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. Brent Suter Jersey
Oil companies profitability to remain weak in 2017: Fitch
Fitch Ratings today said natural gas prices in India remain unattractive towards drawing large investments despite liberal exploration terms and higher rates for difficult discoveries. In a report ‘2017 Outlook: Indian Oil & Gas’, Fitch said India’s petroleum product consumption will remain strong at around 5-6 per cent in 2017 but the profitability in the oil and gas exploration and production segment will remain weak. “We believe gas prices remain unattractive towards drawing large investments despite a new hydrocarbon exploration licensing policy that eases regulations, and the government allowing higher gas prices for deep and ultra-deep water and difficult fields,” it said. Fitch expected the operating environment to remain challenging for Indian upstream companies in 2017 at its oil- price assumption of USD 45 per barrel, and low natural-gas prices. Stating that it did not expect any major improvement in profitability at Oil India Ltd and upstream operations of Reliance Industries Ltd, it said that most domestic gas fields are likely to make losses in 2017. “Without a change to the pricing mechanism, Fitch does not expect a significant improvement in gas prices. At the current gas price of USD 2.50 per million British thermal unit in India, OIL can only recover the cash costs of bringing the gas to the surface, but not the production levies, taxes, and sunk costs,” the report said. Fitch, however, said it expects upstream oil companies to continue investing in their current portfolio to maintain production and improve efficiency. On fuel consumption, it said India will see a strong growth of around 5-6 per cent in 2017. “Consumption increased by 8 per cent during the first half of 2016-17 fiscal (six months ended September 30, 2016), compared with 10.9 per cent in FY16,” Fitch said. Fitch also expects gross refining margins of all Indian oil refiners to narrow in 2017, while remaining stronger than the historical levels prior to FY16. “This, together with higher volumes, is likely to support strong operating cash flows in 2017. Therefore, we expect these entities’ credit metrics to stay in line with their current standalone profiles despite their large capex in the medium term.” It expected no discounts and under-recoveries (the difference between market prices and state-controlled selling prices) on kerosene and liquefied petroleum gas (LPG) to be borne by state-owned upstream oil companies or the three state-owned oil marketing companies (OMCs), in FY17 and FY18. “Fitch believes the gross refining margins (GRM) of all Indian oil refiners will shrink in 2017, from the strong levels in 1H16. However, Fitch expects GRMs to remain stronger than the historical average; investments to expand refining capacity and complexity is enhancing GRMs for most of the rated issuers,” the report said. This, together with higher volumes, is likely to support strong operating cash flows in 2017. Dennis Cholowski Womens Jersey
Get Ready! Petrol, Diesel Prices Could Go Up Sharply
Petrol and diesel prices could go up sharply higher when they are revised by the middle of this month. The reason: a surge in global oil prices following an agreement reached by Organization of the Petroleum Exporting Countries (OPEC) on Wednesday to cut output from January 2017 – its first reduction since 2008. OPEC produces a third of global oil. After the OPEC announcement, Brent crude prices, the international benchmark for oil prices, shot up over 10 per cent to around $52 per barrel. Analysts say that global oil prices could be headed even higher in the short term. Tushar Bansal, director of Ivy Global Energy, said global oil rates could rise to $60 per barrel in the short term. And if there is a supply disruption in Libya or Nigeria, prices could shoot up to $65 per barrel, he adds. Goldman Sachs said in a note after the OPEC agreement that it expects oil prices to average $55 per barrel in the first half of next year. Petrol and diesel prices are deregulated in India, which means they are linked to market rates. Oil marketing companies revise their prices every fortnight, depending on global oil rates and the rupee’s movement against dollar. India imports more than three-fourth of its crude oil requirements. So apart from global oil prices, the value of the rupee as well as the margins of oil marketing companies and the various government levies determine the final price of petrol and diesel price in India. Normally, state-owned fuel retailers Indian Oil Corp (IOC), Bharat Petroleum Corp and Hindustan Petroleum Corp revise rates of the fuel on a fortnightly basis based on the average oil price and foreign exchange rate in the preceding fortnight. The Indian crude basket, which is a benchmark followed by the oil ministry, averaged around $45 in November. Indian crude basket is a weighted average of the prices of Oman and Dubai sour crude. The prognosis for rupee is not encouraging either. Analysts expect the rupee to remain weak against dollar, which has hovered around 14-year highs against a basket of global currencies. Shrikant Chouhan, technical analyst at Kotak Securities, expects the rupee to slide to around 70 against the US dollar over the next few weeks. Leonard Fournette Jersey
