India, Japan should co-operate on long term LNG contracts: Minister
India and Japan should co-operate on long term contracts for LNG with a defined cost of energy which would provide a stabilizing factor for the renewable energy thrust that India is currently giving, Indian minister for power, coal, new & renewable energy and mines, Piyush Goyal said January 11 on the side-lines of the seventh India-Japan Energy Forum in New Delhi. The minister said that India’s power demand is going to expand four-fold in the next 15 years to become one of the largest energy markets globally and it would open immense business opportunities for Japan. Being a major LNG importer, India has been advocating for some time that Asian LNG buyers should come together so that they get a better deal in the global market. Large Asian LNG buyers, including India, could benefit by joining hands and thereby, possibly, bring in more equitable trade deals, Indian oil minister Dharmendra Pradhan said during the fifth IEF – IGU Ministerial Gas Forum that was held in New Delhi December 6 on the sidelines of Petrotech 2016. In 2014, Gail India and Japanese trading house Sumitomo Corporation agreed to work together in the fields of gas procurement and petrochemicals. Jason Kidd Jersey
Banks, oil cos to bear card payment charges: Dharmendra Pradhan
Banks and oil marketing companies (OMCs) will bear transaction charges for the fuel bought using cards at petrol pumps, oil minister Dharmendra Pradhan said on Thursday. “The decision is very clear. Consumers will not be burdened with Merchant Discount Rate (MDR). Retail outlets (petrol pumps) will also be kept out of its purview. Now it is between banks and OMCs how they share it,” he said. Pradhan was speaking to reporters after attending a meeting on the issue that was called by the department of financial services, ministry of finance. “It is a commercial decision and they (banks and OMCs) will sit together and sort it out,” he said. MDR is a charge levied on merchants by banks for accepting payments through credit and debit cards. This charge was passed on to consumers but post-demonetisation, the government, in a bid to promote digital payments, waived it till December 30. Banks, after that date, decided to pass on the MDR to petrol pump operators since the government mandate was very clear that consumers should not be burdened with any additional charge for using cards for payments. Petrol pump owners threatened to stop accepting card payments, forcing the government to broker a settlement. Pradhan said banks and oil companies will continue to discuss as to who should bear these charges and in what proportion. “MDR charges will be levied as per RBI guidelines of December 16,” he said. Asked if it will be shared equally between the oil marketing companies (OMCs) and banks, he said: “That is yet to be decided.” Pradhan said the government stands by its decision that customers using non-cash digital modes of payments will not have to pay any transaction charge. Also, the 0.75% discount on fuel rate for using digital payments will continue. “Banks and OMCs are discussing the issue. In the next couple of days a mechanism will be worked out so that MDR are levied from 16th,” he said. MDR of 1% on all credit card transactions and between 0.25% and 1% on all debit card transactions will be charged on fuel bought through cards. Pradhan said “neither the customers nor petrol pump dealers will bear additional charges on digital transactions at petrol stations”. The government, he said, had issued guidelines in February 2016 stating that the MDR charge will not be passed on to the consumers and the stakeholders will take appropriate steps to absorb it. Jered Weaver Authentic Jersey
Jairam Ramesh seeks Sebi probe into ONGC’s GSPC stake buy
Calling for a Sebi probe into ONGC’s sudden decision to buy GSPC’s stake in KG basin gas block for $1.2 billion, Congress MP Jairman Ramesh today said the PSU had flouted listing guidelines and did not secure approval of minority shareholders for the transaction. In an open letter to Sebi Chairman U K Sinha, he said as per Oil and Natural Gas Corp’s (ONGC) own admission, it and GSPC are related parties of the Government of India. “It is needless to say that there is indeed a strong ‘relationship’ between the Government of Gujarat that owns GSPC and approved its borrowing binge between 2005 and 2014 and the Government of India that owns ONGC, which suddenly after 2014 seems to have had a realisation that buying GSPC’s gas block in KG basin is a virtue. Clearly, this entire ONGC- GSPC deal is an utter sham,” he wrote. ONGC, he said, has flouted