Petrobras’ Indian partners fight delay in troubled Brazil oil project
Petrobras has warned its Indian partners in a huge offshore project to not expect oil from the site until 2022, according to sources, a fresh sign of how low oil prices and the state-owned company’s corruption scandal and mountain of debt are dragging on Brazil’s energy industry. The previously unreported, four-year delay in the “super-giant” discovery off the northeastern coast of the Brazilian state of Sergipe is forcing India’s Oil and Natural Gas Corp and IBV Brasil Petroleo Ltd to seek ways to speed up the Petrobras-led project which has cost them $2.1 billion with no return in sight. The delay and pressure from the Indian partners is just one of many challenges for new Petrobras Chief Executive Pedro Parente, named by Brazil’s interim-President Michel Temer in late May amid an ongoing financial crisis. In the face of a massive bribery and kickback scandal and Petrobras’ $126 billion of debt, Parente has pledged to run the company in a more market-friendly way but has declined to comment on individual projects. He has also promised a revamped investment plan by the end of October – though it is unclear whether it will address the Sergipe offshore standoff. In April, Petrobras told IBV, a 50-50 joint venture between state-owned Bharat Petroleum Corp and privately held Videocon Industries Inc, that there will be no oil output from Sergipe “until at least 2022,” an IBV executive told Reuters. A year ago, Petrobras’ promised first oil by 2018. Hoping to speed up development, IBV told Reuters it has offered to arrange up to $10 billion in loans from Indian and other international development banks to finance the Sergipe development – Brazil’s biggest oil prospect outside the prolific subsalt region near Rio de Janeiro where Brazil is pinning hopes of energy independence. “It’s a common and simple loan structure, if Petrobras is willing to provide future output as collateral, it won’t have to pay a penny until oil starts flowing, something we could can probably do by 2020,” the IBV executive said. “But we get the feeling that Petrobras has yet to accept its new, more restricted circumstances,” the executive added. Petrobras told Reuters it has yet to receive a formal proposal from its Indian partners to finance the project. Alshon Jeffery Womens Jersey
IOC lines up Rs 400 billion to take refining capacity beyond 100 million tons
Indian Oil Corporation (IOC) will invest Rs 400 billion to expand its refining capacity to over 100 million tons by 2022 as the nation’s largest oil firm takes the lead to add capacity to meet India’s rising energy needs. “As we see, (fuel) demand is expected to grow at 3.5-4 per cent CAGR and we need to build capacities to meet that requirement,” IOC Director (Refineries) Sanjiv Singh told PTI. International Energy Agency’s World Energy Outlook projects 4 per cent CAGR growth in India’s fuel demand to 348 mt by 2030, from 184 mt in 2015-16. BP projects demand to be 335 mt while EIA has pegged it at 294 mt, which translates into a CAGR of 3 per cent. India has a refining capacity of 232.06 mt. “All the projections clearly show that the demand will grow and unless we start investing now, we will lag,” he said. IOC will expand its refining capacity to 104.55 mt by 2022 from the current 80.7 mt per annum with an investment of about Rs 400 billion, he said. It is looking to scale up its Koyali refinery in Gujarat to 18 mt from 13.7 mt while capacity of the Panipat refinery in Haryana will be raised by a quarter to 20.2 mt from the current 15 mt. A 3-mtpa capacity addition each is planned for Uttar Pradesh’s Mathura and Bihar’s Barauni refineries, which will take their capacity to 11 mt and 9 mt, respectively. The recently-commissioned 15-mtpa Paradip refinery in Odisha will see a capacity addition of 5 mt while about 3 mt will be added in IOC’s Digboi and Bongaigaon refineries in the North-East, he said. Other state refiners too have planned capacity addition to meet rising demand. Bharat Petroleum Corp (BPCL) is looking to ramp up capacity to 53 mt, from 30.5 mt currently, by adding 1.6 mt to its Mumbai refinery and another 6 mt to the Kochi unit. There is a plan to ramp up capacity of Bina refinery in Madhya Pradesh by 9 mt, to 15 mt, while Numaligarh’s will go up to 9 mt, from 3 mt. Hindustan Petroleum Corp Ltd (HPCL) also plans to expand its Mumbai refinery to 8.2 mt from 6.5 mt and that of Vizag unit to 15 mt from 8.3 mt. While its Bhatinda refinery’s capacity will go up to 11.2 mt from 9 mt, it has plans to set up a 15-mt unit in Vizag in Andhra Pradesh and another 9-mt refinery at Barmer in Rajasthan. As for the Mangalore refinery, it is chalking up plans to increase capacity to up to 21 mt, from the current 15 mt. Derrick Henry Jersey
RIL gets green nod for Rs 8 billion drilling project in Tamil Nadu
