Oil supply grows in India, falls at global level: IEA
A global oil glut that has sent prices tumbling is set to “shrink dramatically” later this year, as wildfires have disrupted Canada’s output and demand in India soars, the International Energy Agency (IEA) said Thursday. Demand for oil worldwide is set to grow at a “solid” rate in 2016, with India as the “star performer”, the 29-nation IEA said in its monthly report, adding to it they believed “the global supply surplus of oil will shrink dramatically later this year”. “This provides further support for the argument that India is taking over from China as the main growth market for oil,” the 29-nation IEA said in its monthly report. The oil market has for months been depressed by a vast oversupply. Oil prices surged to six-month highs this week and are now well over USD 46 a barrel after plummeting below USD 30 early in the year. They are nevertheless far below the USD 100-a-barrel mark of mid-2014. But the IEA said it believed “that the global supply surplus of oil will shrink dramatically later this year”. In Canada devastating wildfires near Fort McMurray forced a production curb early this month, which, the IEA said, would result in oil supplies falling to just over 3.7 million barrels a day in May, nearly 1 mb/d less than at the start of the year. The IEA said the events in Canada, however, had not sent oil prices sharply higher, as would have been expected some years ago, with Brent crude hovering around USD 45 a barrel showing little reaction. Iran, the IEA said, had provided the other surprise. Its oil production and exports increased slightly faster than expected following Iran’s return to the market after the lifting of sanctions under its nuclear deal. Iranian oil production in April was nearly 3.6 mb/d, a level last achieved in November 2011 before Western sanctions against Tehran were tightened, the IEA noted. “Even more important for global markets, oil exports reached 2 mb/d, a dramatic increase from the 1.4 mb/d seen in March,” it added. Teemu Selanne Jersey
As LPG demand balloons, India to become more reliant on imports
A raft of government initiatives has propelled India’s insatiable appetite for LPG to record highs, leading analysts to believe that growth is expected to hover close to double digit levels in the near to medium term as New Delhi intensifies its push towards cleaner fuels. But with LPG domestic demand growing at a much faster rate than output, the country, where refiners find it more profitable to focus on middle distillates rather than boosting LPG output, will be increasingly dependent on imports to meet its incremental consumption growth, analysts added. LPG demand in March hit a record high of 1.835 million mt, up 14.16% year on year, taking the cumulative demand in January-March 2016 to 5.254 million mt, up 11.28% year on year, data from India’s Petroleum Planning and Analysis Cell showed. Top officials of Indian oil companies and independent analysts recently told Platts that even though demand growth is unlikely to hold at those lofty levels, LPG demand will continue to grow around 7%-9% over the coming years. “Lower prices and various affirmative government initiatives will support India’s robust LPG demand growth in the medium term,” said Sri Paravaikkarasu, Senior Consultant and Asia Downstream Specialist at Facts Global Energy. Paravaikkarasu said around 2.1 million new LPG connections were added across the country in March, which contributed to the surge in demand. In addition non-subsidized LPG consumption grew by 35% year on year in March. “We expect demand growth to remain strong in the coming quarters, albeit at slightly reduced levels than that seen in recent months,” Paravaikkarasu said. PPAC said that LPG demand from India’s auto sector grew 3.3% year on year n March, while cumulative growth was 4.3% over fiscal year 2015-2016 (April-March). “Even commercial LPG is now substantially cheaper than gasoline/diesel due to the multiple hikes in excise duties on these liquid fuels. This makes LPG attractive for auto LPG usage too,” Macquarie said in a research study on India’s oil sector. India’s LPG demand rose 8.6% year on year to 19.55 million mt in fiscal year 2015-2016, while the country imported 8.88 million mt of LPG over the period to meet its domestic needs. Industry sources have said that India’s LPG imports could surge in fiscal year 2016-2017, prompting the country to compete with Japan and China for the title of Asia’s biggest importer. “India’s LPG imports will keep rising,” said