GRMs of oil marketing cos may recover on strong demand: Report
Gross refining margins (GRMs) of public-sector oil marketing companies may recover on account of strong demand and higher marketing margins, says a report. According to stock brokerage ICICI Securities, GRMs of oil marketing companies (OMCs) in the first quarter of 2016-17 so far is sharply lower compared to the estimates in the last fiscal. While the first quarter GRMs estimated for state-run HPCL are marginally lower, those for other public sector entitiesBharat Petroleum Corp (BPCL) and Indian Oil Corporation are higher than the forecast for whole of the current fiscal, it added. “We are hopeful of recovery in GRMs as recent data suggests strong global oil demand growth,” ICICI Securities said in a report. “Higher marketing margins than assumed are also not ruled out,” it added. The brokerage has estimated GRMs of the OMCs to be at USD 4.3-5.5 a barrel, which is 11-28 per cent lower than their 2015-16 estimates, the report said. GRM generally refer to the difference between the total value of petroleum products coming out of an oil refinery and the cost of crude oil. “Our assumption of OMCs’ 2016-17 GRMs are conservative and we estimate that their first quarter GRMs have been boosted by inventory gain of USD 1.1/bbl,” the report said. Julius Nattinen Womens Jersey
India seeks rights to operate Iran oil field
India has sought a discovered oilfield from Iran for raising crude oil imports from the Persian Gulf nation as part of efforts to widen economic and energy ties post lifting of sanctions. Indian Oil Corp (IOC), the nation’s largest oil firm, has proposed to Iran that it be given rights to operate and produce crude oil from the discovered field to help move away from buyer-seller relationship to a strategic partnership, sources privy to the development said. The oil produced from the field can then be shipped home, the IOC has said. IOC had last fiscal imported 1.2 million tons of crude oil from Iran. In the fiscal year that began from April 1, it is looking to raise it by at least three-fold. Prime Minister Modi’s visit to Iran was aimed at boosting trade and commerce between the two countries. His trip came just months after lifting of international sanctions on Iran following Tehran’s historic nuclear deal with the Western powers over its contentious atomic programme. Besides IOC, ONGC Videsh Ltd has also sought two discovered fields from the 16 fields that Iran is likely to put on auction shortly. The fields sought by OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), is besides the Farzad-B offshore field for which it is in advanced talks to secure developmental rights. OVL had in 2008 discovered the Farzad-B field in the Persian Gulf. The field holds 12.5 Trillion cubic feet of recoverable reserves. Sources said Iran has so far not responded to the requests by the Indian firms. It has, however, shown willingness to give Farzad-A, which holds 283 billion cubic meters of reserves. The field besides holding smaller reserves is more challenging, OVL feels. Sources said India may import as much as 20 million tonnes of crude oil from Iran in 2016-17 fiscal, up from about 11 million tonnes in the previous year. This follows lifting of sanctions against Iran in January. Till 2010-11, Iran was the second biggest supplier of crude oil to India after Saudi Arabia. Fresh US sanctions in 2010 led to imports, which were 18.5 million tonnes in 2010-11, to fall to 11 million tonnes. Iraq is now the second biggest supplier of oil to India. Sources said India has also expressed interest in investing in chemicals, petrochemicals and fertilizer plants if Iran provided natural gas at low prices. It also is looking at setting up an ammonia/urea plant in Chabahar Free Trade Zone with long-term off-take of urea to India. While Mangalore Refinery and Petrochemicals Ltd (MRPL) and Essar Oil Ltd – the biggest Indian buyers of Iranian oil – are likely to maintain buying at around 5 million tonnes each, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) may begin importing oil from the Persian Gulf nation. HPCL-Mittal Energy Ltd (HMEL) has indicated it will buy a small quantity with an option to raise volumes. In addition, private refiner Reliance Industries is seeking to buy 5-6 million tons of Iranian oil, mainly heavy grades. India imports about 189 million tonnes of crude oil to meet about 80 per cent of its oil needs. Saudi Arabia sold about 38 million tonnes of oil to India in 2015-16, while Iraq supplied 33 million tonnes. Jose Altuve Womens Jersey
Government seeks bids for oil, gas fields in first auction since 2010