Reliance Industries has received green nod for drilling 8 additional exploratory wells to ascertain the reservoir capacity and commercial viability of hydrocarbons off the coast of Tamil Nadu at a project cost of Rs 8 billion. The company has been awarded exploratory rights for hydrocarbons prospecting in the offshore block DY-III-D5 under the New Exploration Licensing Policy-III. RIL has already been given the environment clearance to drill 11 exploratory wells in this block. As on date, Reliance Industries Ltd has drilled nine wells and discovered hydrocarbons in three wells. Since seismic data and the drilling campaign shows presence of hydrocarbons in the block, RIL is planning to carry out 8 additional exploratory well drilling to establish the reservoir capacity. “Based on the recommendation of the Expert Appraisal Committee (EAC), the Environment Ministry on June 30 gave environment clearance for the RIL’s exploratory drilling project in Tamil Nadu,” a senior government official said. The clearance to the Rs 8 billion project has been given subject to certain conditions, the official added. Among key conditions specified, RIL has been asked to ensure gas produced during the testing should be flared with appropriate flaring booms. It should also ensure that there is no impact on flora and fauna due to drilling of wells in the offshore sea. It should undertake conservation measures to protect the marine animals/biota in the region. The company should monitor the petroleum hydrocarbons and heavy metals concentration in the marine fish species regularly and submit report to the government. Among others, the Panel suggested that all the hazardous waste generated at the rig/offshore facility should be properly treated, transported to on shore and disposed of in accordance with the norms. The company has also been asked to take permission from the Shipping Ministry for commencement of the drilling operations. Reliance forayed into the exploration and production business by partnering British Gas in an unincorporated joint venture in Panna Mukta and Mid and South Tapti blocks, where it holds 30 per cent stake. Besides Panna Mukta and Tapti blocks, their domestic portfolio comprises of five conventional oil and gas blocks in Krishna Godavari, Mahanadi, Cauvery Palar, Gujarat Saurashtra and Cambay Basin and two Coal Bed Methane blocks in Sohagpur East and West in Madhya Pradesh. The company also has blocks overseas. Nikita Kucherov Womens Jersey
India demand surge sucks up LNG otherwise meant for Europe
India’s burgeoning demand for liquefied natural gas is dictating how many tankers make it to Europe, the world’s dumping ground for the fuel. LNG imports to India jumped 43 percent in May from a year earlier, a contrast to western Europe where shipments have stagnated over the past three months. The world’s second-most populous nation is expected to double its LNG intake over the next four years, according to energy consultants Wood Mackenzie Ltd. India overtook South Korea as the second-biggest buyer of spot and short-term LNG cargoes after prices crashed about 65 percent in almost two years, spurring demand for the cleaner fuel from fertilizer producers to power plants. For a supplier, having a closer market helps. It takes three days to ship LNG to western India from Qatar, the biggest producer of the fuel, compared with two weeks to get it to the U.K. where prices are lower. “India needs to be full before you start getting LNG imports in Europe going up,” Noel Tomnay, vice president of global gas and LNG research at Wood Mackenzie, said in an interview in London. “We haven’t seen a significant uptick in European LNG imports yet. What we have seen is a significant uptick in India.” The nation gets the fuel from Qatar at about $5 per million British thermal units, according to Petronet LNG Ltd., India’s biggest importer. That compares with $4.37 on average at Britain’s National Balancing Point trading hub in the second quarter, data from the ICE Futures Europe exchange in London show. “The NBP is below the western Indian market price, and that should gravitate the spot cargoes toward India,” Prabhat Singh, the chief executive officer of Petronet, said in an interview in New Delhi on June 30. “India is the place for world LNG to come if we handle the market well.” India’s imports of cargoes under contracts with duration of four years or less rose 45 percent to 9.7 million tons in 2015, according to the International Group of LNG Importers. The country imported 14.6 million tons of LNG last year, little changed from a year earlier, according to the group. In May, the nation purchased a total of 2.08 billion cubic meters of LNG, or 1.57 million tons, according to provisional data from the Oil Ministry’s Petroleum Planning & Analysis Cell. That compares with 3 billion cubic meters imported into western Europe, a figure that’s slated to fall to 1.25 billion cubic meters in June, according to consultants Energy Aspects Ltd. Western Europe is poised to take a bigger share of LNG imports “over the coming quarters” thanks to the region’s liquid trading hubs capable of absorbing excess LNG from the global markets, according to Fitch Ratings Ltd.’s BMI Research unit. Global supply is set to soar from the second half of