Iran said to cut benefits on crude oil sales to Indian state-run refiners
Iran will cut some benefits to Indian state-run refiners on crude purchases after the South Asian country decided to reduce the amount of oil it buys from the Persian Gulf nation, people with knowledge of the matter said. National Iranian Oil Co. will cut the credit period on crude oil sales to 60 days from 90 days for refiners such as Mangalore Refinery & Petrochemicals Ltd. and Indian Oil Corp., the people said, asking not be identified as the matter isn’t public yet. Iran will also reduce the discounts it offers on the shipping of crude to 60 percent from 80 percent, they added. The lower incentives will make Iranian purchases costlier and less competitive in a world awash with crude oil where rivals such as Saudi Arabia and Iraq are seeking to expand their market share. Iran’s crude sales to India more than doubled in 2016 after the lifting of sanctions over its nuclear program. India is Iran’s second biggest customer and the emerging center of global oil demand. India in turn, is using the supply glut to put pressure on Tehran for securing development rights to the Farzad-B gas field in the Persian Gulf, which was discovered by an Indian consortium led by ONGC Videsh Ltd. about a decade ago. Iran and India were aiming to conclude an agreement on developing the field by February. The South Asian nation, which stood by Iran during the sanctions, is seeking to invest as much as $20 billion in Iran’s energy industry and ports. Cutting Purchases Indian state-run refiners told Iran last month that they would cut oil purchases by 3 million tons during the financial year that started April 1, the people said. MRPL and Indian Oil will reduce imports by 1 million tons each, while Hindustan Petroleum Corp. and Bharat Petroleum Corp. will cut purchases by about half a million tons each, according to the people. India’s overall oil imports from the Persian Gulf nation touched 19.8 million tons during April-December last year, compared with 12.7 million tons in the 2015-16 financial year, according to oil ministry data. Iran’s Oil Minister Bijan Namdar Zanganeh said “there are many other customers” if India decides to cut imports, the state-run Islamic Republic News Agency reported on April 5. Reuters earlier reported Indian state refiners will cut oil imports from Iran by a fifth. India’s Oil Minister Dharmendra Pradhan said April 6 that it’s up to the state refiners to decide on Iran crude volumes. MRPL spokesman Prashanth Baliga couldn’t comment immediately, while an Indian Oil spokesman declined to comment. National Iranian Oil Co.’s public relations office in Tehran didn’t respond to an email and two calls seeking comment. Paul Carey Authentic Jersey
Fresh tax demand of Rs 10,200 crore from Cairn Energy
Indian tax authorities have made a fresh demand of Rs.10,200 crore in taxes from Cairn Energy Plc in the old case of retrospective tax on alleged capital gains made in 2006 but dropped the demand for heavy interest, the company has said in a notice to shareholders. Cairn Energy has all along contested the government demand of tax on a transaction, which it considers mere reorganisation of assets before listing its local unit Cairn India on the exchange. An arbitration in underway to decide on the validity of the tax demand. “The final assessment order was appealed to the Income Tax Appellate Tribunal, Delhi (“ITAT”) which ruled on March 9, 2017 that tax in the amount of Rs.10,200 crore remained payable but that Cairn Energy could not be required to pay interest under the relevant sections of the Indian Income Tax Act, 1961 on the basis that the legislation introduced in 2012 was a retrospective amendment and Cairn could not have anticipated that payment of tax would be required,” the company said. The Income Tax Department had earlier raised a tax demand of Rs.10,247 crore and another Rs.18,800 crore as interest for 10 years. “Following the ruling of the ITAT, an amended tax demand, received on March 31, 2017 noted that late payment interest would now be charged from February 2016, i.e. from 30 days following the date of the original 2016 final assessment order,” the company said. The decision of the ITAT is potentially subject to appeal, the company added. In 2011, Cairn Energy sold its stake in Cairn India to Vedanta but retained just about 10 per cent. In 2014, Cairn Energy received an order from tax authorities restricting it from selling its residual 10 per cent shares in locally-listed Cairn India, valued at $1billion then, pending a review of an internal group reorganisation carried out in 2006, the company said. Jonathan Huberdeau Authentic Jersey
