Prices of LPG cylinders, kerosene and jet fuel increased
A subsidised 14.2 kg cylinder will become expensive by Rs 2 to Rs 434.71 in Delhi, as against Rs 432.71 earlier. State-run oil marketing companies (OMCs) on Saturday hiked the price of subsidised cooking gas, or LPG, along with kerosene and aviation turbine fuel (ATF). The three state-owned OMCs revise rates of LPG, kerosene and ATF on the first of every month, based on global oil prices and the foreign exchange rate. This is the seventh straight month of increase in cooking gas cylinder prices — a subsidised 14.2 kg cylinder will become expensive by Rs 2 to Rs 434.71 in Delhi, as against Rs 432.71 earlier. In a move to reduce its LPG subsidy outgo, the government in July had decided on small hikes of around Rs 2 per cylinder every month. NON-SUBSIDISED LPG DEARER BY RE 1 The price of non-subsidised LPG, which consumers buy after exhausting their quota of 12 cylinders in a year, was also hiked on Saturday by Re 1 to Rs 585. Meanwhile, kerosene will became dearer by 26 paisa to Rs 19.43 per litre in Kolkata Steve Yzerman Jersey
Here’s how major commodities are likely to perform in 2017
Forecasting commodity markets for 2017 will depend largely on four main likely drivers. After a largely stellar year in 2016, the outlook for major commodities is likely to come down to the actions of Donald Trump, FED, the Chinese government and OPEC. CRUDE OIL There is considerable uncertainty around the outlook of the implementation of the Opec agreement, which, if carried through, will undoubtedly impact oil markets. A modest recovery is projected for most commodities in 2017, as demand strengthens and supplies tighten. Opec’s ability to affect oil prices is likely to be tested by the expansion of oil supply from unconventional sources, including shale producers. In particular, there are concerns that Opec members may not stick to their commitments, that demand will underwhelm – or, more pressingly, that rising prices will trigger a surge in production in the US. However, there is now a sense that the market is returning closer to balance, helped by American Petroleum Institute (API) data last night estimating US crude stockpiles dropped by more than four million barrels last week. In general, however, the market remains optimistic on supplies going into 2017 after the deal between Opec and other world producers, including Russia, to cut global output by 1.8 million barrels a day. Even the news that Libya, one of several Opec members exempted from the cuts, has doubled output to 600,000 barrels a day failed to dampen trader spirits too much. Coal prices surged 30 per cent, reflecting strong import demand and tightening supply in China following restrictions on production aimed at reducing pollution. U.S. natural gas prices jumped more than 33 percent due to strong demand for air conditioning, falling production, lower injections into storage, and increased exports to Mexico and to South America during the southern hemisphere winter. On September 28, Opec agreed to limit crude oil output to 32.5-33.0 million barrels per day, effectively ending two years of unrestrained production. This marked an important policy shift, especially for Saudi Arabia, the organization’s largest producer. Opec, the only surviving commodity organization seeking to influence markets, guiding global oil prices will be challenging in the presence of unconventional oil producers, notably the US shale oil industry. The US crude oil rig count peaked at 1,609 in October 2014. In contrast, it hit 316 in the week ending May 27, 2016-the lowest level since the 1940s. The US drilling activity fell due to lower crude oil prices. The lower prices were due to oversupply. The US crude oil rig count has risen by 109 rigs from the lows in May 2016. The big test then is whether higher prices provide another boost to US shale producers. As such, markets will also scour the US figures for signs the count of drilling rigs is picking up pace, which could suggest a production surge to come. On the technical front, we see prices of NYMEX WTI, hitting $62-63( MCX: 4000-4,200) levels and then grinding lower from there back to $50. But, we believe anything below $45 ( MCX: 3,000) could evoke another round of cuts, which could potentially take prices to the mid $70’s (MCX: 4,800-5000) again. GOLD & SILVER I find myself more pessimistic for bullion going into 2017 and never felt like this even during last year this time around when prices hit a six year low after the announcement of rate hike. But, gold retraced higher subsequently, thanks to weak stock markets and doubts over further hikes. Very similar announcement of a rate hike was made this month as well, but the difference is that, it is accompanied with negative fundamentals for gold. When we describe fundamentals for gold, it is to do with consumption and production. Production has been on the rise and consumption declining rapidly in the large consuming countries, India and China, with China also being a largest miner of gold. India as a country has more trust in adornments, than other asset and it is reasonable to expect demand to suffer more till the first half of 2017, as Indians have to get used to buying gold officially. However, in a country where the appetite for gold is insatiable, demonetization may have slowed down the gold demand only for a couple of quarters and we feel the demand will be back on track and so will the gold imports. Looking back in 