Government is putting up for auction nearly four dozen small oil and gas fields in the first such sale in six years, the country’s oil ministry said in a newspaper advertisement on Tuesday. A successful auction of the small oil and gas fields is seen as crucial to a recently announced hydrocarbon policy, which India hopes will unlock energy resources worth $40 billion by simplifying rules and offering pricing incentives. The world’s fourth-biggest oil and gas consumer imports nearly three-quarters of its energy requirements, but Prime Minister Narendra Modi has set a target of cutting its fuel import dependency to two-thirds by 2022 and to half by 2030. India is auctioning a total of 46 oil and gas fields, the oil ministry said, with 26 on land, 18 offshore in shallow water and two in deep water. The deadline for submitting the bids is on Oct. 31, with companies free to try for more than one exploration block. The mostly small, marginal discoveries on offer were originally controlled by two state-owned exploration companies, Oil and Natural Gas Corporation and Oil India Ltd. The fields have remained undeveloped for years due to their small size and the high cost of development. The current low crude oil prices – now around $48 a barrel – will also likely make it hard for the government to attract bids for the fields. Some exploration consultants have also criticised the revenue-sharing model being used by India as most countries auction oil and gas blocks based on a cost-recovery model. In a revenue-sharing model a company operating an oil and gas field has to share revenue from any sales with the government from first production. In a cost-recovery model a company starts sharing income with the government only once its exploration and development costs have been covered. Jaquiski Tartt Authentic Jersey
New DGH Atanu Chakraborty promises level playing field for E&P players
With contractual disputes dampening India’s efforts to step up investment in its oil and gas hunt, the new DGH Atanu Chakraborty has promised to expeditiously resolve issues, iron out bottlenecks and make decision-making transparent. The Directorate General of Hydrocarbons (DGH), which had been at the centre of controversies, is looking to start with a clean slate by supporting exploration and production (E&P) activities of oil and gas to cut down import dependence. The IAS officer, who took over as the head of DGH last month, in his first message on the regulator’s website said accelerated indigenous exploration efforts are required to meet Prime Minister Narendra Modi’s target of reducing import dependence by 10 per cent to 67 per cent by 2022. “The need of the hour is to make utmost efforts to smoothen out bottlenecks with mutual cooperation and support with the highest level of transparency and procedural alignment. In line with the same approach, we intend speedy resolution of contractual and technical issues within the ambit of DGH in the near term,” he wrote. Of late, DGH has been accused of over-regulation by controlling expenditure of operators as well as insisting on its own set of technical parameters for recognising gas discoveries. It also found itself at the receiving end when it was seen approving a higher capex for KG basin gas fields when production did not match targets. According to Chakraborty, DGH’s contribution in creating a progressive and conducive atmosphere for the E&P sector would be “to adopt the role of an enabler, facilitator and ensure a level-playing field”. Reaching out to E&P companies and service providers for “all-out positive support”, he invited stakeholders to provide suggestions and ideas on upcoming projects. “At the same time, I urge my able DGH team to further expand their horizon and deliver to newer expectations to the best of their capacities,” he said. For better efficiency, he proposed that DGH and the E&P fraternity be more linked and synergistic. “Let’s us help each other in developing a transparent and effective interface that ensures implementation of government policies in order to provide the required impetus to the growth of E&P sector of the country,” Chakraborty added. The world oil and gas scenario, Chakraborty felt, is at the point of inflection. “Low oil prices coupled with technological developments have changed the oil economics all around the world. Shale gas evolution and falling LNG prices have broken all the barriers, compelling the select nations to undo prevailing cartel practices and prevent artificially jacking up of crude oil prices,” he said. Jamal Adams Jersey
As no deal with Iran yet, ONGC may lose gas field to Saudi Arabia
