Oil & Gas companies to turn cash flow positive in 2017
International analyst firm Wood Mackenzie’ global corporate outlook for 2017 forecasts the oil and gas industry to turn cash flow positive for the first time since the downturn, if OPEC production cuts drive oil prices above $55 per barrel. Tom Ellacott, senior vice president of corporate analysis research at Wood Mackenzie, said: “Most oil and gas companies will start 2017 on a firmer footing, having halved cash flow break evens to survive the past two years. Further evidence of a cautious, U-shaped recovery in investment should emerge.” In 2017, according to the firm, strengthening finances will still be a top priority for oil companies. Capital discipline, cost reduction and deleveraging will frame corporate strategies in 2017. But 2016 will prove to be the low point in the investment cycle, with confidence boosted by OPEC’s decision to cut production. US-based companies will respond first to rising prices, the report said. Emboldened by a Trump administration committed to exploiting domestic oil and gas resources, US L48 operators have three core competitive advantages: access to capital; cost-advantaged portfolios; and flexibility to scale back spend sharply if prices stay low. According to Wood Mackenzie’s analysis the US Independents could increase investment by over 25% if oil prices average above $50 per barrel. But spend for the bigger players will continue to trend down – total investment by the Majors will fall by around 8% as recent capital-intensive projects wind down. “More companies will strive to adapt by positioning portfolios lower down the cost curve. The hot oil plays are US tight oil, with the Permian Basin to the fore, and Brazil pre-salt. Both have materiality and development break evens which are among the lowest globally. Renewables exposure will continue to build, though scarce capital and improving returns from upstream suggest small steps in 2017 rather than transformational moves,” the analysis firm said in a statement. Wood Mackenzie forecasts production from the 60 companies covered in its corporate service to grow by an average of 2%, which is impressive given development spend was slashed by over 40% between 2014 and 2016. A selection of international Independents and leading US unconventional players will deliver top-ranking performance on production growth metrics. However, savage investment cuts, asset sales and low prices will take their toll with 23 players experiencing declining volumes in 2017. Wood Mackenzie expects the trend of improving exploration success rates and full-cycle returns to continue in 2017, with more Majors and National Oil Companies stepping up new ventures activity. “Mergers and acquisitions will also offer an attractive value proposition for the financially strong prepared to take a bullish view on long-term prices,” said Ellacott. “Low-cost, low-risk discovered resource opportunities will look attractive again. And the larger players will need these to ensure long-term portfolio renewal as part of a more balanced growth strategy.” Dustin Hopkins Womens Jersey
Petrofed and RGU join forces to support India’s oil and gas skills ambitions
The MoU has come on the back of Robert Gordon University receiving funding from the UK’s Foreign and Commonwealth Office to develop a training framework for the Indian energy sector and a visit from Sh. Dharmendra Pradhan, Union Minister for Petroleum and Natural Gas to RGU in September 2016. The main objectives of the MoU are development of the relationship between RGU and the member companies of PetroFed for development of technical and managerial skills for the Hydrocarbon sector in India. Dr. R.K.Malhotra, Director General, PetroFed said, “India has ambitions to increase its share of hydrocarbon production domestically and reducing its energy import by 10% by 2022, as stated by our Hon’ble Prime Minister, and becoming energy self-sufficient. With a view to provide sustainable workforce and to deliver the planned growth in hydrocarbon exploration and production, we have joined hands with RGU to assess the need for Oil & Gas sector related skills”. Professor Paul de Leeuw, Director of Robert Gordon University’s Oil and Gas Institute (OGI), added, “We are delighted to strengthen our relationship with India. Our collaboration with PetroFed will lay the foundation for exchanging expertise between the Indian oil and gas industry and Robert Gordon University. Through our relationship, PetroFed members will be able to draw on our expertise, particularly in the areas of deep-water drilling and subsea. The MoU will also help to accelerate skills development in support of the Government’s vision to increase domestic production and to reduce the country’s dependence on hydrocarbon imports.” The OGI provides access to world-class expertise in the critical areas of drilling and wells, operations, decommissioning, operations, subsea and business excellence. Led by industry experts and academics, the Institute works closely with the sector on the research and education required to maximise recovery of the world’s hydrocarbon resources and to address the key challenges in the oil and gas industry. Ernie Stautner Womens Jersey