this year as plants from the U.S. to Australia and Angola increase production, pressuring prices, BMI said in a June 30 research note. Increased deliveries have stretched India’s existing infrastructure. The Dahej terminal this year is running at an estimated 111 percent of its designed nameplate capacity and will be operating at 120 percent over the next six months, according to Petronet, which operates the facility. The company plans to complete an expansion of the terminal by September. India’s LNG price is forecast to fall to $4.8 per million Btu on average this year and $4.6 in 2017, down from $7.5 last year, according to Energy Aspects. “We have seen demand elasticity in India and it’s starting to stretch regas capacity,” said WoodMac’s Tomnay. “It is interesting to see how tested India will be as Asia’s natural sink.” Kris Versteeg Jersey
Petronet chief wants oil, gas firms to jointly acquire assets abroad
ndian oil companies must come together to form a consortium and jointly scout for acquisition of hydrocarbon assets abroad, apart from setting up liquefied natural gas (LNG) terminals, says Prabhat Singh, chief executive of Petronet LNG, the government-owned natural gas importer. Apart from the latter, the consortium could comprise Oil and Natural Gas Corporation, Oil India, gas transmission utility GAIL and Engineers India, he said during a conference organised by the PHD Chamber of Commerce and Industry. “The consortium has been conceived by Petronet LNG at a time the company expects the prevailing scenario of low oil and gas prices to stay for another five years. To thrive in such circumstances, the consortium approach of national oil companies would be an ideal situation to acquire oil and gas, including terminal acreages, and assets overseas, including India,” Singh said. The new model can involve floating either a consortium or a Special Purpose Vehicle that will scout for opportunities abroad, including in Bangladesh and Sri Lanka. He said the proposal had already been sent to the petroleum ministry, which has agreed in principle. “The idea has been briefly floated and discussed and its conclusiveness should follow, as India would be bidding to acquire gas properties and to build LNG terminals in Bangladesh and Sri Lanka. For which, if India proceeds with collective approach, it would establish an edge over others,” Singh said. He added the approach could also be used to build domestic oil storages. Petronet, he revealed, had also proposed to the Lt Governor of the Andaman and Nicobar Islands to convert the fossil fuel-led economy of the Union Territory into a natural gas-driven one. Singh gave no details. Anthony Castonzo Womens Jersey
Petronet targets to market 1.5 mt LNG via road
Petronet LNG, India’s biggest importer of liquefied natural gas, targets to sell as much as 1.5 million tonne (mt) of the fuel annually by transporting it via trucks to customers not connected by pipelines, Prabhat Singh, managing director and CEO, told FE. “Our target is that in the next three years, we want to create a market of 1.5 mt of LNG through this route (road). The trucks could load at any terminal,” said Singh, who served as director (marketing) of GAIL (India) prior to Petronet. The strategy behind this move is to replace liquid fuel use by the trucks and small scale industries. Currently, Petronet operates two terminals – 10 million tonnes per annum (mtpa) at Dahej in Gujarat and partly a 5 mtpa terminal at Kochi in Kerala. The Petronet CEO said that nearly 70 mt of diesel is consumed annually in India. Of this, about 20 mt is utilised by long distance heavy duty trucks. Pointing out that there is a huge arbitrage between the diesel and LNG price — atleast $5 including all taxes — an LNG market could be created to substitute diesel. “The country’s LNG demand could double just by replacing one liquid fuel. That is the capacity,” he explained. Petronet is in talks with Tata Motors to buy about 100 trucks, which the gas importer would outsource to fleet owners for operating them. “The market is huge,” said Singh, adding that his firm could cater to mere 1-2 mt. This means that other gas marketing firms such as GAIL and IOC too have a fair chance to share a pie once the concept of transporting LNG via roads is established in India. “We have spoken to regulators and work is going on a fast pace. These trucks will run on LNG. For 1 mt of LNG, there is a need for more than 30,000 trucks. If we cater to 10,000 trucks, we would be able to utilise 0.1 million tonne,” Singh explained. Inititally, Petronet would deploy the tucks in Kerala – Kochi to Mangalore. This is primarily because its five million tonnes per annum re-gassification terminal at Kochi remains under utilised at mere 5% capacity due to lack of evacuation route. Gradually, it would introduce the business model in routes from Mumbai to Delhi and Mundra to Ahmedabad. Nick Chubb Womens Jersey
Ruias plan to sell another 25% stake in Essar Oil
