Bangladesh to import only cleaner gasoil from 2017 – energy officials
Bangladesh will lower the sulphur content of all its gasoil imports from January next year, in line with a global trend towards cleaner fuel, two energy officials said on Sunday. The country will only import gasoil with 500 parts-per-million (ppm) sulphur from 2017 and will no longer buy the 2,500 ppm grade, two senior officials of the Bangladesh Petroleum Corp (BPC) told Reuters. The state-owned company, the country’s sole importer of gasoil, has already started importing cleaner gasoil from this year. This year it hasn’t purchased gasoil with 2,500 ppm from any oil companies other than Kuwait Petroleum Corp (KPC), the biggest supplier of gasoil to BPC with around 1 million tonnes a year. “From next year, we will not import gasoil with 2,500 ppm anymore from any oil companies. We are importing gasoil with 500 ppm only,” said one of the officials, who asked not to be named as they are not authorised to talk to media. BPC buys oil products from a number of oil companies through term deals while it has also started buying a portion through tenders as part of efforts to buy at cheaper rates. Bangladesh imports around 3.0-3.3 million tonnes of gasoil a year to meet demand, while the country’s sole Eastern Refinery produces around 350,000 tonnes, BPC officials said. A shortfall in supplies of natural gas has forced the south Asian country to burn oil, a costlier option, to generate electricity.
India gets six more weeks to respond to Cairn Energy arbitration
India has won a six week extension for replying to USD 5.6 billion claim sought by British oil explorer Cairn Energy plc for being slapped with a Rs 29,047 crore retrospective tax demand. Cairn had in June field a 160-page Statement of claim before a three-member international arbitration panel seeking quashing of the retrospective tax demand on a decade-old internal reorganisation of its India unit and sought USD 5.6 billion in compensation. India was to respond to that Statement of Claims by this month end but at a hearing earlier this month, the arbitration panel gave it time till mid-January to file the response, sources privy to the development said. The government had sought putting on hold the arbitration initiated by British oil explorer against the Rs 29,047 crore retrospective tax demand and instead wanted a parallel arbitration initiated by Vedanta Resources to be taken up first. Sources said the arbitration panel did not clearly give a position on the Indian government’s demand but gave it more time to file the response. The government using retrospective tax legislation, had in January 2014 issued a tax notice on Cairn Energy for alleged capital gains it made on a 10-year old internal reorganisation of its India unit. Three months later in April 2014, it imposed a tax demand of Rs 20,495 crore on Cairn India, the UK firm’s erstwhile subsidiary for failing to deduct tax on the capital gains. Cairn Energy and Vedanta, which had bought Cairn India from the Scottish firm in 2011, had initiated separate arbitrations against the tax demands. Cairn Energy had initiated the arbitration in March 2015 and the three-member arbitration panel had been constituted. But at a hearing last month, the government contended that the proceedings should be put on hold, sources said. Its counsel argued that the government wants the arbitration initiated by Vedanta to be taken up first. Sources said the counsel had also made an application seeking more time to file reply to Cairn Energy’s demand for USD 5.6 billion in compensation. Sources said that in the Vedanta arbitration, the government may contend that tax issues cannot be arbitrated under bilateral investment protection treaty and once it wins a favourable verdict there, it will use the same to quell Cairn Energy’s plea as well. A three-member arbitration panel headed by Geneva-based arbitrator Laurent Levy began hearing Cairn Energy’s plea against tax demand in May and the company filed its ‘Statement of Claim’ in late June. The British firm challenged the tax assessment by seeking an international arbitration under the UK-India Investment Treaty, which unlike the Dutch treaty provides for resolution of tax issues. The UK telecom firm Vodafone has initiated arbitration on a separate retrospective tax under the Dutch treaty. Derek Dorsett Authentic Jersey
Govt softens stand in case against Reliance Industries
