Cheap oil propels RIL to 8th top global oil company
Powered by low oil prices and rising refining margins, India’s Reliance Industries has leapfrogged to rank 8th among 250 global energy companies in the latest survey released by Platts. In the same list state-owned Indian Oil Corporation ranked 14th. Reliance Industries has been ranked 8th among top 10 global oil companies in ‘Platts Top 250 Global Energy Company Rankings 2016’, up from 14th last year, while state-owned Indian Oil Corporation jumped to 14th from 66th last year and Hindustan Petroleum Corporation bettered its ranking to 48th from 133rd last year. Oil & Natural Gas Corp Ltd, the country’s top oil explorer, however, slipped to 20th position this year from 17th a year ago, on the back of low oil prices. “The ranking reflected the oil market’s biggest price collapse in nearly three decades, a resulting re-drawing of the lines in the fuels mix and the successes of energy players less exposed to the price rout triggered by OPEC’s defence of its global oil market prominence,” it said. The Platts Top 250 Global Energy Companies 2016 ranks publicly traded energy companies with assets above $5 billion based on a combination of asset value, revenue, profit and return on invested capital (ROIC) for 2015 (January-December) fiscal year. “India was also the only prominent country for coal demand, boosting Coal India’s standing in the world energy companies,” it added. “Strong performance of the coal industry enabled the largest pure coal mining company in the world, Coal India, to hold its place at 38th in the top 250 ranks. Consumption rose nearly 5 per cent, regaining its share as the dominant fuel in the energy mix at 56 per cent, Platts said. Adani Power Ltd, an independent power producer was ranked 250th. With a 3-year compound growth rate of 54.9 per cent the company is the fastest growing energy company in Asia-Pacific and the second fastest in the world. Elandon Roberts Womens Jersey
ONGC in talks to acquire stake in GSPC gas field
Oil and Natural Gas Corporation (ONGC) is in talks with Gujarat State Petroleum Corporation (GSPC) for acquiring a stake in its gas field in the Krishna-Godavari Basin, ONGC chairman and managing director, D.K. Sarraf said. “We have been talking to GSPC for acquiring a certain percentage stake in their field… some technical studies have been done on the field since it’s a difficult field and the investment is high,” Sarraf told reporters after an annual general meeting of ONGC in the capital. ONGC, the country’s flagship public sector oil and gas explorer, has appointed Ryder Scott as a technical consultant for evaluation of the GSPC’s assets and Sarraf said that the evaluation is currently underway. GSPC owns an 80 per cent participating interest in the KG Basin block while Jubilant and Geo Global Resources have 10 per cent each. Heavy investments in the block had driven GSPC’s debt to Rs.197 billion by the end of March 2015. No objection Oil Minister Dharmendra Pradhan had recently said that the government would have no objection if ONGC and GSPC reached an understanding on a stake sale. Sarraf expressed surprise that the Justice A.P. Shah committee report, which has confirmed the PSU firm’s apprehension that gas had flown from its gas block in the KG basin to an adjoining block owned by Reliance Industries (RIL), implies that ONGC was aware of the problem earlier but remained silent till 2013. “The A.P. Shah Committee has confirmed that gas has flown from our field to Reliance Industries’ field and a significant portion has already been produced. Many consequences follow out of that, including whether we get paid or the government of India should get paid (for unjust enrichment),” the ONGC chief said. “We told the committee we had no knowledge of this earlier. It was a very tough statement to make when we raised our apprehensions (but) as soon as we got to know, we took action in 2013 by approaching regulatory authorities,” Sarraf said, adding that the strong submissions on this aspect made to the committee have not been mentioned in the report. “It seems there is no mention of our submission on this in the report and I don’t know the reason why that’s not part of the report,” he said. The committee’s report, submitted on August 31, noted that Reliance should pay the government for unjust enrichment by drawing gas from an adjacent block, but also recorded an RIL charge that ONGC knew of the connectivity issue way back in 2007. When asked if ONGC was confident of getting the government’s support in its dispute with Reliance, given that Prime Minister Narendra Modi’s image was used in an ad for Reliance’s new telecom business soon after Pradhan committed to act on the A.P. Shah report, Sarraf said the two issues are unrelated. Centre unbiased “The current government is acting without any bias for public or private sector players. This is my firm belief. That the government itself appointed a committee to look into the matter confirms it means business,” Sarraf said. Mark McGwire Womens Jersey