Paravaikkarasu. “Other than the recent Paradip refinery, we are not going to see any other grassroot additions in the near future. This will restrict growth in domestic supplies.” Paravaikkarasu said she expects India’s LPG imports to rise 30,000 b/d year on year during fiscal year 2016-2017. Expanding The Reach The BJP-led government, since coming to power in 2014, has undertaken a series of initiatives to help boost LPG penetration across the country. In its push towards making 2016 the “year of LPG consumers,” the Indian government has set an ambitious target of opening 10,000 new LPG dealerships across the country this year, in addition to the 16,000 that already exist. It has urged the more affluent class of society to give up their subsidized LPG connections. Around 10 million consumers have given up their LPG subsidies already. The growth in March meant that LPG consumption has recorded positive growth over 31 months in a row. Jordan Oesterle Womens Jersey
MRPL Says Owes About $2.6 Billion In Oil Dues To Iran
Mangalore Refinery and Petrochemicals Ltd currently owes about $2.6 billion to Iran and wants to settle the dues as soon as a payment mechanism is worked out, Managing Director H. Kumar said. The state-run refiner, which operates a 300,000 barrels per day (bpd) refinery in southern Karnataka state, is a key oil client of Iran. The central banks of India and Iran have reached an arrangement to use European banks to process pending oil payments to Tehran, oil minister Dharmendra Pradhan told Reuters last week. MRPL has shut a 60,000 bpd crude unit, a coker and a diesel hydrotreater, along with some other units since May 3 due to an acute water shortage in the state. The local authorities have stopped water supply to the refinery. “Our endeavour is to run the units till the last day… If it doesn’t rain till May 17-18 then we will review the situation. We may have to shut some more units,” said Mr Kumar. Because of the shutdown, MRPL’s diesel and liquefied petroleum gas production has been halved while gasoline consumption has been cut by 30 percent. Jonathan Ogden Authentic Jersey
Cairn gives 2 more yrs to Vedanta for $1.25 billion loan repayment, at higher interest
Cairn India has extended the repayment period for a $1.25 billion loan to a group company by two years but at a higher interest rate. The loan was given for two years in May 2014, to THL Zinc (TZL), a foreign subsidiary of Vedanta, the parent entity. Cairn India Holdings (CIHL), a subsidiary abroad of Cairn India Ltd, has decided on a two-year extension, the BSE was informed. A CLSA report had earlier suggested Cairn India seek a clarification from the Securities and Exchange Board of India, since the loan comes under Section 49 of the latter’s listing agreement rules which applied from October 2014, after the loan was granted), and as the loan crossed the threshold set by the clauses for a shareholder vote. A person close to the development said shareholder approval was not required since the transaction did not come under the norms in this regard, with both the companies being foreign entities and not listed in India. The loan extension is on an ‘arm’s length’ basis, at a revised rate of interest of Libor plus 450 basis points in the first year and at Libor plus 475 bps in the second year (compared to the existing rate of Libor plus 300 bps). It is on terms that are market standards, including change of control provisions, and will continue to be secured by a guarantee from Vedanta Resources Plc, said the company. The return from the said loan will provide higher yield to CIHL, compared to the return it is earning from its existing investment out of its cash and cash equivalents, which are denominated in dollars, it added. TZL is the holding company of the Vedanta group’s international zinc business, with assets in South Africa and Namibia. Cairn India reported a historic quarterly loss of Rs 109.48 billion last month for January-March 2016. It also undertook an impairment of Rs 116.74 billion for the full year ending March 2016. The continued fall in crude oil prices has pulled down its performance. The company closed 2015-16 with a loss of Rs 94.32 billion and a normalised profit after tax of Rs 21.45 billion, compared to Rs 44.80 billion profit the previous year. The company had also taken an impairment of Rs 5.05 billion last year in the fourth quarter on account of its Sri Lankan assets. The company’s realisation was down 42 per cent to $28.2 a barrel of oil equivalent, compared to the quarter ending March 2015. It was almost $41 for 2015-16, a 46 per cent fall over the previous year. Rishard Matthews Authentic Jersey
