will continue to rise. Today we produce about 80-90 million metric standard cubic meters per day (mmscmd). By 2020-21, it will rise to 120 mmscmd. This incremental production will come both from private and public sector. What
Natural gas no longer profitable business: ONGC
Oil and Natural Gas Corp (ONGC) has said that producing natural gas is no longer a profitable business for the company as the government-mandated gas price is significantly below the cost of production. The oil major has sought a review of pricing formula from the government. “Natural gas is no more profitable business because the cost of production is very significantly higher than current gas prices,” Dinesh K Sarraf CMD of ONGC, told reporters here on Saturday, adding that “We have no reason to disbelieve that gas prices will not be raised.” “Keeping in view the cost of production of gas, cost of alternate fuels and other market dynamics, the Ministry of Petroleum and Natural Gas is requested to review the existing domestic gas price formula and provide a floor price at least to the level of earlier APM (regulated) price ($4.20 per million British thermal units or mBtu)/ non-APM (administrative price mechanism) price ($4.20 to $5.25 per mBtu) fixed in June 2010,” ONGC recently said. ONGC wants a floor or minimum price of natural gas be fixed at $4.2 per mBtu for the business to be viable. He stressed that, with the current price, it does not make economic or commercial sense for any company to invest in new fields or in augmenting production from existing ones. Sarraf is against any fresh investment if the price remains below the cost of production. In October 2014, the government had adopted a new pricing formula using rates prevalent in gas surplus nations like the US and Canada to determine rates in a net importing country. Prices have halved to $2.48 per million British thermal units since the formula was implemented. India imports half its natural gas needs and the government is keen to cut import bill by raising indigenous production and ‘Make in India’. Sarraf said that the price paid to domestic producers is less than half of the rate paid for import of gas (LNG). ONGC produces 80 per cent of the 70 million standard cubic meters per day which makes it the biggest gas producer in India. He said using this formula the company lost Rs. 50.10 billion in revenue on natural gas business, and about Rs. 30.00 billion in profit in just last one year. Nikolay Kulemin Womens Jersey
IndianOil overtakes ONGC to become India’s most profitable PSU
Indian Oil Corp (IOC) has overtaken Oil and Natural Gas Corp (ONGC) to become India’s most profitable state-owned company. IOC, which has for decades been India’s biggest company by turnover, posted a 70% jump in net profit to Rs191.0640 billion in the financial year ended 31 March, 2017. This was more than the Rs. 179 billion net profit ONGC posted in the 2016-17 fiscal, making IOC the most profitable PSU, according to earning statements of the companies. Billionaire Mukesh Ambani-led Reliance Industries retained the crown of being India’s most profitable company for the third year in a row, posting a net Rs. 299.01 billion in financial year 2016-17. Tata Consultancy Services, India’s largest software services exporter, with a net profit of Rs. 263.57 billion was the second most profitable company in the country. ONGC was long India’s most profitable company but lost the crown to private sector Reliance and TCS a couple of years back. It has now been unseated as the most profitable PSU by IOC. In the previous 2015-16 fiscal, IOC had a net profit of Rs. 112.4223 billion as compared to ONGC’s Rs. 161.40 billion. While IOC Chairman B Ashok attributed the profit growth to higher refining margins, inventory gains and operational efficiencies, ONGC Chairman and Managing Director Dinesh K Sarraf said the company lost Rs. 30 billion in net profit due to government’s natural gas pricing policy that has made the business economically unviable. The BJP-led government had in October 2014 evolved a new pricing formula using rates prevalent in gas surplus nations like the US, Canada and Russia to determine rates in a net importing country. Prices have halved to $2.48 per million British thermal unit since the formula was implemented. Sarraf said the company lost Rs. 50.10 billion in revenue on natural gas business from 35% drop in gas prices in last one year. “Our profit would have been about Rs. 30 billion higher if we got remunerative gas price,” he said. “Natural gas is