Platts revamps Brent oil benchmark for first time in a decade
Oil pricing agency S&P Global Platts is making the first major overhaul of its Brent oil price assessment in a decade, to address falling supplies of the crude oil grades underpinning the benchmark that prices most of the world’s oil. A decline in supply from North Sea fields has led to concerns that physical volumes could become too thin and hence at times could be accumulated in the hands of just a few players, making the benchmark vulnerable to manipulation. Platts said on Monday it would add Norway’s Troll to the basket of four British and Norwegian crude grades which it already uses to assess dated Brent from Jan 1. 2018. This will join Brent, Forties, Oseberg and Ekofisk, or BFOE as they are known. “Overall we have had significant support for the addition of a new grade to the basket,” Jonty Rushforth, global editorial director for S&P Platts Global’s oil and shipping price group, said at an industry conference. “Far and away, Troll has received the most support.” Troll will add about 200,000 barrels per day, or 20 percent, to the basket of crude supplies underpinning the benchmark, Platts said. The move was in line with expectations after Platts said in December it was being considered. Brent is used to set the price of billions of dollars of daily oil trade though a forward market for BFOE crude cargoes, swaps markets, physical benchmark dated Brent and Brent crude futures. Troll, a light, sweet crude, is operated by Norwegian state producer Statoil, which also contributes to the Oseberg, Statfjord, Gullfaks, Grane and Asgard streams. Statoil on Monday said it supported the move. “We are pleased that Platts now has announced that Troll will be included,” Statoil spokeswoman Elin Isaksen said in an email. “Troll will produce both oil and gas for a long time yet,” she said in a separate email. OWNERSHIP STRUCTURE Platts announced the decision at its conference held a day before the start of the Energy Institute’s IP Week, an annual gathering of the oil trading industry in London. Some trade sources on Monday noted that Statoil’s share of the production used to set the benchmark will rise — a development Platts acknowledges. “There is of course interest from the market in the ownership structure of the basket,” Rushforth said at a media briefing. “It does mean that Statoil has a larger share than Shell and Total.” Even so, no single company would own more than a quarter of total production in the new basket, he said in a Platts video on the company’s website. Supply of the current four BFOE grades is normally around 1 million bpd, equal to just over 1 percent of world output. The last change to the dated Brent benchmark was in 2007 when Platts added Ekofisk, a light, sweet crude. Oseberg and Forties were added in 2002. In an earlier move to boost liquidity, Platts began to apply quality premiums to two better-quality crudes – Oseberg and Ekofisk – to encourage delivery of these into contracts. There are no plans yet to apply one to Troll, said Platts, which will be sticking with the BFOE name. Chris Hogan Womens Jersey
Debt pain of Indian energy giants eases as fuel reforms pay off
Lower oil prices and the scrapping of fuel subsidies have allowed India’s biggest energy companies to slash borrowings to the lowest in at least eight years. Total debt at Indian Oil Corp., the nation’s largest refiner, stood at 419 billion rupees ($6.2 billion) at the end of September, down from 863 billion rupees in March 2014, according to the most recent data from company filings. Liabilities at Hindustan Petroleum Corp., the third-biggest fuel retailer, shrunk 65 percent in the same period, the data show An improving credit profile is allowing refiners to raise long-term funds at cheaper rates to fund expansion in a nation that is overtaking Japan as the world’s third-largest oil user. Bharat Petroleum Corp.’s $600 million bond sale in January drew bids for three times the amount, helping the fuel retailer price the 10-year debt at the tightest spread over U.S. treasuries by any Indian company in a decade, according to data compiled by Bloomberg. “Any new bond sale by them will be lapped up,” said Raj Kothari, head of trading at Jay Capital Ltd. in London. “With leverage of these quasi-sovereign companies declining, their position to service debt has improved significantly. A lack of issuance by them has created a dearth of good-quality issuers from India.” Jay Capital holds Bharat Petroleum bonds, he said. Brent oil prices have fallen by half in the past three years, providing the government with a window to free up controls. Prime Minister Narendra Modi ended diesel subsidies in October 2014, completing a process started by his