Billionaire Ruias Seek to Pump India’s First Shale Natural Gas
Essar Oil Ltd. has approached the government for permission to further explore shale formations in its eastern India coal-bed methane block as part of its effort to maximize the production of unconventional resources. The company’s current production of coal-bed methane, which generates a large volume of water, can complement shale gas exploration, which involves blasting water, sand and chemicals underground to release fuel, according to Manish Maheshwari, chief executive officer of Essar Oil’s exploration and production business. “The unconventional can become the new conventional in India,” Maheshwari said in an interview. “The unconventional will include CBM, shale and tight gas.” Essar Oil’s optimism about shale production from its Raniganj block in West Bengal has been further boosted by a streamlined government hydrocarbon policy announced in March that allows companies to explore and produce for all forms of hydrocarbons in a designated area under a single license. The company is currently producing around 900,000 cubic meters a day of coal-bed methane from the Raniganj block and plans to double the volume by March. It aims to hit peak output of 3 million cubic meters a day by March 2019, a delay of four years, which the company attributed to reservoir and technical difficulties. Essar Oil is part of a group of companies that includes shipping, steel and energy units controlled by the billionaire Ruia brothers. Extracting both shale and CBM from the same block won’t be easy for Essar, said Sachin Mehta, an analyst at Centrum Broking Ltd. “It could be technically very challenging to extract shale gas out of coal-bed blocks and then the cost required to achieve that could make it more difficult,” he said. “Commercial viability is an issue as shale is viable only at a certain price.” The Raniganj block holds proved, probable and possible reserves of 1.1 trillion cubic feet of coal-bed methane, according to Maheshwari. It’s also contains 1 trillion cubic feet of gas trapped in shale formations, using the Society of Petroleum Engineers classification as “best estimate” resources, he said. Jordan Howard Womens Jersey
Gas Connections in Villages
The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed that it is Public Sector Oil Marketing Companies (OMCs) aim to increase the National LPG coverage to 75 % with minimum 60 % coverage at State level and at least one distributor in each block by 2019. Further, the Government has launched “Pradhan Mantri Ujjwala Yojana” for providing LPG connections to 5 crore women belonging to the Below Poverty Line (BPL) families over a period of 3 years starting from FY 2016-17. Priority will be given to those States where LPG coverage is lower than the national coverage. Currently, the process for setting up of more than 1800 new LPG distributorships is at different stages of selection across the country. Nicolas Meloche Jersey
Asia’s top consumers paid more than $10/MMBtu for gas in 2015: IGU
The LNG-dependent countries of Asia Pacific paid the world’s highest wholesale prices for gas in 2015, according to a new survey from the International Gas Union. Wholesale prices for gas were highest in South Korea at more than $10/MMBtu, with Japan also paying double-digit figures, the IGU’s Wholesale Gas Price Survey for 2016 showed. The third-highest wholesale price was in China at just below $10/MMBtu, where domestic prices did not fully reflect declining oil prices until November, the IGU said. The average wholesale price in Japan in 2015 was $10.36/MMBtu, down from $15.98/MMBtu in 2014. Contract prices in Japan, which is the world’s largest LNG importer, did not begin to fall significantly until the first quarter of 2015 as the lag effect of falling crude oil prices began to feed through, the IGU said. The price in China declined only marginally to $9.67/MMBtu in 2015, from $10.56/MMBtu in 2014, as the adjustment to city gate prices, formally linked to oil product prices and LPG, were delayed. In addition, the delivered prices of pipeline gas from Turkmenistan to the key east coast markets contain significant fixed transit and transportation elements, the IGU said. In India, prices rose to $7.94/MMBtu in 2015, from 2014’s $6.80/MMBtu. The increase reflected a full year of the new hub-linked pricing formula for domestic production and the price of the Qatar LNG contract, since renegotiated