After stitching a deal to sell 49 per cent stake in Essar Oil % to Russia’s Rosneft, the Ruia family is looking at selling another 25 per cent stake in the company to an oil trader or a strategic investor like Saudi Aramco. The sale of 74 per cent stake (49 per cent to Rosneft and 25 per cent some other investor) will help bring down Group debt by half to about Rs 46,000 crore from current Rs 88,000 crore, sources said. The promoters see an enterprise value of Essar Oil of USD 10 billion. A preliminary deal for sale of 49 per cent in Essar Oil to Rosneft was signed between the companies in July 2015. In March 2016, they signed a non-binding agreement. No valuation was provided for the deal at that time. Rosneft, the world’s top listed oil producer, will get a hold in India’s second biggest oil refinery as well as its 2,400 petrol pumps that will more than double to 5,000 in two years. The Russian firm will also supply 10 million tonnes a year of crude to Essar Oil’s 20 million tonnes per annum Vadinar refinery in Gujarat for 10 years. The deal, however, does not include Essar Oil’s upstream portfolio comprising of five CBM blocks, holding up to 10 trillion cubic feet of gas resource. Rosneft is majority owned by the Russian government with BP Plc holding under a 20 per cent stake and public shareholding at around 10 per cent. The deal between Essar Oil and Rosneft is now in its final stages with the binding terms of the contract expected to be signed shortly, sources said. Essar has commenced discussions with more than one interested foreign investors for selling upto 25 per cent additional equity, they said, While the Rosneft deal is likely to conclude next month, sale of additional 25 per cent equity is expected to conclude by August. Sources said Ruias are leveraging the value created in an asset by monetising it. The promoters had recently paid Rs 3,347 crore to minority shareholders of Essar Oil to get the company delisted. This was the largest payout to public shareholders by any delisting company in India. The delisting had valued the company at about Rs 38,000 crore. Rosneft deal is the biggest private sector investment from Russia to be made in India. A group of Indian state-owned oil companies including ONGC Videsh Ltd, Oil India Ltd and Indian Oil Corp (IOC) are investing USD 5-6 billion in taking substantial stake in two oilfields operated by Rosneft in Russia. Henri Richard Womens Jersey
Honeywell unit eyes India’s $4.3 billion effort to clean air with cleaner fuels
Refining technology companies HoneywellBSE 0.49 % UOP and Technip SA see growth opportunities in India as oil demand booms and the government seeks cleaner fuels within four years to tackle air pollution. France’s Technip projects as much as 20 per cent annual sales growth in Asia’s third-largest economy, while UOP India Pvt., a unit of New Jersey-based Honeywell International Inc., expects an increase of at least 15 per cent. “That’s exciting for us,” UOP India’s Managing Director Steven C. Gimre said in an interview near New Delhi on Monday. “We’re in the process of bidding on some projects that are coming up, and we’ve also signed up some projects.” Technip India Ltd.’s Senior Vice President Shekhar Balvalli said India is fast-tracking improvements at state-run refiners so that petrol and diesel comply with a local equivalent of European Euro 6 emission standards by April 2020. While refiners plan a 288-billion-rupee ($4.3-billion) outlay on upgrades, the timeline is aggressive in a nation where infrastructure deadlines have slipped. “From the context of time, it’s very difficult unless very professionally managed,” said Deepak Mahurkar, leader for the oil and gas team at PricewaterhouseCoopers in India. “They are very, very complicated projects.” Gimre said UOP is tying up with engineers such as Larsen & Toubro Ltd. to prefabricate the refinery units that state-run companies need by 2020, a model that he argued allows for a speedier shift to making cleaner fuel. Surpass Japan India is expected to surpass Japan as the world’s third-largest oil user this year and will be the fastest-growing crude consumer in the world through 2040, the Paris-based International Energy Agency estimates. The nation’s refineries plan to add over 55 million metric tons of annual capacity at their existing refineries by 2020, according to the annual reports and websites of Indian OilBSE 7.35 % Corp., Bharat PetroleumBSE 2.06 % Corp. and Hindustan Petroleum Corp. The government has also announced a plan to build a 60-million-metric-ton-a-year refinery on the west coast. As the same time, officials are grappling with some of the worst air pollution in the world, stoked by everything from tailpipe emissions to crop burning and smoke-stack power plants. “We’re seeing a big market on the refining side due to upcoming opportunities for BS-VI fuel,” Balvalli said, referring to the Bharat Stage VI emissions standards. The Indian government brought forward the introduction of BS-VI to 2020 from 2024 on increasing concern about the high levels of toxic PM2.5 particles in the air. The benchmark seeks to reduce nitrous oxide and particulate matter such as sulphur.