Indian Oil Paradip plant to start making gasoline by year-end, says executive
The Paradip refinery was designed to produce Euro IV- and Euro V-compliant fuels India’s biggest refiner Indian Oil Corp (IOC) plans to start producing gasoline at its Paradip refinery before the year ends following a delay caused by problems at a secondary unit, an executive said on Thursday. IOC started up the 300,000 barrels per day Paradip refinery in late 2015 and has a continuous catalytic reformer (CCR) which turns naphtha into gasoline. The CCR was commissioned in March but was functional only for a week due to compressor problems, prompting IOC to export the naphtha volumes. The (Paradip) refinery is designed not to make naphthabut we have problems with one of the units. We do not want to export naphtha. It is heavy losses for us,” said Sanjiv Singh, executive director of IOC’s refineries division, on the sidelines of the Asia Pacific Petroleum Conference in Singapore. “We want to convert naphtha into gasoline and petrochemicals,” added Singh. Singh added that he expects the compressor problem to be resolved in about a month’s time but it will still take a few weeks to clear out the naphtha stocks. Once the secondary unit stabilises, IOC aims to stop exporting naphtha, which is generating crack margins of only $34.98 a metric ton to Brent crude currently, versus $86.03 a year ago. Dwight Gooden Authentic Jersey
Russia’s oil production hits 25-year high
Russia’s daily oil production approached 11 million barrels in recent months, hitting a record high since 1991, authorities said on Wednesday. “Oil production amounted to 10.71 million barrels per day in August 2016, although it was down 1.6 per cent month-on-month. However, daily oil production increased by 0.1 per cent in August 2016 compared with the same month in 2015,” Xinhua news agency reported citing the authorities as saying. The rising oil production preceded a historic agreement to stabilise oil prices signed by Russia and Saudi Arabia on September 5 on the sidelines of the G20 summit in the Chinese city of Hangzhou. Under the deal, the two countries will form a working group to monitor the market and draft recommendations to stabilise oil prices and ensure steady investment in the industry. Saudi Arabia and Russia are both major oil exporters and experienced substantial drops in revenues since the oil price slump began in June 2014, when oil was traded at $110 a barrel. Oil hit a 13-year low of less than $27 a barrel at the beginning of 2016. Mitchell Marner Jersey
China’s Oil Paralysis An Opportunity For India To Enhance Energy Security
China’s state-owned oil companies, which were extremely active between 2002 and 2013 acquiring foreign oil fields, have gone really quiet over the past three years, with oil prices crashing and oil fields available at much lower prices than before. The reason for this is a mix of internal politics and weakening financials, the latter driven by the acquisition binge of the past decade. Their paralysis means that one major potential global buyer of oil fields is out of the race, which should mean lower asset prices for other buyers, such as India, and Indian companies ought to make the most of this window of opportunity, of a market with few buyers at a time when assets are cheap. This impasse that Chinese firms are going through also shows the downside of a system where the dominant political party is closely intertwined with all sectors of the economy: most senior officials of state-owned companies are also members of the Chinese Communist Party. From 2002-2010, China’s state-owned oil companies – led by Sinopec, CNOOC and PetroChina – spent $83.2 billion, acquiring oil and gas fields across the world. The next three years (2011-2013), Chinese firms were in overdrive, spending an additional $72.5 billion on oil fields. The year 2013 saw three of the biggest deals ever by Chinese firms (Refer Table 1). International Energy Agency Chinese companies accounted for 35 percent of all petroleum deals greater than $1 billion during the year. Post-2013 however, acquisitions by Chinese companies fell off a cliff. During 2014, deal volume from China in the petroleum sector fell over 