from the start of 2016, remaining high because of long lags. Prices have fallen further in the first quarter of 2016, the IGU said. Prices in the first quarter were $7.50/MMbtu in Japan, $7.54/MMBtu in China and $5.50/MMBtu in India, the IGU estimated, with the markets in China and India catching up in the declines as the inertia in their pricing systems begins to reflect prices for spot gas and oil. The Platts JKM for spot LNG cargoes delivered in June fell by 25 cents over the week to May 6, closing at $4.50/MMBtu. At the low end of the scale, Australia enjoyed the cheapest wholesale gas prices in Asia Pacific, at less than $4/MMBtu for 2015, compared with a regional average of more than $8/MMBtu, the IGU said. Australia, which is on its way to becoming the world’s largest LNG exporter, also enjoyed lower wholesale gas prices than its two regional LNG export competitors, Malaysia and Indonesia. “Global energy pricing has entered a new paradigm,” IGU President David Carroll said in the report. “While $70 (and higher) crude was the norm for many years, we are now uncertain about when to expect a rebound to historical trading ranges,” he added. “Gas industry dynamics are also changing,” Carroll said. “Projects approved several years ago in a more robust pricing environment are now coming on stream. This supply abundance has affected gas hub and spot pricing levels and shifts in the wholesale price formation mechanisms are occurring.” Global consumption of gas in 2015 was around 3,554.8 Bcm, up from 3,506.2 Bcm in 2014, with Asia Pacific accounting for 399.9 Bcm, the IGU figures showed. Domestic production accounted for 73% of total world consumption, or around 2,590 Bcm, with pipeline imports accounting for around 637 Bcm and LNG imports accounting for about 330 Bcm. Asia Pacific is the world’s second-largest importing region behind Europe. Asia Pacific’s imports of gas via pipeline and as LNG totaled 221.0 Bcm in 2015, with global imports recorded at 966.3 Bcm. Taylor Moton Womens Jersey
Gujarat State Petroleum Corporation Ltd’s overseas dreams gas out
Gujarat State Petroleum Corporation Ltd (GSPC) has wrapped up its overseas operations, resulting in over Rs 17 billion going down the drain. The state-owned company, which is mired in controversy over alleged wasteful expenditure in KG Basin, has already begun the process of relinquishing its only remaining block in Australia. The company has already surrendered 10 overseas oil and gas blocks in Egypt, Yemen, Indonesia and Australia during 2011-15. GSPC had acquired five blocks in Egypt, three in Yemen and one in Indonesia and two in Australia. The company had acquired two blocks in Australia, of which one was already surrendered before 2015. “In Australia, one block is already relinquished. In second block minimum work programme (MWP) is completed, relinquishment is being processed,” Union petroleum and natural gas minister Dharmendra Pradhan recently informed the Rajya Sabha. “GSPC has reported that its overseas operations are closed,” the minister further added. While there was no exploration success in case of blocks in Egypt and Indonesia, rise in militancy and disturbances in Yemen forced the company to withdraw. When contacted, GSPC’s in-charge managing director J N Singh confirmed the development. “We have closed our Australia operations also. Earlier, we had closed other overseas operations. We now don’t have any further plans for overseas explorations,” he added. In its report for the year ended March 31, 2015, tabled in state assembly this year, CAG had pulled up GSPC for its lack of experience as ‘overseas operator’. “The delay in execution of the work committed resulted in cost escalations in overseas blocks. As a result, the company had incurred expenditure of Rs 17.5746 billion for 10 surrendered blocks, of which Rs 17.3412 billion has been written off,” the apex auditor noted. Last week, Congress halted Parliament proceedings over alleged scam in GSPC. Congress leaders on Saturday met President Pranab Mukherjee and demanded an independent inquiry into futile spending of public money to dig for gas in the KG Basin. Anders Bjork Womens Jersey
Oil & gas fields auction this month to be on simpler terms: Sources