Shell India to expand natural gas marketing business
Royal Dutch Shell, is planning to expand its gas marketing business in India, said Shaleen Sharma, the company’s head of upstream development in India. Sharma, who spoke on the sidelines of an energy conference in Mumbai, said the downstream segment is the most attractive one currently in the gas market and the company plans to supply natural gas directly to buyers including power plants, fertilizer and petrochemical units and city gas distributors. “Indian LNG market is in good shape. That is the future. There are some new initiatives going on to see how we can access new downstream markets,” said Sharma, adding that Shell has set up a team in Singapore to boost the India gas market. Shell operates Hazira LNG Ltd, a five million tonnes per annum liquefied natural gas (LNG) import facility at Hazira, Gujarat. The company plans to double the capacity to 10 million tonnes a year, Reuters had reported on 31 March. Shell Gas B.V., a Royal Dutch Shell Plc unit, owns a 74% stake in the terminal while Total Gaz Electricite France, a unit of Total SA, holds the balance. Sharma also said that the company has dissolved the joint venture for an LNG terminal that it was planning with its consortium partners at Kakinada, Andhra Pradesh. “That was a joint venture with a number of companies including Gail. But we very recently expressed that we cannot carry on with that. This is due to lack of a secure market. We need some surety on the off-take. The joint venture agreement is no longer there,” added Sharma. The A.P Gas Distribution Corporation Limited (APGDC), Gas Authority of India Limited (GAIL) and Shell and Engie Global LNG had in September 2015 signed two joint venture agreements for the establishment of an LNG Floating Storage and Re-gasification Unit (FSRU) at Kakinada deepwater port. Kareem Hunt Womens Jersey
Delay in laying gas pipelines prompts PLL, BPCL to move LNG by road
The inordinate delay in completion of gas pipelines in Kerala might have prompted Petronet LNG Ltd (PLL) to depend on trucks to move gas to its customers. BPCL has also adopted a similar initiative to deliver LNG to an industrial customer in Chennai from the PLL facility in Kochi. A senior official in BPCL told BusinessLine that the company dispatched its first truck-load of LNG supplies from the PLL terminal in the second week of March, to Turbo Energy located at Payyannur near Kanchipuram. The agreement with the Chennai-based company to deliver gas at its premises was signed on September 28, 2016, after undertaking several studies like HAZOP (hazard and operability study), a robust LNG distribution, etc. The company has also set up a storage and re-gasification system after incorporating standard operating procedure and high-degree of safety features, the official said, adding that Gujarat-based Inox India has bagged the contract for gas distribution to customers. BPCL, according to the official, has a success story of ‘LNG by Road Initiative’ from its Dahej plant, wherein the company has already completed delivery of more than 5,000 truck-loads of gas. “The initiative in Kerala will be a new beginning of BPCL in the Southern region, and another 3-4 companies have already approached us for gas supply in a similar way,” he said. Industry sources here pointed out that BPCL has brought around 400 MMbTU of LNG sourced from Australia by spot purchase and unloaded the consignment at the storage facility offered by PLL in Kochi. A part of the gas will be used by BPCL for its own use and the remaining will be for sale to various industrial customers. The spot purchase of the gas will benefit the public-sector petroleum company from avoiding various tax payments like VAT. Following the success of delivering gas to HLL in Thiruvananthapuram by road, PLL has been receiving good customer enquiries both from Kerala and outside. More companies have evinced interest in taking gas by trucks, and discussions are already on to finalise the tendering process with these companies, including a State-owned public sector, PLL officials said. The laying of pipelines by GAIL in the Kochi-Mengaluru stretch is fast progressing, and officials expressed hope that the pipelines will be ready by December 2018. Marshall Faulk Womens Jersey
Saudi Aramco keen to take stake in west coast refinery
