OVL’s dollar bond issue gets low investment grade ratings
Global rating agencies Moody’s and S&P today assigned low investment grade ratings to a US dollar bond issue of ONGC Videsh Ltd to fund its acquisition of 15 per cent stake in Russia’s Vankor oilfield. “Moody’s Investors Service has assigned a Baa2 rating to the proposed foreign currency senior unsecured bonds to be issued by ONGC Videsh Vankorneft Pte Ltd (OVVPL), a wholly owned subsidiary of Oil and Natural Gas Corporation (ONGC),” the rating agency said in a statement. S&P Global Ratings assigned its ‘BBB-‘ long-term issue rating. The state-owned firm will “unconditionally and irrevocably guarantee the notes,” it said. “We consider the proposed notes as ONGC’s debt obligation because the notes are issued by a 100 per cent-owned subsidiary set up to raise funds for ONGC.” ONGC Videsh, the overseas arm of ONGC, expects to use the proceeds of the proposed notes to refinance existing bridge loans incurred to acquire a 15 per cent stake. S&P said the rating on ONGC reflects the company’s strong competitive position as one of Asia’s largest oil exploration and production companies with a long reserve life, stable production and good profitability. However, ONGC’s production is concentrated in India, particularly the Mumbai basin, and its expansion outside India is in higher-risk countries, it said adding the company is also exposed to negative government intervention, such as the sharing of oil subsidies. “The restriction of a guarantee to a finite amount is driven by regulations in India, which do not allow open-ended guarantees for obligations of offshore subsidiaries, rather than an actual intention on ONGC’s part to restrict its liability under the bonds,” said Vikas Halan, Moody’s Vice President and Senior Credit Officer. Moody’s said ONGC’s issuer ratings incorporate expectation that the impact of declining oil prices on the company’s cash flows will remain low, as the company. Dmitry Kulikov Authentic Jersey
India’s first quarter oil demand grows at fastest pace in a decade
India’s oil demand in the three months of the financial year that began April 1 grew at the fastest pace for any first quarter period in the past 10 years. The country consumed 48.5 million tons of oil products in the quarter, an increase of 7.8 percent from the same period a year ago, according to the oil ministry’s Petroleum Planning and Analysis Cell. That’s the fastest since the first quarter of the year ended March 2007, when growth was 8.4 percent. Diesel consumption expanded 4.7 percent to 20.1 million tons and gasoline use increased 10 percent to 5.9 million tons. The International Energy Agency expects India to lead the world in oil demand and surpass Japan as the world’s third-largest oil user this year. It will be the fastest-growing crude consumer in the world through 2040, Paris-based IEA estimates, adding 6 million barrels a day of demand, compared with 4.8 million for China. “We have seen acceleration in India’s oil demand as income levels improve and with infrastructure building picking up pace,” said Richard Mallinson, a geopolitical analyst at Energy Aspects. India’s oil demand may grow by 400,000 barrels a day in 2016 and 2017 “faster than any other country,” he said. The growth in consumption has a cyclical element to it with the first quarter being slower than the other three in a year. In the previous three quarters demand climbed at least 11 percent. “Normally, demand is low in the first quarter and picks up post monsoons,” said P. Balasubramanian, director-finance at the country’s second-largest fuel retailer Bharat Petroleum Corp. The four-month rainy season began in June. The country consumed 15.6 million tons of oil products in June, an increase of 6.2 percent from the same month a year earlier. Diesel consumption rose 1.5 percent to 6.4 million tons and gasoline sales climbed 4.4 percent to 1.8 million tons. The monthly growth in diesel sales was the slowest since July 2015 and that in gasoline since November 2014. Dell Curry Authentic Jersey
India to hold two roadshows in Houston to promote bidding