India’s flagship explorer ONGC is facing a repeat of KG fiasco in Iran as lengthy negotiations on terms may drive it to a point where its discovered gas reserves in Farzad-B field in the Persian Gulf may be drawn out by neighbouring Saudi Arabia. State-owned Oil and Natural Gas Corp (ONGC) alleges that 11.12 billion cubic meters of natural gas worth Rs 11,055 crore has flowed from its idling Krishna Godavari basin blocks in Bay of Bengal blocks to neighbouring KG-D6 fields of Reliance Industries. And the same is now on the verge of repeating in the Farzad-B field, which it had discovered in 2008 but no contract to exploit the 12.5 trillion cubic feet of recoverable reserves has so far been concluded with Iran. Sources said a portion of Farzad-B field extends into territorial waters controlled by Iran’s regional arch-rival Saudi Arabia. Saudi Arabia has already drilled wells on the area falling in its territory, which it has named Hasbah field, and has begun production. The two fields are connected, with the area falling in Iranian territory holding larger share of 12.5 Tcf of recoverable reserves while the Saudi territory has only 3 Tcf or so. But the two fields are connected and whosoever is able to move first would extract more benefits. Sources said in the dispute with RIL, ONGC is claiming compensation for its gas flowing through under-sea connected reservoir to KG-D6 and the government has constituted a one-man committee to look into the issue and suggest compensation. But such a thing may not be possible for Farzad-B as rivalry between Saudi Arabia and Iran may prevent from arriving at any internationally recognised practice of splitting the spoils in conjoined fields. It was expected that Prime Minister Narendra Modi’s visit to Tehran today and tomorrow may see finalising of a contract, giving developmental rights of Farzad-B field to ONGC Videsh Ltd, the overseas arm of the state explorer. But Iran is yet to agree to USD 4.3 billion master development plan submitted by OVL. Also, it is yet to agree on the price at which OVL can take all of the gas produced from the field, they said adding that no definitive contract for the development of the field would be signed during Modi’s visit. Previously, Iran was to pay OVL a fixed fee for its effort for discovering and producing gas from Farzad-B field. The gas ownership was to be with Iran and so Tehran was pushing for a low price of gas. But now a new modified contract is being talked about which will part ownership of the gas produced to OVL. And so naturally, Iran is now seeking a higher gas price, they said. Once investment in the field and the gas price are frozen, possibly by August-end, an agreement confirming development rights on OVL will be signed. But after that negotiations on the terms of the contracts – fixed fee or ownership of gas as well as marketing of the fuel, will begin, sources said adding the entire process may take one year time. Also, Iranian Parliament, Majlis is yet to approve new Iran Petroleum Contract (IPC) under which the Farzad-B field is to be given to the OVL-led consortium. IPC ends two-decade old buyback system that prevented foreign companies from booking reserves or taking equity stakes in Iranian companies. Under some circumstances, the new model allows reserves to be booked, but foreign companies would still not own oil fields. While previously foreign firms were paid a fixed fee for discovering and bringing to production an oil and gas field, the new model raises their profit by grading the fee based on the risk of the fields, allows contracts to last for up to 25 years and no ceiling on capital expenditure. Foreign firms are to be paid a fee per barrel and they will also be entitled to an increase in profits in the face of dramatic oil price fluctuations. Back home, ONGC believes the KT-1/D-1 gas find in its Krishna Godavari block (KG-D5) and G-4 Pliocene gas find in Godavari Block extend outside the block boundaries into KG-D6. According to ONGC, RIL’s D6-A5, D6-A9 and D6-A13 wells drilled close to the block boundary may be draining gas from the G-4 field while the D6-B8 well may be sucking out gas from DWN-D-1 field of KG-DWN-98/2 block. RIL has denied allegations saying RIL it has “scrupulously followed every aspect of the production sharing contract and has confined its petroleum operations within the (boundaries of its) KG-D6 block” in Krishna Godavari basin. Edgar Martinez Jersey
GMR to set up an LNG terminal at Andhra’s Kakinada port with a funding of Rs 471 crore
