IOC plans to double refining capacity by 2030
Indian Oil Corp (IOC), the nation’s largest oil company, plans to nearly double refining capacity to 150 million tonnes by 2030 to meet fast expanding energy needs of the country, its Chairman B Ashok said. The company has capacity at refineries to produce 80.7 million tonnes per annum of fuel currently. “IOC is self-sufficient in the refining segment, but keeping in view the rising demand for petroleum products in the short-term, we are aiming at a refining capacity of about 100-110 million tonnes per annum by the year 2022 and progressively scale it up to at least 150 million tonnes by the year 2030,” he said. International Energy Agency’s World Energy Outlook projects 4 per cent CAGR growth in India’s fuel demand to 348 million tonnes by 2030, from 184 million tonnes in 2015-16. BP projects demand to be 335 million tonnes while EIA has pegged it at 294 million tonnes, which translates into a CAGR of 3 per cent. India has a refining capacity of 232.06 million tonnes. “Our core business is liquid fuels, LPG, lubes, petrochemicals and natural gas. With the prognosis that fossil fuels will continue to dominate the energy mix till the year 2040, we have a fairly large window of opportunity to profitably expand in our core business while at the same time getting ready for the low-carbon economy of the future,” he said IOC will expand its refining capacity to 104.55 million tonnes by 2022 from the current 80.7 million tonnes per annum with an investment of about Rs 40,000 crore. It is looking to scale up its Koyali refinery in Gujarat to 18 million tonnes from 13.7 million tonnes while capacity of the Panipat refinery in Haryana will be raised by a quarter to 20.2 million tonnes from the current 15 million tonnes. A 3-million tonnes capacity addition each is planned for Uttar Pradesh’s Mathura and Bihar’s Barauni refineries, which will take their capacity to 11 million tonnes and 9 million tonnes, respectively. The recently-commissioned 15 million tonnes Paradip refinery in Odisha will see a capacity addition of 5 million tonnes while about 3 million tonnes will be added in IOC’s Digboi and Bongaigaon refineries in the North-East. He, however, did not give details of the expansions that will take the capacity to 150 million tonnes. Ashok said IOC is also expanding its pipeline and retail network. “We have 45,000-plus customer touch points as of now and this number will go up further in the next five years, especially in rural and virgin markets in order to secure the first mover advantage,” he said. Also, a Strategy Cell has been set up, which is preparing roadmaps for future growth of IOC as an energy business amid multiple scenarios, he added. Shaquill Griffin Authentic Jersey
‘States await Rs 24,000 cr bounty from excise on oil products’
Indian states await a big boost to their finances this year as they are on course to get an additional Rs 24,000 crore bounty or more from the Centre by way of the excise duty share on oil products this fiscal year, which is set to jump by around Rs 60,000 crore. As per the 14th Finance Commission wards, the Centre has to part 42 per cent of the incremental excise mop up on oil products with the states from 2015 through 2020 fiscals. Since the government has been increasing the excise duty on oil products since mid 2014 after the crash in crude prices, excise on oil products has been biggest contributor this form of tax kitty. While it contributed as much as 63 per cent of the total excise mop-up last year, up from 46 per cent in the previous year, it is going to jump by around Rs 60,000 crore this year to Rs 1,78,600 crore. The government has jacked up the basic excise duty on diesel and petrol by Rs 6.5/litre and Rs 7.75/litre, respectively, in four tranches between November 2014 and January 2015. “Excise collections on oil products may expand by an incremental Rs 55,000-60,000 crore in the current fiscal year and 42 per cent of these incremental collections would devolve to the states. “This is equivalent to Rs 22,000-24,000 crore, which is sizeable in relation to the estimated devolution of excise on fuels of Rs 36,400 crore in 2015-16, and a positive factor for the states’ fiscal health this fiscal,” Icra’s chief economist Aditi Nayar said in a report. She adds this estimate is contingent on the facts that the basic excise duty on petrol and diesel continues unchanged in the remainder of this year and consumption of these items grows by an average of 5 per cent. The contribution of oil products to the overall excise duty levied by the Centre has increased significantly from 46 per cent in 2013-14 to around 63 per cent in 2015-16, following a high growth rate of excise on fuels in the recent years, the report notes. While the Centre mopped up Rs 79,400 crore from oil products in 2014-15, 23 per cent of it or Rs 17,900 crore were devolved to the states in that year. Deion Sanders Jersey
