India’s new motorcycle owners drive gasoline boom – Kemp
India’s gasoline consumption is growing rapidly as millions of additional households buy motor cars and especially motorcycles as a status symbol amid growing prosperity. Gasoline consumption averaged 550,000 barrels per day between June and August, an increase of nearly 15 percent from 480,000 bpd a year earlier. Gasoline consumption hit a new record of 600,000 bpd in August, according to the Ministry of Petroleum and Natural Gas. Consumption remains low compared with the advanced economies or China, the other emerging-market giant, but no other country is exhibiting such fast and sustained growth. The number of registered vehicles on India’s roads has been doubling every seven years and hit 182 million in 2013, according to the Ministry of Road Transport and Highway. The majority of registered vehicles in 2013 were motorcycles (133 million) with a much smaller number of cars, jeeps and taxis (25 million) and goods vehicles (9 million). Unlike cars, many of which run on diesel, motorcycles all run on gasoline. Motorcycles accounted for more than 60 percent of all gasoline sales in 2013. Motorcycle sales have been expanding at a compound growth rate of 7 percent per year since 2010/11 and hit a record 16.5 million in 2015/16, according to the Society of Indian Automobile Manufacturers. In contrast, car sales have grown at a compound rate of just over 2 percent per year and reached 2.8 million in 2015/16. Owning a personal vehicle rather than relying on public transport is an important status symbol for India’s fast-expanding middle class but many buyers opt for motorcycles due to cheaper purchase and operating costs. “The majority of the middle-class, middle-income population including college students prefer to travel by two-wheelers, as it is more economical,” a market research report for the government said. Motorcycles are also far more maneuverable in the country’s crowded urban streets and highways. Two-wheelers use far less fuel than cars but the sheer number of motorcycles being added to the country’s roads each year is propelling rapid growth in fuel consumption. India’s fuel demand would be growing even faster if consumers were buying cars (“As long as India’s oil demand is driven by mopeds, it won’t be the new China”, Reuters, July 13). But consumption is nonetheless growing fast as millions more people use a motorcycle rather than walking or taking public transport, which is the relevant baseline for oil demand. Vehicle ownership rates in India remain far below the level in advanced economies as well as other middle-income developing countries, according to the Ministry of Road Transport and Highways. India’s motorcycle ownership rates are fairly high, at 108 motorcycles per 1,000 population, and steadily increasing, which puts the country ahead of most peers, though far behind Malaysia with 362. But overall vehicle penetration remains low, at 149 motor vehicles per 1,000 population, compared with 273 in Brazil, 277 in Mexico, 512 in Britain and 781 in the United States. So there is enormous scope for fuel demand to increase over the next decade as more households obtain access to a motor vehicle – initially two-wheelers before some upgrade to four wheels. Wayne Gretzky Jersey
Petrol, diesel consumption hits 5-year high in August
Consumption of petrole um products grew at the quickest pace on a monthly basis in five years during August, rising over11 per cent year-on-year (y-o-y) to nearly 16 million tonnes. It had increased 9.5 per cent y-o-y on an average in the preceding three months.Analysts tracking the sector attributed the surge in petrol consumption to the ban on diesel vehicles in the NCR (National Capital Region) and increased sales of two-wheelers and passenger vehicles. Both diesel and petrol led the way, growing at 14 per cent and 25 per cent respectively on a y-o-y basis during the month. Diesel consumption surged to a near five-year high on a monthly basis in August, primarily driven by commercial transportation. “Consumption of other industrial and commercial pro ducts such as fuel oil, petcoke and aviation turbine fuel (ATF), also surged, pointing to robust economic activity ,” analysts at Religare Securities said. “This, coupled with a higher demand for other industrial fuels, indicates improving economic activity, though the uptick may be reflected in other macroeconomic data with a lag,” they said. The analysts added, “The rising retail preference for petrol, especially in urban areas, with the added benefits of using economical CNG (compressed natural gas) through a kit could be another key driver for growth.” LeSean McCoy Authentic Jersey
IOC announces Rs 1.80-trn investment plan in next 6 years