predecessor, Manmohan Singh, who got rid of gasoline subsidies in 2010. Refiners no longer have to sell the fuels below cost, which frees up cash to invest in infrastructure for faster growth. “Our debt-equity position and profitability has improved, thereby scaling up the company’s standing in the market,” P. Balasubramanian, finance director at BPCL, said by phone. “We definitely get better deals now.” Hindustan Petroleum plans to spend $8 billion over the next five years to help expand and upgrade its 60-year-old refineries as the International Energy Agency sees energy demand in India doubling by 2040. Indian Oil plans to invest about $6 billion in six years to boost capacity. Shares of the two refiners climbed for a third session at 9:29 a.m. in Mumbai. “The refiners may have an advantage in terms of the quantum of money they have access to today, and incrementally to pursue projects related to domestic refining or inorganic opportunities,” said Ashwini Agarwal, a Mumbai-based portfolio manager at Ashmore Investment Management India LLP. “Their profitability has improved significantly.” Tom Barrasso Womens Jersey
IOC threatens relook at Rs 52K cr Odisha investment
State-owned IOC has threatened to reconsider plans to invest Rs 52,000 crore on expansion of Paradip refinery in Odisha and setting up a petrochem project as the state government is withdrawing tax sops. Indian Oil Corporation (IOC) plans to expand the 15 million tonne a year Paradip refinery by 5 MT as well as set up a Polypropylene Plant and a monoethylene glycol production facility at the site of the one-year old refinery. Following BJD-led state government decision to roll back tax sops because the project was delayed by six years, the company is now threatening to reconsider future investment plans, sources privy to the development said. The project is caught in a political cross-fire as Oil Minister Dharmendra Pradhan, who hails from the Odisha, and the state government are involved in a high pitched political battle. BJP is looking to capture power in state in 2019 assembly elections. Sources said IOC is telling the Odisha government that it is reconsidering its investment plans because of the withdrawal of 11-year deferral of VAT on petroleum products sold in the state. Investment plans also included projects to improve petrol and diesel quality to Euro-VI standards by 2020. If the investment does not take place, IOC will have to look for a market for fuel outside India as no petrol and diesel of lower quality can be sold within the country. Also, the Rs 3,500 crore polypropylene plant is already under construction with September 2017 as the target date for commissioning. It remains to be seen if IOC can stop the project midway. In the December 29, 2016 notice, Odisha government has asked why the fiscal incentives like 11-year deferment of sales tax on petroleum products sold in the state should not be withdrawn considering that the Rs 34,555 crore refinery was delayed by over six years. Sources said the state government had in February 2004 signed an agreement with IOC to give fiscal incentives for setting up a 9 million tonnes a year oil refinery at Paradip by 2009-10. However, the project was delayed and started only in early 2016. The delay is now being cited by Odisha to seek withdrawal of the incentives, sources said, adding that the state government feels the delay has pushed back the payback time of deferred taxes by few years. Also, the state government says that the refinery was originally planned for a 9 million tonnes per annum capacity but the actual size commissioned was 15 million tonnes. Withdrawal of VAT deferment would mean an annual payout of about Rs 2,000 crore on 2 million tonnes of petroleum products sold in the state. Sources said IOC has replied to the showcause notice saying the size of the refinery should not matter as VAT deferment is limited to 2 million tonnes of products sold in the state. On delay in commissioning of the refinery, IOC says the Odisha government made clear its intentions of withdrawing the incentives in 2010 or 2011 itself to enable the company to redraw its plans. More importantly, even if the refinery was commissioned in 2009-10, the VAT deferment would have been in operation till 2020-21 and there is no case for it ending in 2016-17. The company said the state government will not suffer any revenue loss as it will pay back the taxes after 11 years albeit without interest on it. IOC said its board had approved investments only in 2009 and the withdrawal of the VAT concession will reduce by 2 per cent the rate of return it considered for working out the investment. Sources said the state government was of the opinion that the refinery no longer needs incentives as its profitability had increased due to a higher capacity and low global oil prices. IOC said Paradip refinery is yet to achieve profitability on a standalone basis and that its investment in higher capacity and downstream petrochemical plants will only lead to higher economic activity and employment in the state. Higher capacity was needed for setting up two petrochem units at an additional cost of Rs 7,250 crore. Originally, the foundation stone of the Paradip refinery was laid by the then Prime Minister Atal Bihari Vajpayee on May 24, 2000. Bradley McDougald Jersey
