India’s August fuel demand rises 11.4 pct y/y
India’s fuel demand in August rose 11.4 percent from a year. Earlier, driven by a spurt in transportation fuels, data released by the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed. Local fuel consumption, a proxy for oil demand, totalled 15.80 million tons in August, the data showed. Diesel consumption, which accounts for more than 40 percent of local fuel sales, rose by 13.2 percent while that of gasoline surged by about 25 percent. Pat O’Donnell Authentic Jersey
OMC’s free-cash flow to remain negative on high capex plans: Fitch
The free-cash flow of the state-owned oil companies likely to remain negative due to high capex plans, said a Fitch Ratings report. According to the report, the rating agency expects high capex for all state-owned oil marketing companies (OMCs) over the medium term as the companies are planning to upgrade and expand refining capacity. his year in March, amid the low crude prices, Dinesh K Sarraf, Chairman and MD of Oil & natural gas (ONGC) had said that the company will be incurring a “multi-billion dollar” capital expenditure programme to bolster exploration, development and production of crude oil and gas, a Forbes report had said. However, Muralidharan R, Analyst, APAC Energy and Utilities, Fitch Ratings, in a note titled ‘India Oil & Gas Downstream Dashboard’ said, “However, We expect the FCF of Reliance Industries Ltd to turn positive after FY17, when it will complete its capex in petrochemicals and telecom investments.” The OMCs aim is to improve refining complexity and meet new fuel standards. Another example of high capex plan is, Indian Oil Corporation (IOC) and Bharat Petroleum Corp Ltd (BPCL) planning to acquire upstream assets in this month, the report said. Will rising capacity lead to fall in exports? According to the Fitch report, the higher refining capacity will boost the volume which will meet the rising demand for products in the next 12-18 months. This will again be driven by expansion plans of three OMcs, namely, IOC, BPCL and Hindustan Petroleum Corporation (HPCL). The rating agency expect that these companies’ expansion plans will lead to fall in further exports by FY17. In FY16 the exports fell by 5.3% as compared to 5.9% in FY15. Following the increase in refining capacity, Fitch expects gross refining margins (GRM) of all Indian oil refining companies will moderate in FY17 from the strong levels achieved in FY16. “However, Fitch expects GRMs to remain stronger than the historical average, which together with higher volumes, is likely to support strong operating cash flow in FY17,” Muralidharan said. Further, as per the report, the agency does not expect any under-recoveries, which is the difference between market prices and state-controlled selling prices, as long as current crude prices surge from the current levels. “The net share of under-recoveries for the OMCs was nil in FY16, reflecting low oil prices and price deregulation of diesel”, Muralidharan said. Consumption growth The consumption growth for petroleum products to remain strong over the medium term in the current financial year as compared to previous fiscal year, the report said. The consumption of the petroleum products increased by 7-8% in the first quarter of the current fiscal ended on June 30, compared to 10.9% in FY16. However, the rating agency expect the growth to moderate to around 5-6% in FY17 and thereafter. “We expect continued strong gasoline consumption growth of around 9%-10% over the medium term, supported by robust passenger-vehicle sales amid low crude-oil prices. Furthermore, Fitch expects an improvement in India’s GDP growth, which is likely to boost demand for diesel”, Muralidharan added. Colin Kaepernick Womens Jersey
India’s next big push for oil — tripling of strategic storage
The perfect cocktail of low global crude oil prices and galloping domestic demand has prompted India’s petroleum ministry to carve out a detailed plan that will help the country’s strategic oil reserve storage capacity to more than triple over the next five years. India’s petroleum minister Dharmendra Pradhan told S&P Global Platts in an exclusive interview late Friday that with the new plan in place, India would be able to raise its oil storage capacity and take advantage of low oil prices. “We want to join the high table as far as strategic oil storage is concerned,” Pradhan said on the sidelines of his Singapore visit for a roadshow seeking potential investors for India’s small oil and gas fields. “With the new plan in place in the next five years, we should be able to sharply raise our storage. But that target could get even bigger because of refinery and pipeline expansions that will be on the way during the coming years.” Under the first phase, India has set up strategic petroleum reserves, or SPRs, in three locations — Visakhapatnam, Mangalore, and Padur — in southern India. They will have a combined capacity of 5.3 million mt, or 38.8 million barrels, of crude oil. The Visakhapatnam facility on the eastern coast began filling its