Sebi’s guidelines for listing obligations and disclosure requirements and did not secure the approval of the minority shareholders for this transaction. “Sebi should order an inquiry into this proposed transaction immediately,” he said. “The sanctity and integrity of the venerable 83-year-old institution called the Reserve Bank of India has been demolished following the demonetisation of November 8, 2016. Its credibility has been severely damaged. In this context, it is even more imperative that the 25-year-old institution called Sebi guards its professionalism fiercely,” he wrote. Ramesh said it is incumbent upon Sebi to investigate the ONGC-GSPC transaction on behalf of minority shareholders. “Specifically, Sebi’s guidelines prescribe a ‘majority of minority’ rule for material transactions of listed companies, including PSUs. Therefore, I urge you to examine this proposed transaction between ONGC and GSPC in the greater interest of 5.5 lakh small shareholders spread across small cities and towns of India,” he asked Sinha. He called ONGC buying Gujarat State Petroleum Corp’s (GSPC) 80 per cent stake in the Deendayal block a “Rs 8,000 crore scam”. The Congress leader said GSPC has been trying to recover gas from the KG basin block for more than a decade without much success despite massive borrowings. “The Comptroller and Auditor General of India (CAG) has issued a scathing report indicting GSPC of incurring massive losses to the exchequer through dubious transactions. “The CAG report submitted in the Gujarat assembly in March 2016 notes that GSPC has loans outstanding of nearly Rs 20,000 crore. The company is facing interest dues alone of Rs 1,800 crore every year. Its profits have collapsed to a mere Rs 23 crore. GSPC is on the verge of bankruptcy,” he said. Andre Johnson Jersey
U.S. shifts LNG exports to Asia as arb opens up
The biggest divergence between U.S. and Asian gas prices in a year has created an opportunity for tankers delivering liquefied natural gas, with most departures from a key Louisiana terminal in the last month-and-a-half heading toward East Asia, shipping data released on Wednesday show. The facility, Sabine Pass, owned by Cheniere Energy Inc , opened last year as the first LNG export terminal in the U.S. Lower 48 states. The United States has been exporting gas out of Alaska since 1969. U.S. gas prices at the Henry Hub benchmark in Louisiana this week dropped about 20 percent since hitting a two-year high on Dec. 28, trading around $3.25 per million British thermal units (mmBtu) on Wednesday. Spot gas in Asia has soared by more than 30 percent since early December to a near two-year high of $9.75 per mmBtu. The premium of Asia over U.S. gas has reached its highest level since January 2015, presenting an arbitrage opportunity that LNG traders have rushed to fill. “China is experiencing colder-than-normal conditions, demand has kicked higher and prices have followed,” said Matt Smith, director of commodity research at energy data provider ClipperData in Louisville, Kentucky. In addition, China is looking to avoid previous gas shortages that the country has experienced in the past, Smith said. Of the 17 LNG vessels that left Sabine Pass in Louisiana since the start of December, at least 10 have either delivered their cargoes in East Asia or were moving in that direction across the Pacific Ocean, data from Reuters and ClipperData show. Those 10 ships have the capacity to carry about 33.2 billion cubic feet (bcf) of gas, worth about $120.6 million, based on the Henry Hub average. The United States consumes about 75 bcf per day (bcfd) of gas on average. Those 10 included the first shipments from Sabine to both Japan and South Korea. Royal Dutch Shell Plc’s BG Group has the contract for the part of the capacity for parts of the first and second 0.65-bcfd liquefaction trains at Sabine Pass. Gas Natural Fenosa also has a contract for part of the capacity of the second train. Since February, 61 vessels have taken cargos from Sabine, but just three vessels delivered LNG to East Asia between February and the end of November. Another 27 went to either South America or Mexico and five to India; the rest were scattered around the Middle East and Europe. Rod Brind’Amour Authentic Jersey
Government wants to know if it can recover $1.55 billion from RIL