Saudi Aramco, the world’s largest oil producer, is interested in picking a stake in India’s biggest oil refinery being planned to be set up in Maharashtra at a cost of Rs 1.8 lakh crore. State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) together plan to set up a 60-million tonnes a year oil refinery on west coast to meet the rising fuel needs of the country. “Saudi Aramco and Abu Dhabi National Oil Co (Adnoc) are talking to us for investments in the Indian oil sector,” Oil Minister Dharmendra Pradhan said at the Global Natural Resources Conclave here. Later talking to reporters, he said Aramco is interested in picking a stake in the west coast refinery while Adnoc is keen on petrochemical projects. “Aramco is talking of stake in the refinery,” he said. He, however, did not go into how much stake the Saudi national oil company will pick. “Let’s see,” is all he said. IOC holds a 50 per cent stake in the project while BPCL and HPCL have 25 per cent each. The 60-mt a year refinery will be set up in two phases, along with a mega petrochemical complex. The phase-1 capacity will be 40 mt together with an aromatic complex, naphtha cracker unit and a polymer complex. This will cost Rs 1.2-1.5 lakh crore and will come up in 5-6 years from the date of land acquisition. The mega complex will require 12,000-15,000 acres and land on the Maharashtra coast has been identified, he said. The second phase, involving a 20 mt refinery, will cost Rs 50,000-60,000 crore. IOC has been looking at the west coast for a refinery as the company found it tough to cater to requirements in West and South with its refineries mostly in the North. HPCL and BPCL too have been looking at a bigger refinery because of constraints they face at their Mumbai units. The mega west coast refinery will produce petrol, diesel, LPG, ATF (aviation turbine fuel) and feedstock for petrochemical plants in plastic, chemical and textile industries in Maharashtra. A top official at one of the state refiners said the project will be funded with 60 per cent debt and 40 per cent equity. The three refiners will chip in Rs 72,000 crore in equity. Fifteen mt a year is the biggest refinery any public sector unit has set up at one stage. IOC recently started its 15 mt unit at Paradip in Odisha. Reliance Industries holds the distinction of building the biggest refinery in India till now. It built its first refinery at Jamnagar in Gujarat with a capacity of 27 mt, which was subsequently expanded to 33 mt. It built another unit adjacent to it for exports, with a capacity of 29 mt. The refinery being planned by the state-owned firms will be bigger than that. The phase-1 itself will be bigger than any one single unit. India has a refining capacity of 232.06 mt, which exceeded the demand of 183.5 mt in 2015-16. According to the International Energy Agency (EA), this demand is expected to reach 458 mt by 2040. Alec Ogletree Jersey
HPCL reworks fiscal pact for Rajasthan refinery, work to start
State-owned HPCL’s long-pending 9 mtpa refinery at Barmer in Rajasthan will go on stream soon, with the state government agreeing to a revised fiscal package for the project, Oil Minister Dharmendra Pradhan said today. “Very soon, work will start on the Rajasthan refinery project. We have finalised the financial assessment,” he said at the Global Natural Resources Conclave here. Later talking to reporters, he said fiscal incentives for the project have been revised and a memorandum of understanding (MoU) is likely to be signed in Jaipur later this month. “The fiscal package negotiated by the previous (Congress) government had put a big burden on Rajasthan. Now, that has been balanced,” he said. He did not provide details of the revised fiscal incentives being offered by the Rajasthan government. “Work on the project will start very soon,” he added. The project, which has been in the works for nearly five years now, is projected to cost Rs 41,000-42,000 crore, up from the previous estimate of Rs 37,320 crore. HPCL, in March 2013, had signed an MoU with the Rajasthan government for setting up the refinery-cum-petrochemical complex in the Thar desert near the oil discoveries made by Cairn India. But the refinery never took off as a change of guard in the state led to the Rajasthan government putting on hold the fiscal incentives for the project. While the size of the refinery remains the same, the unit will cost more because it now has to be built to produce Euro-VI grade petrol and diesel, officials