India, second largest buyer of Iranian crude
Iran’s crude oil exports to India in March 2016 surges from 290 to 505 thousand barrels per day turning the South Asian country into Iran’s second largest oil customer. During sanction years, India purchased about 20 per cent of Iran’s oil exports equal to an average of 200 thousand barrels per day. Following the implementation of the Joint Comprehensive Plan of Action (JCPOA), India increased its oil imports from Iran as Indian refineries have made new oil purchase proposals. The surge in oil exports marks a significant achievement for the Iranian government in development of activities in regional markets after the removal of sanctions. In March 2016, India’s Essar Oil refinery ranked first in importing crude oil from Iran while Mangalore Refinery and Petrochemicals Limited (MRPL) stood in the second place. Also after a six-year hiatus, Reliance Petroleum Limited of India purchased a shipment of oil condensate produced at Iran’s Forouzan oilfield. On the basis of a report released by Iranian Ministry of Oil’s Office for OPEC affairs and relations with energy organizations, the average volume of India’s imports from Iran reached 4.35 million barrels per day in the first three months of the year 2016 indicating a 500-thosand increase as compared to same period a year earlier. Iran remains as the third supplier of India’s oil demands following Saudi Arabia and Iraq. The South Asian country’s imports from Iran reach a total of 505 thousand barrels in March revealing a 290-thousad growth as compared to February, 2016. Currently, Iran ranks third among oil exporters to India while at the beginning of 2016 the country only stood in the sixth place. Recently, Reuters touched upon Iran’s oil exports to India reporting “India’s crude oil imports from Iran have reached more than 500 thousand barrels per day marking the highest level in the past five years. Shea Theodore Jersey
Government trying to bring in startups for open bidding of small oil and gas fields
Petroleum Minister Dharmendra Pradhan said that in the open bidding of small and marginal oil and gas fields which will start next month, government is trying to bring in start-ups to join the process. Pradhan, who was in GUWAHATI on Saturday, told et that government is working on if the net worth clause for start-ups may be reworked and instead bank guarantee can be taken for the start-ups. ‘Already we have done away with experience clause for the Discovered small fields bid round.” The minister said that bidding will take place for 67 oilfields, out of which 12 are in Northeast India. In these fields there is resources worth Rs 700 billion. “We have simplified the bidding process so that start-ups with new technology can come in. It was start-ups will propelled the growth of Shale gas sector in US.” Pradhan added, “Local entrepreneurs can participate in a big way and make use of IIT Guwahati.” Guwahati roadshow was the second roadshow after Mumbai. The minister said, “By July 15 bidding will start and the whole process will be over by December this year.” According to the ministry Assam contributes 10 per cent of total crude oil and natural gas. Only 44 per cent of the resources has been tapped leaving an opportunity to establish and develop the remaining 56 per cent resource base. The roadshow in Guwahati was attended by 200 participants including participation of industry leaders from Jubilant, GeoEnpro, Nippon Power, Eagle offshore, Jaybee energy, SKG Global, ONGC, OIL and BPCL. The discovered small fields bid round offers 46 contract areas which are estimated to hold in place oil and oil equivalent volumes of 86 million metric tons. The minister said that bid round makes a shift from the earlier production sharing contract model to simpler and easier revenue sharing contract model. Peasant leader organisation Krishak Mukti Sangram Samiti opposed the FDI in oil sector. Protestors gathered outside a hotel where the roadshow was going on protesting against including 12 fields from Northeast India in the bidding. Chad Henne Jersey
Top India LNG Buyer Said to Plan Terminal Expansion by September