Kirloskar partners with Gulf Petrochem to launch K-Oil
UAE-based Gulf Petrochem has partnered with a subsidiary of Indian conglomerate Kirloskar Group to launch a specialised diesel engine oil in the Middle East and African markets. The engine oil will be launched following an extensive six-month engine trial and product evaluation and will build upon strong foundations in India, where K-Oil has been servicing engines, spare parts and gensets for over 15 years. Gulf Petrochem announced the partnership with Kirloskar Oil Engines Ltd (KOEL), part of India’s engineering conglomerate Kirloskar Group, to launch K-Oil into the Middle East and African markets. “Following a rigorous testing at Kirloskar R&D in Pune, the robust design and proven performance in extreme conditions ensures the final product will be suitable for all types of diesel engines,” a joint statement released by the two companies here said. Gulf Petrochem Group specialises in oil trading and bunkering, oil refining, grease manufacturing, oil storage terminals, bitumen manufacturing, and shipping and logistics. “This is a great opportunity to expand into the Middle East & African market and compliments KOEL as part of our value addition and portfolio enhancement. What makes us particularly positive about the move is the reputation and expertise of our partner, Gulf Petrochem, and the quality of the product, which is designed to withstand demanding conditions such as those in the region. We believe the demand here will be high,” KOEL Managing Director Rahul Kirloskar, said. Sudhir Goyel, Managing Director of Gulf Petrochem, said: “Due to the extreme weather conditions we face in the Middle East and Africa, these products are ideally suited to the growing market here and the fact it is designed by an engine manufacturer will only strengthen its appeal”. James Van Riemsdyk Womens Jersey
Indian, 1 Chinese firms in race for GAIL project
Six firms, including one from China, are in the race to build the much-touted Kochi-Kootanad-Managalore-Bengaluru pipeline project of GAIL (India). The pipeline would give a lease of life to Petronet LNG’s 5 million ton per annum re-gasification terminal at Kochi, which remained underutilised at a mere 5% capacity, due to the lack of an evacuation route. Sources told FE that for the Kochi–Kootanad–Managalore-Bengaluru pipeline project, the countdown has started as bids were invited for two sections of the stretches of 220 km covering five districts of Kerala — Ernakulam, Thrissur, Palakad, Mallapuram, and Kozhikode. “The estimated cost for this stretch is about Rs 3 billion, of which six bids have been received for the 90-km section from Punj Lloyd (PLL), Corrtech, Kalptaru Power Transmission (KPTL), JSIW, IL&FS and China Petroleum Bureau (CPP), while for the other section of 130-km PLL, KPTL, JSIW, IL&FS and CPP have submitted bids,” a senior official privy to the development told FE. “The bids are being evaluated and the job will be awarded in August 2016, and the work will commence in September-October this year,” the official added. In January 2014, then Prime Minister Manmohan Singh unveiled a Rs 4,500-crore LNG terminal at Puthuvype in Kochi set up by Petronet LNG. The terminal became idle due to the non-laying of the pipeline by GAIL due to local protests. The pipeline would raise the utilisation of Petronet’s terminal to at least 50%, in addition to making natural gas available to Kerala and parts of Karnataka. Land acquisition issues and opposition by farmers and the Tamil Nadu government had disrupted a key section of GAIL’s ambitious Rs 3,400-crore Kochi-Kuttanad-Bengaluru-Mangalore project, which is passing through farmland in seven districts of the state. Josh Ferguson Authentic Jersey