said. Engineers India Ltd (EIL) is doing a feasibility study. The HPCL board, in March 2013, had approved setting up of the complex at a cost of Rs 37,320 crore. Half of the crude oil requirement at the proposed refinery at Barmer was to come from the neighbouring oil fields of Cairn India. The rest was to be imported crude. At that point, HPCL had asked the state government to extend fiscal benefits like the ones extended by Gujarat and Odisha to new refinery projects to make the Barmer unit viable. The concessions included 50 per cent exemption in excise duty, waiver of VAT on products sold in Rajasthan and the state government picking a small stake in the project. Originally, the state-owned Oil and Natural Gas Corporation (ONGC), which owns 30 per cent interest in the Barmer oil fields of Cairn India, in 2005 had committed to building the refinery, but later started soft-pedalling the project. In 2012, HPCL entered the fray and proposed to take 51 per cent stake in the same. ONGC, which originally had the authorisation from the government for processing the Barmer crude at the proposed refinery, willingly made way for HPCL. Cairn India, which holds 70 per cent interest in the fields, currently produces about 1,60,000 barrels per day oil (8 million tonnes a year) from the Rajasthan fields. For HPCL, which has only two refineries in Mumbai and Visakhapatnam, the project will help meet fuel demand in the north. Pierre Pilote Womens Jersey
India plans high speed diesel pipeline to Bangladesh
India plans to build a pipeline to carry high-speed diesel (HSD) to Bangladesh, similar to a project it announced last week to supply fuel to Nepal. A formal proposal on the friendship project could be announced when Bangla Prime Minister Sheikh Hasina meets her Indian counterpart Narendra Modi here on April 8, people in the know said. The cross-border pipeline will run from Siliguri in West Bengal to Parbatipur in northern Bangladesh. Until the project is completed, HSD will be transported from Assam’s Numaligarh Refinery to Bangladesh via rail and one such consignment will be flagged off by the two prime ministers. In fact, supplies to Bangladesh has already begun from Numaligarh Refinery. Recently, it dispatched the first consignment of HSD to Bangladesh – a railway rake containing 2,281 metric tonnes of the fuel chugged off from the refiner’s marketing terminal at Siliguri to the Parbitipur depot of Bangladesh Petroleum Corp (BPC). Each such consignment will travel some 516 kms – 253 km in India and 263 km in Bangladesh – on an existing rail line. Numaligarh Refinery and BPC have signed a sale-purchase agreement which includes a joint initiative for the construction of a 131-km pipeline, with a capacity to carry 1 million metric tonnes a year of fuel products, to Parbatipur from Siliguri. The neighbouring countries are also contemplating building a gas pipeline. State-run Oil and Natural Gas Corporation and BPC are in talks to build the 6,900-km pipeline that is proposed to link Chittagong in Bangladesh and Sitwe in Myanmar with India’s northeastern states. The pipeline project is part of the government’s Hydrocarbon Vision-2030 for the northeastern region. A joint LPG plant is planned at Chittagong from where the gas will be piped to the northeastern region. The project had figured in the talks during Modi’s Dhaka trip in 2015. India last week announced that it will lay pipeline to supply fuel to Nepal and jointly market it in the Himalayan nation. State-run Indian Oil Corporation will help build the pipeline to supply petrol, diesel and cooking gas. Franco Harris Jersey
Gajendra Singh is GAIL’s new marketing director
Gajendra Singh on Wednesday took over as director (marketing) of state-run GAIL, a key responsibility at a time when the government is aiming to promote gas-based economy. He will be responsible for sourcing gas from international and domestic suppliers for marketing in the country, ensure capacity utilisation of pipeline infrastructure and expanding the pipeline network. Singh has 32 years of experience the oil and gas industry and has been involved in the execution of several prestigious projects of GAIL, including the Hazira-Vijaipur-Jagdishpur pipeline. He was executive director (marketing) before his elevation. Nathan MacKinnon Womens Jersey
Here’s why India decided to cut Iranian oil purchases in row over gas field
