Exclusive: Oil majors join forces in climate push with renewable energy fund
Top oil companies including Saudi Aramco and Shell are joining forces to create an investment fund to develop technologies to promote renewable energy, as they seek an active role in the fight against global warming, sources said. The chief executives of seven oil and gas companies – BP, Eni, Repsol, Saudi Aramco, Royal Dutch Shell, Statoil and Total — will announce details of the fund and other steps to reduce greenhouse gases in London on Friday. The sector faces mounting pressure to take an active role in the fight against global warming, and Friday’s event will coincide with the formal entry into force of the 2015 Paris Agreement to phase out man-made greenhouse gases in the second half of the century. The group is part of the Oil and Gas Climate Initiative (OGCI), which was created with the backing of the United Nations in 2014 and includes 11 companies representing 20 percent of global oil and gas production. The company leaders are expected to detail plans to create an investment vehicle that will focus on developing technologies to lower emissions and increase car engine and fuel efficiency, according to the sources involved in the talks who declined to be named. The size and structure of the fund were unclear. The fund will also focus on ways to reduce costs of carbon capture and storage (CCS) technology, which involves capturing carbon dioxide emissions produced from fossil fuel burning plants and re-injecting them into underground caverns. OGCI, Shell, Total and BP declined to comment. The CEOs are also expected to announce the next phase of their plan to reduce the oil sector’s emissions, primarily by reducing flaring of excess gas at fields, increasing the use of CCS and limiting the release of methane, a highly polluting gas often emitted through pipe leaks. OGCI leaders called on governments last year to set a price on carbon emissions to encourage the use of cleaner technologies, although some companies including Exxon Mobil have resisted the idea. They now hope to show they can play an active role. The drive to limit global warming to 1.5 degrees Celsius by the end of the century poses a threat to oil and gas companies as transport and power sectors gradually shift towards renewable sources of energy such as solar and wind. Oil majors including Norway’s Statoil, France’s Total and Italy’s Eni, have increased their investments in renewable energy in recent years, although it is still dwarfed by the main fossil fuel business. Oil producers have also lobbied for the phasing out of coal in favor of the less pollutant natural gas in the power sector. Total CEO Patrick Pouyanne said last month that OGCI leaders will announce plans “to work collectively to develop technologies which will be needed to face climate change issues.” Delegates from signatory nations meet in the Moroccan city of Marrakesh on Nov. 7-18 to start turning their many promises into action and draw up a “rule book” for the sometimes fuzzily worded Paris Agreement on climate change, reached last December. Kevin Johnson Authentic Jersey
DGH reviews poor bidding response to oil & gas fields: Sources
India’s first oil and gas fields’ auction in over 4 years is in deep trouble. CNBC-TV18 reports initial bidding has not met government expectations despite several exploration incentives and market-linked pricing, forcing an extension in auction deadline. The government had already extended the deadline for bidding from October 31 to November 21. Sources say investors have conveyed to the Directorate General of Hydrocarbons (DGH) their concerns on the size of the marginal fields as well as the data available and that they would prefer to wait for some issues to be addressed before bidding. They have also suggested the adjoining areas be made available for exploration and the Oil Ministry is considering a follow-up auction for these areas. Oil Ministry is reportedly also considering clubbing of more blocks to attract bids by the November 21 deadline. Delino DeShields Jersey
State government gives nod for 1,864 crore petrochemical park in Kochi
The state government has issued an order granting in-principle nod for Kerala Industrial Infrastructure Development Corporation (Kinfra) to set up a petrochemical park in Kochi. “The next step is to procure 600 acres from FACT complex at Ambalamugal in Kochi for the project. The decision regarding this is pending for Union ccabinet approval,” said M Beena, managing director of Kinfra. The estimated project cost is Rs 1,864 crore, including the cost of land and internal infrastructure, which will be provided by Kerala Infrastructure Investment Fund Board (KIFB) in loan, Kinfra officials said. Kochi already has a large refinery, fertiliser and chemical factories, a bulk terminal and International Container Transhipment Terminal (ICTT), besides the LNG Terminal & Gas Pipeline Network being established. The project assumes significance in view of the proposed expansion of BPCL, and proximity to port and natural gas infrastructure. “The detailed project report (DPR) for the proposed petrochemical park will be sent to the state government for final approval,” said Kinfra official KN Srekumar. The corporation would also explore the possibility of getting central funding for the project, he added. Infrastructure facilities required to be created include internal roads, drainages, water treatment plants, internal water supply system, internal electrification, common sewage treatment plants, common effluent treatment plants, rain water harvesting