Government engaged in phase 2 of building strategic oil reserves
With global crude oil prices having dropped to under $50 barrel levels amid a supply glut, the Indian government has been giving attention to developing the country’s strategic petroleum reserves for enhanced energy security. Earlier this week, Petroleum Secretary K.D. Tripathi, along with senior officials of state-run Indian Strategic Petroleum Reserves Ltd (ISPRL) and Engineers India Ltd (EIL), visited the proposed petroleum storage site at Chandikhol in Odisha, a Petroleum Ministry statement here said. “The underground storage facilities at Chandikhol will be created within the available government-owned land parcel, and would involve a significant development in the region with the greater objective of Odisha becoming the energy gateway of the Eastern and Northeastern region of India,” the statement said. “The estimated capital cost of the Chandikhol project is approximately Rs 5,000 crore,” it added. The first phase of implementing India’s strategic oil reserves would be completed by end of this fiscal with over 5 million tonnes (MT) of crude reserves in place in three separate storage facilities. The facilities entail storage of crude oil in underground rock caverns. “Under Phase I storage program, three facilities have been created at Vishakhapatnam, Mangalore and Padur, with a total storage capacity of 5.33 MT,” the ministry said. Petroleum Minister Dharmendra Pradhan had told reporters earlier this year that preparations had started for the second phase of construction where it is planned to build reserves of 12.5 MT, so that by the end of the second phase India has strategic reserves of around 17.8 MT. “Government is considering the proposal for establishment of Phase II storage program for a total storage capacity of 10.0 MT, which includes 4.4 MT storage capacity at Chandikhol and 5.6 MT storage capacity at Bikaner (Rajasthan),” the ministry said in a statement on Saturday. India imports nearly 80 percent of its oil requirements, and the government had decided to set up strategic crude oil storages as a cushion against external supply disruptions. These storages would be in addition to the existing ones of the oil companies. The construction of the storage caverns is being managed by ISPRL, which is a special purpose vehicle created by the Oil Industry Development Board (OIDB). Seth Roberts Authentic Jersey
Oil pipeline protest turns violent in southern North Dakota
A protest of a four-state, USD 3.8 billion oil pipeline turned violent after tribal officials say construction crews destroyed American Indian burial and cultural sites on private land in southern North Dakota. Morton County Sheriff’s Office spokeswoman Donnell Preskey said four private security guards and two guard dogs were injured after several hundred protesters confronted construction crews Saturday afternoon at the Dakota Access pipeline construction site just outside the Standing Rock Sioux reservation. One of the security officers was taken to a Bismarck hospital for undisclosed injuries. The two guard dogs were taken to a Bismarck veterinary clinic, Preskey said. Tribe spokesman Steve Sitting Bear said protesters reported that six people had been bitten by security dogs, including a young child. At least 30 people were pepper-sprayed, he said. Preskey said law enforcement authorities had no reports of protesters being injured. There were no law enforcement personnel at the site when the incident occurred, Preskey said. The crowd dispersed when officers arrived and no one was arrested, she said. Vicki Granado, a spokeswoman for Dallas-based Energy Transfer Partners, which is developing the pipeline, said the protesters broke through a fence and “attacked” the workers. The incident occurred within half a mile of an encampment where hundreds of people have gathered to join the tribe’s protest of the oil pipeline, which is slated to cross the Dakotas and Iowa to Illinois. The Standing Rock Sioux have gone to court to challenge the Army Corps of Engineers’ decision to grant permits for the project, and a federal judge will rule before Sept. 9 on whether construction can be halted. The tribe fears the pipeline will disturb sacred sites and impact drinking water for thousands of tribal members on the reservation and millions farther downstream. The protest Saturday came one day after the tribe filed court papers saying it found several sites of “significant cultural and historic value” along the pipeline’s path. Tribal preservation officer Tim Mentz said in court documents that the tribe was only recently allowed to survey private land, where researchers found burials, rock piles called cairns and other sites of historic significance to Native Americans. Standing Rock Sioux Chairman David Archambault II said in a statement that construction crews removed topsoil across an area about 150 feet wide stretching for 2 miles. Tre’Davious White Womens Jersey