Three foreign oil companies keen on hiring strategic oil storages
Abu Dhabi National Oil Company (ADNOC), Saudi Aramco of Saudi Arabia and Royal Dutch Shell have evinced interest in hiring strategic oil storage that India has built on east and west coasts, Oil Minister Dharmendra Pradhan said today. India, which is 80 per cent dependent on imports to meet its crude oil needs, has built three underground oil storages at Vishakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka as insurance against supply disruptions. “ADNOC of UAE, Saudi Aramco of Saudi Arabia and Shell have expressed their interest in storing crude oil in the strategic petroleum reserve facilities,” he said in a written reply to a question in the Rajya Sabha here. Pradhan said under Strategic Petroleum Reserve project Phase-I, underground rock caverns for storage of 5.33 million tons of crude oil at three locations — Vishakhapatnam (1.33 million tons), Mangalore (1.50 million tons) and Padur (2.5 million tons) have been created. “The Vishakhapatnam and Mangalore storage facilities have already been commissioned. The facility at Vishakhapatnam has already been filled up and nearly one-fourth of Mangalore storage facility has also been filled. The storage facility at Padur has also been completed,” he said. These reserves as well as storages at refineries and depots are enough to meet 73.5 days of India’s crude requirement, he added. “To facilitate participation of foreign investors in filling up part of Mangalore storage facility, Government has inserted Section 10 48(A) in the Income Tax Act providing for exemption from income tax of a notified foreign oil company,” he said. Finance Minister Arun Jaitley in his budget for 2016-17 gave tax exemption to income of foreign company from storage and sale of crude oil stored as part of strategic reserves. Indian Strategic Petroleum Reserves Ltd (ISPRL) has built the underground storage facility. But to meet the huge cost of filing the storages with crude oil, the Government is keen to meet a substantial part of the financial burden through participation of private players including foreign national oil companies (NOCs) and multinational companies (MNCs) storing and selling crude oil from outside India. However, the storage of crude oil by NOCs/MNCs and its sale in India would have created tax liability for these entities. In order to achieve neutrality in terms of taxation to encourage the NOCs and MNCs to store their crude oil in India and to build up strategic oil reserves, Jaitley amended the provisions of Section 10 of the Act to provide that any income accruing or arising to a foreign company on account of storage of crude oil in a facility in India and sale of crude oil therefrom to any person resident in India shall not be included in the total income. Jacquizz Rodgers Jersey
Oil companies shoulder pain of downturn with lower output
The world’s listed oil companies have slashed oil output by 2.4 percent so far this year during one of the industry’s worst downturns as OPEC battles to agree on its first production cut since 2008. The aggregated production of 109 listed companies that produce more than a third of the world’s oil fell in the third quarter of 2016 by 838,000 barrels per day from a year earlier to 33.88 million bpd, data provided by Morgan Stanley showed. By comparison, the Organization of the Petroleum Exporting Countries produced 33.64 million bpd in October. OPEC has struggled to agree on a joint production freeze or cut to support oil prices before its Nov. 30 meeting in Vienna. In the second quarter of 2016, the companies reduced production by nearly 930,000 bpd, according to Morgan Stanley. The firms include national oil champions of China, Russia and Brazil, international producers such as Exxon Mobil and Royal Dutch Shell, as well as U.S. shale oil producers like EOG Resources and Occidental Petroleum. The drop in oil companies’ output is particularly compelling given the increase in 2015, when third-quarter production rose by some 1.9 million bpd. “Clearly, we have seen a large swing in the year-on-year trend in production, from strong growth as recent as a year ago, now to steep decline. This is the outcome of the strong cutbacks in investment,” Morgan Stanley equity analyst Martijn Rats said. Capital expenditure for the companies combined more than halved from $136 billion in the third quarter of 2014 to $58 billion in the same period this year, according to Rats. Oil executives and the International Energy Agency have warned that a sharp drop in global investment in oil and gas would result in a supply shortage by the end of the decade. Large oilfields, such as deepwater developments off the coasts of the United States, Brazil, Africa and Southeast Asia, typically take three to five years and billions in investment to develop. Cost reductions and increased efficiencies have only partly offset the drop in production as a result of the lower investment. Technological advancements have also helped boost onshore U.S shale production. “These declines should temporarily soften in 2017 as new fields are coming on-stream in Canada, Brazil, the former Soviet Union and U.S. tight oil probably stabilises,” Rats said. “Still, unless investment rebounds relatively soon, this steep downward trend is likely to resume in 2018 and beyond. Eddie Murray Authentic Jersey