2016, gold received a kicker since the beginning of the year, after reaching its nadir right towards the end of 2015, where it sank to around $1 050/oz. But what appeared to be a rapidly deteriorating economic environment characterised by negative interest rates in many developed countries, has led the yellow metal to rise by almost $300/oz or slightly above 20% since the start of the year. By the middle of the year predictions of $1500-$1900 started appearing from many of the reputed banks and institutions across the world purely based on hope that the FED might not hike rates for long period of time. Something like Brexit did not evoke the kind of reaction that is normally expected of gold and then came the trump shock taking any bullish meat left in gold. Since then, prices have fallen for six straight weeks, the worst streak in a year, as prospects for higher US borrowing costs damped demand for gold, a for a zero yielding asset like gold. Markets don’t seem too optimistic about the outlook for 2017. Hedge funds cut their bets on a rally to the lowest since February, while outflows are ramping up from exchange-traded funds. Where do we see the price of gold going in 2017? Given that stock markets, are becoming very bullish, gold could loose its safe-haven appeal. In the early days of 2016, markets were driven by fear, which is the reason gold rallied so strongly, but that has changed recently. Add to it Eurozone woes, the never-ending doubts over the fate of the Italian banking system, and general concerns over the health of the global economy. More
Reliance Commissions New Paraxylene Plant at Jamnagar on Reliance Founder’s Day
Reliance Industries Limited (RIL) has announce commissioning of the first phase of Para-xylene (PX) plant at Jamnagar, Gujarat. The plant with capacity of 2.2 MMTPA is built with state-of-the-art crystallization technology from BP which is highly energy efficient and environment friendly. With the commissioning of this plant, RIL’s PX capacity will more than double from 2.0 MMTPA to 4.2 MMTPA. “Commissioning of the new PX plant marks beginning of the culmination of a series of projects including the refinery off-gas cracker, ethane import project and petcoke gasification. These projects are part of the largest contemporary investment, in excess of Rs. 100,000 crore, in Refining and Petrochemicals sector anywhere in the world. Our projects are on schedule and at an advanced stage of mechanical completion. The new PX capacity takes us a step closer to being among the top 10 petrochemical players globally. This is a fitting tribute to our visionary Founder Chairman Shri Dhirubhai H. Ambani,” said Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Limited. Reliance Industries Limited (RIL) is India’s largest private sector company, with a consolidated turnover of INR 296,091 crore (US$ 44.7 billion), cash profit of INR 40,737 crore (US$ 6.1 billion) and net profit of INR 27,630 crore (US$ 4.2 billion) for the year ended March 31, 2016. The move comes on the birth anniversary of Reliance’s Founder Chairman Padma Vibhushan Shri Dhirubhai H. Ambani. On commissioning of entire PX capacity, Reliance will be the world’s second largest PX producer with 9% of global PX capacity and 11% share of global production. The new PX capacity will add value to the output from refineries and improve the profitability of the Jamnagar complex. PX is the building block for the entire polyester chain. The new capacity will complete the integration within Reliance’s polyester value chain, leading to improved margins and also strengthen its position in polyester industry globally. RIL is the first private sector company from India to feature in Fortune’s Global 500 list of ‘World’s Largest Corporations’, currently ranking 215th in terms of revenues and 126th in terms of profits. RIL ranks 238th in the Financial Times’ FT Global 500 list (2015) of the world’s largest companies. RIL ranks 121st on the Forbes Global 2000 list (2016), continuing to be the top-ranked Indian company. RIL’s activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail and telecommunications. Peyton Barber Womens Jersey
Sale of petrol, diesel grew 9 per cent in Delhi last financial year
The sale of petrol and diesel in Delhi increased to 902,000 tonne during 2015-16 compared to 831,000 tonne in 2014-15 fiscal. As per latest data released by the city government, the sale of CNG also went up from 717,000 tonne in 2014-15 to 738,000 tonne in 2015-16. For LPG, the figures stood at 732,000 tonne and 777,000 tonne for 2014-15 and 2015-16 respectively. According to the city government’s Delhi Statistical Handbook 2016, number of consumers of domestic light and fans in 2015-16 stood at 40,94,647 while the figure was 42,89,124 in 2014-15. The number of commercial light, fans stood at 8,51,410 and 8,71,330 in the year 2014-15 and 2015-16 respectively. Joel Heath Authentic Jersey
BP buys Woolworths fuel business in Australia
Oil company BP says it has agreed to buy the fuel business of Australian supermarket chain Woolworths Ltd. for $1.3 billion as part of its efforts to rebuild itself. The deal includes 527 fuel convenience sites and 16 other development sites across Australia. That adds to the 350 BP-owned gas stations in the country, and some 1,000 other BP-branded outlets owned by independent business partners. The deal, announced Wednesday, is subject to approval from Australian authorities and is expected to be complete over the next year.