Announcing its plan of investing Rs up to 1.80 trillion across verticals in next six years, state-run Indian Oil Corporation today said it also is talks with foreign entities to co-invest in the investment that includes setting up a mega refinery in coastal Maharashtra. “In next six years, we need to spend Rs 1.70-1.80 trillion on refinery expansions, new petrochemical projects which are coming up and expenditure being incurred on natural gas, besides some exploration blocks that we are actively looking at,” IOC Chairman B Ashok told reporters here. He further said about Rs 50,000 crore will be invested in setting up refining capacity where it plans to add at least 24 million tonnes per annum over the next five years, followed closely by marketing infrastructure including new plants, new terminals, LPG import infrastructure and pipelines. Besides this, it has also earmarked sums for investments in petrochemicals and natural gas, he said. The state-run company will be investing Rs 15,000 crore in the current fiscal and will accelerate to over Rs 25,000 crore each over the next two fiscals, Ashok said, adding it has budgeted for a Rs 72,000 crore investment over the next three years. Meanwhile, Ashok said the ambitious project to set up the largest refinery project in the country in coastal Maharashtra is on and the state government has shown six potential sites where it can come up. IOC, which is taking leadership in the project that is estimated to cost Rs 1.76 trillion, will be holding a 50 per cent stake in the refinery while the remaining will be split evenly between its sister companies HPCL and BPCL. The company is also in talks with international investors for participating in the ambitious project, Ashok said, adding that the three domestic partners will dilute their stake equally as and when such an investor comes in. Ashok declined to name the foreign investors with whom talks are on and also refrained from giving a time-line for the project, saying it should come to life as soon as possible given the demand projections on the back of economic growth. It is looking for a 15,000-acre land parcel to set up the refinery, he said, adding that a third of it will be reserved for green zone. The technical specifics of the project, including the fuel to be refined and which products to be done has already been prepared in consultation with EIL (Engineers India). Asked about getting required clearances, given the heightened ecological sensitivities, Ashok exuded confidence of getting all the nods. Peter Holland Jersey
RIL biggest defaulter of MMRDA: RTI
Mukesh Ambani-owned Reliance Industries Limited is the biggest defaulter of Mumbai Metropolitan Region Development Authority (MMRDA), with dues of over Rs 15.76 billion against it, shows an right to information (RTI) response. A total of about Rs 16.41 billion of premium is pending against five lease holders of MMRDA, who were given extensions to complete construction of projects on the plots allotted to them, the MMRDA said in a reply to an RTI application filed by Mumbai-based activist Anil Galgali. The RIL reacted saying that court stay and regulatory clearances had delayed the construction. “The matter is before an MMRDA committee from which a final decision is awaited,” an RIL spokesperson said. The dues towards first plot, G/C-64, which is yet to be completed with six-year extension already given, amounts to about Rs 11.87 billion while a sum of about Rs 3.89 billion is pending for G/C-66 plot for a four-year extension on which the construction has been completed recently. The RIL has paid about Rs 0.4 million as premium against another plot G/RG -1A. The response says about Rs 24.37 billion got accrued as premium against 29 lease holders for extensions of which Rs 7.96 billion has been realised so far. While the dues against government organisations are over Rs 125 million, private sector owes over Rs 16.286 billion and public sector organisations have a negative balance of Rs 8.5 million (MMRDA has to return). Avonte Maddox Authentic Jersey
Indian Oil Petronas Gets Greenlight for Haldia LPG Terminal Expansion
Indian Oil Petronas has obtained environmental approval to expand the capacity of its LPG import/export terminal at Haldia, West Bengal state, to 36,500 mt from 31,500 mt, in a bid to increase LPG supply in the state, a company source said Tuesday. The expansion will cost Rupee 750 million ($11.2 million), according to a report by The Economic Times late last week. The report quoted a senior government official saying that the environment ministry has given clearance to the terminal expansion project at Haldia, subject to certain conditions. Among the conditions, IPPL is required to give adequate buffer zone around the storage tanks and construct a garland drain around the project site to prevent a spillage of oil into the nearby water. IPPL, a 50:50 