Petronet LNG Ltd., India’s biggest buyer of liquefied natural gas, will complete expanding its import terminal on the nation’s west coast by September, boosting shipments to the facility, according to three officials with knowledge of the matter. The capacity of the Dahej terminal, the nation’s largest LNG import and regasification plant, in India’s Gujarat state will be boosted by 50 percent to 15 million metric tons per year, said the people, who asked not to be identified because the information isn’t public. The expansion will lead to additional LNG imports of at least 1 million tons in the September to December period, they said. While Petronet uses the terminal for its own imports, it also allows other companies to lease the facility for taking delivery of their LNG purchases. The expansion will allow Indian buyers to ship additional volumes from overseas, taking advantage of a global glut that’s cut prices for the fuel by two-thirds since September 2014. Higher processing will increase Petronet’s income from regasification, boosting profits. Petronet Chief Executive Officer Prabhat Singh didn’t answer two calls to his mobile phone seeking comment. Surging Imports The New Delhi-based company has already leased out about half the expanded capacity to other energy companies such as Gail India Ltd., Indian Oil Corp. and Bharat Petroleum Corp. These firms import LNG to Dahej and pay Petronet regasification fees. India’s LNG imports have more than doubled in the past seven years as domestic gas supplies dried up. The nation purchased 2.08 million tons of the super-cooled fuel last month, a 43 percent increase from a year earlier, according to provisional data from the oil ministry’s Petroleum Planning & Analysis Cell. Jermaine Kearse Authentic Jersey
IOC to increase its capex to Rs 200 billion a year over next 5-7 years
Public sector oil major Indian Oil Corporation (IOC) said that it would increase its investment every year from the current Rs 140-150 billion to around Rs 200 billion over the next 5-7 years. The proposed investment would be towards brown and greenfield expansions. IOC also confirmed its participation in two key projects including a Rs 800 billion mega refinery in Maharastra and revival of three fertiliser plants in the country along with other PSUs at a cost of around Rs 150 billion. IOC’s Director (Finance) A K Sharma said that over the next 5-7 years the company would invest around Rs 1200 billion, of which around Rs 300-350 billion would be in petrochemical. Petrochemical is doing well and now contributes nearly 30% of IOC’s EBITDA (Earnings before interest, taxes, depreciation and amortisation), he noted. This is one of the areas IOC has been betting big to address cyclical risks. The other area, which IOC is betting big is LNG. IOC’s new Rs 50 billion LNG terminal at Ennore, near Chennai would go on stream by 2018 and the company is still looking for strategic partner, said Sharma. He was bullish about company’s performance during the upcoming quarters since the crude oil price has established. Inventory loss came down from around Rs 150 billion in 2014-15 to Rs 90 billion in 2015-16 and during the current quarter company is not expecting any loss. While the company is going for brown field expansions, IOC also confirmed that along with other oil PSUs it is looking at setting up a mega project with 60 million tonnes capacity. Sharma said the Maharastra Government has offered land and IOC is evaluating it. The refinery would require around 5,000 acres of land and the state government has offered the land in the Konkan coast. The project will be implemented through a JV and broad understanding on ownership has been put in place among the oil companies. IOC will have major chunk on the project, which will have initial capacity of 40 MTPA and would cost around Rs 700-800 billion. “Such project is required in the country to meet the future demand,” said Sharma. The oil company is also getting into fertiliser, though it is not its core area or adjoining business, IOC was asked by the Centre to participate in reviving three fertiliser plants in the country. IOC along with NTPC, Coal India, Fertiliser Corporation of India (FCI) and HFL is planning to revive the three defunct fertiliser units at Gorakhpur, Sindri and Barauni. Total project is estimated to be around Rs 150 billion and equity portion from these PSUs would be around Rs 50 billion. “Yes it is not our area, but Government wants us to help to revive the plant for the sake of country’s economy and want to capitalise IOC’s management skills,” said Sharma. Their will not be a major pressure because of equity commitment for IOC, since it is would be very minimal. All the investments would be funded through debt and internal accruals mainly, said Sharma adding that the company also got over Rs 100 billion worth of bonds and value of its investment is around Rs 300 billion. IOC also said that it is open for acquisitions and it is also right time to look for assets. The company to invest $1.2 billion as its shares to acquire Rosneft Oil Company (Rosneft). IOC along with Oil India (OIL) and Bharat Petro Resources (BPRL), a 100% subsidiary of Bharat Petroleum Corporation (BPCL), have signed definitive agreement to acquire upto 23.9% shares from Rosneft Oil Company (Rosneft), NOC of Russia in JSC Vankorneft, a company organised under the law of Russian Federation which is the owner of Vankor and North Vankor Field licenses. Sharma said the company has reported asset valuation loss in Canada (writes off around Rs 6 billion and Venezuela since they are trapped in oil price. Brett Hundley Jersey