and solid waste management. BPCL refinery is set for expansion of its refining capacity from 9.5 MMTPA to 15.5 MMTPA. With increased crude capacity of 15.5 MMTPA, the refinery will produce 5 lakh TPA propylene. This is in addition to production of various fuels like LPG, Kerosene, Coke and Bitumen. Utilizing 5 lakh TPA propylene, BPCL plans to establish a joint venture for production of various base materials that would boost manufacturing, augment exports and generate employment. Petrochemicals currently contribute about 30% of India’s $120 billion-worth chemical industry, which is likely to grow at a compound annual growth rate (CAGR) of 11% over the next few years and touch $250 billion by 2020. India stands a good chance, as petrochemicals market has shifted from the West to Middle-East and Asia. Future outlook for the industry is bright in various chemical sub sectors. While petroleum sector meets energy requirement, chemicals and petrochemical sector caters to various industries, including fertilizers, construction sector, pharmaceuticals, agriculture and textiles. Ryan Switzer Authentic Jersey
GSPC seeks partners for onshore blocks, gets Magna Energy, Essar Oil, Tata Petrodyne, others on board
State-owned oil and gas exploration firm Gujarat State Petroleum Corporation (GSPC) is seeking partners for nearly 20 onshore blocks. It has entered into preliminary agreements with close to eight firms to review the data of the blocks, two officials privy to the development told FE. Of the 22 blocks on offer for partnerships, 16 are producing hydrocarbon. Nearly eight firms including the UK’s Magna Energy, Essar Oil, Tata Petrodyne, IOC and Bharat PetroResources, among others, have signed non-disclosure pacts with GSPC to study the geological data of the blocks, said one of the officials, who did not wish to be named. The firms would be offered ‘participating interest’ under the existing production sharing norms. The producing blocks are mature and in need of technical assistance to make hydrocarbon flow from them. This is why GSPC wants to farm out to partners who could bring technical expertise, said another official. The final decisions of the partners would be decided by way of bidding and are likely to be finalised by December. GSPC has roped in consultancy firm EY for the job. This partnership is in addition to one where central government-owned ONGC and GSPC have signed an initial pact that would pave the way for ONGC buying a majority stake in the latter’s 1,850 square km KG Basin offshore block, KG-OSN-2001/3. In FY16, GSPC reported total revenues of Rs 107.2497 billion, on which it recorded a loss before tax of Rs.8.75 billion and net loss of Rs 8.0442 billion. The loss was because of adverse impact on profitability due to writing off exploration cost, impairment of producing properties due to lower oil and gas price. Of the producing GSPC-operated blocks in FY16, the Ingoli and Sanand East field of Ahmedabad block were producing 725-750 barrels of oil per day (bopd); 200-250 bopd and 25,000-30000 cubic metres of gas per day was produced from the Tarapur block. In the case of non-operator blocks of GSPC in FY16, Karannagar, Vadtal, Dholasan, Allora, Kanawara, North Karhana, Hazira and Dabka were producing hydrocarbon. GSPC said in its last annual report that oil and gas volumes, which depend on the yield from the company’s producing fields, have a significant impact on its results of operations. “Currently, all of our producing fields are within the Cambay basin, where compact holds participating interests in 16 producing fields,” it said. The Cambay basin is a maturing resource province with declining production levels, particularly of natural gas. GSPC intends to continue exploration activities in its existing exploration blocks to discover new oil and gas reserves for development. “The company’s future production will be significantly dependent upon success in finding and developing new reserves in a timely and cost effective manner,” said the annual report. Brandon Mashinter Authentic Jersey
Modi chairs meeting seeking reduction in India’s oil imports
Strategies discussed include increasing crude oil and gas production and promoting renewables, among others. Prime Minister Narendra Modi on Wednesday chaired a meeting to discuss a roadmap to reduce the country’s dependency on the import of oil and gas, sources said. They said the Petroleum Ministry presented strategies at the meeting to achieve the objective of reducing oil and gas imports. The strategies included increasing production of crude oil and gas, promoting bio-fuels and renewables, attaining energy efficiency and promoting conservation. Home Minister Rajnath Singh, Petroleum Minister Dharmendra Pradhan and Environment Minister Anil Madhav Dave attended the meeting. Among the other dignitaries present during the meeting were NITI Aayog’s Vice Chairman Arvind Panagariya and its Chief Executive Officer, Amitabh Kant. Cabinet Secretary Pradeep Kumar Sinha was also attending the meeting. Senior officials from various ministries, including the Prime Minister’s Office, Petroleum Ministry, External Affairs Ministry, Home Ministry, Finance Ministry and Defence Ministry were also present. Geronimo Allison Womens Jersey
Next LNG importing giant Pakistan readies for buying spree
