BP acquires Repsol’s 3.06 per cent stake in Tangguh LNG project
British oil company BP has acquired Spanish group Repsol’s 3.06 percent stake in the Tangguh liquefied natural gas (LNG) project in Indonesia for $313 million dollars, a BP spokesman said on Monday. The purchase lifts operator BP’s stake in the plant to a little more than 40 percent. The Tangguh plant processes 7.6 million tonnes of LNG a year. In June BP gave the go-ahead for the $8 billion expansion of Tangguh’s third LNG train, one of only a handful of major investment decisions in the sector this year as companies trim spending in response to a protracted slump in oil prices. Repsol, which announced the deal on Friday evening, said the transaction will generate $26 million in pre-tax capital gains.
RasGas says seeing preference for short term LNG contracts in India
Qatar’s RasGas is seeing preference for short-term LNG contracts from customers in India, its chief executive said on Tuesday at the Petrotech energy conference in New Delhi. Hamad Mubarak Al Muhannadi also said that India needs more LNG terminals to unlock demand. Asia’s third-largest economy will become the world’s second-largest spot and long-term LNG buyer this year, Muhannadi said. Butch Goring Jersey
Industries across NCR using sulphur-heavy fuel: EPCA
Rampant use of sulphur-heavy fuel like furnace oil and pet coke in industries across the National Capital Region is generating “enormous” amount of air pollutants and it needs immediate attention, a Supreme Court- appointed body has said. While furnace oil (FO) is ‘bottom-of-the-barrel’ product at refineries, pet coke is a by-product found in these facilities and there has been a spike in their sales possibly due to a “crash” in the global fuel prices, the panel said. The Environment Pollution (Control and Prevention) Authority has called for amendments to the 1996 notification that had banned these fuels in Delhi and extend its ambit across NCR. It has recommended that the states in the region adopt policies towards incentivising clean fuel over polluting fuel, observing that the situation is quite the opposite at present. “While governments provide tax exemptions to FO? Uttar Pradesh does not charge VAT on FO? natural gas is taxed. In Uttar Pradesh, cleaner natural gas is charged VAT at 10 per cent. This is the case in other states as well,” an EPCA investigation into quality of fuel being used in NCR said. Around 30,000 metric tons of FO have been sold every month in NCR last year, the report noted. EPCA stressed on the need to mandate the need for clean fuel, not just in Delhi but across NCR as industries outside the boundaries of the national capital are using polluting fuel. “Also many industries in Delhi operate in non-authorised colonies and so are outside the control of the Delhi Pollution Control Committee (DPCC),” it said. Combustion of sulphur leads to the emission of particulates and gaseous pollutants like Sulphur Dioxide (SO2) and depending on the level of moisture in the air, gas gets converted into particles. “These secondary particles are a key source of air pollution in Delhi/NCR. According to the IIT-Kanpur report, as much as 25-30 per cent of the winter sources are secondary particles, which are emitted from vehicles, power plants and industries,” the report said. Jeremy Lauzon Authentic Jersey
ONGC crosses daily production target; revises annual goal
State-run oil behemoth ONGC has crossed its daily production target of 16,200 tons per day and has accordingly revised its annual goal upward to 5.9 million tons for this fiscal. “Production trend has reversed in recent months. We will produce more in this year compared to last year. All over India, production of onshore has increased,” ONGC Director (Onshore) Ved Prakash Mahawar told PTI. The daily production of the company has already touched 16,300 tons compared to 15,300 tons in August 2015, he added. “We had set the target on higher side compared to last year and it was 16,200 tons per day. We have already achieved it. The last six month’s average is 16,290 tons a day,” Mahawar said. He said the company gave a mission target for production to all its assets across the country for the current financial year and all will achieve it by the end of the fiscal. “Our whole year’s target is 5.87 million tons. We will do more than our target. We are trying to reach 5.9 million tons in this fiscal and we are hopeful about it,” Mahawar said. When asked about Assam, the Director said the production this year will increase compared to last year in the state too. “In last fiscal, our production in Assam was 0.9 million tons. This year, we will reach the figure of one million tons,” he added. The average production of Assam asset was 2,250 tons a day a year earlier. “It has already crossed 2,350 tons per day. We gave the target of 2,400 tons a day to Assam asset. By January, this figure will also be achieved,” Mahawar said. Talking about the Jorhat basin, he said the production was 350 tons a day. “We have made it an asset to bring in more focus on production. As soon as it was made an asset, production has gone up to 400 tones every day. This will increase to 500 tons next year,” Mahawar said. Christian Kirk Jersey
