Essar Oil to double CBM production this year
Company to ramp up wells count in Raniganj East block coal fields, seeks to triple output to 2.5 mn scmd in FY18, from current level. Essar Oil & Gas is planning to ramp up its coal-based methane (CBM) production to a minimum of 1.8 million standard cubic metres per day (scmd) by the end of the current fiscal year from the existing 0.85 million scmd and scale it further up to 2.5 million scmd during 2017-18. In this endeavour, it will increase its wells count in theRaniganj East block coal fields from the near-300 mark to 363 this year. “We’ll complete the increase in well count by March 2017. Of the near 300 wells now, 266 have been fracked while 247 have been completed and 175 have been on active de-absorbtion cycle”, the company’s CEO of exploration and production, Manish Maheshwari told Business Standard. It has a revenue-sharing contract with the government for the 260-acre Raniganj CBM project, where it has been granted mining rights for 500 sq km. So far, the company has made an investment of Rs 3,300 crore in this project, which is in advanced stage of operations. The company owns CBM mining rights in the coalfields in Raniganj in West Bengal, Sohagpur in Madhya Pradesh-Chattisgarh, Rajmahal in Jharkhand and Talcher and Ib Valley mines in Odisha making it the largest private CBM producer in India. “Rajmahal will also begin production in five years. Currently there are 20 core holes in this project and we have received the necessary approvals for land acquisition there. At present only Raniganj is producing the CBM but other projects will come up in time”, he said. This project, where the company is pumping in $ 3-4 million is in its primary stage. While land acquisition approval for the Sohagpur minefield is pending from the Chattisgarh government, the Petroleum Exploration Licence for the Talcher and Ib Valley coalfields is pending from the Odisha state government. All these coalfields is supposed to have a reserve of 12 trillion cubic feet (tcf) of CBM of which Raniganj has a possible reserve of 1.1 tcf. To extract CBM from these coal mines, the company has employed six drilling rigs of which two have been procured from Greka drilling on a contractual basis. It is also on the lookout for CBM mining projects globally including Iran but will keep off “matured markets” like USA and Australia. Besides, Essar Oil & Gas, which is expecting the global crude scenario to remain buoyant at a maximum of $ 50 per barrel of oil till mid-2017 is also planning to aggressively increase its count of petrol pumps from over 2,000 outlets to 5,000 outlets by 2018. Butch Goring Jersey
Iran seeks interest on $6.5 bn due from Indian oil refiners
Iran has asked Indian refiners like Essar Oil and MRPL to pay interest rate of Libor-plus 0.75 per cent on the USD 6.5 billion they owe it in past oil dues, to make up for the foreign exchange losses. The demand was made when Oil Minister Dharmendra Pradhan met Iranian Central Bank Governor Valiollah Seif in Tehran earlier this month. “They are seeking interest rate on past oil dues. They mentioned a rate of Libor (London Inter-Bank Offered Rate) – plus 0.75 per cent in the meeting,” a senior official said. Iran is insisting on interest being paid after differences cropped up over foreign exchange rate. Iran sold oil to refiners like Essar Oil and Mangalore Refinery and Petrochemicals Ltd (MRPL) in US dollar per barrel. 45 per cent of the oil bill was paid in rupees in a UCO Bank account while the rest 55 per cent was to be cleared whenever banking channels open. Now with lifting of sanctions, Iran has presented its unpaid bill. But Essar Oil and other refiners want to pay Iran at the exchange rate prevalent at the time of buying crude oil in the last three years. Rupee to a US dollar was under 55 in February 2013 when the 45:55 payment system became operational. Rupee to a US dollar is nearing 67 now. “They (Iran) say they are losing a lot of money due to exchange rate variation and now want to make it up through interest rate,” the official said. India is agreeable to paying some interest rate even though the ‘Bilateral Payment Agreement’ entered into in August 2012 does not provide for payment of interest. The official said Iranian Central Bank officials will shortly visit India to further discuss the modalities. Ideally, if refiners had kept dollar equivalent to their purchase in separate account over the years they could have readily paid Iran now. But for a barrel of oil they bought in February 2013 at say USD 80, they would now have to pay Rs 5,360 instead of Rs 4,400 then. He said Iran wants its dollar dues in full without factoring in the exchange rate. Refiners like Essar Oil on the other hand want to pay rupee equivalent of the purchase at current rate. Iran, he said, wants dollar equivalent of the dues in Euros. Tehran has told India that the three-year old mechanism of paying 45 per cent of oil import bill in rupees and keeping the remaining 55 per cent pending for payment channels to clear, has come to an end. It will be opening or re-activating euro accounts with Indian banks and would like to have the past money transferred from refiners into these accounts. Mike Hull Jersey