Pakistan LNG Ltd has launched a mid- and a long-term tender to purchase a combined 240 shipments of liquefied natural gas (LNG), the company said on its website, as the country emerges to become a major gas importer. Pakistan, which can only meet around two-thirds of its gas demand, is expected to issue further tenders seeking twice as much supply to fill out remaining capacity at its new import terminal at Port Qasim, in the commercial capital Karachi, according to one Pakistani energy expert. The mid-term tender covers a period of five years and calls for 60 shipments, while the long-term tender is for 15 years and 180 cargoes, according to information presented in the tender documents released on the company’s website on Tuesday. Suppliers must submit bids by Dec. 20. Pakistan has ploughed billions of dollars into LNG infrastructure, including the construction of a second LNG import terminal and pipelines linking Karachi with Lahore in the Punjab region, the nation’s industrial heartland. The current crop of tenders are a small part of Pakistan’s projected demand as the country works to bring two more import terminals online within the next couple of years, making it a potent force in global gas markets. The country first began buying LNG last year and has already contracted supplies from trading firm Gunvor and Qatargas, the world’s biggest LNG producer. Cheap gas is tempting out new importers from the Middle East to Africa and Asia, helping stave off a deeper price rout hurting producers’ bottom lines. Cheaper than fuel oil and cleaner-burning than coal, LNG suits emerging economies racing to bridge electricity shortfalls and support growth on tight budgets. The Port Qasim LNG terminal, which is due to go online in mid-2017, has a capacity of 600,000 million cubic feet per day. “This tender is for 200 million cubic feet. That means another 400 million will need to be tendered out soon,” said the industry source. A Pakistan LNG official in September said the country was working on commercial as well as government-to-government LNG deals. Tom Rathman Womens Jersey
IOCL, FCIL & HFCL roped in to revive three ailing fertilisers units
Indian Oil Corporation (IOCL), Fertiliser Corporation of India (FCIL) and Hindustan Fertiliser Corporation of India (HFCL) were roped into the joint venture to revive Sindhri and Gorakpur urea units of Fertiliser Corporation of India. This joint venture will also revive the Barauni unit of HFCL, it has been recently decided. Initially, NTPC and Coal India formed a 50:50 joint-venture to revive the Sindhri and Gorakpur fertiliser units. Subsequently, on the direction of the government, three new shareholders were inducted into the special purpose vehicle formed which will also revive the Barauni unit along with the Sindhri and Gorakpur units. According to a notice issued by Coal India, the joint venture will have a revised shareholding pattern in which Coal India, NTPC and Indian Oil Corporation will hold 29.67% each while FCIL and HFCL will hold the remaining 10.99% in the special purpose vehicle which has been christened According to sources, three cash rich PSUs, IOCL, CIL and NTPC will cough up around Rs 50 billion in the form of equity in the special purpose vehicle to deliver on promises made by Prime Minister Narendra Modi in Uttar Pradesh, Bihar and Jharkhand. Revival of the three plants will require a total investment of Rs 180 billion. According to the deal the existing defunct units at these locations will be scrapped and new ones would be set up. “Equity infusion in the proposed special purpose vehicle would be around Rs 1600 each by IOC, CIL and NTPC while FCI may cough up Rs 5 billion in the projects which is expected to be ready in three-four years. Each units is expected to cost Rs 60 billion. They would be gas based will be supplied by GAIL India,” a senior official from one of the PSUs said on condition of anonymity. Edinson Volquez Authentic Jersey
Shell beats profit forecasts, targets lower 2017 spending
Royal Dutch Shell reported an 18 percent rise in third-quarter profit on Tuesday, lowering next year’s capital spending to the bottom of the expected range as it grapples with persistently low oil prices and weak refining margins. The Anglo-Dutch oil major, whose acquisition of BG Group transformed it into the world’s top liquefied natural gas producer, has been under pressure from shareholders to cut annual spending to ensure it can maintain its dividend given the slow recovery in the oil prices. “Lower oil prices continue to be a significant challenge across the business, and the outlook remains uncertain,” Chief Executive Officer Ben van Beurden said in a statement. Shell’s “A” shares were up 3.4 percent shortly after the opening of trade in London. Shell said its 2017 capital spending was expected to be at around $25 billion, at the bottom of the range previously given. This year’s capex will be around $29 billion, down from a combined $36 billion for Shell and BG Group in 2015. Net income in the quarter, based on a current cost of supplies (CCS) and excluding exceptional items, rose to $2.8 billion, beating analysts’ expectations of $1.71 billion. Shell disappointed the market with its second-quarter results, the first full quarter following the completion of the BG acquisition in February, by missing expectations by around 50 percent. Shell’s Integrated Gas division generated $931 million in profits, slightly above last year’s level, while oil and gas production division, known as upstream, was virtually flat. The refining and trading division, or downstream, once again offered support with a profit of $2.01 billion, although this was down from $2.6 billion a year ago. RBC Capital Markets analyst Biraj Borkhataria said there was “room for Shell to outperform its peers in the near term” following the solid results. BP on Tuesday also beat earnings expectations, trimming its 2016 capital spending by another $1 billion. Other rivals, including Exxon Mobil and Chevron, reported sharply lower in quarterly results last week due to lower oil prices and weaker refining margins. Peyton Manning Jersey