NGT asks West Bengal to decide on GAIL gas pipeline in a fortnight
The National Green Tribunal (NGT), eastern zone bench, has given the chief secretary (CS) 15 days to decide whether Gas Authority of India Ltd (GAIL) should be entrusted with natural gas distribution in the city through a pipeline by itself or a joint venture company should be set up for this. The gas major plans to complete its 2,539km long pipeline from Jagdishpur in Uttar Pradesh to Haldia by 2020. It proposes to distribute gas in seven cities, including Kolkata, enroute. Environment activist Subhas Datta had moved the NGT in September last year, to introduce natural gas in Kolkata. The green bench had passed several directions, after which the state government and GAIL have been at loggerheads with technical issues regarding the CNG distribution. In August, the NGT had directed the CS to take up the matter with the Ministry of Petroleum and Natural Gas and GAIL. When this didn’t happen, the bench directed senior officials including the CS to attend a meeting convened by it on December 7. Nearly 30 people attended the meeting while the CS chose to stay away. On Friday, the bench of justice SP Wangdi and professor PC Mishra expressed displeasure at this. “We didn’t convene the meeting to grace or glorify us. We are keen to introduce green and clean fuel in Kolkata,” the bench observed before going through an affidavit submitted by GAIL. In the affidavit, GAIL wrote, it is making efforts to complete the pipeline by December 2019, and laying a distribution network in Kolkata would cost nearly Rs 3,500 crore. Gareon Conley Authentic Jersey
ONGC allowed loot, plunder of equipment: Parliament panel report
Parliament’s Public Accounts Committee (PAC) has asked the government to probe the role played by oil ministry officials in delaying a decision on awarding the Ratna and R-Series fields, as well as ONGC executives for allowing “loot and plunder of equipment and take stringent action against them. The PAC report, tabled in Parliament on Friday, said the ministry’s indecision “directly compromised national interest on energy security and stringent action may be taken in this matter”. PAC said ONGC allowed “plundering and looting” of equipment from offshore platforms of fields by not putting in place effective security systems. “Non-maintenance of oil-producing fields by ONGC and subsequent plundering and looting from the sites is a sheer failure of a public sector undertaking in looking after the nation’s property,” the report said. Last year, the Comptroller and Auditor General (CAG) had said the 16-year delay in award of Ratna and R-Series fields caused a loss of Rs 26,000 crore to the exchequer. The fields, 90km southwest of Mumbai, were awarded in February 1996 to a consortium of Ruias-promoted Essar group and UK-based Premier Oil through an international bidding process as per then prevailing policy for discovered fields. ONGC retained 40% stake as the original licensee. Subsequently, however, disputes over terms of the award delayed handing over of the fields to the consortium. Last year, the government finally restored the fields to ONGC. But in the 16 years that went by when the field idled, much of the equipment was stolen or became unserviceable. “ONGC’s own inspections reported the facts of ‘plundering and looting’ of platform utilities and equipment… As per ONGC’s own estimate of 2010, cost of repair itself of these facilities would be Rs 1,086 crore,” the CAG had said last year and projected a loss of Rs 26,000 crore to the country due to the 16-year delay in awarding the fields for production. Striking a similar refrain, the PAC report said ONGC “should have maintained the fields as being a PSU it would have anyway recovered all its expenses sooner or later”. Carlos Baerga Womens Jersey
LPG woes: Cash crunch threatens to turn off stoves
The demonetisation effect has entered the family kitchen now as the deadline for paying the scrapped notes for LPG cylinders expired on December 15 and there is ashortage of smaller currenciesin the system. Worse still, the LPG dealers are unlikely to get swipe machines in the near future because there is a shortage of them in the market due to the high demand. The market is flooded with Rs 2,000 notes, thanks to the ATMs full of them. Banks are also giving at least 80 percent of cash in these notes. “The loose change is gone from the market as it is not being replenished by the banks. As there was a hoarding of higher denomination notes, the lower denomination notes are in demand now. Given the situation, we are unable to book the refill cylinder of LPG,” Sushma Jadhav, a teacher in a private school, residing in Pathardi area, said. Similar is the case with Kailas Adhav of Panchavati who had booked a refill cylinder on December 13 and had to send the delivery boy back after he said he had no change. “He came to our house and on December 16 with the cylinder, but my wife had to send him back because she had Rs 2,000 notes and and no change. She tried to get change from a private shop that had a PoS machine, but in vain,” he said. The shortage of change is creating problems for people. “We have change but that is largely being