Odisha not cooperating in Ujjwala implementation: Oil secy
Odisha not cooperating in Ujjwala implementation: Oil secy Bhubaneswar: For the second time in a fortnight, the Centre has complained that the state government is extending due cooperation in implementing the Pradhan Mantri Ujjwala Yojana (PMUY), touted Narendra Modi government’s largest political initiative, in which subsidized cooking gas cylinders are given to poor families. This has resulted in cold war of sorts between the BJP and the BJD. In a letter dated August 31 (copy with TOI) to chief secretary AP Padhi, petroleum and natural gas secretary K D Tripathi said government premises as venues for MPUY programmes were being cancelled even after confirmation of allotment just before the functions. Earlier on August 13, Tripathi in another letter to the chief secretary had said that disturbances were being created by ruling party men, including an MLA at Nimapara in Puri district. He had given instances of law and order situation at Nimapara, Athagarh and Nabarangpur. Stating that the scheme is meant for the benefit of the poor women, Tripathi in his latest latter requested the state to extend all cooperation for the scheme. Terming Tripathi’s letter politically motivated, BJD spokesperson S N Patro said the letter has no meaning. “BJP is using the government events like party forums. Instead of inviting the local MLAs and MPs to PMUY programmes, the saffron party is inviting its ow leaders. That is the reason why people are protesting,” Patro said. Countering the BJD, BJP spokesperson Sameer Mohanty said the regional party fears LPG to the poor women will increase BJP’s popularity. The BJD is reacting violently because it is scared. It should however understand that the cooking gas is for benefit of the poor,” he said. Odisha is one of the identified priority state for implementation of PMUY. The Centre aims to provide LPG connections to five crore BPL women in the country in three years. The BPL families get connection by paying Rs 990 for the burner and market price of the gas while seeking a new connection while the subsidy amount is credited in their bank accounts. Wes Horton Jersey
Brokerages eye govt’s next move after AP Shah committee report to guage impact on RIL
Amid the excitement and analysis of Reliance Industries’ rollout of Jio broadband services, analysts are also closely watching the government’s next move after the AP Shah Committee said the company made “unjust” gains by pumping natural gas that flowed from ONGC’s adjoining block in the Krishna-Godavari basin. On August 31, the AP Shah Committee report accepted the consultant’s report on the dispute over migration of gas from ONGC’s blocks to RILs block in the eastern coast. The one-man committee headed by former Chief Justice of Delhi High Court Ajit Prakash Shah states the compensation for the gas that migrated should go to the national exchequer and also made recommendations to avoid such disputes in future. The government’s action is awaited. “This is unprecedented in India so we will have to wait and watch how government reacts to it. Prima facie, it looks like RIL may have to compensate the government for the gas that came from ONGC’s block. But whether the migration of gas was an unforeseen act of nature or whether the two companies allowed it to happen with knowledge of it is yet to be determined,” an energy expert tracking the development closely said. Between April 1, 2009 and March 31, 2015, as much as 11.122 billion cubic meters of gas migrated from ONGC’s Godavari-PML and KGDWN-98/2 blocks to adjoining KG-D6 that are in RIL’s control. At current prices, this gas would be worth around Rs 11,000 crore. The government then set up the AP Shah committee to study the findings of the independent expert DeGolyer & MacNaughton (D&M) that established reservoir continuity between the KGD6 and contiguous ONGC operated blocks. “In our view, quantifying any impact on RIL as of now is difficult and so is