India will promote bidding of 67 discovered small oil fields in two international roadshows here which will be attended by Minister of State for Petroleum and Natural Gas Dharmendra Pradhan. Pradhan will pay an official visit to Houston, known for its oil and gas industries, and Washington between July 13 and 18, during which he will launch the international road show for the 67 DSF in Houston. “The two-day road show in Houston from July 14 will be held to promote the 67 Discovered Small Fields (DSF) Bid Round 2016,” a Petroleum Ministry source here told PTI. Pradhan will also hold meetings with various think-tanks working in hydrocarbon sector both, in Houston and Washington. He will also visit technology centres working in oil and gas spheres, petroleum ministry said in a statement. Pradhan will be accompanied by K D Tripathi, Secretary, Minister of Petroleum and Natural Gas, Senior officers and Chairman and Managing Directors of leading Oil companies ONGC, IOCL, GAIL, HPCL and MD BPRL. During the Interactive meet scheduled to take place on July 14 and 15, the delegation of senior government officials and leaders of Indian oilBSE 0.47 % & gas companies, led by Pradhan will interact with CEO’s of US-based E&P companies, group of Indian scientists from the field of Hydrocarbon research, members of US India Business Council (USIBC) and group of investors. Pradhan will also inaugurate the ‘Data Centre’ in Houston on July 13 which can be accessed by all interested investors to view the technical data related to the small fields being offered under the upcoming bid round. These DSF of the Oil and Natural GasBSE 3.01 % Commission and Oil IndiaBSE 1.67 % could not be monetised during the previous years and are being offered for international bidding now. Bidding will open between July 15 and October 31. The offered fields hold 625 million barrels of oil and gas reserves. Of the 46 small fields, 26 are on land, 18 offshore in shallow water and two in deep water. While 28 discoveries are in the Mumbai offshore, 14 others are in the east coast’s Krishna-Godavari basin. Eventual operators will be issued a single licence for exploration of conventional and non-conventional hydrocarbons and will have the freedom to sell oil and gas at “arms length” market prices. The auction will be under the new Hydrocarbon Exploration and Licensing Policy (HELP) approved in March, based on a revenue-sharing model as opposed to cost-and- output-based norms earlier. Pradhan is also likely to visit Washington on July 18 where he may meet US Secretary of Energy Ernest Jeffrey Moniz to review issues of bilateral hydrocarbon cooperation. Udonis Haslem Womens Jersey
Petrol pump owners seek ‘one nation one rate’ for fuel
Fuel pump owners in the country have demanded ‘one nation one rate’ for petroleum products in order to eliminate disparity in prevailing prices of petrol and diesel. “We are demanding ‘one nation one rate’ for fuel so that there should be no disparity in prices of petrol and diesel in the states. This step will help in controlling prices of this essential commodity,” All India Petroleum Dealers Association President Ajay Bansal said here today. He added that because of different VAT rates prevailing in states, there was a disparity in fuel prices, which vary between 60 paise and Rs 4 per litre in case of diesel and Rs 1 to Rs 7.50 per litre for petrol. Bansal said maximum tax on petrol is levied by Tamil Nadu state, which is about 35 per cent while Goa imposes lowest rate of tax on the commodity. In case of diesel, Haryana charges lowest tax while states like Rajasthan and West Bengal levy 20-24 per cent tax. “We want the prices of fuel which is an essential commodity should be same throughout the country and states should build consensus on the same,” he said. The association, which claims to be a national body representing more than 52,000 petrol pumps in the country has been holding meeting with chief ministers and state finance ministers to convince them to bring parity in retail price of petroleum products. Bansal said: “We also demand that petroleum products be brought under GST to ensure one nation one rate.” But, he said, states are unlikely to agree on the same. Ronnie Lott Womens Jersey
Fuel retailers invite tenders for 20 million litres of biodiesel
State fuel retailers are seeking to purchase 20 million litres of biodiesel from local manufacturers to blend with diesel. Bharat Petroleum (BPCL) has invited tenders on behalf of all three state fuel retailers to procure 20,460 kilo litres of biodiesel, of which 43% would go to Indian Oil Corporation (IOC) and the balance will be almost equally split between Hindustan Petroleum (HPCL) and BPCL. The fuel retailers will mostly require the supply of biodiesel in Andhra Pradesh, and also in Gujarat and Tamil Nadu between July and September. Vendors will have to submit their bids online by July 25, according to the tender document. The contract for the supply of biodiesel shall be awarded on location-wise lowest net delivered cost basis. Vendors have the option to choose a location and offer a quantity that can’t be less than 500 kilo litres nor more than the requirement in that location. Oil companies started procuring biodiesel, produced from vegetable oil or animal fat, last year for blending with diesel. The government has not set any target for blending biodiesel although it has made mandatory for oil companies to use 5% ethanol, produced mainly from sugar and corn, in the petrol they sell. The companies are yet to meet the 5% target. The National Policy on Biofuels had proposed a 20% blending ratio for both biodiesel and ethanol by 2017 but the lack of supply and pricing issues had held back progress on this. Craig Anderson Jersey