Modi strikes gold on Ujjwala Yojana, 30% LPG connections given to UP
Making it one of the most successful social sector projects of the Narendra Modi-led BJP government, the Pradhan Mantri Ujjwala Yojana (PMUY) has achieved its target of giving LPG connections to 15 million families in 2016-17 within seven months of its launch in May. The scheme was launched on May 1 this year at Billie in Uttar Pradesh with a target of providing connections to 50 million below poverty line families in three years time, with a government support of Rs 16 billion per connection. Though the target for the current financial year was 15 million connections, Dharmendra Pradhan-led petroleum ministry was able to achieve the target with more than three months to spare. As per the PMUY website, the ministry crossed 1,51,07,561 families on Thursday. Interestingly, about 30 per cent of these connections are given to the poll-bound Uttar Pradesh. The government has allocated Rs 80 billion for the scheme in which connections are issued in the name of the women in those families. According to industry sources, the minister himself is overseeing Modi’s pet project, along with a team of officials in the marketing division led by joint secretary Ashutosh Jindal and deputy secretary K M Mahesh, with oil marketing companies reporting the developments of PMUY to the team on a daily basis. Poll-bound Uttar Pradesh has got the maximum number of connections with more than 4.5 million people benefitting from the scheme, followed by West Bengal with 1.95 million, Bihar with 1.9 million, Madhya Pradesh with 1.7 million and Rajasthan with 1.45 million connections. The ministry is likely to revise the target for this fiscal now. The government is also looking to invite the participation of private sector and other individuals to the scheme through PMUY Plus. The Pradhan team’s plan is that PMUY is set to get an image makeover, with the participation of private corporates and other individuals through a scheme called PMUY Plus. As per the concept floated by Pradhan, private parties can pay for the subsidy of below poverty line families. According to the plan, the three oil marketing companies (OMCs) — Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation – will form a society to run this programme. While companies like Saudi Aramco had shown interest in being a part of the project, even individuals like Minister of State for Tourism and Culture Mahesh Sharma had offered his one month salary for PMUY. The scheme is followed by the success of “Give it Up” campaign launched by the ministry of petroleum and natural gas through which about 10.5 million people gave up their LPG subsidy. Gathering impetus from PMUY scheme, the government has already added more than 20.5 million LPG customers this year. “In last two-and-a-half years, the government was successful in adding 60 million LPG connections, while in the 60 years before that, only 130 million connections were added,” said a source close to the development. According to the petroleum ministry data, India currently has 191.1 million LPG connections, while OMCs added 16 million consumers in 2014-15 and 20 million in 2015-16. Ryan Murray Authentic Jersey
Securing our energy future
In a recently held international conference sponsored by Bangladesh Chamber of Commerce and Industry (DCCI), Mr. Anders Hasselarger, an energy expert from Denmark pointed out in his keynote speech that the share of renewable energy, mostly solar and wind, in the energy mix in Denmark is 30 percent at present with prospect of raising it to 50 percent by 2030. Many other European countries are also forward moving towards an all renewable energy market. What Mr. Hasselarger tried to suggest based on the European energy sector concept, was that Bangladesh should have a diversified future energy mix with a long term perspective towards renewable energy sources with solar energy as the primary source. However, biomass, wind, hydro and wave or tidal water systems could also be relevant. Denmark and other European countries are not rich in sunlight. Sunlight is abundant in Bangladesh, yet the share of renewables (including solar, wind, hydro) in the energy mix in Bangladesh is only 3 percent, way behind a sun poor Denmark. Bangladesh targets to raise the renewable share in the energy mix from 3 percent today to 10 percent by 2020. This implies an increase of renewable based power to 2,400 MW (10 percent of projected generation capacity of 24,000 MW) from the present 450 MW in just four years. The absence of visible projects to fulfil the target led most observers to be sceptical about its success. Solar energy has very small share in the present energy mix in Bangladesh – less than 2 percent. Yet in one count, solar has a successful story. Bangladesh hosts the fastest growing solar home system in the world with 60,000 SHS units being installed per month. In terms of megawatt this may be tiny (solar produces only 190 MW while the national total power production capacity is 13,000 MW), but its contribution is enormous in socially uplifting millions of people, by raising their standard of living, by providing solar electricity to those who would never have grid electricity. Lighting a remote off the grid house with small solar power is one thing; providing energy feed for a large mass of people aspiring for rapid industrialisation is quite different. This is a bigger challenge. Bangladesh at present is energy starved. Its