trying to freeze a timeframe for final resolution. Broadly, we do not see this entire issue (AP Shah Committee recommendations on gas migration) as having any material impact on RIL,” JP Morgan said in a report. The brokerage said it will watch out for the government’s decision pertaining to monetary claims from RIL and whether it includes any penalty and does it take into account any operating expenses and capital expenses. While RIL head Mukesh Ambani refrained from commenting on the issue at the company’s Annual General Meet, sector experts expect the company to opt for legal route to challenge monetary claims. RIL has invested about Rs 40,000 crore in developing wells in the Krishna-Godaveri basin, where it had expected reserves of 10 trillion cubic feet but it witnessed a steep fall in output. Billy Turner Jersey
Rising oil import costs may become Asia’s growing pain
A widening gap between Asia’s oil production and demand is creating a growing capital drain for the region and leaving countries vulnerable to global supply disruptions and a sudden surge in oil prices. Asia’s net oil imports surpassed the total amount of oil consumed in North America in 2015 and are set to rise after producers slashed spending on exploration and production on low oil prices, leaving oilfields at risk of sharp production declines in the next decade. Activities across Asia-Pacific to search for energy resources have nearly ground to a halt in the past year while recent exploration finds have struck more natural gas than oil, analysts said. As Asia’s net imports grow and crude prices recover, the region’s oil import bill is set to climb back above $500 billion in 2017 for the first time in three years, calculations based on forecasts by the International Energy Agency and a Reuters crude oil price poll in August showed. “With demand growth set to continue and outpace declining domestic production, this leaves Asia increasingly vulnerable to rising prices,” said Energy Aspects analyst Virendra Chauhan. FALLING OUTPUT The oil price slump since mid-2014 had given Asian economies a breather from high import bills. But oil demand in the Asia-Pacific is expected to grow by 800,000-900,000 barrels per day (bpd) this year and next, while the region’s output could shrink by 240,000-330,000 bpd during the same period, Chauhan said. The gap between oil production and demand has jumped over 30 percent since 2010 to an estimated 25.7 million bpd in 2016 and is set to grow by another 1.1 million bpd next year. Rising oil prices, however, means the cost could soar by a third in just one year to $566 billion. “We have seen two years in a row in 2015 and 2016 oil investments declining,” International Energy Agency (IEA) chief Fatih Birol said. “This would mean oil security and oil markets may face a challenge as a result of a huge drop in the investments in a very few years in the medium term.” Producers across the region are struggling, which is not being helped by international oil companies’ capital and expertise leaving the region, said Chauhan. Consultancy Wood Mackenzie expects Asia’s oil production to fall to 5 million barrels per day in 2025 from 7.6 million bpd in 2016. “We’ve seen a number of projects delayed – some cancelled – plus the level of investments in existing oil fields is falling,” Angus Rodger, director of Asia-Pacific upstream research at Woodmac said. “That has a minor impact in the short-term, but if you go out to 2020, it means oil production across the region will have declined significantly.” China is leading the decline, with output hitting a five-year low in July as producers shut-in marginal fields while imports hit a record. Indonesian officials said they are looking at ways to shore up a production target of 780,000 bpd in 2017, the lowest since 1969 and 40,000 bpd lower than 2016’s forecast. “We are discussing how to make Cepu block production higher than now,” Director General of Oil and Gas Wiratmaja Puja said, adding that output at the oilfield operated by Exxon Mobil may increase by 15,000 bpd. Indonesia, the largest oil producer in southeast Asia, faces a potential 20-25 percent natural decline in production unless it steps up activities such as drilling and well servicing, said Muliawan, deputy for operations at regulator SKK Migas. MIDEAST SUPPLY IMPASSE China, Indonesia and India have been actively investing in overseas oil production assets to supplement domestic output. China has also been broadening its sources of supply, taking more oil from Russia and Latin America to reduce its dependence on the Middle East, as well as building its strategic reserves to