The oil ministry has decided not to take any coercive action to recover the $1.55 billion it has demanded from Reliance Industries Ltd (RIL) as compensation for producing gas allegedly at the expense of state-owned Oil and Natural Gas Corp. (ONGC) from a shared offshore reservoir while the dispute remains under arbitration, an official aware of the development said. Keeping the demand, raised on 4 November, in abeyance is a departure from the approach the government had taken in several past disputes that have gone into arbitration, including with RIL and Cairn India Ltd. The development will avert an immediate financial impact on RIL, one of the largest private investors in the oil and gas sector. The move is also set to signal certainty of the regulatory regime governing resolution of disputes in the natural resources sector, and is in line with the Modi administration’s intent to improve the country’s track record on enforcing commercial contracts, an indicator in World Bank’s ease of doing business ranking. The oil ministry has been campaigning for investments into hydrocarbon exploration and has set a target for reducing oil and gas import dependence by 10 percentage points to 67% by 2022. The ministry raised the demand after the Justice A.P. Shah panel, which looked into ONGC’s claim of gas flow between the neighbouring fields of the two companies, recommended on 31 August that RIL should compensate for the “unfair enrichment” it had by way of retaining the gains of gas flow into its block KG-DWN-98/3 (KG D6). “Recovery of the compensation will be kept in abeyance. There is little sanctity in arbitration if coercive measures are taken simultaneously,” a person briefed about the oil ministry’s position said on condition of anonymity. An email sent to RIL on Thursday remained unanswered at the time of publishing. This contrasts with the approach the government had taken earlier. When gas price was raised by 33% to $5.61 per million British thermal unit on 18 October 2014, the government insisted that since an arbitration with Reliance was pending since November 2011 on recovery of cost of gas production, the incremental revenue from price hike should be kept in an account maintained by GAIL (India) Ltd till legal proceedings are over. That arbitration is still on. Also, the government had in May 2014 attached the residual stake of 10% that UK’s Cairn Energy Plc holds in Cairn India Ltd in relation to a tax dispute arising from the controversial 2012 retrospective amendment to the Income Tax Act. That dispute too is in arbitration. Dispute resolution is one area the government is working on to improve investor interest in the country’s sedimentary basins, the entire unexplored part of which will be opened up for bids next year under a new open acreage policy. Director General of Hydrocarbons Atanu Chakraborty told Mint in an interview published on 13 October that the upstream regulator was planning to set up a portal to facilitate communication among stakeholders in the industry that will help in reducing disputes. At the moment, there is no such mechanism for companies operating different blocks which are adjacent to one another. According to Kalpana Jain, senior director, Deloitte in India, prolonged disputes do not augur well for the natural resources sector considering the high risk and capital-intensive nature of the industry. Maliek Collins Authentic Jersey
Indian Oil loses market share in bulk diesel, ATF
Indian Oil Corporation Ltd (IOCL), the country’s largest refiner and marketer, has lost market share in bulk diesel and aviation turbine fuel (ATF) while Reliance Industries, Essar Oil, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have gained in these segments. IOCL, still the market leader in the bulk diesel sales segment, has in the past two years seen its market share drop from over 80% to over 70% now. “Industrial sales have become a challenge due to entry of new players. Earlier we were the only player in the market with majority share. But now we have private players as well and so our share has dropped,” an IOCL official said on condition of anonymity. He said IOCL is competing aggressively and trying to match prices with the private players. “We have list volumes but can’t afford to keep losing. Besides, we have the infrastructure and are most consistent suppliers. That will always work in our favour.” IOCL did not reply to an email sent on Wednesday. Moneycontrol.com on 18 October quoted a CLSA report as saying that among PSUs, IOC had seen the biggest loss in market share in retail diesel (around two percentage points in two years) and in bulk sales by around 10 percentage points in two years as competition increased. The government had in 2013 deregulated the sale of bulk diesel. Public sector companies—Indian Oil, Hindustan Petroleum and Bharat Petroleum—were meeting almost the entire requirement for bulk diesel users until 2013. Of the total diesel sales in the country, around 20% are in bulk. Bulk customers fall in two categories—defence, railways and state transport undertakings which form 60% —and industries like power plants, cement plants and chemical plants etc which form the rest. Diesel sales are the mainstay for all fuel retailers. “In bulk diesel and ATF, IOCL has lost market share. This business is basically based on tenders. So sometimes it happens and it will continue to happen that you win a significant tender and your volumes are immediately added. Somebody bids aggressively and you lose the volumes. So, I think these are something which will continue to happen as far as the bulk diesel segment is concerned and this may change from quarter-to-quarter,” AK Sharma, IOCL’s director finance told analysts in a conference call post second quarter