Flash fire at Reliance Industries’ Jamnagar refinery; 8 workers injured
Eight persons were injured when a flash fire broke out at Reliance Industries’ 33-million-tonnes -a-year refinery at Jamnagar in Gujarat. The fire which borke out at 3 AM was immediately extinguished and there was no impact on production, the company said in a statement. The fire broke out at the fluid catalytic cracking unit (FCCU), a petrol-making unit, domestic tarrif area (DTA) refinery, which was under maintenance. RIL owns and operates two refineries at the Jamnagar refining complex – a 33 million tonnes a year old unit that cater to fuel demand locally and a 29 million tonnes a year only-for-export newer unit. “There was an unfortunate flash fire in one of the units under a planned maintenance shutdown in our DTA refinery at Jamnagar. “While the Reliance fire brigade extinguished the fire swiftly, this has resulted in injuries to 8 contract workers, who are being provided necessary medical treatment,” the statement said. RIL said all operations of the refinery continue to be normal. Adam Shaheen Womens Jersey
Dealer Association urges public to follow restraint while transacting at petrol pumps in Punjab
Petroleum Dealers Association Ludhiana (PDAL) in a press statement released on Tuesday clarified that the news of all petrol pumps of Ludhiana having facility to dispense cash against debit cards is untrue and only a select few pumps of Oil Marketing Companies, IOCL, BPCL and HPCL have been selected by banks to provide this facility. Association also informed that SBI has already started providing cash to the designated Petrol Pumps through debit card swipes from the EDC machines of banks provided at Petrol Pumps. PDAL also requested the public to exercise restraint over transacting in old currency notes and also for withdrawing cash against debit cards as the petrol pumps are receiving very less cash for daily transactions while the cash against debit card is being provided by concerned banks,that too in limit. Matt Wieters Womens Jersey
Algeria’s Sonatrach and Spain’s Cepsa extend oil field contracts
The Algerian state energy firm Sonatrach and Spain’s Cepsa signed an agreement on Tuesday to extend partnership contracts for two oil fields in the North African country, Sonatrach said. OPEC member Algeria has announced plans to boost oil and gas production after stagnation in recent years due to a lack of foreign investment. Under Tuesday’s deal, contracts for the Rhourde El Krouf (RKF) and Ourhoud oil fields will be extended by 25 years and 10 years respectively, Sonatrach said in a statement carried by the state news agency APS. The Sonatrach-Cepsa contract for Ourhoud was due to expire in 2019, the statement said. The agreement was signed by Sonatrach chief Amine Mazouzi and Cepsa CEO Pedro Miro Roig. The two sides also signed a memorandum of understanding “to explore opportunities in other areas where both companies have common interests in Algeria and internationally”, the statement added. Algeria says it expects gas output to reach 141.3 billion cubic metres (bcm) in 2017, 143.9 bcm in 2018, 150 bcm in 2019 and 165 bcm in 2020. Oil production targets are 75 million tonnes of oil equivalent in 2017 and 2018, 77 million tonnes in 2019 and 82 million tonnes in 2020. In 2015, gas production stood at 128.3 bcm, while oil output reached 67 million tonnes. Curtis Martin Jersey
Petroleum ministry to enhance safety measures for first time domestic cooking gas consumers
To ensure safety of liquefied petroleum gas (LPG) consumers covered under the government’s Pradhna Mantri Ujjawal Yojana (PMUY), the ministry of petroleum and natural gas is rethinking safety measures related to use of cooking gas cylinders for beneficiaries, most of whom are first-time users. With the aim to provide cleaner cooking fuel to move towards a gas-run economy, PMUY was launched by the National Democratic Alliance government on 1 May 2016 in Ballia, Uttar Pradesh. The government plans to provide 50 million LPG connections to BPL women in the next three years, with 15 million connections to be distributed in the current financial year. According to the official website of PMUY, 638 districts across 18 states have been covered till date with 10,140,075 connections already been provided. “There were a lot of complaints from the end-consumers and distributors regarding safety issues. Apart from launching