75 percent, while during 2015, Chinese firms accounted for less than 1 percent of all acquisitions upstream. What changed? The reason for this slowdown has been largely political. In December 2014, Zhou Yongkang, the former head of China’s security services and a member of the 17th Politburo Standing Committee, was expelled from the Communist Party and arrested. In June 2015, he was sentenced to life in prison for corruption, and an estimated $14 billion worth of assets was seized from him and his family. A number of Zhou’s supporters/protégés have also been stripped of their positions and sentenced to long prison terms. His downfall is linked to the Chinese President Xi Jinping’s drive to purge rivals from positions of influence. Unfortunately for China’s oil giants, Zhou’s base of influence includes the petroleum industry. He is a geophysical engineer and worked in China’s petroleum sector for 32 years and went on to head the China National Petroleum Corporation, the state-owned oil giant. Many of his supporters who have been investigated and sentenced are also senior officials in the petroleum sector. The deals that they concluded, including overseas acquisitions, are now being scrutinised for corruption. Some of the biggest acquisitions, such as Nexen and Kashagan, have also run into trouble. The Chinese oil industry, therefore, seems to be in the doldrums as far as external investments are concerned. Meanwhile, the fall in oil prices has not helped. Chinese companies bought most of their assets when the oil price was high and are now losing money on these fields. Profitability has dipped (Refer Table 2). The reduced cash flows and their existing capital expenditure commitments limit their ability to buy new assets. These Chinese firms have been the major rivals for India’s state-owned ONGC in its quest to acquire oil fields outside India. In multiple cases, ONGC was outbid by Chinese firms with their bigger balance sheets and willingness to pay much higher prices. A prime example of this was the bid for the giant Kashagan oil field in 2013, which CNPC stole from under the frontrunner ONGC’s nose. There is thus an opportunity here for India’s oil majors to acquire oil fields overseas, with fewer worries about being barrelled out by the competition. This has turned out to be a blessing, as Indian companies are not saddled with expensive assets generating poor returns. Now that prices are lower, the same money can fetch them much more. India needs to act before the tide turns, either on oil prices or on Chinese policy. There are two ways Indian firms can act. First, they must buy assets in politically stable, friendly and oil-rich countries: Russia, Iran, the US and Canada fit the bill. Indian public sector firms have already acquired oil fields in Russia, they must now move on to the other three. Gateway House has, in the past, identified the US and Canada as two stable, oil-rich countries with transparent public markets suitable for Indian investment. The low price of oil has pushed a hundred shale oil producers in the US to bankruptcy – Indian companies can invest in some of these firms where a financial infusion can make a difference. Iran has invited Indian firms to invest in developing a gas field, which it was unable to do because of Western sanctions on it. With sanctions out of the way, this project has to be pushed through. Buying developed assets is an expensive proposition even in present times. Indian firms, too, need to explore, and given their limited experience and success, tying up with an exploration company with a strong track record may be a better approach. The most successful explorers are not usually the global oil majors, but smaller, more focused companies such as Anadarko, Tullow Oil and Cairn (UK). Bharat Petroleum has already tried this approach with Anadarko and reaped rich dividends. Indian oil firms need to identify and ally with such partners. In the current scenario, as exploration spends are being cut back, a financial partner willing to shoulder costs will be welcome. By not going overboard with investments during the boom, Indian oil companies are already in a strong position. By judiciously increasing investments during the downturn, they can create long-term value and energy security for the nation. Eric Berry Womens Jersey
Cairn India, ONGC get 10-yr Barmer block extension beyond 2020