Direct Benefit Transfer leads to Rs 50,000-crore savings for government in 3 years
Savings due to Direct Benefit Transfer (DBT) over the last three years have touched Rs 50,000 cr as on December 31, 2016, as per latest government figures. This amount is equivalent to the subsidy paid out under DBT in this financial year, implying nearly a year’s subsidy was saved. “The savings figure is expected to significantly rise further in the next financial year as the government will be bringing a total of 533 central payout schemes in 64 ministries under the DBT mechanism by March 31, 2018 as per the directions of PM Narendra Modi,” a top government official told ET. Presently, 84 schemes in 17 ministries are covered under the DBT, up from 34 schemes as on March 31, 2015. “Under UPA, the talk was only about big scams and several lakh crore rupees of losses. There is no scam now…instead we have saved nearly Rs 50,000 cr by crediting the subsidy amounts directly in the bank accounts of the correct beneficiaries and eliminating ghost beneficiaries,” the top official added. Nearly 33 crore people receive various subsidies directly in their bank accounts now through DBT. As per government’s interim figures as on December 31, the cumulative DBT savings stand at Rs 49,650 cr, pending information from many states. The top government official pitted this figure against the one of Rs 48,860 cr of subsidy transferred through DBT in this financial year till December 31, 2016. The total DBT payout since 2014 till date has been Rs 1.6 lakh cr. “This implies that nearly one year of total subsidy payout has been saved by the government through DBT,” the official said. Though the DBT mechanism started in 2013 under the UPA on a pilot basis, it took off in a major way only under Modi government after the LPG subsidy scheme (Pahal) was commenced through the DBT mechanism in November 2014. “We saved Rs 15,192 cr in 2014-15, Rs 20,951 cr in 2015-16 and nearly Rs 14,000 Cr in 2016-17 till December 31, 2016 through DBT,” the official said. The government says it has saved almost Rs 14,000 cr in its Public Distribution Scheme (PDS) by deleting 2.33 cr ration cards so far and better targeting of beneficiaries through DBT. Rs 7,633 cr is cited as the savings in the MGNREGS scheme by the government so far. Rs 399 cr is cited as savings in the National Social Assistance Programme. The biggest saving of Rs 26,408 cr is cited in the LPG PAHAL scheme, including Rs 4,824 Cr in the first nine months of this financial year. The LPG subsidy payout qualifies as the world’s largest cash transfer programme, Centre claims. The government is sticking to its guns on the LPG subsidy savings figure despite the Comptroller and Auditor General of India (C&AG) poking holes in the same in a recent report saying the savings were “exaggerated”. C&AG said the government had assumed that the 3.11 cr blocked or inactive customers would have availed 12 subsidised cylinders apiece rather than only 6 cylinders as per national average per capita consumption of cylinders. The major schemes new on DBT platform over the next one year will include Pradhan Mantri Ujjwala Yojana, Atal Pension Yojana, PM Suraksha Bima Yojana and PM Jeevan Jyoti Bima Yojana, PM Crop Insurance Scheme and PM Gramin Awas Yojana. Justin Braun Womens Jersey
Iran finds 2 billion barrels shale oil reserves in western province – agency
Iran has found shale oil reserves of 2 billion barrels of light crude in its western Lorestan province, a senior official at the state-run National Iranian Oil Company (NIOC) was quoted as saying. “Based on studies, it is estimated that the shale oil reserves in Ghali Koh in Lorestan amount to 2 billion barrels of oil in place,” Bahman Soleimani, NIOC’s deputy director for exploration, told the semi-official news agency Tasnim. “The oil is light.” Soleimani said exploration was also being carried out for shale gas reserves in the area, and the studies were expected to be completed by October, 2017. Iran’s proven oil reserves of about 160 billion barrels, almost 10 percent of the world’s total, rank it fourth among petroleum-rich countries. John Jaso Womens Jersey
Trump effect on world energy will benefit India