underground caverns last summer. The Mangalore and Padur facilities are expected to be completed later this year. Pradhan said his ministry had finalized plans to set up two new larger storage facilities, each with about 5 million mt of capacity, in the eastern state of Odisha and in the northwestern state of Rajasthan. It would involve a total cost of about $2 billion. “To set up the new storage facilities, we are open to both private and foreign participation,” Pradhan said. “Work on the new storage facilities will start this financial year (April 2016-March 2017). It will take our overall storage capacity to more than 15 million mt in the next five years. We can use the reserves as and when required.” The Indian Strategic Petroleum Reserves Limited, a special-purpose legal entity owned by the Oil Industry Development Board, manages all the SPR facilities in the country. The US Energy Information Administration had recently said in a report in July that the significant drop in international oil prices since mid-2014 had provided India with an incentive to speed up construction and filling up of SPRs. India is seeking to finance the second phase of its SPR partially through commercial agreements with foreign oil producers who can lease storage, it said. As such, New Delhi was currently negotiating with the UAE’s Abu Dhabi National Oil Company to lease 5.5 million barrels of the Mangalore facility. Two-thirds of this volume would be available for India, and ADNOC could store the remaining volumes or sell it in the domestic market, said the EIA report. OVERSEAS INTEREST IN RETAIL SECTOR Pradhan said that with demand for oil products growing in double digits, many oil multinationals — such as Saudi Aramco, BP and Shell — had evinced interest to either expand or set up shop in India’s retail oil sector. “Our size is a big attraction to a lot of these companies,” Pradhan said. “Also, providing clear and transparent polices through market reforms is helping us to attract those companies.” “Shell is already there in our retail sector but in a smaller scale. BP has applied for licence and others are discussing,” Pradhan said. “They are all keen to bring in the investment and set up their infrastructure. There will be healthy competition between these players and domestic companies and ultimately, the consumer will reap the benefits.” The minister’s remarks came just three days after Trafigura’s CFO for Asia Pacific, Nicolas Marsac, told Platts in an interview that the surge in Indian oil demand was just the start of a story that promises to run for long, prompting the commodities trader to put together a strategy and a team on the ground in place to win in the South Asian nation. India’s oil products demand grew 8.5% year on year in 2015 to 177 million mt, or 3.81 million b/d, as gasoline, LPG and naphtha saw double-digit growth in consumption. Over January-July this year, India’s oil products demand rose 10.1% year on year to 112.50 million mt, or 4.15 million b/d, according to India’s Petroleum Planning and Analysis Cell. The IEA expects Indian oil demand to average at 4.3 million b/d in 2016. The government’s clear policies for the oil sector, strong and sustained GDP growth, and a huge push towards making India a manufacturing hub were not only playing crucial roles in accelerating oil consumption but were also whetting appetite of leading multinationals to set up shop in the nation. “The oil demand growth we are witnessing is phenomenal. Transparent policies can attract more investment into the sector,” Pradhan said. Some of other policy reforms India had recently undertaken for the oil sector — such as gradually raising the price of kerosene in an effort to promote cleaner fuels and expanding the LPG network — was moving ahead swiftly as per plan. “All these have to be gradual. For example we can’t raise the price of kerosene at one go,” he added. India deregulated diesel prices in October 2014, but continues to subsidize LPG and kerosene prices. The BJP-led government has recently also given the go-ahead to state-run companies to raise prices of kerosene, which accounts for more than 40% of the total petroleum subsidies, by a small amount every month until April 2017. The government has also announced 2016 as the “year of LPG consumers” and has set an ambitious target to open 10,000 new LPG dealerships across the country this year, in addition to the 16,000 that already exist. Terrance Williams Womens Jersey
Petroleum ministry moots market price for CBM gas