Private explorer Cairn India and its state-run partner ONGC will get a 10-year extension for the Barmer oil and gas block in Rajasthan beyond 2020, when the current production-sharing contract (PSC) ends. The Barmer block is the biggest onshore oil producing project in India and its current output hovers around 166,943 barrels of oil equivalent per day. On July 28, the Delhi High Court asked the Centre to decide “within five weeks” whether it will extend the PSC for the block — RJ-ON-90/1, spread over 3,111 sq km west of Barmer. Cairn India had moved the court seeking extension of the PSC and permit to export crude oil from the block. Cairn India said in its latest presentation that the Rajasthan PSC extension till 2030 could mean conversion of an estimated 250 million barrels of oil equivalent (mboe) into reserves. While the extra investments required to tap these reserves could not be ascertained, gross capital expenditure of more than $800 million is required for Raageshwari Deep Gas and Bhagyam polymer flood, which are part of the asset. FE has learnt that the decision to extend the PSC by 10 years has been taken after the issue was “deliberated in detail” at a recent meeting chaired by petroleum minister Dharmendra Pradhan. The government, however, is yet to officially communicate the decision to Cairn India. The extension comes with a caveat that the explorer would have to share 10% additional “profit petroleum” during the extended duration. Profit petroleum is the main source of revenue for the government from a hydrocarbon block. It is calculated using what is called an investment multiple that denotes how many times the earnings are to the investment. Sources privy to the development told FE that the government has arrived at the decision after “carefully examining several surveys that shows that increasing Centre’s share of revenue from the prolific block would not impact the economical viability of the project”. The government, however, was keen that the rise won’t be steep to hamper “the ease of doing business”, the source said. Cairn India declined to comment for this story citing that the matter is sub judice. The Vedanta Group company has forked out Rs 23.64 billion towards profit petroleum in FY16 on a consolidated basis. A chunk of it would be towards hydrocarbon output from Barmer block. The consolidated profit petroleum shared in FY15 stood at a little over Rs 47.34 billion. One of the sources also added that the decision is in line with the Cabinet decision of March 10 where a policy has been put in place on grant of extension to the PSC for 28 small and medium-sized discovered fields. It has been decided that government’s share of profit petroleum during the extended period of contract shall be 10% higher for both small and medium-sized fields, than the share as calculated using the normal PSC provisions in any year during the extended period and hence will vary from year to year based on the investment multiple and post-tax rate of return. Other key projects include recovery potential of about 100 mboe from polymer flood in the Mangala and Aishwariya fields. Cairn India said that it continues to take measures to improve economics of key projects in core Mangala, Bhagyam and Aishwariya fields, Barmer Hills and satellite fields, and invest in pre-development activities to ensure their readiness for development with grant of extension of PSC. Marvin Jones Jr Womens Jersey
Oil block auctions under Hydrocarbon Exploration Licensing Policy by early next year
India will likely begin auctioning its major oil and gas blocks early next year under its fresh Hydrocarbon Exploration Licensing Policy (HELP) that heralds a major shift from the previous policy by bringing in revenue sharing between companies and the government, offering companies the option to carve out blocks, and the freedom to market gas. “We are currently working on the procedures and the methodologies to help operationalise the new policy. his should be ready by early next year, which is when we will allow companies to bid under this,” said an oil ministry official, who didn’t want to be named. In March, the government notified the new hydrocarbon policy, replacing the NELP, or New Exploration Licensing Policy that guided Indian hydrocarbon space for more than a decade. Some of the key changes the new policy introduced include just one license for extraction of all forms of hydrocarbons,. freedom to market gas, and a revenue-sharing system that puts an end to micromanagement by bureaucrats and the accompanying acrimony between the government and the contractor. The officials at the oil ministry and its technical arm, the Directorate General of Hydrocarbons, are now figuring out every operational detail for a smooth launch of HELP. The oil ministry is currently managing the auction of 67 small discovered oil and gas fields for which