no more profitable business because cost of production is very very significantly higher than current gas prices,” he said. Oil Minister Dharmendra Pradhan in a written reply to a question in Lok Sabha on March 20 had stated that the cost of production of natural gas in the prolific Krishna Godavari basin is between $4.99 per mmBtu and $7.30 per mmBtu. The same for other basins is in the range of $3.80 per mmBtu to $6.59 per mmBtu, he had said, adding the production costs of companies vary from field to field depending upon size of the reservoir, location, logistics and availability of surface facilities. ONGC is the country’s biggest gas producer, accounting for some 80% of the 70 million standard cubic meters per day current output. Demaryius Thomas Authentic Jersey
India’s top energy research bodies come together to develop next-gen fuel resources
In a first of its kind move, India has brought forward its top energy research agencies which are working together to develop the next generation of fuel resources for cutting edge commercial applications. The three state-owned research bodies include the Indian Railways’ alternate fuel arm Indian Railways Organisation for Alternate Fuels (IROAF), Indian Institute of Petroleum (IIP) Dehradun and National Institute of Solar Energy (NISE) which are working to develop solar-assisted Biomass Pyrolysis technology for production of methanol as an alternate fuel. In addition, IROAF is separately experimenting with Hydrogen-powered fuel cells for power generation. BIOMASS PYROLYSIS Delhi-based IROAF has been tasked with exploring new avenues to fuel the national transporter which has set a target of reducing its annual energy bill, including electricity and diesel, of over Rs 30,000 crore by Rs 41,000 crore over the next decade. “An alternate route of Methanol production is by using biomass, wood and waste products. Currently, people use the catalytic route (enzymatic route) for this. We aim to do this through biomass pyrolysis,” Ravinder Gupta, Chief Administrative Officer of IROAF told ETEnergyWorld in an exclusive interview. Pyrolysis refers to thermal decomposition of biomass occurring in the absence of oxygen. The process pyrolysis results in by-products including bio-oil and gases like methane, hydrogen, carbon-monoxide and carbon dioxide, among others. “We have formed a joint working group at IROAF with IIP, Dehradun and NISE. We are putting our heads together to develop a solar-assisted biomass paralysis plant in the first stage and eventually look at the possibility of obtaining methanol,” Gupta said. IROAF aims to use solar energy to convert wood and bio-waste into wood-oil and IIP is currently conducting research on how to convert wood-oil into methanol. According to Gupta, the Indian Railways will have to develop a dual-fuel engine for converting existing locomotives to run on Methanol. FUEL CELL The Indian Railways’ fuel arm is also experimenting with hydrogen-powered fuel cells on a pilot basis. A fuel cell is a device in which hydrogen is used to generates electricity through a chemical reaction in the presence of Oxygen with water as a by-product. The device finds application in the electric vehicle industry. “We are also working on fuel cell technology. Hydrogen-run fuel cells have also become affordable. On an experimental basis, we are going to fit a hydrogen fuel cell for powering guard vans attached to trains as a standby. Fuel cells can generate power up to 300 kilowatts,” Gupta said. The use of fuel cells to power electric vehicles has risen of late. Global automobile giants including Honda, Toyota and Hyundai have reportedly leased a few hundred fuel cell-based vehicles over the past three years, and expect to lease over 1,000 in the current year. The Indian auto industry lobby Society of Indian Automobile Manufacturers (SIAM) has also called for developing the fuel cell technology to meet the government’s target of shifting completely to electric vehicles by 2030. Jerry Hughes Womens Jersey
Believe it or not! Petrol could be below Rs 30 a litre in 5 years