After more than a 4-year break, India will this month launch auction of discovered oil and gas fields on simpler contractual terms together with pricing and marketing freedom. Oil Minister Dharmendra Pradhan will on May 25 launch the Discovered Small Fields Bid Round, official sources said. Last exploration licensing round concluded in March 2012. That was the Ninth round of bidding under the New Exploration Licensing Policy (NELP). A total of 256 block were awarded in the nine rounds of NELP. Now in the new round, as many as 67 idle discoveries of state-owned ONGC and Oil India Ltd have been clubbed into 46 fields for offer in the international bidding round. Of these, 28 discoveries are in Mumbai offshore and another 14 are in the prolific Krishna Godavari basin. As many as 10 discoveries in the Assam shelf. Sources said the government took away these discoveries from ONGC as it could not develop them because of small size and unviable price. But in the bidding round, the government is offering complete pricing freedom and ONGC too can bid to get back its discoveries. The discoveries were given up by the state run as late as 2012-13. In-place reserves in these identified discoveries/ fields is about 88 million tons of oil and oil equivalent gas. The biggest discovery among the lot is the D-18 in Mumbai Offshore that alone holds 14.78 million tons of in-place oil reserves. Among the gas discoveries, the largest is ONGC’s B-9 find in the offshore Kutch basin that has an in-place reserve of 14.67 bcm. Spelling out salient features of the Marginal Field Policy, sources said the auction will be done on a new revenue sharing model where bidders will be asked to quote the revenue they will share with the government at low and high end of price and production band. The new revenue sharing regime will replace the controversial Production Sharing Contract (PSC) model where oil and gas blocks are awarded to those firms which show they will do maximum work on a block. The PSC regime allowed all their investments to be recovered from sale of oil and gas before profits are shared with the government. This model was criticised by CAG which said it encouraged companies to keep raising cost so as to postpone higher share of profits to the government. Also, single licence for exploration and exploitation of conventional and non-conventional hydrocarbons will be issued and operators will have freedom to sell oil and gas on arms on arms length market price, he said, adding that there would be no cess on crude oil. Joe Schobert Womens Jersey
Nagarjuna Oil in talks with Saudi royal family to revive refinery
Nagarjuna Oil Corporation, which is setting up a refinery in Tamil Nadu, has initiated talks with the royal family of Saudi Arabia for a possible strategic investment as it attempts to complete the project that has been held up for over four years now. In addition, public sector oil companies, led by IndianOil, are also being nudged by the government to look at possible equity investment. Sources said talks with the Saudi royal family were initiated earlier and the lenders and the PM’s Office, which began monitoring the project a few months back, were informed about the discussions around six weeks ago. In fact, the government has taken it up with some Saudi officials and the promoters have been advised to pursue the issue. A source said equity infusion from the Saudi royal family would depend on discussions at the bilateral level. Prime Minister Narendra Modi as well as petroleum minister Dharmendra Pradhan recently visited Saudi Arabia and oil was clearly the main item on the agenda. The Nagarjuna Oil refinery, which will have an annual capacity of six million tonnes in the first phase, is nearly 60% complete but has been held up since a cyclone hit Cuddalore in December 2011. It has been identified as one of the projects that the PMO is pushing for completion. Last September, the lenders had got a due diligence done and were targeting completion in 24-26 months. The exercise showed that an additional funding of over Rs 11,600 crore was required, with around Rs 3,800-crore equity required and the remaining Rs 7,800 crore coming in the form of loans. The overall project cost was pegged at just under Rs 20,000 crore. Sources said that the project has received environmental clearance, financial assistance through VAT refunds and has access to port to import crude and ship out refined products. “It is a question of arranging funds, which is possible, and we are willing to undertake some restructuring to ensure that the project is completed,” said a banker. Sources said that a consortium of lenders led by IDBI Bank was willing to provide additional funding, extend the repayment period and also convert a part of the interest component into equity or preference shares to ease the repayment burden. Chandler Catanzaro Authentic Jersey