a campaign to make the users aware and educate them about the use of gas cylinders, we are also in talks with the supply side of the value chain to ensure better safety precautions. The gas pipes which are used shall also be examined in a better way now,” said a petroleum ministry official requesting anonymity. The government in a statement on 9 November said the petroleum minister had informed that a massive safety awareness campaign will be carried out over a period of four months starting November to educate all LPG consumers on importance of safety norms. The finance ministry has allocated Rs.20 billion for the current financial year for implementation of the scheme. A total budgetary allocation of Rs.80 billion has been made for the next three years. “We are working to improve safety measures. We recently increased the insurance amount as well,” said another petroleum ministry official who also did not want to be named. The Narendra Modi-led government’s stress on cleaner sources of fuel comes in the backdrop of India ratifying the Paris climate deal on 2 October. The country also wants to increase natural gas’ contribution to 15% of the total energy mix from a current level of 6.5%. Queries emailed to the spokesperson of the petroleum ministry on 20 November remained unanswered. According to experts, safety measures are of utmost importance. “We need to understand who the beneficiaries are. Also, gas usage anyway requires a certain bit of precaution,” said Sanjay Grover, partner at EY, a consultancy. According to the Petroleum Planning and Analysis Cell, as on 1 April 2016, there were 17,916 LPG distributors and 201.79 million domestic LPG customers registered with oil marketing companies. A subsidised 14.2kg domestic cooking cylinder at present cost Rs.430.64 in New Delhi whereas the actual cost is Rs.895. Dan Girardi Jersey
Shapoorji Pallonji to acquire 51% stake in Gopalpur port
Shapoorji Pallonji has agreed to buy a 51% stake in Odisha’s Gopalpur port. Orissa Stevedores Ltd (OSL), one of the three original promoters, will hold the remaining 49%. This comes as OSL’s founder Mahimananda Mishra is wanted by police investigating a murder that took place last month. The second private port in Odisha, the Gopalpur project was won by a consortium of OSL, metal trader Sara International and Hong Kong-based Noble Group in 2006. Developed from a minor to an all-weather port on a BOOT (Build, Own, Operate, Transfer) model, any change in ownership requires state government approval. Noble exited the special purpose vehicle (SPV) in 2010. Shapoorji will be mostly acquiring Sara International’s stake. A Shapoorji Pallonji group spokesperson confirmed the acquisition plan and said it would invest fresh money in the port. “At this stage of the transaction, due diligence and documentation are in progress and government clearance is awaited. This acquisition is a part of our larger group strategy to play a meaningful role to build marine infrastructure particularly around development of bulk, liquid and LNG (liquefied natural gas),” said the spokesperson in an email. A senior official in the Naveen Patnaik government confirmed the application was pending with it. Halfway between Paradip port and Vishakapatnam, Gopalpur was well placed to serve the plant Tata Steel was planning to build nearby at the time that bids were floated. In the midst of an expansion, the port took a beating in 2013 when cyclone Phailin hit landfall nearby. In 2011, Naveen Jindal’s Jindal Steel and Power Ltd (JSPL) came close to acquiring a controlling stake. The deal failed to get the Odisha government’s approval and ties are said to have soured between JSPL and OSL. The current issues at the Paradip port follow JSPL awarding part of its cargo handling contract to Seaways Shipping and Logistics last year, breaking OSL’s monopoly through the association of stevedores, transporters and workers unions. It was amid this strife that Seaways’ Odisha MD Mahendra Swain was killed on Oct 26. Jagatsinghpur police last week arrested five people in connection with the murder and said it had proof linking those arrested to OSL and MD Misra, one of Odisha’s most successful businessman. Misra’s son and OSL director Charchit Mishra had earlier told ET that neither his father nor OSL had anything to do with the murder. Meanwhile, Shapoorji Pallonji is hoping to resolve the obstacles in its bid to acquire a majority stake in Karaikal port. The company said it has reached out to the Puducherry government and is confident of a positive response. “Shapoorji Pallonji Group was invited as a white knight by the private equity investors and lenders to revive the Karaikal port which was in an urgent need of financial and technical infusion,” the spokesperson said. “We understand that the existing promoter of Karaikal could not arrange for the required funds creating further issues for all other stakeholders. However the group is clear that it will invest only if the stakeholders are adequately on board.” Robby Anderson Authentic Jersey