Armanco plans stake in Indian oil refineries
Armanco is planning to purchase stakes in Indian oil refining and petrochemical projects. Oil Minister Dharmendra Pradhan on Monday said the Saudi Arabian Oil Company Armanco is planning to purchase stakes in Indian oil refining and petrochemical projects. Pradhan met Khalid al-Falih, Chairman of Armanco, and asked for Saudi’s investment in a planned 1.2 million barrels per day (BPD) refinery for the expansion of Dahej’s Bina refinery and petro-chemicals. In order to meet the country’s growing oil demand, Bharat Petroleum Corporation, Indian Oil Corporation and Hindustan Petroleum Corporation are planning to build a 1.2 million BPD refinery in the country’s West Coast, costing more than Rs.1 trillion. In Central India, Bharat Oman Refineries Limited is increasing the capacity of Bina Refinery by 30%, while in Western Gujarat, OPAL, which is majorly owned by Oil and Natural Gas Ltd., is building a petrochemical plant. Amin Nasser, CEO of Armanco said the company is looking forward to expanding and distributing its investment in India, Malaysia, Vietnam, China and Indonesia. Armanco said, India would be the major driving force in the energy consumption by 2014, with its oil consumption rising by 6 million BPD to 10 million BPD. India is one of the largest consumers of crude oil, and it imports 80% of the total oil requirement. During the first quarter, India imported about 21% of its total requirement from Saudi Arabia. 889,000 BPD was sent from Saudi Arabia to India in the first quarter. Andre Johnson Jersey
India’s fuel demand likely to rise 7.3% in FY17
After registering the fastest pace of growth in 15 years, India’s fuel demand is likely to rise by 7.3 per cent in 2016-17 fiscal, lead by robust expansion in consumption of petrol and diesel. Fuel consumption, which rose 10.9 per cent in 2015-16 to 183.5 million tonnes, is projected to rise to 190.03 million tonnes, according to demand estimates made by Oil Ministry. Diesel demand, which soared 7.5 per cent to 74.6 million tonnes last fiscal, is projected to further go up by 7.7 per cent to 78.11 million tonnes. The consumption of petrol is projected to rise by 12.4 per cent to 24.14 million tonnes. Petrol consumption was up 14.5 per cent at 21.8 million tonnes in 2015-16, its highest level in two decades as automobile sales grew at their fastest pace in five years on narrowing price differential between petrol and diesel. Indian Oil Corp ( IOC) Director ( Finance) A K Sharma said the narrowing price difference between petrol and diesel has led to people preferring petrol driven vehicles. While petrol price was free or made market driven in June 2010, diesel was linked to market only in November 2014. Subsidy on diesel meant it costed about Rs 20 less than petrol. But now, a litre of petrol in Delhi costs Rs 61.13 while diesel is priced at Rs 48.01 per lire. The higher rate for petrol is a result of more taxes on it than diesel. Naphtha consumption is projected to rise by 5.5 per cent to 13.6 million tonnes in 2016-17, an indication of greater demand from industry because of economic activity picking up, the ministry’s demand estimate showed. ATF or jet fuel sale is projected to rise 3.9 per cent to 6.18 million tonnes. So is cooking gas LPG whose consumption is projected to rise by 9.3 per cent to 21.16 million tonnes. Kerosene sale, however, is projected to fall 10 per cent to six million tonnes as government pushes for use of cleaner LPG in households instead of the heavily subsidised kerosene. Kerosene demand fell to 6.82 million tonnes in 2015-16 from 7.02 million tonnes. Also in 2015-16, LPG sales were up 8.6 per cent at 19.5 million tonnes while Naphtha consumption was 20.9 per cent higher at 13.4 million tonnes. ATF or jet fuel consumption was up 8.7 per cent at 6.22 million tonnes in 2015-16, indicating robust growth in air traffic. Lauri Markkanen Jersey
Government to save Rs. 54,223 crore as oil subsidy dips 29% in 2015-16