joint venture between Indian Oil Corporation and Malaysia’s Petronas, has another LPG terminal at Ennore, Tamil Nadu state, with a capacity of 31,000 mt, according to the source. There are currently no plans to expand the Ennore terminal at this point. IPPL is however, looking at building a third LPG import/export terminal in the west coast of India, the source said, but added it is too premature to give details. India’s LPG imports have been growing steadily amid rising demand for the cooking gas. Imports grew from 6.567 million mt in fiscal year 2013-2014 (April-March) to 8.313 million mt in FY 2014-2015 and 8.885 million mt in FY 2015-2016, data from the Petroleum Planning and Analysis Cell showed. John Carlson Womens Jersey
ONGC starts selling gas at ‘premium’
State-run ONGC has started selling natural gas from its East Coast field at a premium price of $6.61/mBtu, to be the first to benefit from the government’s policy to reward production from difficult fields, reports Siddhartha P Saikia in New Delhi. In March, the government had allowed higher price for new gas production from deep, ultra deepwater and high pressure, high temperature areas. The current gas price for regular fields is $3.06/mBtu on a gross calorific value basis. “Happy that ONGC started sale of gas from its deepwater field for first time at market price taking benefit of March 10 Cabinet decision,” petroleum minister Dharmendra Pradhan tweeted. ONGC has started selling natural gas from the first development well at the S1-Vashishta gas fields located in the Krishna-Godavari (KG) offshore basin. This is a deep water field and current production is hovering 0.6 mmscmd. The output from the field is likely to go up to 3-4 mmscmd after complete development work. The gas is being sold to GAIL (India). Considering an output of 4 mmscmd for a full year at a price of $6.61/mBtu, ONGC would earn revenues to the tune of Rs 23 billion against Rs 11 billion at a normal gas price of $3.06/mBtu. In FY16, ONGC approved projects worth Rs 479.06 billion to develop 33.662 million tons of crude oil and 63.956 bcm of reserves. The chunk of it would go towards development of cluster 2 of its KG-basin deep water block — KG-DWN-98/2, which would cost Rs 340.12 billion. The price of domestic natural gas is currently decided based on a formula approved by the Modi government in October 2014, which is linked to select global indices. However, the government in March 2016 approved a mechanism that allows pricing freedom to gas production from high pressure, high temperature, deep and ultra deep water blocks. The only caveat is the ‘market price’ is subject to a ceiling to be derived from landed cost of alternate fuels such as fuel oil, naphtha, LNG and coal. The new pricing formula will apply to gas projects already discovered but are yet to commence production because of un-remunerative pricing of the commodity Laquon Treadwell Jersey
India Plans First LNG Facility in Haldia
The Haldia Dock Complex under Kolkata Port Trust has recently earmarked about 10 acres of land in the vicinity of Haldia Oil Jetty No. 1 for a period of 30 years for setting up of LNG storage facilities, with permission to lay pipelines and install unloading arms through tender cum auction. The project will be undertaken on land lease model by granting lease of land by middle of December, 2016. LNG facilities are expected to be developed within 24 months from date of allotment of land. This is an important development in context of the recent efforts of the Ministry of Shipping to reduce logistics cost and achieve the COP21 targets on cutting down pollution by introducing the use of LNG as fuel for barges. Use of LNG is expected to save around 20 percent on fuel. Carbon Dioxide emissions are likely to get reduced by 20-25 percent and nitrogen/sulphur oxide emissions by 90 per cent. The government is therefore taking measures to facilitate the movement of LNG and its storage at places situated along the inland waterways. Only a few advanced countries are using LNG powered barges at present. Therefore in that sense, the development at Haldia Dock Complex can be seen as a very positive one. The efforts to introduce LNG as barge fuel is part of the overall efforts to promote transport on inland waterways and coastal shipping. Inland Water Transport (IWT) is a cost effective and environment friendly system and a lot of importance is being accorded to it since the last two years. Work is already on for construction of terminals and other activities to facilitate navigation on river Ganga under the Jal Marg Vikas. The Ministry of Shipping has been regularly holding discussions with Petronet LNG Ltd. (PLL) and Inland Waterways Authority of India (IWAI). PLL is in the process of preparing a Detailed Feasibility Report for setting up LNG