IGL hikes CNG, PNG prices in Delhi, Noida, Greater Noida, Ghaziabad
The public sector Indraprastha Gas Limited (IGL) today hiked the selling prices of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) from midnight tonight in Delhi, Noida, Greater Noida and Ghaziabad due to increase in its input gas cost effected by gas suppliers as a result of reduction of input tax credit to them. A press release from IGL said the revision in prices would result in an increase of Rs 1.85 per kg in the consumer price of CNG in Delhi and Rs 2.15 per kg in the consumer price of CNG in Noida, Greater Noida and Ghaziabad. The new consumer price of Rs.37.30 per kg in Delhi and Rs 42.75 per kg in Noida, Greater Noida and Ghaziabad would be effective from midnight tonight, the release said. To boost CNG refueling during non-peak hours, IGL will continue to offer a discount of Rs 1.50 per kg in the selling prices of CNG for filling between 12.30 am and 5.30 am at select outlets. Thus, the consumer price of CNG would be Rs. 35.80 per kg in Delhi and Rs 41.25 per kg in Noida, Greater Noida and Ghaziabad between 12.30 am and 5.30 am at the select CNG stations across the region. The new consumer price of PNG to the households in Delhi is also being revised by Rs 1.05 per scm from Rs 23 per scm to Rs. 24.05 per scm with effect from December 4. Due to differential tax structure in the state of Uttar Pradesh, the applicable price of domestic PNG to households in Noida, Greater Noida and Ghaziabad would be Rs 25.56 per scm, an increase of Rs 1.21 per scm over the existing price of Rs 24.35 per scm. An IGL spokesperson said the increase in retail prices of CNG and PNG is to the extent of increase in its input gas cost. “IGL has been informed about the increase in gas cost by its natural gas suppliers due to reduction in input tax credit to them in course of inter-state trade and commerce. The suppliers have passed on the entire impact of the tax variation to IGL in respect of the gas supplied to it. “However, this increase would not have a major impact on the per km running cost of vehicles. For autos, the increase would be 5 paise per km, for taxi it would be 9 paise per km and in case of buses, the increase would be 53 paise per km, which translates to just around one paisa per passenger – km,” he said. “With the revised price, CNG would still offer nearly 60% savings towards the running cost when compared to petrol driven vehicles at the current level of prices. When compared to diesel driven vehicles, the economics in favour of CNG at revised price would be over 31%. IGL is currently catering to over 9,50,000 CNG vehicles in the capital, which include nearly 5,50,000 private cars. IGL is augmenting its CNG refueling infrastructure to meet the rapidly growing demand as a result of increased number of vehicles switching to CNG mode,” the spokesperson added. IGL is a joint venture of the public sector GAIL (India) Ltd. and Bharat Petroleum Corporation Limited (BPCL) and the Government of the National Capital Territory of Delhi. Harrison Smith Jersey
India nudges Iran to award expedition rights of Farzad-B field to ONGC Videsh
India has nudged Iran to quickly award rights to develop the coveted Farzad-B gas field in the Persian Gulf to ONGC Videsh by wrapping up negotiations that have been dragging on for months. Oil Minister Dharmendra Pradhan met Iranian Foreign Minister Mohammad Javad Zarif on Saturday to press for award of rights to develop the field, which was discovered by OVL, at the earliest. “Our relationship is much more than a usual (bilateral) relationship,” Pradhan told PTI. “We stood by them (Iran) in their difficult times (US and western sanctions) and continued to buy oil from them.” He said that he reminded the visiting minister of Iran’s commitment to awarding the field development to OVL on nomination basis. “I hope they will complete the process within the agreed time frame,” he added. In October, the two nations had pushed back the timelines for concluding a deal on Farzad-B field to February from November agreed previously. “Let me just say that I am hopeful of concluding the deal within the agreed time frame,” Pradhan said when asked if Iran would awarded the field to OVL within this fiscal. Iran is reportedly unhappy with the $10 billion plan submitted by OVL, the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC), for development of the 12.5 trillion cubic feet reserves in Farzad-B field and an accompanying plant to liquefy the gas for transportation in ships. It feels the $5 billion cost OVL and its partners have put for developing the field is on the higher side and wants it to be reduced. OVL will earn a fixed rate of return and get to recover all the investment it has made in the field