Cairn Energy seeks $5.6 billion compensation from India
British explorer Cairn Energy has sought $5.6 billion in compensation from the Indian government for raising a retrospective tax demand of Rs 29,047 crore on 10-year old internal reorganisation of its India unit. In a 160-page ‘Statement of Claim’ filed with an international arbitration panel on June 28, the Edinburgh-based company sought withdrawal of the tax demand and declaring that India has “failed to uphold its obligations” under the UK-India Investment Treaty by not giving its investments in the country “fair and equitable treatment”. It sought $1.05 billion in compensation for the loss of value its 9.8%-shareholding in its erstwhile subsidiary Cairn India suffered following Income Tax (I-T) Department raising the tax demand in January 2014 and attaching the shares. “In the alternative, and should the (arbitration) Tribunal determine not to order India to refrain from enforcing its unlawful tax demand”, Cairn sought to be compensated of breaches of the investment treaty by being paid for the loss of value of its holding in Cairn India as well as interest and penalties, totalling $5.587 billion (Rs 37,400 crore). The total compensation sought is equal to the tax demand raised and the value of Cairn Energy’s 9.8%-shareholding in Cairn India. A three-member arbitration panel headed by Geneva-based arbitrator Laurent Levy began hearing Cairn Energy’s plea against tax demand in May and the company filed its ‘Statement of Claim’ late last month. The Indian government will file its ‘Statement of Defence’ by November and evidential hearing is expected to commence in early 2017, sources said. The I-T Department had in January 2014 slapped a draft tax assessment of Rs 10,247 crore on Cairn Energy on alleged capital gain it made when, in 2006, it transferred its India assets to a new subsidiary, Cairn India and listed the firm. The British firm sold majority stake in Cairn India to Vedanta Resources in 2011 but still holds 9.8% stake in the company, which was attached by I-T Department. This year, a final assessment order was slapped on it that included a Rs 18,800 crore of interest on top of Rs 10,247 crore principal tax amount. In the ‘Statement of Claims’, Cairn said it had an option to list Cairn India on UK stock exchange but decided to go for a local initial public offering (IPO) with a view to “further Indianising” the business. “To accomplish what was to be one of the largest-ever IPOs in the Indian history, however, Cairn had to reorganise its corporate group structure significantly,” it said. It is in this restructuring that the I-T Department says Cairn made capital gains of Rs 24,503.50 crore. If it had known that India would change rules and retrospectively tax, the company would have restructured business differently and listed the firm on UK exchange, it added. Anthony Duclair Authentic Jersey
Piped natural gas for more citizens
Minister of state for petroleum and natural gas Dharmendra Pradhan on Friday said Pune’s gas distribution company Maharashtra Natural Gas Limited (MNGL) has a very important role to play in the smart city project. Speaking to MNGL officials, Pradhan said the piped natural gas (PNG) must be made available to all households in the city and adjoining areas so that residents can avail the facility, which is safe and convenient. “The MNGL has to work hard to spread the eco-friendly fuel network across the city. Pune is a rich city in its heritage and has got immense potential to promote the eco-friendly fuel and natural gas,” he said. MP Anil Shirole assured his full support to the MNGL and said the PNG project will be implemented in the city in a time-bound manner. MNGL’s managing director A M Tambekar felicitated Pradhan. Among other officials who were present at the event included independent director Rajesh Pande and director (commercial) J Vedagiri. In October last year, Pradhan had launched the consumer connect initiative in the city. In November last year, the urban development ministry had asked all states and municipal corporations to supply PNG and CNG stations in smart cities. Pune has been ranked second in the list of 98 smart cities. Petroleum and natural gas authorities have urged the civic bodies to ensure speedy approvals for laying gas distribution pipelines in smart cities. The MNGL is supplying PNG to areas of Prabhat Road, Bhandarkar Road, Kothrud and some areas around Deenanath Mangeshkar hospital, besides areas like Pimple Gurav, Wakad, and Shahunagar. However, many households in Pimple Saudagar have been deprived of gas connections due to delay in permission granted by the PCMC for laying the network. Joel Iyiegbuniwe Authentic Jersey