Mahanagar Gas IPO does not move the needle much for GAIL
The GAIL (India) Ltd stock has underperformed the Sensex in the last one month. True, investors expect Mahanagar Gas Ltd’s initial share sale to unlock value for GAIL, which is selling 12.5% stake in the city gas distributor. However, in the overall scheme of things it may not amount to much. For perspective—at the higher end of the price band of Rs.380-421 per share, GAIL will fetch about Rs.520 crore through the offer for sale while its market capitalization on Thursday was Rs.47,618 crore. Also, at Rs.421 per share, GAIL’s remaining 32.5% stake is valued at around Rs.1,350 crore, hardly moving the needle. Nevertheless, investors have reason to rejoice. So far this fiscal year, the share price has increased 10% from a closing low of Rs.340 at the beginning of April. A recovery in its petrochemicals business is on the cards. Overall, fiscal year 2016 was a challenging one. Stand-alone pre-tax and one-time earnings declined by a fourth from a year earlier to Rs.3,173 crore. The petrochemicals business has been a major source of pain what with the segment posting earnings before interest and taxes (Ebit) loss of Rs.807 crore in FY16. Performance was impacted on account of lower sales volume and weaker prices. However, the business is expected to swing to profit this year. The re-negotiation of RasGas long-term LNG (liquefied natural gas) contract at lower prices is expected to reduce raw material costs, helping petrochemicals performance. GAIL has commissioned its petrochemical plant expansion in Pata (Uttar Pradesh) with capacity of 0.4 million tonnes per annum or MPTA (taking total capacity to 0.81 MPTA). Accordingly, the segment should also benefit from a gradual ramp up in volume. Further, if crude oil prices continue to improve, an improvement in petrochemicals prices can be expected. Investors must also keep a tab on tariff hikes. Motilal Oswal Securties Ltd informs that GAIL has implemented KG basin pipeline tariff from 1 April and final tariff orders for other pipelines are awaited. The only worry, however, is that GAIL’s share currently trades at about 14 times estimated earnings for this fiscal year, suggesting a good portion of the optimism is already in the price. Therefore, meaningful upsides could be limited in the near-term. In the last one year, the GAIL stock has shed 7% compared with a 2.9% decline in the benchmark Sensex. Saquon Barkley Authentic Jersey
Pilot Programme to run two wheelers on CNG launched by Shri Dharmendra Pradhan & Shri Prakash Javadekar
In a major step to curb rising air pollution in Indian cities, Minister of State for Petroleum and Natural Gas (I/C) Shri Dharmendra Pradhan and Minister of State (I/C) for Environment, Forests & Climate Change Shri Prakash Javadekar launched first of its kind Pilot Programme in the country to run two wheelers on Compressed Natural Gas (CNG) in New Delhi today. Smt. Meenakshi Lekhi, Member of Parliament, was also present on the occasion. Welcoming the initiative, Shri Pradhan said that the Government is pro-actively striving to promote clean fuel in the country. He said that under the visionary leadership of Prime Minister Shri Narendra Modi, the Government is promoting the use of gas in the country, thereby providing a better lifestyle to the people and also fulfilling the COP-21 commitments to curb pollution. Shri Pradhan said that the Gas share in the country’s fuel basket is just 7% compared to world average of around 24%. Describing the pilot programme to run two wheelers on CNG as historic, he said that after evaluating its experience, it will be expanded very fast. Expressing the Government’s commitment to Clean Delhi, the Minister said that he has already written to Delhi Government to make Bawana power plant fully operational on LNG so that cheaper and clean power is made available to residents of Delhi, but no satisfactory reply has been received. He said that 350 MW Badarpur Thermal power plant in the capital is making several times more pollution than all the vehicles of Delhi put together. Speaking on the occasion, Shri Prakash Javadekar