cushion itself in the event of an oil price shock. The region’s biggest oil consumer is also turning to gas and renewable energy, but these are long-term solutions. Asia imports just over half of its oil from the Middle East and will continue to rely heavily on Gulf producers, analysts said, exposing the region to geopolitical risks that have disrupted oil production and exports. “Asian production is on the decline, notably among others in China, and with increases in refining capacity that are unlikely to remain idle, the dependency of the region to Middle Eastern oil will remain,” BNP Paribas Global Head of Commodity Markets Strategy Harry Tchilinguirian told the Reuters Global Oil Forum. “It is, as you can imagine, hard to replace Saudi Arabia in your import mix for many an Asian refiner.” Tracy Mcgrady Womens Jersey
India to carry petroleum products via Bangladesh
The Indian Oil Corporation Limited (IOCL) will transport petroleum products from the northeastern state of Assam to Tripura through Bangladesh from September 7, an official said here on Sunday. The official said the arrangement was due to the difficulties faced in carrying petrol and diesel through the Indian roads of the region. The IOCL under the Ministry of Petroleum and Natural Gas of the Indian Government and the Roads and Highways Department (RHD) of the Bangladesh government had signed Memorandom of Understanding (MoU) in lieu of this in Dhaka on August 18. “If the passports of the officials and truckers of IOCL were received by Tuesday, the transportation of the petroleum products from Assamto TripuraviaBangladeshwould start from September 7,” an IOCL official said. He said Indian oil tankers carrying petroleum products from Bongaigaon (northern Assam) will ply on the Dawki border (Meghalaya)- Tamabil (Bangladesh)- Chatlapur (Bangladesh)- Kailasahar (north Tripura) route covering a distance of 136 km in about four hours. “This new route via Bangladesh would save time and costs in carrying petroleum products from Assam to Tripura as the existing over 400 km mountainous route required more than ten hours to carry these essential items. Besides, the condition of national highways through Meghalaya and southern Assam is horrifying,” the official added. The short-term India-Bangladesh deal on shipping of the petroleum products is valid till September 30. An official statement of the Indian High Commission in Dhaka said based on the request by the Indian government, Bangladesh has granted permission for the movement of petroleum goods on humanitarian grounds through their territory. The MoU will facilitate India to carry petroleum goods (Motor Spirit, High Speed Diesel, Superior Kerosene Oil and Liquefied Petroleum Gas) from Assam to Tripura through Bangladesh territory to make a buffer stock of them in the northeastern state. Bangladesh had earlier allowed India to carry food grains and heavy machineries from different parts of India to northeastern state of Tripura via Bangladesh. The Food Corporation of India(FCI) has transported a fresh consignment of 2,350 tons of rice last week from Kolkata to Tripura via Bangladesh to avoid transportation hitches through the traditional route of Assam and Meghalaya. Earlier in 2012, Bangladesh had allowed state-owned Oil And Natural Gas Corporation to ferry heavy machinery, turbines and over-dimensional cargoes through Ashuganj port for the 726-MW Palatana mega power project in southern Tripura. There is only a narrow land corridor to the northeastern region through Assam and West Bengal that passes through hilly terrain with steep gradients and multiple hairpin bends, making plying of vehicles, especially loaded trucks, very difficult. Agartala via Guwahati is 1,650 km from Kolkata by road, and 2,637 km from New Delhi. But the distance between Agartala and Kolkata via Bangladeshis just 620 km. Justin Hunter Womens Jersey
Inventory gains boost oil marketing companies in June quarter