aspiration for entering the club of middle income country requires an increase in per capita energy use to boost the per capita GNI, a prerequisite for the above transition. The core problem Bangladesh faces is a shortage of primary energy to run the rapidly growing industry and power installations. Being a local gas based mono energy nation for the last four decades, Bangladesh was caught unprepared with an energy crisis when the trend of depleting gas reserve was confirmed. Although good amount of coal reserves are known to occur in north Bangladesh, local coal could not be used immediately as an alternative to gas because of the absence of enough coal mining. This leads Bangladesh to look for energy from outside. In the medium to long term future, Bangladesh plans to source its energy needs through imported fuels including coal, liquefied natural gas, LNG and oil. In one estimate, Bangladesh will have 90 percent dependence on imported energy sources by the year 2030. And this would come at a cost. The present downward prices of oil, LNG and coal are likely to be short lived and will bounce back to their original or even higher positions. Therefore, long term dependence on imported fuel for most of its requirement will introduce stress on the economy and will increase prices of industrial products including electricity and import inflation. Introduction of LNG in the short term future to compensate for the immediate gas supply deficit is perhaps justified, but the merit of a long term supply of large volume of costly LNG may be questionable. A rightful alternative is to launch serious gas exploration. Major exploration for hydrocarbon has not been undertaken in the country for more than a decade and a little gas reserve could be added to the reserve base. The gas exploration in Bangladesh may be called anything but serious with less than 10 exploratory wells drilled in the last 10 years. In spite of the fact that a large ocean area has now been claimed by the government as undisputed following the verdict of the international court, there has been too little activity by Bangladesh offshore. Yet, on the other side of offshore boundary, Myanmar has been registering significant gas discoveries since the boundary dispute was settled in 2012. Interestingly, the offshore Rakhaine Basin of Myanmar, where the late gas discoveries are being made, is a geologic continuation of the SE offshore Bangladesh. Geologists are therefore pointedly suggesting that the latter area would be equally gas prospective as the former. Unfortunately the Bangladesh offshore sees little exploration to prove it right. Bangladesh stands at a cross road of transition from an under-developed power and energy sector to a more developed one with projections of attaining a power generating capacity of 39,000 MW by 2030 and 56,000 MW by 2040. A major challenge for its successful implementation is to secure a cost effective sustainable primary energy supply. The government plans major changes in the way Bangladesh runs its energy business. As per the government’s plan and publicity, an energy mix is forthcoming in the mid to long term future with massive imported coal, large volume of imported LNG, imported oil, significant cross border electricity, nuclear energy, renewables and some local gas. This is likely to visibly change the energy and power scenario in the country, but the impact of such large volume of imported energy sources raises one question: how would the economy react to the price shock that comes with the large scale energy imports? Bangladesh should prioritise hydrocarbon exploration especially in the offshore, optimise renewable prospects especially solar and develop local coal to mitigate the energy crisis in the short to mid-term future. For the long term future (beyond 2030 or even 2040)
India November LNG Imports up over 15%
India’s LNG imports in November saw a double-digit percentage growth as relatively low prices attracted buyers. According to latest data published by oil ministry’s Petroleum Planning and Analysis Cell (PPAC), LNG imports in November were 2.01bn m³, up 15.47% compared with the same month last year. Cumulative imports too remain substantially higher. For the April-November period, India’s LNG imports were 16.9bn m³, up by 23.2% on year. Out of the total imports 51.93% came from Qatar, 8.61% from Angola, 8.17% from Equatorial Guinea, 7.8% from Singapore, 7.65% from Trinidad & Tobago, 4.14% from Australia, 3.97% from Nigeria, 3.93% from UAE and 3.81% from Spain. LNG was procured by Petronet LNG, Gail, Gujarat State Petroleum Corporation, Reliance Industries, Hazira LNG, Indian Oil Corporation, Torrent Power and Bharat Petroleum Corporation. The cost of importing LNG has dropped sharply this year after New Delhi signed a revised long term contract with Doha. Qatar is the largest supplier of LNG to India. Given the backdrop of low global LNG prices, Petronet LNG insisted on renegotiating its long-term contract with RasGas. In December, the two parties have signed a revised deal. The revised formula bases the price on a three-month average figure of Brent crude oil, replacing a five-year average of a basket of crude imported by Japan. India has four operational LNG terminals: Dahej, Hazira and Dabhol in northwest India, and Kochi in the southern state of Kerala. According to a document released by the oil ministry on June 3, India’s LNG terminal capacity could more than double by 2022 as existing terminals expand capacity and new ones get commissioned. Bradley Chubb Jersey