In a boost to hydrocarbon exploration firms Reliance Industries (RIL) and ONGC, the petroleum ministry has proposed to offer market price for natural gas produced from the coal bed methane (CBM) blocks. RIL is targeting to start production of CBM from its Sohagpur (West) block in Madhya Pradesh in FY17, while state-run ONGC is developing the Bokaro block in Jharkhand. The petroleum ministry has proposed a revised policy for CBM blocks which is in similar lines to the policy rolled out for the ongoing auction of 67 discovered small and medium oil and gas fields. “The Cabinet note has been moved for inter-ministerial consultation last week,” a source told FE. The Narendra Modi government has unveiled a policy for the small fields that provide an investment opportunity in already discovered fields with no signature bonus, no requirement of prior technical experience and no mandatory work programme. The new policy is based on revenue sharing contract model with the aim of simplifying the operating regime and making it more transparent. In addition, the explorers would get market price for the hydrocarbon produced. The standing committee on petroleum and natural gas under the 16th Lok Sabha found anomaly in pricing of gas produced from CBM blocks currently. Two firms producing CBM — Essar Oil and GEECL — have a pre-approved price for their gas. RIL and ONGC, which are gearing up for production, would have to follow the natural gas pricing formula put in place by the government in October 2014. This means RIL and ONGC would have to sell CBM at $3.06/mBtu, compared with more than $6-15.5/mBtu enjoyed by Essar Oil and GEECL. “I would not say that pricing challenge is not there. However, the investment to be made by ONGC for CBM is less than Rs. 10 billion and therefore we are going ahead with it,” D K Sarraf, chairman and managing director of ONGC, told FE, hinting that the government is expected to roll out a new policy that would make CBM business economically viable. ONGC is investing Rs. 6.59 billion to develop the Bokaro block with reserves of 4.098 bcm. India offered 33 CBM blocks. However, 17 of them, or 50% of the blocks, have been relinquished. The natural gas output from CBM blocks was reported at 1.0734 mmscmd in FY16 and it is currently hovering 1.3757 mmscmd. Petroleum ministry has set a target of 5.77 mmscmd in FY18. The standing committee has recommended that the petroleum ministry should formulate a separate pricing and marketing mechanism which also considers availability of small gas volumes, requirement for higher drilling and remote locations, among others. Josh Bynes Jersey
RIL-ONGC gas row: State firm to contest key findings of Shah panel
Oil and Natural Gas Corp (ONGC) will likely question the role the Directorate General of Hydrocarbons (DGH) played while Reliance was pumping out gas from the state firm’s fields and argue 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 the state firm’s resolve to challenge 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 A P Shah, which found Reliance Industries 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 criticized 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 did not act on it promptly, and that it can’t claim compensation as it had not developed the field yet, company executives said. The company will also call into 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 Reliance’s. It knew exactly where the wells were being drilled by Reliance. It should have acted in time,” said an executive. ONGC Chairman D K Sarraf said last week that the company had no information before 2013 that the reservoirs of Reliance and ONGC were linked and the panel ignored all the submissions the company made regarding this. He said the company’s technical and legal teams were studying the findings and it would be ‘very difficult’ to say whether ONGC will be compensated for gas loss. ONGC executives said the company will stake its claim for compensation as it is the contractor and therefore must get the economic benefits flowing from the fields. “We have spent money on making the discovery and intended to develop this. At that time, it was not commercially viable to develop this. But the delay in developing the field can’t be used to hold back compensation,” an executive said. The DGH had supported ONGC’s claim for compensation in a written submission to the panel but later its advocate took a different stand, arguing that the migrated gas produced by Reliance belonged to the government and ONGC had “no right whatsoever.” The committee concluded that “till the time ONGC produces gas from its blocks, it has no legal or possessory rights in the gas under its surface and contract area” and cannot seek compensation from Reliance. ONGC executives said the company was not delaying the project but it wasn’t commercially viable to produce then and this was borne out in a 2003 appraisal report of Reliance’s block, a copy of which the state firm had submitted to the Shah panel during the hearing. ONGC had told the panel that the appraisal report concluded that “a standalone working of the ONGC block Godavari PML would be cost prohibitive and may not be commercially viable; the drawing of gas from the connected reservoir (RIL’s KG-DWN-98/3 block) would deplete the gas reserves of ONGC’s Godavari PML block; and finally that all these findings of the 2003 Appraisal Report were known to RIL and Niko.” Shaun Alexander Womens Jersey
Trafigura puts India oil team in place as demand takes off