earnings on 28 October. Bulk consumers include state-run bus transport corporations, the Indian Railways, and small and medium-size enterprises that use gasoil to run their facilities. They buy fuel directly from refineries. Private fuel retailers—Essar Oil, Reliance Industries and Shell India—form less than 10% of India’s fuel retail business. Government-owned companies—IOC, HPCL and BPCL—dominate the fuel retail business, with a more than 90% share. In the past, diesel prices have been controlled by the government due to the sensitive nature of the product as an auto fuel and its impact on inflation. RIL said ATF sales volume grew by 31% during the second quarter over the last year and it re-secured its customer base with an over 4.5% market share post deregulation in the bulk diesel segment. Bulk marketing initiatives contributed to domestic market share gains, RIL told analysts in a presentation. It added that RIL had a leading market share in 10 out of 25 airports where it operates. “Award for 30 Railway Consumer Depots (RCDs) under a new Rate Contract with all India share-out at 11.6% for diesel requirement of Indian Railways,” RIL said. It has also accelerated expansion of its network in Southern India. Essar Oil, BPCL and HPCL hold over 2% market share in the bulk diesel segment. BPCL and HPCL did not reply to an email sent on Wednesday. “IOCL had always been the powerful retailer in the market so with the opening of the segment, they are bound to lose market share. BPCL has been growing and we are getting aggressive on the segment,” said a BPCL official on condition of anonymity. “Right since 1960s the entire government’s business was with IOCL and thus the company had 100% share in the bulk diesel segment. After deregulation, most state utilities went in for a tender system which saw private players participate and end IOCL’s monopoly,” said the head of the industrial and commercial segment at one of the oil marketing companies on condition of anonymity as he is not allowed to speak to the media. “When it comes to Railways and state-run utilities, it will be difficult for private players to penetrate that as public sector companies have superior infrastructure and reach. Besides, they look at supplying fuel at an all India basis. Newer players however, may be able to capture markets in and around their refineries,” said an industry official on condition of anonymity. RIL and Essar Oil have refineries in Gujarat and are aggressively marketing in the Western region. Minnesota Vikings Authentic Jersey
Petroleum ministry may put brakes on railways’ crude oil import plan
The Indian Railways has been denied approval by the ministry of petroleum and natural gas to import and refine crude oil. The national carrier’s plan was to import 500,000 tonne of crude oil on a pilot basis as part of its strategy to import and refine crude oil on its own to reduce fuel bill by around Rs.3,000 crore annually. Given low crude oil prices, the Indian Railways sought permission from the petroleum ministry to import crude oil and refine it at state-run Indian Oil Corp. Ltd’s (IOC) refineries. The strategy included selling other refined products extracted from the crude through IOC to garner additional revenue, as reported by InfraCircle on 2 September. “The petroleum ministry is not agreeing. We had sought permission to import 500,000 tonne. Its (petroleum ministry) argument is that it did not give permission to the ministries of defence and aviation either to import crude oil. It looks like it is not happening, though the railway minister’s letter is yet to be replied by the petroleum ministry,” said a senior railway ministry official requesting anonymity. Diesel expenditure is the second-largest component of the railways’ revenue expenditure. The railways consumes 2.6 billion litre of diesel, costing around Rs.20,000 crore annually and accounting for almost 3.2% of the total diesel consumption of India’s transportation sector. The national carrier spends around Rs.30,000 crore on energy bill annually. “We have communicated it to the ministry of railways that it shall be difficult to give permission due to a lot of issues. We are yet to send them an official letter. The matter is still is process and is being discussed,” said a petroleum ministry official who also did not want to be named. Queries emailed to the spokespersons of the ministries of railways and petroleum on 17 November remained unanswered. According to experts, many countries follow the practice of unbundling refining from the downstream activities such as marketing. “As a practice, in countries with competitive markets, refining is unbundled from supply and trading. Crude is procured and supplied to refineries to refine for a charge who in turn supply products at gate. New Zealand and Kenya are good examples. Entities who cannot buy all products can find the method challenging though,” said Deepak Mahurkar, leader-oil and gas industry at PwC India, a consultancy. The national carrier estimates its energy demand to triple by 2030 to 49 billion units of electricity. The national carrier is saddled with falling revenues and non-availability of funds and is looking to reduce costs. The railways capital outlay for the financial year 2016-17 is Rs.1.21 trillion compared with around Rs.1 trillion in the last budget. Any savings will help the railway which plans to invest Rs.8.5 trillion in the next five years. Alex Iafallo Jersey