facilities at Haldia, Sahibganj, Patna and Ghazipur on NW-I (Ganga) as per an MoU signed by them with IWAI during the Maritime India Summit in Mumbai in April this year. In the last follow up meeting earlier this month, IWAI was requested to share the details of projections on the cargo and pattern of traffic on NW-1 as per a study conducted for the Jal Marg Vikas Project so as to enable PLL to estimate the demand for LNG. As a long term market for transportation of coal on LNG barges from the Eastern Coal Fields to various thermal power houses on Ganga, IWAI agreed to share with PLL the information they had gathered. The construction of LNG barges at Indian shipyards would be entitled to the 20 per cent subsidy through the ship building subsidy scheme whose guidelines have already been released by the Shipping Ministry. PLL was also requested to list out in detail the infrastructure support needed for moving to LNG as fuel for barges and specify the milestone for achieving the activities required to be accomplished. The LNG storage hubs may be built along the river Ganga which would facilitate potential gas consumers in the hinterland also as LNG has the potential to replace LPG, Naphtha, and HFO fuel. It would serve a variety of industries such as metal, ceramic and glass, food processing, refractory’s etc. as well as heavy mining machineries. LNG could even fuel the road transport sector. Goa and Maharashtra also have a tremendous potential for introduction of LNG barges on their waterways. PLL was requested to explore the introduction of LNG barges for that region also. Similarly the option of LNG based vessels on NH-5 was also discussed in the meeting this month. Bruce Bochy Womens Jersey
Petroleum products to come under GST regime
Petroleum products, including crude and some intermediate products, could be taxed under the proposed goods and services tax (GST), a move that will reduce the imperfections in the new levy and also narrow the inflationary impact of the tax. A proposal favouring imposition of a modest tax on these products is being examined and is expected to be taken up by the newly constituted GST Council where the government will try and convince states of its merit. The idea is to have some minimal tax of about 2-3 per cent so that seamless flow of credit is not broken and cascading is removed. These products are at present proposed to be covered within the GST but zero rated till the time the council decides to impose a tax. States will continue to have freedom to levy local sales tax on it. States have been opposed to a change in tax regime for petroleum goods, an easy way of quickly mopping up revenues if needed. But now thinking has veered around to having some minimal tax from the beginning as it could help in bringing down the overall tax rate and allow the industry to get credit. The Arvind Subramanian committee has recommended a standard GST rate of around 18 per cent. There are concerns GST could stoke inflation. ET had reported some policymakers are in favour of rate as low as 16 per cent. Tax at marginal rate would not hurt consumers much but will benefit industry in a big way. “If the petroleum products are taxed at a GST rate which is equivalent to the input GST cost, the cascading of taxes would be mitigated and the final price of the products may reduce,” said Bipin Sapra, partner, EY. Credits to power, airlines sectors Sapra said this will allow some credits to the sectors such as power, airlines, transport of goods and passengers, which will help in reducing the cost of these services. “There have been discussions on having some tax on petroleum products…,” said a government official, adding that the final decision would rest with the GST Council. This would be in addition to local state sales tax on these products. “This would reduce cascading to some extent and allow for some flow of credit,” the official added. The committee headed by Chief Economic Adviser Arvind Subramanian, which had suggested revenue neutral rate in the 15-15.5per cent range with a lower rate of 12per cent anda standard rate of 18 per cent, had said its inclusion could make the industry more competitive. “Bringing electricity and petroleum within the scope of the GST could make Indian manufacturing more competitive,” the report had said. The government has put implementation of GST, which seeks to replace plethora of central taxes including excise duty, service tax, cesses and state taxes such as value-added tax, octroi, entry tax with a single levy, on fast track and the newly set up GST Council will meet later this month to take a call on crucial issues. Prime Minister Narendra Modi will also attend a presentation on the GST framework and issues connected with it on Wednesday. Justin Britt Womens Jersey
Investors seek bigger area under small oilfields