Energy demand in the US and the West will remain flat because of increased energy efficiency. The United States, India, and the world are waiting to see what President Donald Trump’s words “only America first”, “buy American, hire American” and “protection” to “make America great again” mean in practice. What Trump means for the world’s energy policy and US-India cooperation on energy is particularly important. Energy is deeply entwined with the fundamental issues of international security, economic development, human health, climate change, and a whole host of subsidiary issues. A wise man once said, “Where a door is closed, a window is opened.” This metaphor is applicable to energy policy under Trump and what it means for India and the world. For example, Trump’s overwhelming emphasis on fossil fuels may be closing the door of US leadership on climate change and environmental protection. However, Trump’s stepping back on environmental effects of energy gives India the opportunity to play a pre-eminent world leadership role on this issue. Paradoxically, the Trump emphasis on fossil fuels, along with nuclear and hydro, also presents an opportunity for US-India cooperation on environmentally responsible energy security across the board. US energy policy is like a great ocean liner. It cannot be turned quickly and is subject to forces that are not within the control of the ship’s captain—even if that captain is Donald Trump. In the United States particularly, these forces include supply and demand as expressed through the market and free enterprise. Against this background, here is what the Trump effect will and will not mean for world energy policy. First, no change by the Trump Administration will alter the increasing demand for energy in the non-OECD countries of Asia, mainly India and China, as the main driver of world energy policy. According to the International Energy Agency, India’s energy demand will grow more than any other country’s from now to 2040. This demand must be accommodated. On the other hand, energy demand in the US and the West will remain relatively flat—not for lack of growth, but primarily because of increased energy efficiency. This shows that India and the world must view efficiency as a fuel and that a mutually beneficial system for moving energy technology and sources to India is highly desirable. Second, oil and gas are now in the US energy driver’s seat. Trump has appointed a plethora of men associated with oil and gas production to top posts. In a phrase made famous by Sarah Palin, former governor of Alaska and Vice-Presidential candidate, “drill, baby, drill” is winning out. The US is already the largest producer of oil and gas in the world, and under Trump such production will only become larger. The US was already projected to be energy independent by as early as 2018—meaning that it will be exporting more energy than it imports. The Trump Administration is likely to favour many international measures that increase the international exploitation of oil and gas. The Administration has already signalled approval of the Keystone pipeline that will bring oil from Canada through steel pipes made in America. There will be rapid permitting of LNG export projects that should benefit India. Third, Trump will decrease environmental regulations promoting renewables and will probably withdraw the US from the Paris Agreement. Trump Cabinet nominees acknowledged in their confirmation hearings that humans are contributing to climate change. However, they consider the degree of contribution and what to do about it as open questions. On the campaign trail, Trump said he would “cancel” the Paris climate change agreement. Later he said he had an “open mind” on the subject. However, Trump will certainly retract the Obama Clean Power Plan. This plan is the main mechanism for the United States meeting its commitments to lower its CO² emissions by 26%-28% of 2005 level by 2025. There is also a pledge of the developed nations to mobilise $100 billion a year by 2020 to fight climate change. The Trump administration is unlikely to see this as a priority. Thus, withdrawal seems likely. Fourth, in spite of Trump policies, natural gas and renewables will continue to replace coal in the US and world energy mix. India should capitalise on this trend. Trump loves coal. His attacks on Obama’s supposed “war on coal” were instrumental in his victory in several key states. While Trump has promised to bring back coal, the continued emphasis on gas fracking and technological developments in horizontal drilling are working against the resurrection of coal. With the rise of LNG, the phenomenon of natural gas competing with coal is becoming worldwide. This phenomenon is being driven by both