Indian Oil Adani Gas snaps PNG supply at medical college in Kerala
Indian Oil Adani Gas Pvt Ltd. (IOAGPL) snapped the supply of piped natural gas (PNG) to commercial establishments at Ernakulam Medical College on Tuesday as authorities refused to pay the security deposit. PNG was supplied to three hostels and a Kudumbashree canteen at the college. However, supply of PNG supply to residences were not disrupted. But, medical college authorities said that IOAGPL had earlier said that no extra charges would be levied on them other than usage charges. “The company, while establishing the connections, had publicly declared that no extra charges would be levied. Last month, they issued a notice asking us to pay a sum of Rs 92,000 as security deposit,” said principal of government school of nursing Thankamony T Alex. The canteen was asked to pay Rs 1.58 lakh as deposit. The supply, which was stopped around 2pm, created a panic at both hostels and the canteen. Lunch was delayed. One of the hostels had already reverted from PNG to LPG few months ago citing more expenses. College authorities received two letters on November 4 and November 10. The last letter had warned of disconnection in case of failing to pay the amount. “The expense of the mess is met by pooling cash from students. Our students are from economically-backward and middleclass families. For them, it would be a burden to pay the huge bills. We had asked the hostels to switch over to LPG various times after we found PNG expensive,” said Thankamony. Earlier, a medical college authorities met IOAGPL officials – including Ajay Pillai, deputy general manager to discuss the issue. “We had agreed to seek the government’s opinion. IOAGPL agreed to wait until government took a decision. Now, their move to end supply is nothing short of arrogance,” said principal of Government Medical College, Ernakulam, Sreekala VK. “We had chosen PNG as they told us that this would be cheaper. But from the first month they added an extra amount of Rs 6,000 every month as additional tax. Now they have imposed another huge amount,” said Sudha Raveendran, a member of the Kudumbashree canteen. Ajay Pillai claimed that the firm was affected as the parties had not paid the amount. “We had been telling them to pay the amount. A final decision on resuming supply has not been taken,” he said. Stacy McGee Womens Jersey
Proposal to construct 2 Indian Oil Corporation terminals in Karnataka opposed
Residents of Aligadda are opposing the move by the port department to hand over 2 acres of land to the Indian Oil Corporation (IOC) which wants to build two terminals in the area. The port department has issued notice to 12 persons to vacate the area. The IOC, which already has storage tanks in the area, has requested the port authorities to allot additional land in Aligadda on a 10-year lease to supply oil to ships in the INS Kadamba Naval Base. Aligadda is situated next to Karwar port. Preetam Masurkar, who is leading the opposition, told TOI that the IOC can use the additional land which is with the Navy to build the oil terminals. “The Indian Navy acquired 11,300 acres of land in Karwar for Project Seabird. Hundreds acres of the acquired land are still unused. So why does the OIC want to evacuate 12 more families?” he asked. The port department acquired the land, where the IOC terminals are proposed, for the development of Karwar port about four decades ago. But the development of Karwar port was halted due to Project Seabird. “The port department had stated in an affidavit in the high court that the land acquisition process is not yet complete. No awards were given to the families. This being the case, the port department cannot acquire the same land for another purpose,” Masurkar said. Local residents say that they have already raised the issue with the port department officials. They are worried due to reports that the administration will vacate houses in the area by Saturday. Department officials said that the district administration has been informed about objection from the residents. The assistant commissioner has convened a meeting on November 28 to discuss the issue. Representatives of the IOC, Navy and local residents will participate in the meeting. The final decision will be taken by the district administration, said a port department official. Track Order Authentic Jersey
Purti Group co develops bio-CNG for vehicles