Gail India tenders to buy 6 LNG cargoes for 2017 delivery
Gail India has launched a tender to buy six liquefied natural gas (LNG) cargoes for delivery in 2017, according to trade sources. The supply is to be purchased based on a link to Brent crude oil prices, one of the sources said. Price-sensitive Indian importers have taken advantage of relatively low LNG prices to bolster purchases and provide additional supply to gas-starved domestic industries. Vincent Rey Jersey
India’s refineries to go capacity deficit by 2030
With increasing domestic consumption of petroleum products, India would run short of its production by 2030, warned Indian Oil Corporation’s (IOC) director of refineries Sanjiv Singh. The country with a refining capacity of 230 million tons (MT), is presently a net exporter of petroleum products. The government is also seeking to ramp up its refining capacity to 300 MT in 15 years. However, Singh told Economic Times that the planned expansion of refineries may not be adequate to meet the growing demand, both domestically and for exports. He pointed out that the country’s surplus capacity too was not as robust. Over the last two years, India’s net export of petroleum products had fallen continuously to hit 32.3 million tons (MT) in fiscal 2016 from 42.6 MT the previous year. Data shows that fall in petroleum product export coincides with growth in domestic consumption. In 2015-16, consumption of petroleum products increased 11 per cent to 183 MT, while the production grew nominally by 4.5 percent. Singh pointed out that the situation should not worry India as there was always the option of importing. However, he highlighted that the opportunity to invest in production ramp up was more lucrative as the country is slated to achieve a 7.6 percent growth this year, and would continue to put up good performance going ahead. “Nothing is going to drastically change till 2030. Oil and gas consumption is going to grow even till 2040,” he said on the impact of green fuels on oil and gas business. However, disruptive technologies cannot be discounted, he cautioned. The official noted that given India’s strength in refining, it may not be well suited to import refined oil products as much as importing the crude oil itself. “The crude market is very wide but the products are available only with a few companies,” he told ET. IOC, Bharat Petroleum, Hindustan Petroleum and many private refiners like Essar and Reliance Oil are all expanding their production capacity. However, the problem of environmental damage from refining remains, unless clean development mechanisms are invented and implemented. Oil products basically include petrol, diesel, naphtha, ATF and feedstock for petrochemical plants and other industries. In 2014, India was the fifth largest refiner in the world after the U.S., China, Russia and Japan. Matthew Slater Jersey
D Rajkumar New Chief Of Bharat Petroleum; Utpal Bora To Head Oil India
Technocrats D Rajkumar and Utpal Bora were on Monday appointed as Chairman and Managing Director (CMD) of Bharat Petroleum Corporation Ltd (BPCL) and Oil India Ltd, respectively. Mr Rajkumar is, at present, working as Managing Director of Bharat Petro Resources Ltd, a unit of BPCL focused on exploration and production. Mr Bora is Executive Director in Oil and Natural Gas Corporation (ONGC) Limited. They have been appointed to the posts for five-year term, an order issued by the Department of Personnel and Training (DoPT) said. Mr Rajkumar will take over the charge on or after October 1, 2016 after retirement of BPCL’s current chief S Varadarajan in September. BPCL is a state refiner and retailer. Senior IAS officers Anil Kumar Jain and Ravi Kapoor were among the 10 contenders for the top job at Oil India Ltd, the country’s second biggest state-owned oil and gas explorer. Mr Bora was selected on the recommendation of a three-member search-cum-selection Committee, headed by Cabinet Secretary P K Sinha, officials said. Matt Stajan Jersey