Oil & Gas year-ender: Petroleum sector set for a major fillip in 2017
The Indian oil and gas sector is set for a major fillip in the new year with the government in advanced stages of awarding oil and gas blocks under the new Hydrocarbon Exploration and Licensing Policy (HELP). The upcoming launch of the national sedimentary data repository will provide the new exploration policy an additional thrust and help ramp up output. “We expect to auction oil and gas blocks in a few basins next year under the HELP regime. The national repository data will also be functional by next year,” a senior oil ministry official said. A major highlight of the year gone by was the commissioning of India’s largest public sector refinery – Paradip in Odisha set up by state-run refiner Indian Oil Corp (IOC) – at a cost of Rs 34,555 crore in January 2016. The mega refinery is currently operating at 65 percent capacity and is expected to work at an excess of 90 percent capacity utilization beginning 2017, according to IOC. In the new year, the oil refining sector will also witness activity on the front of the planned 60 MTPA refinery being built by the three PSU oil firms – IOC, Bharat Petroleum Corp (BPCL) and Hindustan Petroleum (HPCL) — on the West coast. The companies signed an initial pact last month to construct the refinery at a cost of $30 billion. The project will be undertaken by a consortium of IOC, BPCL and HPCL with a 50, 25 and 25 percent stake, respectively. The detailed feasibility report of the project will be in works over the next year, according to an IOC executive. The past year will also be remembered for the Cabinet approval for the HELP policy that came in March replacing the earlier NELP regime. The differentiator for the new policy would be easing of E&P norms including — single license for exploration and production of conventional as well as non-conventional hydrocarbon resources, option to select blocks without waiting for formal bid rounds, revenue sharing model with no micro-management by the government as opposed to profit sharing model under the previous policy and pricing and marketing freedom. The oil ministry concluded the auction of 67 Discovered Small Fields in November where a bulk of the participation came from new entrants. The auctions witnessed 134 e-bids from 42 companies. Officials said the contracts for development of the blocks are likely to be awarded in the beginning of the year 2017. Analysts say the biggest highlight of 2016 was the OPEC decision to cut output by 1.2 million barrels per day to rein in global glut and prop up prices. The decision may force the government to cut excise duty on fuel, impact the petroleum subsidy budget for the next fiscal year and disrupt oil companies’ balance sheets. The rising oil price scenario will not translate into good news for the downstream refining and marketing companies, said Salil Garg, Director-Corporates at research agency India Ratings. “An upward movement in crude will also impact natural gas prices which will increase the cost of production for the downstream segment as many of the crude derivates are used for their own industrial use,” he said. The oil and gas sector also witnessed one of the biggest acquisitions in 2016 when Russia’s oil major Rosneft announced its decision to acquire Essar Oil and its Vadinar refinery in October in a deal pegged at over Rs 72,000 crore. The deal is likely to be closed in the first quarter of 2017. Prime Minister Narendra Modi also launched Ujjwala Yojana in May 2016 aimed at providing 5 crore LPG connections to BPL families with a support of Rs 1,600 crore per connection in the next three years. The government has allocated Rs 8000 crore for the scheme. The ministry managed to provide 14.5 million LPG connections in the first six months since the launch of scheme prompting them to revise their targets. Mirco Mueller Jersey
OMCs to open trading desks in Singapore
State-run oil marketing companies Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are setting up offices in Singapore that will hunt for bargain crude oil deals, executives from the companies have told. Singapore is the trading hub for the world’s biggest consumer region and an office there will help these firms have better access to information and speedier decision making. “We have approval for setting up this office for a long time but we have not been able to do so because the policy was fluid,” said Dipti Sanzgiri, executive director-international trade at BPCL. “Now, we hope to do it soon as it will help us have multiple options for buying crude oil and improve our sourcing strategy.” Until recently, public sector oil companies would often lose out on opportunities to buy cheaper crude from the international spot markets as their sourcing policies required them to float a tender and obtain approvals from the oil ministry before they could place an order. The process used to take up to two months. While these companies had board approvals to set up offices abroad, they could not go ahead due to policy constraints and concerns over transparency in the public procurement policy. But earlier this year, the government approved the plan to change the crude procurement process for government-owned refiners to put them on a par with their private sector peers like RIL and Essar Oil. This made way for them to buy cheaper crude in spot market. Jack Lambert Jersey