While the June quarter was supported by strong inventory gains, a similar support in the current quarter is unlikely, according to some analysts. State-run refining and marketing companies (OMCs)—Bharat Petroleum Corp. Ltd (BPCL), Indian Oil Corp. Ltd (IOC) and Hindustan Petroleum Corp. Ltd (HPCL)—have all delivered strong June quarter results. A key reason why these companies were able to perform better is the fact that they reported a better gross refining margin (GRM). For the quarter, the measure for IOC, HPCL and BPCL stood at $9.98 a barrel, $6.83 a barrel and $6.09 a barrel, respectively. GRM is a measure of profitability for refining companies. In general, GRMs of refining companies were expected to get a boost from inventory gains, thanks to the rising oil price trend over the quarter. That has panned out. Spark Capital Advisors (India) Pvt. Ltd says, adjusted for refining inventory gains, the GRMs for these companies were in the range of $4-5 a barrel. That’s not very impressive. Nevertheless, the results beat street expectations. IOC’s operating profit increased by one-third, compared with the same period last year to Rs.136.83 billion. HPCL’s operating profit increased 17% year-on-year to Rs.36.27 billion, while BPCL’s operating profit increased at a much slower pace of 3% to Rs.39.19 billion. Reported net profit of IOC, HPCL and BPCL increased 25%, 30% and 11%, respectively, to Rs.82.69 billion, Rs.20.98 billion and Rs.26.20 billion. What next after a great quarter? Investors in these stocks have little to complain. Higher visibility on profits thanks to reforms in the sector, benefits from lower crude price and robust demand have helped sentiment. So far this year, shares of these companies have outperformed the Sensex meaningfully. Currently, BPCL, HPCL and IOC trade at 11 times, nine times and 10 times estimated earnings for this fiscal year. Even as valuations do not appear demanding, the outlook isn’t the brightest. Spark Capital believes OMCs’ earnings have peaked out in fiscal 2016 and sees risks to 2HFY17/FY18E earnings. Some factors that pose risks, according to the brokerage, include weaker GRMs and narrowing of trade discounts offered by West Asian suppliers—hitting GRMs and normalization in marketing margins of auto fuels. Further, while the June quarter was supported by strong inventory gains, a similar support in the current quarter is unlikely. In fact, it is possible that the June quarter ends up being the best quarter for this year. Given this and the sharp run-up in the stocks, upsides in the OMC stocks could be capped. Keith Magnuson Jersey
IOC plans to double refining capacity by 2030
Indian Oil Corp (IOC), the nation’s largest oil company, plans to nearly double refining capacity to 150 million tons by 2030 to meet fast expanding energy needs of the country, its Chairman B Ashok said. The company has capacity at refineries to produce 80.7 million tons per annum of fuel currently. “IOC is self-sufficient in the refining segment, but keeping in view the rising demand for petroleum products in the short-term, we are aiming at a refining capacity of about 100-110 million tons per annum by the year 2022 and progressively scale it up to at least 150 million tons by the year 2030,” he said. International Energy Agency’s World Energy Outlook projects 4 per cent CAGR growth in India’s fuel demand to 348 million tons by 2030, from 184 million tons in 2015-16. BP projects demand to be 335 million tons while EIA has pegged it at 294 million tons, which translates into a CAGR of 3 per cent. India has a refining capacity of 232.06 million tons. “Our core business is liquid fuels, LPG, lubes, petrochemicals and natural gas. With the prognosis that fossil fuels will continue to dominate the energy mix till the year 2040, we have a fairly large window of opportunity to profitably expand in our core business while at the same time getting ready for the low-carbon economy of the future,” he said IOC will expand its refining capacity to 104.55 million tons by 2022 from the current 80.7 million tons per annum with an investment of about Rs 400 billion. It is looking to scale up its Koyali refinery in Gujarat to 18 million tons from 13.7 million tons while capacity of the Panipat refinery in Haryana will be raised by a quarter to 20.2 million tons from the current 15 million tons. A 3-million tons capacity addition each is planned for Uttar Pradesh’s Mathura and Bihar’s Barauni refineries, which will take their capacity to 11 million tons and 9 million tons, respectively. The recently-commissioned 15 million tons Paradip refinery in Odisha will see a capacity addition of 5 million tons while about 3 million tons will be added in IOC’s Digboi and Bongaigaon refineries in the North-East. He, however, did not give details of the expansions that will take the capacity to 150 million tons. Ashok said IOC is also expanding its pipeline and retail network. “We have 45,000-plus customer touch points as of now and this number will go up further in the next five years, especially in rural and virgin markets in order to secure the first mover advantage,” he said. Also, a Strategy Cell has been set up, which is preparing roadmaps for future growth of IOC as an energy business amid multiple scenarios, he added. Max Pacioretty Womens Jersey