said that the Government is fully committed to control pollution in the country, and for this purpose, there will be a jump from Euro-IV type fuel to Euro-VI by 2020. He said that Environment Ministry will fully support the endeavours to promote clean fuel, including Gas. The Minister said that the launch of pilot phase of the project for CNG kit in two-wheelers will have a far-reaching implication in reducing pollution. Outlining the steps taken by the government, Shri Javadekar said that steps such as cess of Rs. 400 per tonne on coal, introduction of E-rickshaws and providing subsidy to electric/hybrid cars, show the urgency and intention of the government to fight pollution. Mrs Meenakshi Lekhi congratulated the Ministry of Petroleum and Natural Gas for initiating the welfare measures. She said that pilot project is a sign of growing India-Iran cooperation, as the Iranian kits have been used for retrofitment. Being implemented by Indraprastha Gas Limited (IGL) and one of its parent company, GAIL (India) Limited, the Pilot Programme involves 50 CNG retrofitted two wheelers. Of these, the first batch of ten CNG retrofitted two wheelers were flagged off by the dignitaries today. The introduction of CNG in two wheeler segment has the capacity to revolutionize the fight against air pollution in the country and especially in the metros like Delhi, where two wheelers contribute a major portion in the vehicular emissions, according to several studies. The ‘Hawa Badlo’ movement is a people’s initiative to fight air pollution which is supported by GAIL and city gas distribution companies. As part of the movement, a number of awareness drives have been carried out regarding the fight against air pollution. ‘Hawa Badlo’ also supports research initiatives in this regard, of which the CNG retrofitted two wheeler programme is a part. The scooters are being retrofitted with CNG kit manufactured by M/s Ituk Manufacturing India Pvt. Ltd. The type approval of the CNG kit has been taken from Automotive Research Association of India (ARAI) as well as Transport Department, Govt. of NCT of Delhi. The type approvals of all Components, parts, assemblies in the kit have been received from Petroleum and Explosives Safety Organization (PESO), International Center for Automotive Technology (ICAT) and Automotive Research Association of India (ARAI), as applicable. The retrofitment in vehicles has been undertaken in a centre authorized by Transport Department, Govt. of NCT of Delhi. As per idle emission test, the hydrocarbon emissions from CNG retrofitted two wheelers are 75% lesser and CO emissions are 20% lesser as compared to petrol driven similar models. The CNG kit for two wheelers comprises two CNG cylinders of 4.8 litre water capacity each, which can be filled with up to 1 kg of CNG in each cylinder. These CNG retrofitted two wheelers can drive upto 120 kms in a single fill and are expected to be substantially economical as compared to a similar petrol run vehicle at the current level of prices, as per the kit manufacturer. The performance of 50 CNG retrofitted two wheelers would be closely monitored in terms of efficiency, emissions, etc. during the pilot phase by all the stakeholders and the learning from this project would be used to develop the roadmap for introduction of CNG in two wheeler segment across the nation. Noah Hanifin Authentic Jersey
OIL-led consortium inks deal for 24% stake in Vankor oil field
Deal is valued at $2 billion and is expected to close by September 2016. A consortium led by Oil India has signed an agreement to acquire 23.9% stake in Russia’s second biggest oil field of Vankor from Rosneft. The deal is valued at $2 billion. The stake acquired by OIL-led consortium is in addition to the 15% interest picked up by ONGC Videsh Ltd in the Vankor oilfield for $1.268 billion. “Indian consortium, led by OIL, along with Indian Oil Corp and Bharat PetroResources Ltd, a subsidiary of Bharat Petroleum Corp Ltd (BPCL), signed definitive agreement to acquire up to 23.9% shares from RosneftOil Co in JSC Vankorneft, a company organised under the law of Russian Federation which is the owner of Vankor and North Vankor field licenses,” OIL said in a statement. The deal is expected to close by September 2016. The 23.9% stake would be split in the ratio 33.5-33.5-33 between IOC, OIL and BRPL (IOC and OIL picking up 8% stake each while the remaining 7.8% stake would go to BRPL). Rosneft holds 85% shares in Vankor while ONGC Videsh Ltd (through its subsidiary) holds 15% at present. Vankor field, located in East Siberia, is Russia’s second largest field by production and accounts for around 