The government is seeking legal advice on whether it can recover $1.55 billion compensation from Reliance Industries in the gas dispute case with ONGC while arbitration proceedings are underway, people with direct knowledge of the matter said. The oil ministry had directed Reliance in November to pay $1.55 billion, or about Rs 10,600 crore, to the government for “unjust gains” from producing natural gas that had flowed from the adjoining field of Oil and Natural Gas Corp (ONGC). Reliance initiated arbitration against the decision. “We are seeking advice from our lawyers and the law ministry to decide if we can recover the amount while the arbitration is in progress. Once we get their views, we will take a final call,” one of the sources said. It can take months, if not years, for the arbitration panel to complete proceedings and decide on the case. “The government has all options available to it and has not foreclosed any option. The one that will best suit the interests of government/public will be decided,” an oil ministry official said. Reliance Industries declined to comment for the story. The government demand was based on the Justice AP Shah panel report, which concluded that Reliance had unjustly gained by producing gas that had migrated to its field off the eastern coast from adjoining ONGC fields. The report said Reliance must restore that gain to the government. Reliance Industries has nominated Bernard Eder, a former High Court judge in the UK, to the arbitration panel while the government has named G S Singhvi, a retired Supreme Court judge, as its representative. The hearing will begin in India after the third arbitrator is decided. RIL had previously said the government order was arbitrary as the company had carried out its activities within the boundaries of the block it operates and had abided by contractual provisions and the law. Johnny Hekker Womens Jersey
Saudi cuts February oil exports to some buyers in India, Malaysia to meet OPEC deal
Saudi Arabia has cut February term crude supplies to refiners in India and Southeast Asia, seeking to comply with an OPEC deal, but it has held most of its exports to the rest of Asia steady for a second month, industry sources said on Wednesday. State oil giant Saudi Aramco reduced February term supplies of mainly heavy crude to Reliance Industries and Hindustan Mittal Energy Ltd (HMEL), as well as to Malaysia’s Petronas, four sources familiar with the matter said. Aramco has also cut oil supplies to another southeast Asian buyer for a second month in February, one of the sources said. That means some major oil companies in Europe and the United States could see reductions of up to 18 percent in their term volumes for February, the source said. “Saudi Arabia and Kuwait are focusing their cuts on US and European customers as they target excess inventories and protect market share in Asia,” Energy Aspects analyst Virendra Chauhan said. Saudi Aramco and the other companies could not be reached for comment. Details on the amounts of the supply reductions could not be confirmed. Saudi’s February supply reductions to a handful of Asian refiners mark the start of cuts to a region left untouched in January at the onset of the OPEC output deal. The producer maintained strong exports to Asia in January to protect its market share there and because it gets higher netbacks on sales to the East than it does for other regions. The Organization of the Petroleum Exporting Countries (OPEC) agreed to cut production by 1.2 million barrels per day (bpd) in the first half of 2017 to reduce a global supply glut and support prices. World’s top exporter Saudi Arabia cut oil output in January by at least 486,000 bpd to 10.058 million bpd. Still, Saudi Aramco kept February supplies to most North Asian refiners at full volumes for a second month, trade sources said, indicating it will have to continue cutting exports to Europe and the United States to meet its OPEC commitment. “I think the Saudis won’t touch volumes to Japan, South Korea and Taiwan. Southeast Asian demand is small when compared to North Asia,” a Singapore-based crude analyst with a European oil company said. Ed Dickson Womens Jersey
Demonetisation to hold back India’s 2017 fuel demand growth
Fuel demand growth is expected to slow by as much as 40 per cent in 2017 from last year as a government-induced cash shortage hurts businesses, industry and car sales. The dent in demand growth in the world’s third-largest oil consumer is expected to be temporary, though, with India still taking up the third-biggest portion – behind China and United States – of 2017’s rise in fuel use on a barrel-per-day basis, according to energy consultancy Wood Mackenzie. Fuel demand in 2016 grew at its fastest in at least 16 years as low oil prices boosted demand for gasoline and aviation fuels, but analysts say the nation’s currency troubles will put the brakes on this year. Oil product demand growth in 2017 is expected to drop to 