Subsidy on petroleum products has come down by nearly 29% in 2015-16, marking a saving of Rs 54,223 crore from the year-ago period on the back of low crude prices and market reforms. Latest government data pegs subsidy on domestic LPG (liquefied petroleum gas supplied in refills as kitchen fuels) and kerosene, the only two fuels subsidised by the government, at Rs 22,085 crore in 2015-16 against Rs 76,308 crore in 2014-15. Subsidy on LPG is estimated at Rs 12,092 crore for 201516, down from Rs 40,569 crore in 2014-15. Similarly, subsidy on kerosene declined to Rs 9,993 crore in 2015-16 from Rs 24,804 crore in 2014-15, oil mi nister Dharmendra Pradhan told the Lok Sabha in a written reply on Monday . The lower subsidy bill comes as icing on the cake for policy makers. India’s crude oil import bill for 2015-16 is likely to be half the previous year’s tab. The savings, combined with the additional mop up through excise duty hikes, would provide a wide financial berth for the government’s social sector projects. Outgo on crude import is estimated to drop 45% from $113 billion in 2014-15 to $62 billion, assuming an average price of $35 a barrel for the mix of crude India buys and an exchange rate of Rs 67 to a dollar for February and March 2015, according to the Petroleum Planning & Analysis Cell, the oil ministry’s market tracker. Market reforms, namely deregulation of diesel pricing from October 2014, and effective implementation of the scheme to transfer cash subsidy on LPG directly into consumers’ account also helped save government’s outgo. While there is no subsidy on diesel since Ocotber 19 2014, the cash transfer scheme has plugged leakage of subsidy by eliminating ghost connections, one of the key factors responsible for diversion of subsidised cylinders into the black market for commercial use. Buoyed by the savings, the government is pushing state-run fuel retailers to expand their network and is set to launch on May 1 an ambitious Rs 8,000 crore programme to provide free of cost gas connection in the name of women from five crore BPL (below-poverty line) families in next 3 years to increase clean fuel penetration in rural areas. Overall LPG coverage has been going up in the last few years in the country , estimated at 61.9%. Ryan Fitzpatrick Authentic Jersey
ONGC’s PAT to take Rs 3,000 cr hit on falling gas price
State-run Oil and Natural Gas Corporation is likely to take a hit of around R3,000 crore on its profit after tax (PAT) in FY17 owing to the 20% reduction in domestic gas price for the April-September 2016 period, reports Siddhartha P Saikia in New Delhi. This is despite the company expecting a rise in its gas output by at least 2 billion cubic metres or 9% in the current fiscal year. AK Srinivasan, director (finance), told that when gas price drops by $1, the company’s top line would reduce by R4,353 crore and bottom line by R3,917 crore. The domestic natural gas price has dropped 20% to $3.06 pre million British thermal units (mBtu) for April-September 2016 against $3.82 per mBtu in the previous six months (October 2015-March 2016). The price of domestic natural gas is currently decided based on a formula approved by the Modi government in October 2014, which is linked to select global indices. To add to ONGC’s worries, its natural gas output has been falling for the past three years in a row (see chart). The government-owned firm is expected to see a substantial rise in natural gas output after completion of its two prolific projects — Daman and KG-98/2 on the east coast. Despite zero subsidy burden, upstream earnings look set to remain challenged due to weak net realisations at $34 per barrel, down 37% year-on-year, leading to a sequential decline in earnings, Morgan Stanley said in a April 7 note. In Q4FY16, the global financial services firm estimates ONGC to report Ebitda (earnings before interest, taxes, depreciation and amortisation) of `8,000 crore, down 27% year-on-year, while PAT is likely at `2,820 crore, which is a 28% drop on a year-on-year basis. ONGC maintains that it could have also produced natural gas at the same rate as last year had some unavoidable circumstances not come its way. Several reasons have been cited for a drop in gas production including a fire at a GAIL (India) pipeline last year in East Godavari district of Andhra Pradesh, which led to the shutting down of the east coast gas fields for more than four months. Also, ONGC has to undertake safety repairs of a 42-inch gas pipeline at Hazira, do a maintenance shutdown at its Bassein field and come to terms with a natural decline from existing fields. Russell Okung Womens Jersey
Saudi Aramco studying offers for Indian oil refinery stakes: Dharmendra Pradhan