4% of Russian production and currently producing about 422,000 barrels of oil per day. “It is the largest of the fields, discovered and commissioned in Russia during the last 25 years and is located in the North of Eastern Siberia in Turukhansk district of the Krasnoyarsk Territory, 142 km away from Igarka town,” the statement said. The recoverable resources of the Vankor field as of January 1 stood at 361 million tonnes of oil and condensate and 138 billion cubic meters of gas. “With the closure of the Vankor deal, IOC’s equity oil portfolio will go up by 1.6 million tons per annum,” it said. Further, Rosneft has agreed to sell another 11% stake in Vankor to OVL. Details of this deal are yet to be finalised. The acquisitions have significant strategic importance to India, both in terms of augmenting energy security as well as enhancing its stature in the global political and economic arenas, the statement added. Justin Simmons Authentic Jersey
IOC to join NTPC, CIL for fertilizer projects
Indian Oil Corp. is set to join a consortium of Coal India Ltd and NTPC Ltd for setting up three fertilizer factories with a total investment of Rs.200 billion. The investment is expected to help improve the financial health of ailing state-owned Fertilizer Corp. of India Ltd (FCIL), which will provide land for the factories at Sindri in Jharkhand and Gorakhpur in Uttar Pradesh, and that of ailing state-run firm Hindustan Fertilizer Corp. Ltd which will provide land at Barauni in Bihar. The existing production facilities at these places are archaic. Coal secretary Anil Swarup said that the petroleum ministry has informed the coal ministry of its support for IOC joining the project. The board of directors at IOC will consider the proposal by the end of July. An email sent to IOC on Wednesday morning remained unanswered at the time of publishing. NTPC had on 17 May said that it has formed an equal joint venture with CIL to set up two urea factories on the premises of FCIL, with provision for a third partner to join in. “Now there is a clear roadmap for the project. All the three proposed factories will be operational by December 2020. The joint venture will have a debt equity ratio of 1:3,” said Swarup. The partners together will bring a little more thanRs.60 billion of equity. Each of the natural gas-based factories will require an investment of roughly Rs.65 billion. The project also entails state-owned Gail India Ltd supplying natural gas for the factories by connecting them with its Jagdishpur-Haldia pipeline. Natural gas is a more efficient and cost-effective feedstock for urea production, compared to naphtha, which is used in older fertilizer plants. India produces a little over 21 million tons of urea and imports about 8 million tons. Since adverse currency movements and price of the feedstock in global markets influences the import price, the government has been trying to achieve self sufficiency in this plant nutrient. Subsidy is given to companies for selling urea at below their actual cost of import or production, based on their audited sales figures. The government wants to leverage profit-making public sector enterprises in the energy sector to turn around the ailing ones in the fertilizer sector. Reviving the three units is expected to create about 1,200 direct and 4,500 indirect jobs, minister of state for chemicals and fertilizers Hansraj Gangaram Ahir informed Parliament on 4 March. He said a total of 10 defunct fertilizer units will be revived. Zemgus Girgensons Authentic Jersey
World’s biggest natural gas producer Gazprom eyes bigger share in India
Russia’s Gazprom PJSC, the world’s biggest natural gas producer, is stepping up supplies to India. Last week, Alexey Miller, chairman of the Gazprom management committee, and Dharmendra Pradhan, India’s petroleum minister, discussed the modalities for increasing Gazprom’s gas sales in St Petersburg. Pradhan was accompanied by top executives from Petronet LNG, Indian Oil Corporation (IOC) and other public sector firms. “During the visit to St Petersburg, (we) discussed various routes to bring Russian gas to India and cooperation in third countries. Also, (I) met Alexei Miller, CEO Gazprom, world’s largest gas company. Gazprom is keen to work various gas projects with India,” said petroleum minister Dharmendra Pradhan. Pradhan also met top executive from Novatek, the second largest gas producing company of Russia, which also express interest to participate in Indian gas sector. Gazprom, which supplies nearly 30% of Europe’s demand, interest to expand business here comes at a time when its domestic rival Rosneft has offered equity