price and the superior performance of gas from an environmental perspective. Solar and wind are precipitously dropping in price and have obvious environmental advantages. The shift to renewables backed by natural gas will continue regardless of Trump’s preferences. Under Prime Minister Narendra Modi, India has already taken a strong position on renewables. India’s leadership of the International Solar Alliance is but one example. Trump’s scepticism about renewables will provide further scope for India to assume leadership on solar and wind. In regard to nuclear and hydro, Trump seems to favour these as well as fossil fuels. Thus, India may find it easier to cooperate with the US in making all sources of energy more efficient and environmentally responsible. Thus, there is good news and bad news about the Trump effect on world energy policy. The good news is that it offers the opportunity for closer cooperation with India and most other nations on sources of energy across the board. The bad news is that the emphasis on the exploitation of fossil fuels may overwhelm US leadership on energy and the environment. The threats of air pollution and climate change to the people of the world are real. The last three years have each been the hottest years on record. The health of hundreds of millions in India and around the world is being severely harmed by air
India’s Top Refiner Said to Review $8 Billion Spend on Tax Shock
Indian Oil Corp., the nation’s top refiner, is reconsidering plans to invest $8 billion in the country’s east after a provincial government threatened to withdraw promised tax breaks, people with knowledge of the matter said. The government of Odisha state said in a letter to the company that it was no longer keen to provide a deferral of value added tax on the sale of petroleum products, the people said, asking not to be identified because the information isn’t public. The benefit was initially extended as an incentive to build the Paradip refinery in the state and ending it would hit profitability and impact future investments, they added. The 11-year tax deferral was for products from the refinery sold in the state. Indian Oil has plans to invest 520 billion rupees ($7.8 billion) in Paradip to expand the refinery, upgrade it to produce a superior quality of fuels and add downstream petrochemical units along with pipelines and storage facilities. The offer of the tax break on sales of petroleum products prompted Indian Oil to spend 346 billion rupees to build a 15 million metric tons a year refinery in Odisha. Work on the Paradip refinery began in 2004 and the plant is operating at 80 percent of capacity in the current financial year. Indian Oil is also an investor in the proposed 60 billion rupee liquefied natural gas importing terminal at Dhamra in the state. Indian Oil is in talks with the state government and is hopeful, a company spokeswoman said. The Odisha chief minister’s public relations officer Sukanta Kumar Panda did not respond to phone calls and an e-mail seeking comment. The refiner has chalked out plans to spend 1.84 trillion rupees through 2022 to expand its refining, pipelines and distribution infrastructure. The state-run refiner will add annual capacity of 24 million tons to its existing refineries over the next six years, Chairman B. Ashok said last year. Caleb Sturgis Authentic Jersey
Major Petroleum Theft Detected on Mathura-Jalandhar Pipeline
Jalandhar Pipeline where oil mafia had virtually installed a parallel filling station by constructing a big tunnel for operation. The breach on the pipeline was detected after about three months in R K Puram colony under Highway police station. “Though the theft was suspected in the month of November, 2016, as drop in pressure of fuel in the pipeline was observed by ‘leak detection system’ however it could not be found in spite of repeated surface monitoring as theft was not massive,” said Virendra Kumar, pipeline manager, Telecom and Instrumentation. It came to surface when more drop in pressure was detected recently,” he said adding that theft this time has been committed in a planned way where all the three systems – survey, activation and operation appear to have been adopted,” he said. SP City Ashok Kumar when contacted said the act is daring, planned and a challenge for police however, police is committed to nab the real culprits. He disclosed that prima facie hunt is on for two persons whose names have come up. According to the FIR filed on Saturday, the tunnel (15 feet deep and about 100 meters long) on the outskirts of R K Puram colony was found when concentrated surface monitoring was conducted following a report of massive leakage through leak detection system. A tanker was being filled from the pipeline when police and refinery officials reached the spot but not before the oil mafia gang managed to escape. A valve for taking out the fuel was attached to the pipeline and the tunnel was fully electrified with provision for fresh air through pipes, the police report stated. Police disclosed that JCB machine was used for unearthing the tunnel and the entire system. “The culprits this time would not go scot-free,” Police Circle Officer Anupam Singh said when asked about the case since so far over half dozen incidents of fuel theft on the pipeline have taken place but none have been solved. Kyle Korver Jersey