used for important needs like grocery and vegetables. But the LPG dealers can bring the swipe machines,” Sanjay Narkhede, a shopkeeper said. The situation is still bad in rural areas where banks do not have enough branches to dispense cash to farmers. “We have to travel 15 km for an ATM, forget any bank branch. We are not tech savvy and cannot use cards or net banking. How will we buy refills? Till December 15, the Rs 500 notes were allowed, but now that is not the situation. Besides, the internet connection is not friendly,” Abhijeet Kadam, a residnet of a village in Niphad, said. The LPG distributors have their own story to tell. “Some people are paying exact change, but the number those rejecting delivery of cylinders has shot up. The deliveries are being rejected mainly because people do not have cash these days. Most delivery men bring back at least one cylinder per day,” said a distributor. A senior official of a petroleum company said people using smart phones know that they can pay online at the time of booking, but those who not tech savvy are unable to do that. “Requests for swipe machines have been made by distributors and are waiting for the receipt of the same,” the officer said. “It is a major headache to buy a POS machine on rent. The online transactions have grown from 0.5 percent to about 2 percent after demonetization, but are not enough for a distributor to bear the charges of the POS machine. Besides, distributors will have to give one POS to every delivery person, which means at least about five machines per distributor. Who will bear the rents is a major question,” said a distributor. “The USSD code used for money transaction without internet connection is a good option but the problem is that people are not familiar with it. Even we are not aware of it at this point of time. The petroleum companies should conduct some workshops and display boards to create awareness among people,” another dealer from Nashik Road said. Howie Morenz Authentic Jersey
Iranian company launches CNG kit in India
An Iran-based company has zeroed down on the diamond city to launch its CNG kit for the two-wheeler segment, first time in Gujarat and India. Officials from ITUK Manufacturing India Limited, a subsidiary of TUK Manufacturing based out of Tehran, the capital of Iran, were in the diamond city to launch the CNG kit for two-wheelers at the Gujarat Gas Company Limited’s (GGCL) CNG filling station at Pal on Friday. Company officials stated that Surat in particular has the highest penetration of CNG powered vehicles in the entire state. Apart from savings from CNG, there is a huge impact on environment as scooter segment comprises of nearly 17 per cent of the total vehicle population of Surat and 23 per cent of the total two-wheeler population. Every year more than 25,000 new two-wheelers are purchased by the citizens in the diamond city and this number would be in exponentially higher in the State of Gujarat. ITUK has its manufacturing plants including the one located in Pune, other than Tehran the capital of Iran, which manufactures all parts indigenously in India including the regulators, valves, mixers, seat and frames etc. Reto Berra Jersey
BP strikes deal for 10 percent stake in Abu Dhabi’s ADCO concession
BP became the second Western oil major to renew a 40-year onshore concession in Abu Dhabi on Saturday after almost two years of negotiations to improve terms to help operate the United Arab Emirates’ biggest oilfields. The British oil company signed an agreement with state-run Abu Dhabi? National Oil Company (ADNOC) giving it a 10 percent stake in the Abu Dhabi Company for Onshore Petroleum Operations (ADCO), which operates the concession. “BP becomes a 10 percent shareholder in ADCO,” ADNOC said in a statement. ?”The agreement includes BP becoming asset leader for the Bab asset group within the concession.” The ADCO concession, including the Bab, Bu Hasa, Shah and Asab fields, has total resources of between 20-30 billion barrels of oil equivalent over the term of the concession. ?The fields produce 1.6 million barrels per day (bpd) and are expected to reach 1.8 million bpd from 2017. Total (TOTF.PA) was the first oil major to renew the concession, securing a 10 percent stake in January last year and putting its peers under pressure to improve terms after ADNOC said the French company made the best offer. Asian and other Western oil firms also bid for stakes after a deal with major oil companies in the concession first granted in the 1970s expired in January 2014. Total and BP had both held 9.5 percent equity stakes in the ADCO concession since the 1970s. Shell (RDSa.L) and Exxon (XOM.N) were also partners in the old concession. Since then other Asian energy companies were granted smaller stakes.? INPEX Corporation (1605.T) of Japan, and GS Energy of South Korea GSHOLE.UL received 5 percent and 3 percent stakes respectively. ADNOC said it “continues to look for partners to take up the remaining 12 percent stake of the 40 percent earmarked for foreign partners.” As part of the deal, BP said it would issue 392,920,353 of new ordinary shares to be held on behalf of Abu Dhabi’s government at a price of 4.47 pounds ($5.58) per ordinary share.