160,000 barrels per day (bpd), from 270,000 bpd in 2016, according to Woodmac. “We see Indian demand growth slowing … due to the recent currency demonetisation drive by the Indian government,” said Suresh Sivanandam, the consultancy’s Singapore-based senior manager of Asia Pacific refining research. Prime Minister Narendra Modi’s currency crackdown has led to a cash crunch that has severely hurt overall output and consumer demand, with December factory activity contracting in its biggest monthly decline in eight years and last month’s car sales dropping the most in 16 years. Growth in both diesel consumption – used mainly for heavy industrial vehicles – and gasoline burned to power cars, is expected to slow, especially in the first quarter, traders and analysts told Reuters. And while this will dent refining margins for diesel, it is not expected to be enough to undercut a strong 2017 profit outlook for the fuel across Asia this year. “The cash crunch … is dampening growth in agricultural and other small-to-medium scale sectors, which are heavily cash-reliant,” said Sri Paravaikkarasu, head of East of Suez Oil at energy consultants FGE. “It will easily take three to six months for the dust to settle,” she said, although long-term prospects remain strong, with spending on infrastructure projects and a resumption in economic growth and freight shipments supporting diesel. Diesel demand is expected to grow only 2 percent in the first quarter of 2017 compared with a year ago, less than half of the 5 per cent growth rate seen in the first 10 months of 2016, said Tushar Tarun Bansal, director of Singapore-based consultancy Ivy Global. Actual oil demand growth may be lower than projected, though, cautioned an Indian refiner source, as consumers have been stocking fuel to take advantage of an exception given to old 500 and 1,000-rupee notes for purchases of diesel and gasoline at retail pumps. Leonard Williams Jersey
Target of 15 million LPG connections under PMUY for 2016-17 achieved: Pradhan
The Centre has already achieved the target of 1.5 crore LPG connections for 2016-17 fiscal under a scheme for providing free cooking gas connections to BPL families, Petroleum and Natural Gas Minister Dharmendra Pradhan said today. The government had set a target of five crore connections for three years, ending 2018-19 under the Prime Minister Ujwala Yojana (PMUY) scheme, with 1.5 crore each during this and next fiscal, and two crore in 2018-19, he said here. For 2016-17 fiscal, the target had been achieved by the end of December and 10,000 more connections would be added in the remaining months, he said. He said LPG connection was not only commercial one, but a catalyst for socio-economic change and considering the deaths of five lakh women per year due to the usage of unhealthy fuels for cooking, the government decided to provide the connections free of cost. Stating that there were 13 crore LPG consumers in 2014, when NDA government took over, he said it had gone up to 19 crore and the target was 27 crore by 2020. His ministry would add 10,000 distributors to the present 80,000, to achieve this. Replying to a question, he said his ministry had records to prove that beneficiaries were using the LPG connections. On digital payments at petrol outlets, Pradhan said fifty cities, including Chennai, Coimbatore, Madurai and Tiruchirapalli, had been identified for ensuring 100 per cent digital facility. Of the 4,554 petrol bunks in Tamil Nadu, a total of 4,077 were having either Point of Sales machines or wallet facility, he said Pradhan, who was here to attend the convention of All India LPG Distributors Federation, said he had asked the gas agencies to focus on safety, by spreading awareness about preventive measures. On plans to generate alternative fuel or producing more ethanol, Pradhan said the government had decided to start 11 ethanol plants, including one in Tamil Nadu, in the next two years. Mark McGwire Womens Jersey
India’s 2016 fuel sales growth highest in at least 16 years on low crude prices