The context to the apparently sudden dispute between India and Iran on oil has much more to do with expected trend in pricing of crude and less to do with the delay on the terms of Farzad B gas field. Indian policy makers feel they can slowly take on more risks in buying of crude from spot markets than stick to long term contracts. India has always played with a safety first approach to the purchase of its crude from abroad which accounts for 80% of its domestic requirement. The approach is a follow though from the impact of the successive oil shocks of the seventies and the periodic forex crisis, which has occurred even as late as 2013, all of which have left their scars on the economy. So the petroleum and natural gas ministry prefers to deal with the oil exporters to set a price band known as the official selling price (OSP). These bands are used to sign a long term contract, usually of one year where India is assured of the contracted supply at a price that hovers around the OSP. It is a hedge against the day when crude prices would zoom upwards. As a measure of further safety even within the set prices, India diversifies the list of countries from whom it shops for oil. Saudi Arabia accounts for 18% of the total imports, while Iran accounts for 6% (it used to be higher before the sanctions) Venezuela accounts for 12% and even countries like Angola account for 4% of India’s crude import. The ratio of long term to spot purchase for India at any given period is roughly 80:20. From early 2014, as prices of oil has dipped globally, the expected bad day when prices would shoot past $100 a barrel has not happened even once for India. Instead as the analysis of IEA or BP shows, there is very little reason to believe it would happen in future too. These trends give India the confidence to depend on the spot markets a wee bit more and diversify the market even more. India wants to buy more from the African oil producers—it also makes sense as India pushes up investment in their upstream and downstream projects. Other than Angola the shopping list includes Algeria, Gabon, Equatorial Guinea, Cameroon and the Republic of Congo. It would cut the share of the existing sellers, especially for the heavy crude that Iran has more of and is thus more keen to sell. The market for this variety is limited—India itself has only two refineries that processes this crude, the RIL refineries at Jamnagar and state-owned Mangalore Refineries (MRPL). It is a bit of a buyers’ market here, as the bulk competitors for this type of crude are only China and Japan in Asia. The decline that has set in the price of crude also now appears to be long term trend. Any spike is expected to come up against the world of shale oil. Prices are not expected to shoot up in this top heavy environment. To test the waters IOC had for some time raised its spot component to 30%. It has not come to grief. The lower price helps to keep the prices at the petrol bunks low back home—a huge political dividend for any Indian government. There is enough temptation for India to bargain with its buying power in the global oil markets now. Maxime Lagace Womens Jersey
Removal of subsidy to hit LNG Demand
India’s liquefied natural gas (LNG) demand could ease as the government has scrapped subsidies on gas sales to power companies, the chief executive of the country’s biggest gas importer said on Wednesday at a gas conference in Japan. Natural gas accounts for about 6.5 per cent of India’s overall energy needs, far lower than the global average. India plans to raise the share of gas in its energy mix to 15 percent over the next three years, but a major challenge to that goal is the price sensitivity of Indian consumers. India has for the last two fiscal years been giving discounts on the sale of imported LNG to revive more than 14 gigawatts of stranded power generation capacity that had been hit by domestic gas shortages. But a power ministry official confirmed that the LNG subsidy has not been extended beyond March 31, and Prabhat Singh, chief executive of Petronet LNG, said these gas-based projects cannot compete with plants using cheaper coal. “If (the power subsidies in India) don’t happen, then definitely around a million to 2 million tons of LNG which was going there will be lost,” Mr Singh told reporters at Gastech in Japan. After the subsidies were first put in place, India’s annual LNG imports surged 15 percent to 16.08 million tons in 2015/16. Then for the first 11 months of the 2016/2017 fiscal year – the April – February period – India imported 17 million tons. Data for March is not yet available. Shaquil Barrett Jersey