For Trafigura, the surge in Indian oil demand is just the start of a story that promises to run for long, and the commodities trader is busy putting together a strategy to ensure that it is not left behind in the battle for market share in Asia’s next big center for growth, after China. The company has just put together a team to be based in India to handle oil trading, expanding its ground presence beyond metals in the country. “We are also ramping up to serve what we see as an expanding market in India, both with imports of crude and trading of refined products,” Nicolas Marsac, Trafigura’s CFO for Asia Pacific, told S&P Global Platts in an interview Tuesday. India’s oil products demand grew 8.5% year on year in 2015 to 177 million mt, or 3.81 million b/d, as gasoline, LPG and naphtha saw double-digit growth in consumption. In the first half of 2016, India’s overall oil products demand surged 11.1% year on year to 97.62 million mt, or 4.2 million b/d. The IEA expects total Indian oil demand to average 4.3 million b/d in 2016. The Industry Leadership Award for Downstream is looking for companies with exceptional operational and financial performance in an ever-changing downstream environment. Nominate your company for a Platts Global Energy Award by September 12. Learn more and nominate The government’s clear policies for the oil sector, strong and sustained GDP growth, and a huge push towards making India a manufacturing hub are not only playing crucial roles in helping accelerate oil consumption move into top gear, but are also whetting the appetite of leading multinationals to set up shop in the South Asian nation. In addition to Trafigura’s plan to set up a trading team, there have been reports in the media about the Swiss trader’s interest in acquiring a stake in Essar Oil Ltd., India’s second-largest private refiner. But this has not been confirmed and company officials are tight-lipped about it. THE CHINA STORY While Trafigura pushes its expansion into oil in India, it is also aggressively moving ahead with its plans for China, where the liberalization of the oil sector from government control has been one of the biggest Asian oil growth stories since last year. “China’s oil liberalization is a very good opportunity and we are well-equipped for that. We are also expanding our infrastructure and presence in China. The independent refiners provide us a very good opportunity to boost our business volumes,” Marsac said. Trafigura has been one of the most active companies in trading with China’s independent refiners. Besides supplying foreign crude, it has also been the offtaker of a number of gasoline cargoes exported by these refiners. Sources said recently that Trafigura had struck a deal with two refineries — Luqing Petrochemical and Huifeng Petrochemical, also known as Wonfull — to supply crude to them and buy their oil products for export, but on preferential credit terms. It has been also making an effort to sell Iranian crude to independent refiners, according to sources. In addition to oil, the company is keen to expand its presence in LNG and bitumen in Asia, sources have said. Trafigura’s gross profit for the six-month period ending March 31 was $1.17 billion, down 23% from $1.52 billion a year earlier, giving a gross margin of 2.7%, CEO Jeremy Weir said in a statement while releasing the financial results in June. Its average volume of oil traded during H1 amounted to 4 million b/d, an increase of 46% from 2.7 million b/d in H1 2015 — leading to doubling in size of its oil trading book since H1 2012. Weir said in June that with US production falling sharply and demand continuing to grow strongly, for example for gasoline in the US and China, he believed that the much-anticipated rebalancing of supply and demand seemed within reach. Keith Kinkaid Womens Jersey
LNG soon to be the fuel for barges : Haldia Dock earmarks land for LNG storage facilities
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. Brent Urban Womens Jersey
Seven oil PSUs plan to set up Rs. 1 billion start-up fund
Seven public sector oil companies—Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd, Gail India Ltd, Oil India Ltd, Engineers India Ltd and Oil and Natural Gas Corp. Ltd—are coming together to launch a Rs.1 billion start-up fund shortly, said three officials who are part of the process. All the seven companies will be pitching Rs.100-200 million each to create the fund. The fund will be used to foster, nurture and incubate new ideas related to the oil and gas sector. “So far seven public sector companies are part of the Rs 1 billion start-up fund. The fund is being set up under the aegis of the ministry of petroleum and natural gas,” said the first official mentioned above. The officials spoke on the condition of anonymity as they are not allowed to speak to the media. On similar lines, on 14 August, ONGC unveiled a Rs.1 billion start-up fund called ONGC Start-up, in line with the government’s ‘Start-up India’ initiative. As part of this initiative, ONGC will provide the entire support chain for start-ups including seed capital, hand-holding, mentoring, market linkage and follow-ups. ONGC is setting up a dedicated