India bets on LNG fuelling stations
As part of its strategy to reduce emissions, India is betting on liquefied natural gas (LNG) to fuel its road transportation sector. The clean fuel promotion attempt involves exploring setting up of LNG filling stations. This comes in the backdrop of India’s petroleum and natural gas ministry planning a pilot programme on LNG-run vehicles in Kerala. Going forward, the strategy is to fuel long-haul commercial vehicles and trains with LNG. “We are confident that the pilot project will have desirable results after which we shall begin work on its filing stations across India,” said a petroleum ministry official requesting anonymity. Another government official, requesting anonymity, confirmed the strategy. LNG is transported in ships with a regasification terminal required to convert the fuel to gas. India has a regasification capacity of 25 million tonnes per annum. In order to meet India’s gas demand, the government plans to increase the country’s LNG import capacity to at least 50 million tonne in the next few years. Queries emailed to a petroleum ministry spokesperson on 28 October remained unanswered. India in June launched a programme to run two-wheelers on compressed natural gas. The National Democratic Alliance (NDA) government plans to move towards a gas-based economy, in sync with its commitment made by ratifying the Paris climate change deal to reduce carbon footprint. “This is being done to promote the usage of clean fuel in the country. India has been looking to shift to relatively cleaner sources of fuel and this falls in lie with the same,” said Sanjay Grover, partner at EY, a consultancy. According to a June report by the World Health Organization, half of the world’s most polluted cities are in India, including the capital city of New Delhi. The NDA government has been working towards expanding the country’s gas grid with a target of providing piped domestic cooking gas connections to every household in eastern India by 2020. It is also planning to set up multiple bio-compressed natural gas plants in the country. However, natural gas currently contributes 6.5% to India’s energy mix, though the government plans to raise the contribution to 15%. India’s natural gas demand is expected to grow from 473 million standard cu. metre per day (mscmd) now to 494 mscmd in 2017-18 and 523 mscmd in 2018-19. Brock Osweiler Womens Jersey
IndianOil lines up 1800 billion capital expenditure for 5 years
India’s largest refining and oil marketing company Indian Oil Corporation (IOC) has lined up capital expenditure to the tune of Rs. 1830 billion between FY18 and FY22. A large chunk of the proposed investment would go towards expansion of refineries and marketing-related facilities such as setting up of terminals, the PSU told analysts in a recent conference call. In the current financial year, IOC is spending Rs. 190 billion. In the next five years, Rs. 500 billion would be spent towards ramping up refining capacity, while another Rs. 400 billion would be spent under marketing initiatives, said an analyst present at the conference. Another Rs. 220 billion is earmarked for pipelines expansion, Rs. 300 billion for exploration and production and Rs. 290 billion for petrochemicals business. Currently, IOC is in the process of making a 15 million tonnes per annum greenfield refinery at Paradip in Odisha operational. “Despite all the initial glitches, the Paradip refinery has finally been commissioned. The second quarter FY17 volume stands at 1.7 million tons and current utilisation is at 65%. By March 2017, quarterly run rate of the refinery would be 3.7 to 4 million tons. Post 90% utilisation level, it would start making positive gross refining margin,” Dhaval Joshi, research analyst at Emkay Global Financial Services said in a note. IOC aggressive expansion strategy comes at a time when India is racing to add capacity to meet increasing fuel consumption. India is poised to surpass Japan as the world’s third-largest oil user this year and will be the fastest-growing crude consumer in the world through 2040, Bloomberg quoted Paris-based International Energy Agency saying. With the government freeing petrol and diesel prices coupled with direct subsidy transfer for domestic cooking gas, IOC has more leg room for investments. Earlier, due to delayed compensation of subsidies, the company’s debt piled up leaving little room for investing in new projects. IOC’s gross debt has come down by nearly 21%to Rs. 418.85 billion as of September 30, against Rs. 534.04 billion on March 30, said A K Sharma, director (finance) of the government-owned firm. IOC controls 11 of India’s 23 refineries. The group refining capacity is 80.7 million tonnes per annum — the largest share among refining companies in India. It accounts for 35% share of country’s refining capacity. IEA estimates sees India’s fuel demand to touch 329 million tonnes by 2030. Currently, India’s total refining capacity stands at 230 million tonnes a year. The total fuel demand in FY16 was 183.5 million tonnes, according to the petroleum ministry. In order to meet the demand, the Prime Minister Narendra Modi government has proposed a mega 60 million tonnes a year refinery in Ratnagiri district of Maharashtra. The project is to be setup by IOC in joint venture with other public sector firms. Cameron Erving Womens Jersey