GAIL ready to invest Rs 350 million on CNG
The National Green Tribunal (NGT), eastern zone bench, has given the chief secretary (CS) 15 days to decide whether Gas Authority of India Ltd (GAIL) should be entrusted with natural gas distribution in the city through a pipeline by itself or a joint venture company should be set up for this. The gas major plans to complete its 2,539km long pipeline from Jagdishpur in Uttar Pradesh to Haldia by 2020. It proposes to distribute gas in seven cities, including Kolkata, enroute. Environment activist Subhas Datta had moved the NGT in September last year, to introduce natural gas in Kolkata. The green bench had passed several directions, after which the state government and GAIL have been at loggerheads with technical issues regarding the CNG distribution. In August, the NGT had directed the CS to take up the matter with the Ministry of Petroleum and Natural Gas and GAIL. When this didn’t happen, the bench directed senior officials including the CS to attend a meeting convened by it on December 7. Nearly 30 people attended the meeting while the CS chose to stay away. On Friday, the bench of justice SP Wangdi and professor PC Mishra expressed displeasure at this. “We didn’t convene the meeting to grace or glorify us. We are keen to introduce green and clean fuel in Kolkata,” the bench observed before going through an affidavit submitted by GAIL. In the affidavit, GAIL wrote, it is making efforts to complete the pipeline by December 2019, and laying a distribution network in Kolkata would cost nearly Rs 350 million. Eric Sogard Womens Jersey
OPEC supply still opaque despite more data – Petro-Logistics
OPEC’s first supply cut deal in eight years came as good news for a Swiss family business founded by an economics analyst who once helped the then Rhodesian government procure oil supplies in the face of sanctions. Geneva-based Petro-Logistics earns money from the lack of timely and complete information from OPEC members and other oil exporters like Russia in the 95 million barrels-per-day global market, by tracking shipments to estimate production and supply. The Organization of the Petroleum Exporting Countries is planning to cut its output by 1.2 million bpd from Jan. 1, its first such deal since 2008. Russia and other non-members are planning to cut about half as much. The deal will heighten interest in assessments of OPEC production, to see the extent to which it makes good on the cutbacks. As well as Petro-Logistics, other consultants, government bodies and news services estimate OPEC output. Oil prices jumped to $57.89 a barrel, their highest since July 2015, on Dec. 12, supported by the prospect of lower supply. Estimates of OPEC and Russian compliance in 2017 will likely lead to more price volatility. Since the early days of Petro-Logistics which was founded in 1980, and since the last OPEC cut of 2008, more data has become available, such as satellite information on tanker positions, helping to make the oil market more transparent. While this helps, piecing together the whole picture such as what type of crude is on the tanker and who is buying it remains no easy task, Petro-Logistics’ chief executive Daniel Gerber, who began with the firm in 2009, told Reuters. “When I started at Petro-Logistics, we were still using Lloyds List Voyage Records, which were monthly publication hardbound books providing you with a handful of tanker positions in any one update,” he said. “While there is some information that is easier to get, such as satellite data on ship positions, the whole story is harder to put together in terms of things like grades, customers, refining activity, in-country demand and field-by-field production, making the element of human experience even more important than in the past.” Petro-Logistics estimates OPEC managed to achieve about 60 to 70 percent of the pledged reductions last time around in 2008-2009, and expects a similar level with the new initiative. “This time we expect the core OPEC – Saudi, UAE and Kuwait – to largely stick to their commitments, which alone should result in about 50 percent cut compliance. With a bit of help from the other members, we should see 60-70 percent compliance once again.” Libya and Nigeria – exempt from the cut – are wild cards, as is Russia. “Russia doesn’t have the best history of joining OPEC cuts, they are another big wild card.” COUNTERING SANCTIONS Since OPEC accounts for the bulk of the world’s oil exports, its level of production is vital information