website for this initiative. “This initiative would promote entrepreneurship among younger Indians by creating an ecosystem that is conducive for the growth of start-ups in the oil and gas sector, which has a huge potential for technology-enabled ideas,” ONGC chairman and managing director Dinesh K. Sarraf said on 14 August. The start-up fund by the seven PSUs is being driven by the oil ministry and could either be housed in the ministry or each company will have a office for the fund, the second official mentioned earlier said. “The structure and investment policy is still in the works. Discussions are on at the board level of respective companies. Something concrete would take shape by November-December 2016,” said the official. The PSUs are planning to target engineering and petroleum institutes to fund start-ups where they say they would be able to find technology and innovation relevant to the energy sector. “We plan to reach out to the IITs (Indian Institutes of Technology) and NITs (National Institutes of Technology). The start-ups we plan to invest in, would be selected on the basis of relevance, innovative solutions in matters of refinery, new technologies in pipeline transportation, LPG etc where we are facing issues and where we can seek help from outside,” said the third official from a public sector company. Oil minister Dharmendra Pradhan on 6 September urged the PSUs to create start-up funds on the lines of private sector in order to promote innovation and nurture new ideas in the energy sector. “I am advising my CEO friends in PSUs that if Ratan Tata can put his private funds for start-ups and if Narayana Murthy can do that for new start-ups then why cannot you (do that),” Pradhan had said. All oil PSUs plan to invest and provide financial partnerships to new start-ups engaged in exploration and production and downstream activities. Mathieu Perreault Womens Jersey
India expects higher oil demand growth this year: Petroleum Minister Dharmendra Pradhan
India’s oil demand growth is set to exceed 11 percent this year as the world’s third-largest oil and gas consumer accelerates its economic development, the country’s petroleum minister said on Monday. “The primary prediction for oil trajectory (last year) was 7 to 8 percent but we ended up with 11 percent. This year I am much more hopeful,” Minister of Petroleum and Natural Gas Dharmendra Pradhan told Reuters. “This year (India’s oil demand) will break all the records and prediction and we are prepared.” The growth will be driven by better monsoon rains and an acceleration of economic activity, he said. The minister was speaking in London ahead of a presentation of India’s bid round for discovered small fields which are estimated to hold 625 million barrels of oil and gas. The Indian government plans to launch an exploration licensing round bid in the next financial year as the country seeks to reduce its dependency on imports by 10 percent by 2022, Pradhan said. James Paxton Womens Jersey
US based energy giant, Shell Oil has “clear aspirations” to grow in India
Global energy giant Shell Oil has “clear aspirations” to expand its operations in India as the country’s energy sector expands, the company’s president Bruce Culpepper has said. “By 2050 world energy demand is projected to double, most of that growth will come from developing countries like India as its per person energy use is expected to increase more than 550 during that time frame,” Culpepper said. “About two thirds of the India’s electricity generation is currently coal based. One of the best ways to provide more energy with fewer emissions is to move from coal fired to gas fired power plants,” he said in his keynote address at an event hosted by Indo-American Chamber of Commerce of Greater Houston (IACCGH) here on Friday. “This is one area where Shell can be part of the solution as we are now world’s largest integrated gas player, with unmatched capabilities to produce or acquire natural gas, liquify it, load it to a specialised tanker and ship it where needed”, the Shell president said. “The environment in which we work is changing rapidly, thus creating considerable opportunity. These opportunities exist for the people and economies of Houston and India, fostered by the efforts of the (IACCGH) that has been building bridges between the two countries for last over two decades’, he said. Due to its technical talent and growth, Shell wants to continue to be a trusted partner with the Indian government and the people of India by providing energy solutions. “Shell is the only global oil company with a license to build a network of up to 2000 retail fuel stations”, he said. Shell and JSW Steel were the two companies that participated in the IACCGH programme. Sharing statistics that showcased the tremendous growth in bilateral trade IACCGH President Joya Shukla spoke of the Chamber’s initiative to send business students from Houston to India to intern at companies there to provide a dual perspective on how business is conducted in the two countries. Jonathan Cooper Authentic Jersey