In five years, you could be buying petrol at less than Rs 30 a litre. Emerging technology is going to reduce the world’s dependence on petrol so much that prices will plummet. That’s the prediction by Tony Seba, an American futurist who is famous for predicting a boom in solar power when the prices used to be forbiddingly high, 10 times the prices today. Seba is a serial Silicon Valley entrepreneur, and an instructor in Entrepreneurship, Disruption and Clean Energy at Stanford’s Continuing Studies Program. Seba’s prediction on solar energy came true, but will he be right about the future of oil too? It seems highly likely if you look at what prompts Seba. According to Seba, the rise of self-drive cars would bring down oil demand sharply which could reduce the price of oil to $25 a barrel. “Oil demand will peak 2021-2020 and will go down 100 million barrels, to 70 million barrels within 10 years. And what that means, the new equilibrium price is going to be $25,” Seba said while speaking to CNBC. Seba says people would not stop using the old-style cars but the self-drive electric vehicles will become a much larger part of the sharing economy. These electric vehicles will be cheaper to buy as well as run. Seba had earlier said that by 2030, 95% of people won’t own private cars which would wipe off the automobile industry. He also predicted that electric vehicles would destroy the global oil industry. Recently, Union power minister Piyush Goyal said India was looking to have all-electric car fleet by 2030. He meant not a single petrol or diesel car would be sold in the country after 15 years. If you look at rapid advances in technology and business, you will find Seba convincing. No one doubts that soon electric cars will become a mass trend. Add to this the innovation in travel business such as Uber and rideshare apps. The future these two trends indicate looks like this: most people will prefer shared electric vehicles to owning cars while most of those still buying cars would go for electric ones. “Imagine a Starbucks on wheels. Essentially transportation is going to be so cheap, it’s going to be essentially cheaper for Starbucks to run around and take me to work, which is, you know, 60 kilometers away, and give that transportation for free, in exchange for going to buy coffee in that hour of commute,” Seba said while speaking to CNBC. The dim future of oil will also have a major geopolitical impact: the economies that depend mostly on oil will be hit badly. Many Arab countries will lose much of their influence and power. David Andrews Womens Jersey
India, Japan Joint Venture To Build Gas Import Terminal In Sri Lanka
India and Japan will jointly set up a $250 million liquefied natural gas (LNG) import terminal in Sri Lanka, the first collaboration between the two nations to counter China’s growing influence in the Island nation. Petronet LNG Limited, India’s biggest gas importer, last year proposed to set up a 2-million-tonne (MT) liquefied natural gas import facility on the coast of Sri Lanka to meet its energy needs. Sri Lanka, however, wanted Japan to have a role in it. “An agreement has been reached between the governments of India, Sri Lanka and Japan to set up the LNG terminal as a 50-50 joint venture by Petronet and a Japanese company,” Petronet Managing Director and Chief Executive Officer Prabhat Singh said. Japan is yet to identify the company which will form an equal joint venture with Petronet for setting up the terminal. Without giving more details, Mr Singh said the LNG import facility will be set up at Kerawalapitiya on the western coast of Sri Lanka. Sri Lanka has plans to build a 300 megawatt (MW) gas-fired power plant in Kerawalapitiya, adjoining an existing power plant. The existing plant which uses oil to generate power would also be converted to LNG once the terminal is set up and gas import start. LNG has become significantly cheaper since last year and many countries have begun switching their power plants to LNG. Mr Singh said the LNG terminal, which will import super-cooled natural gas, will take two-and-a-half to three years to build. The LNG terminal in Sri Lanka is part of Petronet’s vision to own 30 MT per annum of LNG import and re-gasification capacity by 2020, Mr Singh said. Petronet already operates a 15 million tonnes per annum import facility at Dahej in Gujarat and has another 5 MT terminal at Kochi in Kerala. Petronet also signed a preliminary agreement to build a 7.5 MT LNG terminal in Bangladesh and is looking at setting up a smaller facility in Mauritius. Mr Singh said Dahej is being expanded to 17.5 MT over the next two years. The India-Japan collaboration comes after a string of Chinese successes in Sri Lanka. China has managed to revive its flagship $1.4 billion Colombo Port City project and is also engaged in expansion of major infrastructure projects it built in the past. These projects include expansion of Hambantota port and Mattala airport. Matthias Farley Authentic Jersey