Saudi Aramco is considering proposals to buy stakes in Indian oil refining and petrochemical projects, India’s Oil minister Dharmendra Pradhan said on Monday, as the world’s biggest oil exporter seeks outlets for its oil. India, the world’s third-biggest oil consumer, imports almost 80 percent of its crude requirements, mostly from Middle Eastnations. In the first quarter, Saudi Arabia was India’s biggest exporter of oil, sending about 889,000 barrel per day (bpd) to the country, or about 21 percent of the total. Pradhan earlier this month met with Saudi Aramco chairman Khalid al-Falih and sought Saudi investment in a planned 1.2 million bpd refinery on India’s west coast, the expansion of the Bina refinery and a petrochemical plant at Dahej, he said today. “All the three we have offered to Saudi. The two sides will decide on the proposals in a time bound manner,” Pradhan told Reuters, meaning there are deadlines for reaching investment decisions. Saudi Aramco did not respond to an email from Reuters seeking comments. Three Indian state refiners – Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp – plan to build the 1.2-million bpd refinery on the country’s west coast at a cost of more than 1 trillion rupees ($15.02 billion) to meet the country’s growing fuel demand. Bharat Oman Refineries Ltd is expanding the capacity of the Bina refinery in Central India by 30 percent to 156,000 bpd while OPAL, majority owned by Oil and Natural Gas Ltd, is building a petrochemical plant in Western Gujarat state. Saudi Aramco Chief Executive Amin Nasser last month said his company will is looking to expand its downstream investments in China, Malaysia, India, Vietnam and Indonesia. Saudi Aramco’s expansion into refineries in major markets help guarantee demand for its crude oil exports amid intensifying global competition. India will be the most important driver of world energy demand growth in the years to come with its oil consumption rising by 6 million bpd to about 10 million bpd by 2040, according to the International Energy Agency. In the fiscal year to March 2016, the country’s fuel demand surged at its highest pace in at least 15 years.
Next oil downturn? Looming gasoline glut threatens crude’s rebound
A rebound in oil prices this year from 12-year lows is in danger of coming to a crashing halt, as the main engine of global demand growth for the past several years starts to sputter amid signs of a gasoline glut. Crude oil has rallied more two-thirds from its mid-January nadir on robust demand from refineries worldwide, stoking cautious optimism among producers and exporters that the epic rout that slashed global prices by 75 per cent between mid-2014 and early 2016 is finally over. But rampant production of oil products, especially in Asia, is threatening to derail that recovery. Several major gasoline importing countries have started to export, as excess supplies of fuels overflow storage facilities and erode refinery profits. Inventories near historic highs “Asia has overcapacity in refining, so that’s ruining margins,” said Oystein Berentsen, managing director for crude at oil trading firm Strong Petroleum in Singapore. “Japan is exporting and product stocks are still building. In China, new refiners are exporting as much as they can, so they’re flooding the market. At some stage, the refining overcapacity will have an effect on crude.” Soaring output has left the world awash with cheap crude as supply exceeds demand by 1 million to 2 million barrels per day. That should be good news for refiners, but “crack spreads” – the difference between the cost of crude and its refined derivatives often used to estimate refining margins – on most oil products have slumped in Asia lately as output exceeds demand, causing inventories to swell. Even gasoline margins – the biggest source of profits for most refiners over the past year – are down nearly 40 per cent since March as storage hubs such as Singapore, where inventories are near historic highs of 15 million barrels, struggle to cope with the glut. With Asia’s big emerging economies driving most demand growth, the effects will be felt globally. “Asia contributed more than 50 per cent of global gasoline growth last year,” said Energy Aspects analyst Nevyn Nah. “Yet gasoline cracks are way lower this year compared to the same time last year because supply has overwhelmed.” Oil market analysts at Barclays said on Monday that “non-OECD product exports… have the potential to move prices lower over the next several months”. Falling profits Asian benchmark refining margins started 2016 near multi-year highs, spurring refiners to churn out as much fuel as they could. The impact of that oversupply was felt first in products such as heavy oil, including fuel for large ships that has been hit as Asian economies have slowed, and diesel, the main fuel for heavy industry. Diesel margins in China have fallen to six-year lows. And margins are coming under pressure in Europe and North America too, although they are still better for refiners than in Asia. “People have spent a lot of money in the past three to four years … to make more diesel because that’s what the world was desiring,” said John Auers, executive vice president at consultancy Turner, Mason & Co. The remaining bright star in refining had been gasoline, also known as petrol, backed by roaring car sales in China and India, where a combined 3 million new vehicles hit the road every month. In the United States, petrol demand is also strong, yet data from the US Energy Information. Administration (EIA) shows that stocks are only just below their highest