for traders, consumers and governments. The trouble is, finding that number is not easy due to a dearth of timely official information. Even OPEC itself issues two sets of figures – those provided by members and independent estimates – which show significant differences about the level of, say, Saudi or Iraqi output. Petro-Logistics was founded by Conrad Gerber, Daniel’s father, after he had spent 13 years working for the Rhodesian government, “countering sanctions and defying an apparently hostile world,” as his son put it. “My father received a challenge from an oil trader to perfect a new discipline in oil market analysis – the art and science of tanker tracking,” Gerber said. “He was willing to do the hard work. That meant a lot of travel to some pretty interesting places, setting up structures to bring all the information together, and the crucial part, the experienced human element.” The Petro-Logistics OPEC estimates originally relied on Gerber senior’s vast network of contacts. Sent out to clients under the heading “CONFIDENTIAL,” the numbers sometimes made their way onto news wires, moving the price of oil. This gave rise to an oil-market myth that Petro-Logistics had people stationed at ports around the world with binoculars, counting tankers as they left with crude, although this was “just people trying to make sense of how my father got access to such good information,” Gerber said. Daniel and his brother, Mark, now manage the company following their father’s death in 2009. It has 15 staff, of which 10 are full time. Three are based in a Houston office. Petro-Logistics’ clients have included most of the main types of participant in the oil market – oil majors, trading houses, banks, hedge funds, national oil companies – and even other OPEC members themselves. “Back in the 80s in particular and still today, OPEC members didn’t trust each other and they were very keen to understand what other members were doing, if they were sticking to their quota agreements,” Gerber said. While it was a myth about the binoculars, and technology now allows real-time tanker tracking, the company does collate information from a source network accumulated over decades. “In reality, knowing what tankers are arriving and leaving a port is the easiest part of the equation,” Gerber said. “Knowing what is on board is far more complex and requires contacts on the ground.” Nick Nelson Jersey
Hike in petrol, diesel rates deferred
PSU oil companies have deferred a planned Rs 2.26 a litre hike in petrol and Rs 1.78 increase in diesel. Indian Oil Corporation(IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) revise rates, particularly when a price cut is necessitated, on 1st and 16th of every month based on average international price in the previous fortnight. But an increase that was warranted because of a rise in international gasoline (petrol) price to $62.82 per barrel from $57.43 and that of diesel to $60.97 from $56.79 was deferred today. The surge in international price, which was moderately tempered by strengthening of the rupee to Rs 68.05 from Rs 68.23 a dollar, had necessitated Rs 2.26 a litre hike in petrol and Rs 1.78 in diesel, officials said. This increase was excluding local levies. The actual hike after considering VAT would have been about Rs 2.90 per litre and the same for diesel would have been Rs 2.10. Petrol in Delhi currently costs Rs 66.10 a litre and diesel Rs 54.57. Rates were last revised on December 1 when petrol price was hiked by a marginal 13 paise a litre, but diesel rates were cut by 12 paise. IOC Chairman B Ashok justified the deferment move, saying “it is not compulsory” to change rates on a particular date. “We continue to review it and will take appropriate decision at the right time,” he said. “Price revision is being done in a calibrated manner.” Stating that global prices are volatile, he said there are lots of changes happening around. “We need to take an overall view and then calibrate our views.” Prior to the December 1 price change, rates were hiked by Rs 1.46 a litre in the case of petrol and Rs 1.53 per litre for diesel, excluding local levies, on November 16. Industry sources said the deferment may be for a day or two as Parliament is in session and any hike would have added to the discomfort for the government, particularly when it is facing heat over hardships caused by currency demonetisation. The Winter Session of Parliament ends today and rate revision may follow soon, they said. Atlanta Braves Authentic Jersey