GMR Group is in the process of setting up an LNG ( liquefied natural gas ) terminal at Andhra Pradesh’s Kakinada sea port with an investment of Rs 471 crore. According to minutes of the meeting held by Expert Appraisal Committee (EAC) under the Ministry of Environment and Forests , the project envisages a start-up capacity of 1.75 million tonnes per annum (MTPA) which comprises of captive use by GMR Energy Limited to the tune of 0.85 MTPA, with the balance for domestic piped and non-piped users within a radius of 450 kms. GMR Holding Pvt Ltd has proposed for development of LNG facility with capacity of 1.75 MTPA at Kakinada Deep Water Port (KDWP) berth 7 located adjacent to survey no. 317/318, GMR barge mounted power plant located at survey no. 411, 413, tehsil Kakinada, district East Godavari, Andhra Pradesh. “The proposed LNG facility consists of the following…development of necessary facility/ equipment for ship berthing and mooring, LNG unloading arms with all safety measures, LNG storage and transportation, onshore insulated cryogenic pipeline, LNG regasification facility and pipeline for connectivity to existing gas distribution grid,” the EAC said. While recommending the term of reference for the project, the EAC asked the company to conduct a public hearing, besides laying down other conditions. “During presentation, project proponent (GMR) informed that regasification plant will also be installed at berth no. 7. Cost of project is Rs 471 crore. Power requirement will be 8 MW. Coringa Wildlife Sanctuary is located at a distance of 1.5 kms south,” it said. Meanwhile, the EAC deferred its decision on environmental and CRZ clearance in case of proposed greenfield facility for import of 5 MMTPA LNG Floating Storage Unit (FSU) and handling facility within Krishnapatnam Port Ltd, Nellore, Andhra Pradesh by LNG Bharat Pvt Ltd. The committee suggested the project proponent that it should submit all the requisite documents to Andhra Pradesh Coastal Zone Management Authority as sought by them. Pierre Pilote Authentic Jersey
Crude spike sparks call for duty cut
There is a growing pressure on the Narendra Modi-government to cut excise duty on petrol and diesel at a time global crude prices have spiked to a six-month high of about $50 per barrel and inflation is showing signs of inching up. However, officials said they would “watch the trend before taking any action as they cannot let inflation go out of hand”. After showing a downtrend since June 2014, crude prices have been on the rise since January 20 this year. Brent has declined from the high of $115 per barrel to a low of $26.39 a barrel in January and surged to around $50 last week. The excise duty on petrol has increased 126.6 per cent to around Rs 21.48 per litre from Rs 9.48 per litre in July 2014. In the case of diesel, it has been hiked 386.8 per cent to Rs 17.33 per litre from Rs 3.56 per litre. “The government could look at reducing the excise duty at some point. This would be when the price of petroleum products increases and the burden falls on the consumers. The government’s primary responsibility is to give relief to consumers and we will do this,” petroleum minister Dharmendra Pradhan had said. The Indian Foundation of Transport Research and Training (IFTRT) has written to finance minister Arun Jaitley seeking a rollback of the nine excise duty hikes on diesel between November 2014 and January 2016. “The central government and later various state governments periodically increased excise duty and sales tax on diesel to retain the benefit of plummeting international crude oil prices. Now, the international crude oil prices have shot up… the truck rentals, too, are shooting up more because of the diesel price hike and other reasons. It is high time that the Centre reduces/rolls back at least half of the excise duty increase on diesel since November 2014,” S.P. Singh, senior fellow at the IFTRT, wrote in a letter to Jaitley. Goldman Sachs had said supply disruptions from Nigeria – Africa’s biggest crude oil producer – would lead to a deficit. This triggered the prices to head north and touch a six-month high last week. The disruptions triggered a U-turn in the outlook for the oil market from Goldman Sachs, which had long warned of global storage hitting capacity and of another price crash to as low as $20 per barrel. The NDA government took the benefit of a drastic fall in oil prices and hiked the excise duty on auto fuel several times since November 2014 to garner up to Rs 700 billion. India is highly dependent on imports to fulfil its energy needs. Therefore, the fall in crude prices has not only helped the government control its current account and fiscal deficits but also rein in inflation, which had been posing a serious challenge to the economy. However, the recent spike has again raised concerns of current account deficit rising as soaring oil prices have the potential to push up inflation besides increasing costs for the industry.