Natural gas price in India likely to be hiked by 8 per cent by April
Natural gas price in India is likely to be hiked by 8 per cent from April 1 driven by an increase in rates in reference markets including US Henry Hub. Price of natural gas, used for generating power and making fertiliser and petrochemicals as well as CNG for automobiles, is likely to rise to USD 2.7 per million British thermal unit for the period from April 1, 2017 to Sept. to September 30, 2017 from current USD 2.5 per mmBtu, industry sources said. This will be the first increase in domestic gas prices in two years. Rates may further rise to USD 3.1 per mmBtu in second half of 2017-18 fiscal (April to March). As per the mechanism approved in October 2014, the price of domestically produced natural gas is to be revised every six months — April 1 and October 1 — using weighted average or rates prevalent in gas-surplus economies at Henry Hub of US, National Balancing Point of the UK, rates in Alberta (Canada) and Russia with a lag of one quarter. So, the rates for April 1, 2017 to September 30, 2017 period will be based on average price at the international hubs during January 1, 2016 to December 31, 2016. Sources said prices in the reference markets for 2016 are known and so the rates in first half of fiscal year beginning April 1 can be calculated. Rates were last changed on October 1, 2016 when they were cut by 18 per cent to USD 2.5 per mmBtu from USD 3.06. This was the fourth six-monthly reduction. John Tavares Authentic Jersey
GSPL Pipeline project for supplying Natural Gas to automobile manufacturers at Becharaji Gujarat completed by Ace Pipeline
In a step towards creating a world class automobile and ancillary manufacturing hub in Mandal -Becharaji taluka of Ahmedabad District, a pipeline to supply natural gas has been commissioned by Ace Pipeline. The 12” diameter carbon steel high pressure pipeline is designed and constructed in accordance with international best practices using high strength pipe material, anti-corrosion system, the use of trenchless horizontal directional drilling technology for pipeline installation across roads and canals such as the Narmada Main Canal without causing any disruption to traffic or flow; and is equipped with valves stations for emergency shutdown of the pipeline in case of any contingency, Supervisory Control and Data Acquisition (SCADA) system to monitor the pipeline round the clock. The entire pipeline has been subject to high-pressure tests by hydro testing and pneumatic testing to assure the quality of material and workmanship. Ace Pipeline Contracts Pvt. Ltd., known for engineering and construction of cross-country pipelines for oil and gas industry, recently completed works and commissioned the 12” x 51 km Mandali-Bechraji pipeline project which was being constructed by it for GSPL (Gujarat State Petronet Ltd). The project shall supply natural gas to the new MSIL (Maruti Suzuki India Ltd) car manufacturing plant at Hansalpur, Bechraji taluka for which Suzuki Motors has invested with an aim to produce around 1 Million cars annual meant for domestic market as well as exports. Another branch of this pipeline has commenced supply of natural gas to Japanese two-wheeler giant HMSI (Honda Motorcycle and Scooter India) at its fourth plant in India at Vithalapur, 14 km from Ahmedabad city for manufacturing of scooters at the 1.2 million two-wheelers per annum capacity plant. The landmark project of the company and for Becharaji Gujarat as it will supply natural gas to the automobile manufacturers, and shall help in establish this region as a hub for the automobile industry. What makes this project truly remarkable is the speed of execution in these times where most projects are delayed due to land acquisition issues. The entire work of the pipeline project including engineering, procurement of all items, construction, testing, commissioning was completed in a span of 10 months. A bid boost to the auto industry and auto ancillary business in Gujarat. The timely completion of projects such as these shall cement the status of Bechraji, once a backward area, to a world class auto-hub.