development. India, however, feels that Iran is not making the right comparison by comparing it with South Pars field development. Farzad-B field is more complex than South Pars and has high sulphur, whose production and handling cost is additional. The field in the Farsi block was discovered by an Indian consortium led by OVL in 2008. It has an in-place gas reserve of 21.7 tcf, of which 12.5 tcf are recoverable. But India initially felt deterred from investing because of the fear of sanctions imposed by the US. But with the lifting of sanctions this year, it is back discussing a master development plan involving investment of $5 billion in field development and an equal amount in an LNG plant. OVL is preparing a Master Development Plan for the gas field while also working on a gas pricing formula keeping in view of the global gas price scenario, sources said. Gas produced from the field can either be converted into LNG by freezing at sub-zero temperature and shipping in cryogenic ships to India or transported through a pipeline — via overland passing through Pakistan or sub-sea. Iran and six world powers in July last year sealed a deal to curb the Islamic Republic’s nuclear programme in return for ending sanctions, opening prospects of Indian investments in the Persian Gulf field. The sanctions were lifted in January this year. Eric Ebron Jersey
Oil prices fall on concerns over OPEC-Russia production deal and profit taking
Oil prices fell on Friday on concerns whether major producers would implement an OPEC-Russia deal to cut production and as investors took profits after Brent touched a 16-month high a day earlier on news of the deal. “It looks achievable on the face of it, provided the parties to the latest production cut deal stick to their pledges, which has historically been somewhat of a sticking point,” ANZ bank said on Friday. But the cartel ability to overcome their differences and come to a last minute agreement was seen as a positive sign. “While OPEC’s adherence to the new allocations will be critical, the group demonstrated more cohesiveness than at any point since at least the 1.5 million barrels per day cut in 2008,” said Jason Gammel of U.S. investment bank Jefferies in a report on Friday. International Brent crude oil futures were trading at $53.52 per barrel at 0704 GMT, down 42 cents, or 0.78 per cent, from their last close. Read More: OPEC output cut could force government to slash excise duty on fuel, bring relief for upstream firms U.S. West Texas Intermediate (WTI) futures were at $50.91, down 15 cents, or 0.29 per cent. “I see it as profit-taking price-action after oil prices have rallied by almost 15 per cent in 2 days as the markets reassess this historical output deal,” said Phillip Futures analyst, Jonathan Chan. Analysts are now focusing their attention on the implementation of the OPEC deal which was joined by non-OPEC Russia for the first time in 15 years to coordinate production cuts by a combined 1.5 million barrels per day. “Compliance issues and a stronger than forecast revival from the U.S. shale sector represents the largest downside risk,” said BMI Research on Friday. It maintained its forecast for Brent crude at $55 a barrel in 2017 due to “ample stock levels and spare capacity within OPEC”. Still, the market remained broadly optimistic in the longer term about an accord designed to help bring the oil market back into balance. “This deal is significant. It sends a very strong message to the market and it should help the market find a balance,” said Simon Flowers, chief analyst at Wood Mackenzie. Flowers forecasts Brent to average $55-$60 a barrel in 2017, but cautioned this would “depend on OPEC being very careful to meet the terms of the agreement”. Price developments in crude futures over the coming days should provide evidence of the extent of the market’s optimism for the deal. “WTI has arrived at the peaks from the middle of last year and again in October,” said Ric Spooner, chief market strategist at CMC Markets, adding the next movements in the futures should provide insight into exactly how positively traders view this week’s agreement. In the days prior to Wednesday’s deal, the market assigned a low probability that OPEC would come to a meaningful agreement because of arguments between de facto leader Saudi Arabia and third-largest producer Iran. But that changed after Russian President Vladmir Putin played a crucial role in helping the OPEC set aside differences to forge the cartel’s first deal with non-OPEC Russia in 15 years. Jimmy Hayes Womens Jersey
Govt oil subsidy burden to be within budgetary allocation in FY2017 despite crude price rise; positive for upstream cos: ICRA