roadshows are being organized. The policy for these small fields also offer freedom to market gas and a revenue sharing model and this bid round will test the key policy measures’ attractiveness for investors. The experience gathered in holding the discovered small field bid round will come handy in preparing the most optimal procedure for operationalising HELP, the oil ministry official said. Once the procedure is ready, companies can submit an initial expression of interest indicating the area which they wish to take up for exploration. Following this, the government will put this area up for auction and the highest bidder will be granted the right to explore. Just because someone has first identified the area for exploration will not grant him any special right to obtain exploration license. Alexandre Texier Jersey
Iran ready to raise oil output to 4 million bpd depending on demand -NIOC
Iran is ready to raise its oil production to 4 million barrels per day (bpd) in a couple of months depending on market demand, a senior official from the National Iranian Oil Company (NIOC) said on Monday. “We can increase crude production based on market requirement,” Seyed Mohsen Ghamsari, the director for international affairs at NIOC said at the Argus Crude Forum. The OPEC producer is currently producing a little over 3.8 million bpd, Ghamsari said. Evan Longoria Womens Jersey
India allocates imported gas to nine stranded power plants
Nine stranded power plants with an installed capacity of 5.070 GW in southern India have been allocated 9.93mn m³/day of imported natural gas after a reverse e-auction process, India’s power ministry said September 3. It was the fourth phase of auctions intended to use gas-fired capacity more. These plants would generate 8.81bn kilowatt-hours for delivery from October 1 to March 31, 2017. The grid connected gas based power generation capacity in the country is 24.150 GW. Of this, 14.3 GW had no supply of domestic gas. These comprise 29 plants which were eligible to participate in the auction process held on September 3, of which 14 plants with a cumulative installed capacity of 7.575 GW participated in the latest round. Indian power plants are using more gas as the price is low. LNG imports have witnessed strong growth during the first four months of fiscal year 2017. Cumulative imports during April-July were 8.092bn m³, up almost by 22% on the same period last year. Imports in July were, however, marginally lower at 1.96bn m³, down 3.8% compared with the same month last year. The cost of importing LNG has dropped sharply this year after New Delhi signed a revised long term contract with Doha. Qatar is the largest supplier of LNG to India. Given the backdrop of low global LNG prices, Petronet LNG insisted on renegotiating its long term contract with RasGas. In December and the two parties revised their deal, which now takes the three-month average figure of Brent crude oil, replacing a five-year average of a basket of crude imported by Japan. Pavel Bure Authentic Jersey
IOC submits bid to enter local market with MPPE
Indian Oil Corporation has submitted a bid to enter the fuel retailing market in Myanmar, the Business Standard newspaper reported on September 3. “We have submitted a bid to start retail outlets and also set up LPG plants in Myanmar,” Mr Anish Aggarwal, director (pipelines) at IOC, India’s biggest state-owned refinery operator, told the New Delhi-based newspaper. The report said state-owned Myanma Petroleum Products Enterprise had last year invited private companies to form a joint venture for importing, storing, distributing and selling all petroleum products. A report in April said the joint venture agreement would be for 30 years, with the possibility of two 10-year extensions, with MPPE holding a 51 percent share. IOC is the second Indian state-owned refining company to express interest in entering the fuel market in Myanmar in recent weeks. The Numaligarh Refinery at Morangi in Assam was in talks with the Myanmar government to export up to 500,000 tons of petrol a year, Bloomberg reported on August 18. The facility is a subsidiary of India’s second-biggest state-owned refiner, Bharat Petroleum Corp. The Bloomberg report quoted London-based BMI Research as saying Myanmar imported more than 60 percent of its refined fuel and three domestic refineries capable of producing 57,000 barrels a day operated at 30 percent capacity in 2015. BMI Research estimated that fuel consumption in Myanmar would expand at an average of six percent a year between 2016 and 2020, outpacing Cambodia, Vietnam and Thailand. Austin Hooper Authentic Jersey