levels seasonally since data became available in 1990. Rise of the teapots Gasoline margins in Singapore, Asia’s pricing benchmark, have collapsed by half since the beginning of the year to just over $7 per barrel as new exports hit the market. In Japan, where petrol demand is waning because of the stalling economy, a falling population and the rise of electric cars, refiners that used to import crude to supply home markets now target international buyers. “Domestic demand is on the decline,” said Yasushi Kimura, president of the Petroleum Association of Japan (PAJ), a refiners and distributors body, adding that as a result producers were “pursuing business opportunities overseas”. And in China the rise of independent refiners, known as teapots, has driven exports of gasoline and diesel as refineries churn out more fuel than even fuel-thirsty China needs. China’s diesel exports soared 316.5 per cent in March from a year earlier to 1.25 million tons, customs data showed on Thursday. Gasoline exports rose 9.1 per cent to 670,000 tons. With similar developments in Taiwan, Asia is seeing so much gasoline flooding the markets that even the rise of India isn’t able to absorb the surplus. Glut in refined products In Singapore, traders have started storing excess gasoline aboard tankers as they run out of onshore storage. Goldman Sachs already warned late last year that an emerging glut in refined products would eventually spill back into the crude market. “If all the major consumers sell off their gasoline, it begs the question who will buy it?” said one Singapore fuel trader. “The answer is that much will remain unsold and in storage, and once that happens prices will crash.” Detroit Lions Womens Jersey
EIL to provide consultancy to Bangladesh Petroleum Corp
State-owned consultancy firm Engineers India Ltd (EIL) today said it has signed a contract with Bangladesh Petroleum Corporation (BPC) for providing project management consultancy services for a $ 1.7 billion refinery expansion project. EIL will earn $ 16.54 million in consultancy fee for the project, the company said in a statement here. The contract has been signed on April 19. “This will be the largest ever single consultancy assignment for EIL in Bangladesh,” it said. BPC is expanding its Eastern Refinery at Patenga at the cost of $ 1.7 billion over the next three years. The expansion will take the refining capacity to 4.5 million tons from present 1.5 million tons per annum. Eastern Refinery Ltd was set up at Patenga in 1968 with an installed capacity of 1.5 million tonnes per annum. P. J. Williams Womens Jersey
BPCL gets green nod for Rs 694 crore LPG project in West Bengal
State-owned fuel retailer BPCL has got green nod for its Rs 694-crore project of developing LPG import terminal as well as storage, bottling and bulk distribution facilities at Haldia Dock Complex in West Bengal. At present, domestic production of LPG is around 12.38 million metric tonne per annum (mmtpa), much lower than the estimated demand of 18.65 mmtpa for this year. The proposed project aims to boost supply and help achieve the government’s target of making LPG available to each household by 2018. “Based on the recommendations of the Expert Appraisal Committee (industry), the environment ministry has given environmental clearance and Coastal Regulation Zone (CRZ) clearance to the BPCL’s project in West Bengal,” a senior government official said. The green nod is subject to certain specific and general conditions, the official said. The proposed project will ensure LPG supplies to far-flung areas of eastern and north-eastern regions and will create an infrastructure to import the eco-friendly LPG fuel, the official added. As per the proposal, Bharat Petroleum Corporation (BPCL) will set up an import terminal at Haldia to import 1 mmtpa of refrigerated Propane and Butane and transfer it through 7.5-km long twin transfer pipeline for LPG production, despatch of bulk LPG via road tankers and bottling of LPG in cylinders. The proposal also includes setting up of a bottling plant comprising two LPG-mounded bullet storage facility of 350 tonnes capacity each, besides loading facilities, allied machineries, loading gantries for bulk tanker and filled cylinder despatch through road within the land allotted. The estimated cost of the proposed project is Rs 694 crore, which is to be completed in a year from the date of award of the environment clearance. BPCL, one of India’s four major integrated petroleum refining and marketing companies, produces a diverse range of products from petrochemicals and solvents to aircraft fuel and specialty lubricants. The company markets its products through its wide network of petrol stations, kerosene dealers, LPG distributors, besides supplying fuel directly to hundreds of industries, and several international and domestic airlines. Jeff Beukeboom Authentic Jersey