With crude oil prices of $50-60 for the balanced months in FY2017, government oil subsidy burden to be around Rs 170-190 billion for FY2017, which would be well within budget allocation of around Rs 270 billion for the current fiscal, ICRA today said.“Thus, the fiscal position of the government of India is unlikely to be affected for FY2017,” K Ravichandran, Senior Vice President, Head Corporate Sector Ratings said. The gross under-recoveries on subsidised domestic liquefied petroleum gas (LPG) and public distribution system (PDS) kerosene are expected to increase by around Rs 12-15 billion for FY2017 with every $5/bbl sustained increase in crude oil prices for the rest of FY2017. The impact of higher crude oil prices on the government fiscal may be limited in FY2018 as well because gross under recoveries would not increase significantly up to crude oil prices of $60-65/bbl due to ongoing regular small hike in prices of subsidised LPG and kerosene on a fortnightly/monthly basis. In terms of impact on foreign exchange outgo, the rise in crude oil prices along with recent depreciation in rupee against US dollar are expected to increase net crude oil and petroleum products import bill of the country by around $4 billion for crude oil prices of $55/bbl for the rest four months in FY2017. Read more: OPEC output cut could force government to slash excise duty on fuel, bring relief for upstream firms Assuming a rise in the average crude oil price to $55/barrel in the remainder of the year from the average of $45/barrel in April-November 2016, would have a first round impact of raising average WPI inflation by around 50 bps and CPI inflation by around 20 bps in December 2016-March 2017. As per existing under-recovery sharing formula, the government bears domestic LPG subsidy upto Rs 18/kg (around Rs 255 per cylinder) under the Direct Benefit Transfer for domestic LPG (DBTL) and kerosene subsidy up to Rs 12/litre. “Post ongoing small increase in LPG and kerosene prices, the threshold crude oil prices for these subsidy levels would be around $55-60/bbl for kerosene and nearly $65/bbl for LPG. Hence, PSU upstream companies (ONGC and OIL) are likely to benefit from rise in crude oil prices as their net realisations would increase with nil or minimal under-recovery burden upto the level of US$60/bbl, as per the current subsidy sharing formula,” said Ravichandran. Private crude oil producers would directly gain from higher crude oil prices. Nonetheless, at crude oil prices beyond $55/bbl, upstream companies may feel the pinch of higher cess burden levied at domestic crude production as the same was revised to 20% ad-valorem (16.67% on net sales realisation) from fixed Rs 4500 /MT (US9/bbl) in the Union Budget 2016-17, he added. The downstream crude oil companies are expected to report inventory gains in Q3 FY2017 resulting from spike in crude oil and petroleum product prices. However, higher crude oil prices would also lead to higher working capital borrowings and interest burden, negatively impacting the net profitability in the ensuing quarters. Besides, marketing margins of oil marketing companies may moderate with sustained increase in crude oil prices and increasing competition from private retailers. Organization of the Petroleum Exporting Countries (OPEC), on November 30, 2016, has agreed to cut total crude oil production of its member countries by 1.2 million barrels per day (mbpd) from January 2017. The decision by the OPEC has led to spike in global crude oil prices by around 15% with Benchmark Brent Crude futures touching $54/bbl. The deal by OPEC also includes coordination with Russia, a large crude oil producer but not an OPEC member. Any further rise in crude oil prices and sustainability at higher levels would depend upon actual cut in production by different OPEC members and Russia up to their commitment levels. Notwithstanding that, oversupply in global crude oil market may persist in the medium term with higher crude oil prices giving pricing power to US shale oil producers to raise production levels. Thus, with rebalancing of the market, global crude oil prices may not increase significantly over the medium term. Lane Johnson Authentic Jersey
OPEC output cut could force government to slash excise duty on fuel, bring relief for upstream firms
The latest decision by the Organization of Petroleum Exporting Countries (OPEC) to cut crude oil output to rein in oversupply and prop up prices may have a significant impact for India, experts say. The announcement to slash output by 1.2 million barrel per day may force the government to cut excise duty on fuel, provide relief to upstream firms and also influence the petroleum subsidy budget for the next fiscal. For consumers, the development translates into higher retail prices for petrol and diesel. “The government may continue with fortnightly adjustment in fuel prices until crude reaches $60 a barrel. Beyond that they may want to use the cushion of excise duty and keep the retail prices at a level that will not hurt consumers and fuel inflation,” said Debasish Mishra, Partner at accounting and consultancy firm Deloitte Touche Tohmatsu India. The 14-member global crude oil cartel on Wednesday agreed for the first output cut since 2008 after a mega global glut pulled down