stakes in two Siberian hydrocarbon assets – Vankor and Taas-Yuryakh to Indian firms including ONGC Videsh, Indian Oil Corporation (IOC), Oil India (OIL) and Bharat PetroResources (BPRL). “The perception of India has changed. Earlier, if any foreign firm wants to do business with India and particularly public sector companies, it used to take atleast two years for the first response. Now, diplomatic push is helping India get energy deals overseas,” a senior petroleum ministry official told FE. In the past two years, India and Russia have agreed to collaborate for $5.5 billion worth oil and gas projects. New Delhi’s interest in increasing economic co-operation with Kremlin is seen as an extension of several rounds of talks between Prime Minister Narendra Modi and Russian President Vladimir Putin. Talking about the affordability of natural gas ferried from Russian fields, the petroleum ministry official said that there are options to swap the LNG with other supplies mid-way. “This would make the LNG affordable for Indian market. These technicalities would be discussed between the companies,” the official explained. In the full year of 2015-16, the LNG imports by India witnessed a surge of 14.96% at 21,309.28 mmscm against 18,535.73 mmscm in FY15. “While Gazprom has been boosting gas exports to its most lucrative market, Europe and Turkey, its dollar-denominated revenue from the region may drop this year to lowest since 2004 as most of contracts linked to oil with a time lag of as much as nine months,” Bloomberg said on April 28. This could led Gazprom to expand its footprint in India, where economy is poised to grow at 8%. Between 2009 and 2016, Gazprom Group delivered 26 liquefied natural gas (LNG) cargoes to India totaling 1.7 million tonnes. In 2012, Gazprom Marketing & Trading Singapore, which is part of Gazprom Group, and GAIL signed a long-term agreement for LNG. The 20-year agreement provides for LNG supplies in the amount of 2.5 million tons per year on a free-on-board basis, with potential for renewal. Imports of LNG have steadily risen over the years, albeit at varying rates of growth from about 7 bcm in FY06 to about 21 bcm now. Overall gas consumption, has increased, especially FY14 onwards, to compensate for the decline in domestic production. Paul Kariya Jersey
Gas pipeline network hit on uncertain KG supply
AMID heated debate on the completion of natural gas network connecting Tamil Nadu, Kerala and Karanataka, the South Indian pie in the entire gas infrastructure in the country is abysmal. Now, there are 27.58 lakh piped natural gas connections provided by various entities in India and the number of compressed natural gas stations stand at 884. In the entire South, the number of PNG connections is 5,564 (0.2%) and there are only 33 CNG stations (3.7%). Tamil Nadu is yet to get the city gas distribution system in place (see chart). “South India would have had more natural gas networks connecting households and CNG stations if only Reliance had delivered on the promised output from KG basin. As against original estimates of 80 mmscmd, KG basin output is less than 10 mmscmd and even this is set to go down further. How do you expect any investor to invest in pipelines and networks when gas supplies are uncertain,”said Sudha Mahalingam, an independent energy analyst and former member of Petroleum and Natural Gas Regulatory Board (PNGRB). “The country is locked into an expensive long-term contract for LNG imports from Australia in the Kochi terminal so much so, there are no takers for this gas and hence no cargoes landing there. It is unfortunate that South India is a big loser in the gas game,” Mahalingam said. One can hope that the ‘retail gas’ segment, which constitutes both PNG and CNG, would improve in the near future as PNGRB has invited bids recently for city gas distribution in Chennai and Coimbatore, Visakhapatnam and Davangere. Also with the laying of pipeline getting resolved in Tamil Nadu, the situation is likely to change. “Currently, the national gas grid extends till Bengaluru only. With the completion of the Kochi-Koottanad-Bengaluru-Manglore pipeline project, Tamil Nadu, Karnataka and Kerala will be benefited more,” said Tony Mathew, Chief Manager, GAIL (India) and co-coordinator of Kochi-Koottanad-Banglore-Manglore pipeline project. “The natural gas network will only grow over a period of time and hence the gas offtake also builds over a period of time. The pipeline gas supply can lead to attracting new industrial and commercial units in South India,” Rajeev Sharma, CEO, Adani Gas details the merits of natural gas. Jacob Markstrom Authentic Jersey