Some companies interested in small discovered fields being auctioned by the oil ministry are keen to explore adjoining areas also but government officials say they can expand their exploration area subsequently with a competitive bid under the new licensing policy. The government is seeking investors for 67 small oil and gas fields in an auction that is underway and allows participants until October 31 to place their bids. The government is hosting roadshows in India and key global financial centres such as London and Singapore to showcase the opportunity these fields offer and explain in greater details the nuances of the new policy governing these fields. Some of the potential investors have raised concern about the smaller size of the contract areas on offer and urged the government to consider offering a bigger area. “The area being offered is too small. That limits our opportunity,” said a top executive at an oil firm seriously considering a bid. The private sector executive has been involved in the country’s oil and gas sector for two decades and said the contract areas offered under previous bid rounds were in hundreds of square kilometres while in this it is mostly just a few square kilometres, making it less attractive. On the other hand, officials say that a proven field cannot be considered less attractive than a bigger exploration area where oil and gas has not been discovered. About 40 of the 67 fields being offered are less than 25 square kilometres in area. Nearly 20 are less than 10 sq km with one field being as small as 2.35 sq km. All 67 fields have been grouped in 46 contract areas that are being auctioned. A senior oil ministry official said some investors have indeed raised this concern but the government will not be able to do anything about it. “We can’t make any changes in the way the fields have been marked or are being offered. Investors should understand that these are discovered fields and not exploration fields. Bigger areas are offered when exploration blocks are auctioned,” said the official. The additional areas surrounding these discovered fields will be auctioned in future separately for exploration under the government’s new exploration policy, Hydrocarbon Exploration and Licensing Policy (HELP), the official said. “The winners of these discovered small fields can participate in that HELP auction and expand their area of operation. They will probably be better placed to offer more accurate bids as they would have superior access to data in those areas,” he said. Government officials are travelling from Singapore to Dubai, Houston, London and Canada to attract bidders for these small fields, which have been lying idle for decades after discovery by state-run Oil and Natural Gas Corporation and Oil India Ltd. Last year, the government took away these fields from state firms and brought out a new policy to auction these to private players. The new policy allows contractors the freedom to market natural gas and cuts out bureaucratic micromanagement by introducing revenue-sharing between companies and the government. Brett Hull Jersey
KG-D6 case: ONGC won’t accept Shah Panel report, will contest key findings
Oil and Natural Gas Corp (ONGC) will likely question the role the Directorate General of Hydrocarbons (DGH) played while Reliance Industries (RIL) was pumping out gas from the state firm’s fields, and argue strongly that its claim for compensation can’t be wished away just on the ground that the firm hadn’t developed the then commercially unviable fields, signaling that the state firm will not quietly accept the government panel’s recommendations. The board of the country’s largest oil and gas producer recently discussed the report of the government panel, headed by retired judge AP Shah, which found that RIL had unjustly gained by producing gas from the fields operated by ONGC. The board has decided to contest some of the key findings of the Shah panel report, which criticised the company for delayed field development and also recommended further scrutiny of “long periods of alleged inactivity on the part of ONGC in this case particularly”. The company will shortly write to the oil ministry rebutting key charges that the company had prior information but didn’t act on it promptly, and that it can’t claim compensation as it had not developed the field yet. The company will also question the role of DGH in this matter, arguing that the government arm has access to all seismic data available with all operators and it should have acted in time, executives said. “ONGC had data only about its own fields. But DGH had access to seismic data of our fields as well as that of RIL’s. It knew exactly where the wells were being drilled by RIL. It should have acted in time,” said an executive. Robbie Ray Jersey