benchmark prices to less than $35 per barrel from a peak of $110 per barrel in mid-June, 2014. During the slump, the Modi government had hiked excise duty on petrol and diesel nine times to mop up additional revenue. In all, it raised excise duty on petrol by Rs 11.77 a litre and that on diesel by Rs 13.47. OPEC output cut could force government to slash excise duty on fuel, bring relief for upstream firmsOPEC output cut could force government to slash excise duty on fuel, bring relief for upstream firms – Image Experts also say the production cut from OPEC and the subsequent hike in crude oil prices will come as a relief for the upstream companies including Oil and Natural Gas Corporation (ONGC) and Oil India (OIL). “The upstream segment was taking a major hit in their margins due to historically low crude oil prices,” said Salil Garg, Director-Corporates at research firm India ratings. He added the development may not translate into good news for the downstream refining and marketing companies. “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,” Garg said. Experts also said in the event of a sharp and sustained increase in crude oil prices, the options before the government to cushion the consumers could include asking upstream firms to bear the burden of Oil Marketing Companies’under-recoveries or relieve the refiners through budgetary support. The three OMCs – Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) — suffered Gross Under-Recoveries (GURs) of Rs 7,826 crore on subsidized sales of LPG and Kerosene in the first half of current fiscal alone. The government had budgeted for a petroleum subsidy outgo of Rs 26,900 crore for the current financial year. According to the oil ministry, every $1 increase in crude oil price leads to additional under-recovery burden to the tune of Rs 1,180 crore for the OMCs. While the production cut will impact the government’s calculation of petroleum subsidy outgo for the next year’s budget, analysts stated the impact may be limited. “There will definitely be a slight increase in subsidy requirement for 2017-18 but it is uncertain whether prices will remain increased for a long time,” said K Ravichandran, Senior Vice President at ratings agency ICRA. He cited two reasons for doubting sustained higher levels of crude prices. The OPEC members’ ability to stick to committed production cuts is still to be tested and US shale producers may jack up output in response to increased crude prices. Dominic Moore Jersey
Greece to decide on gas grid sale next week after talks with SOCAR fail
Greece will decide next week how to proceed with the sale of its natural gas grid operator, a key term of its international bailout, after talks with Azerbaijan’s SOCAR collapsed, a source close to the matter said on Thursday. SOCAR agreed to buy a 66 percent stake in DESFA from Greece and its biggest oil refiner Hellenic Petroleum in 2013. But the 400 million euro deal hit a snag when the European Union, on competition grounds, asked it to reduce the stake. The sale ran into further complications last summer when Athens passed legislation raising DESFA’s gas tariffs by a lower amount than SOCAR had expected, eating into its future profit. Since then, Greece and SOCAR have been struggling to salvage the deal. The energy ministry said on Wednesday that talks were inconclusive. Read More: New LNG buyer Pakistan sees strong interest in giant tender for 240 shipments It said SOCAR’s request for a lower price was not legally feasible and would lead to the cancellation of the tender, while other proposals did not comply with European Union rules. “The decisions will be made next week,” the source told Reuters on condition of anonymity adding that there would be consultations with the country’s official creditors, which will help determine whether Athens will relaunch the sale or change the terms of the current tender. The issue is expected to be discussed at a meeting of euro zone finance ministers on Monday in Brussels, which will take stock of Greece’s bailout progress. Speeding up privatisations, which have reaped only 3.4 billion euros since 2010 due to red tape, union and political resistance has been a key demand. SOCAR confirmed on Thursday that the talks had failed. “The parties could not agree on a mutually acceptable commercial mechanism to address the investors’ and the sellers’ concerns,” it said in a statement. Italian gas grid operator Snam was interested in buying a 17 percent DESFA stake which SOCAR planned to sell, in order to comply with the EU competition rules. Snam declined to comment on the failed talks on Thursday. Greece is set to miss its 2.5 billion euro bailout target for proceeds from state asset divestments this year. It is expected to raise only 500 million euros, according to a budget draft which is being debated in parliament. It expects revenue of 2.6 billion euros from the scheme next year, including 188 million euros from the DESFA sale. Matthew Ioannidis Authentic Jersey