India’s fuel demand in 2016 grew at its highest pace in at least 16 years as low oil prices for most of the year boosted demand for gasoline and aviation fuels. Consumption of fuels, a proxy for oil demand, surged 10.7 percent to 196.48 million tonnes in 2016, data from the Petroleum Planning and Analysis Cell (PPAC) of the Oil Ministry showed. State polls in India in five states in February and March are likely to send thousands of voters criss-crossing vast distances, boosting gasoline demand throughout the first quarter of 2017, but analysts say growth could slow over the year as currency woes bite. Huge rallies by parties to showcase their political might among voters are a common sight before elections. Canvassing involves transportation of thousands of people from neighbouring areas to the rallies in trucks and buses. India’s refined fuel demand grew at 4.3 percent in December, its slowest pace in three months, but use of diesel-fired generator sets and vehicles by political parties for canvassing in state polls could result in higher demand this quarter. “2016 fuel consumption was high, mainly due to gasoline sales, rapid penetration of LPG (liquefied petroleum gas) in parts of the country and cheaper air travel due to low oil prices,” said Tushar Tarun Bansal, a director at Singapore-based consultancy Ivy Global Energy. Gasoline demand rose 12.2 percent in 2016 on top of strong growth in 2015, with diesel demand rising 5.6 percent, its fastest in four years, driven by a surge in domestic automobile sales. Cooking gas or liquefied petroleum gas (LPG) sales rose 11.3 percent to 21.19 million tonnes. In early November, India scrapped the 500- and 1,000-rupee notes as part of a crackdown on tax dodgers and counterfeiters but allowed the use of the banned currency for select purposes such as buying fuel for automobiles and cooking. India’s December fuel sales were dented by an end of that exemption, which was the main reason for a spike in local sales in November. Data on India’s fuel consumption is available only from April 1998 on the PPAC’s website. Bansal of Ivy Global sees India’s fuel demand growth slowing by 4.8 percent to about 4.4 million barrels per day (bpd) in 2017 as currency concerns could slow economic and industrial growth while higher oil prices could choke of the fuel demand gains. “Efforts to ban large denomination notes will have a temporary negative effect on overall economic activity, as they restrain the efficient distribution of money,” the International Energy Agency (IEA) said in a report last month. The IEA also estimated India’s fuel demand growth to ease to 6.3 percent in 2017 from an estimated 7 percent in 2016. Kenneth Acker Womens Jersey
Despite GSPC buyout, ONGC financials are strong enough, says S&P
Given the continuing upward trend in global crude oil prices should help the national explorer ONGC to maintain its credit profile despite the recent leveraged buyout of Gujarat State Petroleum’s oil blocks for USD 1.2 billion, says a report. “Improving oil prices should enable ONGC to maintain adequate, albeit reduced, buffer in its financial ratios, following the acquisition of 80 per cent state in GSPC’s Deen Dayal West gas field,” Vishal Kulkarni, an analyst at S&P said in report today. “Since we expect the GSPC acquisition to enhance ONGC’s gas reserves by 1.1 trillion cubic feet and help increase gas production by 8-9 per cent when commercial production starts, we expect the company to be able to maintain its stand-alone creditworthiness over the next 12-24 months,” the report added. The report further said the state-run company still has enough financial headroom to absorb the acquisition of cost USD1.2 billion. The December 23, 2016 acquisition includes the transfer of operatorship of the field to ONGC and USD200 million of another six discoveries depending on their development progress. The gas production from this Deen Dayal West field has started on a trial basis and will likely reach commercial stable production by 2019. The field is a high-pressure, high-temperature field and is eligible for the premium domestic gas pricing for gas from difficult fields. Despite this, the company would have to incur residual capital spending of about USD1 billion for the field, he said. It can be noted that ONGC has been displaying a rising appetite for acquisitions to enhance production over the past two years, and the report expects this trend to continue. The GSPC acquisition follows ONGC’s acquisition of a stake in a producing field of CJSC Vankorneft for about USD2 billion. The acquisitions came at a time when hydrocarbon prices are low. And these buyouts have depressed ONGC’s financial metrics, with the ratio of funds from operations to debt now close to about 40-45 per cent from about 80 per cent as of March 2016. “Nevertheless, we expect ONGC to sustain its financial position in line with its ‘A-‘ stand-alone credit profile. The ratios could have deteriorated below our downgrade threshold but for the improvement in oil prices since late 2016,” the report noted. “Continued appetite for acquisitions of USD1 billion or more a year or oil prices falling below USD45 a barrel could strain ONGC’s standalone ratings,” he said. Nazem Kadri Authentic Jersey