ONGC struggling to exploit 12.5 trn cubic feet of discovered gas reserves in Iran
India’s flagship explorer ONGC is facing a repeat of KG fiasco in Iran as lengthy negotiations on terms may drive it to a point where its discovered gas reserves in Farzad-B field in the Persian Gulf may be drawn out by neighbouring Saudi Arabia. State-owned Oil and Natural Gas Corp (ONGC) alleges that 11.12 billion cubic meters of natural gas worth Rs 110.55 billion has flowed from its idling Krishna Godavari basin blocks in Bay of Bengal blocks to neighbouring KG-D6 fields of Reliance Industries. And the same is now on the verge of repeating in the Farzad-B field, which it had discovered in 2008 but no contract to exploit the 12.5 trillion cubic feet of recoverable reserves has so far been concluded with Iran. Sources said a portion of Farzad-B field extends into territorial waters controlled by Iran’s regional arch-rival Saudi Arabia. Saudi Arabia has already drilled wells on the area falling in its territory, which it has named Hasbah field, and has begun production. The two fields are connected, with the area falling in Iranian territory holding larger share of 12.5 Tcf of recoverable reserves while the Saudi territory has only 3 Tcf or so. But the two fields are connected and whosoever is able to move first would extract more benefits. Sources said in the dispute with RIL, ONGC is claiming compensation for its gas flowing through under-sea connected reservoir to KG-D6 and the government has constituted a one-man committee to look into the issue and suggest compensation. But such a thing may not be possible for Farzad-B as rivalry between Saudi Arabia and Iran may prevent from arriving at any internationally recognised practice of splitting the spoils in conjoined fields. It was expected that Prime Minister Narendra Modi’s visit to Tehran today and tomorrow may see finalising of a contract, giving developmental rights of Farzad-B field to ONGC Videsh Ltd, the overseas arm of the state explorer. But Iran is yet to agree to USD 4.3 billion master development plan submitted by OVL. Also, it is yet to agree on the price at which OVL can take all of the gas produced from the field, they said adding that no definitive contract for the development of the field would be signed during Modi’s visit. Previously, Iran was to pay OVL a fixed fee for its effort for discovering and producing gas from Farzad-B field. The gas ownership was to be with Iran and so Tehran was pushing for a low price of gas. But now a new modified contract is being talked about which will part ownership of the gas produced to OVL. And so naturally, Iran is now seeking a higher gas price, they said. Once investment in the field and the gas price are frozen, possibly by August-end, an agreement confirming development rights on OVL will be signed. But after that negotiations on the terms of the contracts – fixed fee or ownership of gas as well as marketing of the fuel, will begin, sources said adding the entire process may take one year time. Also, Iranian Parliament, Majlis is yet to approve new Iran Petroleum Contract (IPC) under which the Farzad-B field is to be given to the OVL-led consortium. IPC ends two-decade old buyback system that prevented foreign companies from booking reserves or taking equity stakes in Iranian companies. Under some circumstances, the new model allows reserves to be booked, but foreign companies would still not own oil fields. While previously foreign firms were paid a fixed fee for discovering and bringing to production an oil and gas field, the new model raises their profit by grading the fee based on the risk of the fields, allows contracts to last for up to 25 years and no ceiling on capital expenditure. Foreign firms are to be paid a fee per barrel and they will also be entitled to an increase in profits in the face of dramatic oil price fluctuations. Back home, ONGC believes the KT-1/D-1 gas find in its Krishna Godavari block KG-DWN-98/2 (KG-D5) and G-4 Pliocene gas find in Godavari Block extend outside the block boundaries into KG-D6. According to ONGC, RIL’s D6-A5, D6-A9 and D6-A13 wells drilled close to the block boundary may be draining gas from the G-4 field while the D6-B8 well may be sucking out gas from DWN-D-1 field of KG-DWN-98/2 block. RIL has denied allegations saying RIL it has “scrupulously followed every aspect of the production sharing contract and has confined its petroleum operations within the (boundaries of its) KG-D6 block” in Krishna Godavari basin. Kris Versteeg Jersey
India, Iran sign Chabahar port deal
At the ceremonial signing of trilateral Transport and Transit agreement between India, Afghanistan and Iran Modi said, “It will open new routes for India, Iran and Afghanistan to connect among themselves. India and Iran also share a crucial stake in peace, stability and prosperity of the region.” The pact to develop Chabahar Port for which India will provide USD 500 million is a key milestone. Chabahar is a port in south-east Iran that will enable India to bypass Pakistan and open up a route to land-locked Afghanistan with which New Delhi has close security ties and economic interests. From Chabahar, the existing Iranian road network can link up to Zaranj in Afghanistan, about 883 kms from the port. The Zaranj-Delaram road constructed by India in 2009 can give access to Afghanistan’s Garland Highway, setting up road access to four major cities in Afghanistan — Herat, Kandahar, Kabul and Mazar-e-Sharif. Besides signing a deal on development of Chabahar port, India is looking at doubling oil imports from Iran which a few years back was its second-biggest oil supplier, as well as getting rights to develop a giant gas field. Jay Novacek Authentic Jersey
Cairn India MD & CEO Mayank Ashar resigns
Cairn India Ltd has announced Mayank Ashar, Managing Director and Chief Executive Officer has decided to step down for personal reasons effective June 05, 2016. Sudhir Mathur, CFO, will lead the organization as the acting CEO. Nicklas Grossmann Jersey