Manas Agro Industries and Infrastructure Limited (MAIIL) of the city, an extension of Purti Group of Industries, has developed a process of producing bio-CNG (compressed natural gas) that can be used as fuel for vehicles. MAIIL is planning to set up fuel stations or bio-CNG dispensing units in the city in about 8-9 months. The fuel will be produced from molasses and will be carried in cascades to the fuel stations unlike other CNG which is transported through pipeline. Manish Umale, general manager of MAIIL, told TOI that the bio-CNG would cost Rs40-45 /kg and a scooter can run 65km in one kg. “This is very cheap compared to the conventional petrol or diesel which cause pollution to different extents. Bio-CNG is environment-friendly and the Petroleum and Explosives Safety Organization (PESO) has given nod to use biogas as fuel,” said Umale. The idea for bio-CNG came from Spectrum Renewable Energy Pvt Ltd of Hyderabad which is testing the use of this new fuel in commercial vehicles. Bio-CNG is being produced at Warna Nagar near Kolhapur. Detailing the process of bio-CNG production, Umale said molasses generated while manufacturing sugar is mixed with rectified spirit and ethanol which forms a sludge. This sludge is used to produce methane which is then purified and filled in cascades at high pressure. In the process, some sludge remains which can be used as fertilizer. “We would be transporting the sludge from our Bela plant to city in cascades which will be installed in our fuel stations. Users can fill bio-CNG in vehicles from these outlets which are expected to be ready in less than a year,” said Umale. Considering the benefits, government needs to make changes in rules and infrastructure so as to allow use of bio-CNG as fuel. The government should allow converting existing vehicles like scooters or three wheelers into CNG-friendly vehicles by attaching a conversion kit in it. Old vehicles too can be permitted to be converted into bio-CNG vehicles. An Israeli company I Tuk is learnt to have developed a kit that is already being used in Gujarat. Kawann Short Jersey
HPCL to take 25 per cent stake in proposed 60 million tonnes refinery
Hindustan Petroleum Corp (HPCL) will take 25% equity stake in the proposed 60 million tonnes refinery on the west coast that the state oil companies plan to build, its chairman has said. The proposed refinery–cum-petrochemicals complex will cost about Rs 1500 billion, M K Surana, chairman and managing director of HPCL, said. Indian Oil Corp, the largest of the three oil companies partnering for the project, will take 50% stake in the proposed refinery, Surana said. Bharat Petroleum will take another 25%. Marshall Faulk Authentic Jersey
OMCs report strong gross refining margin for September quarter
The country’s oil marketing companies (OMCs) have so far reported healthy gross refining margins (GRMs) for the September quarter. Analysts expect the trend to continue but pressure on marketing volumes for the state-run OMCs in the bulk fuel business would be a key item to look for. So far, Reliance Industries (RIL) and two of the three state OMCs, Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOCL) have reported their numbers for the quarter. RIL reported GRM at $10.1 a barrel, lower from $10.6 a year before. “Singapore GRMs have again improved in the October month touching $6 a barrel against the last quarter average of $5.1. The next quarter might also see the same healthy trend,” said an analyst from a domestic brokerage firm, who did not wish to be identified. In the September quarter, average GRM for BPCL was $3.08 a barrel against $3.87 a year before. IOCL reported $7.19 a barrel in the April-September period, against $5.76 a barrel a year before. Hindustan Petroleum Corporation will report its financial performance on Tuesday and analysts expect the company to report a similar trend. “We expect the GRM trend to continue for the state-run OMCs to be in the same range as seen so far and for Reliance Industries in double digits,” said a second analyst from a domestic brokerage firm, who did not wish to be identified. The state OMCs might come under stress over marketing volumes and as private competition rises. Both BPCL and IOCL have reported a sequential decline in their marketing volumes for the September quarter. BPCL’s sales were lower at 8.93 million tonnes, from 9.73 mt in the sequential quarter. “Private players are capturing markets and in the bulk deal market, they have seen a significant rise,” said the first analyst quoted earlier. According to an IDBI Capital report on RIL, the company’s market share in bulk diesel sale improved from 3.8% in the June quarter to 4.5% in the September one. According to an October 28 report of Elara Capital on IOCL, there was a sequential decline in their marketing volumes, excluding exports, to 19.7 mt in the September quarter from 21.38 mt in the June one. “This happened only because of some losses in the tenders for the bulk consumer business; it has not been the trend,” said A K Sharma, director-finance at IOCL, in an investor call after its earnings announcement. The state OMCs might face further heat as stronger entities such as BP and Rosneft enter the retailing business. “With the increased competition, we need to see if marketing volumes or the margins come under pressure. Either of one will see an impact,” said the second analyst cited earlier. Armani Watts Authentic Jersey