State-run oil and gas firms set to invest Rs 1.62 trillion this year

Source: Business Standard, Aug 26, 2020

New Delhi: State-run oil and gas firms are set to invest Rs 1.62 trillion in FY21 – including capital expenditure (capex) and operational expenditure (opex) — which is expected to generate employment of 240 million man-days.

At present, the sector is seeing work on 8,363 projects with an anticipated cost of Rs 5.88 trillion.

These expenditure figures, expected to give a fillip to the employment scenario, were lined up by the companies in a review meeting by Petroleum Minister Dharmendra Pradhan recently.

“The amount spent will create a virtuous cycle of investments and play a crucial rule in reviving the economy. It will also provide employment opportunities to people,” said the ministry. The major 25 ongoing projects have an anticipated cost of Rs 1.67 trillion and have incurred Rs 7,861 crore of capex, leading to generation of 7.65 million man-days so far.

Of the total anticipated cost of such projects, close to Rs 1.2 trillion is targeted to be incurred as capex through FY20-22. In FY21, Rs 26,576 crore of capex had already been incurred till August 15. An amount of Rs 3,258 crore was paid on account of labour during this period.

India’s June crude oil imports lowest in over 5 yrs; exports fall

Source: Business Standard, Aug 02, 2020

New Delhi: India’s crude oil imports fell in June to their lowest level since February 2015, while year-on-year refined product exports declined for the first time in almost a year, government data showed on Friday.

Crude oil imports last month dropped about 19% from a year earlier to 13.68 million tonnes, down for a third straight month, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed.

“This is likely driven by not yet fully recovered oil demand and expectation that it might take longer to have Indian oil demand rising strongly again,” said UBS analyst Giovanni Staunovo.

“Together with higher crude imports at the start of the year, crude tanks are still well filled, reducing the need to import more crude for now.”

Fuel demand in India, the world’s third-biggest oil importer and consumer, fell 7.8% in June compared with a year earlier as surging coronavirus cases and rising retail prices hammered demand.

“India’s fuel demand recovery will continue to stall as coronavirus cases continue to skyrocket,” said OANDA senior market analyst Edward Moya.

India’s tally of Covid-19 cases jumped by a record 55,078 on Friday to 1.64 million in India.

Oil product exports fell about 6%, their first year-on-year fall since August 2019, primarily driven by declining diesel exports, which slid to their lowest since April last year.

Shipments of diesel also registered their first year-on-year decline since August last year, falling 5.7% to 2.09 million tonnes.

“To contain the rising inventories, some refineries are now planning to conduct maintenance and shutdowns in late third quarter of 2020, which will likely keep exports in check,” said Aaron Cheong, oil product analyst at consultancy Energy Aspects. The country’s top refiner, Indian Oil Corp, said it would continue to operate its refineries below capacity in 2020/21 as it expected local and overseas fuel demand to remain subdued.

India eyes access to American crude-oil storage facility

Source: The Hindu Business Line, Jul 22, 2020

New Delhi: India finally seems to be getting its act together for ensuring energy security by focussing on crude-oil storage capacities not only in the country but also acquiring access to capacities overseas including in the US.

“To make the most of the low crude-oil prices, India has initiated talks with the US to gain access to oil storage facilities in that country,” said a senior official, adding that this was also discussed at the recently held second ministerial meeting of the US-India Strategic Energy Partnership (SEP), which covered the entire gamut of bilateral energy issues.

In fact, after the meeting, Minister for Petroleum and Natural Gas and Steel Dharmendra Pradhan had said that the two sides have signed a Memorandum of Understanding to begin cooperation on operation and maintenance of strategic petroleum reserves, including exchange of information and best-practices.

They also discussed the possibility of India storing oil in the US Strategic Petroleum Reserve to increase their nation’s strategic oil stockpile. A Petroleum Ministry official in the know told BusinessLine that preliminary meetings have happened for accessing the facility in the US but talks are going to be held to work out the nuances, in the coming days.

This is mainly for the American oil which India will buy, the official said, adding that once the access is there, India, depending on the need, can either bring the oil home or sell it there itself. Modalities on capacity available and pricing will be worked out when the talks reach the final stages.

‘Leveraging expertise’

As regards to the MoU between the US Department of Energy and the Indian Ministry of Petroleum and Natural Gas concerning cooperation on strategic petroleum reserves, the official said: “We are at a nascent stage as far as strategic reserves are concerned. The US has been operating them for years, so we wanted to leverage their experience and expertise. Besides, in our country, even if we start work at phase-II of building capacities, it will take at least six years to complete. So, the opportunity of getting cheap crude should not be let go.”

Meanwhile, India Strategic Petroleum Reserves Ltd (ISPRL) has successfully filled the current capacities available in India. The capacities were filled by the national oil companies. The bilateral hydrocarbons trade between India and the US alone touched $9.2 billion during 2019-20, accounting for 10 per cent of the overall bilateral trade. In fact, India is now the fourth-largest export destination for US crude and the fifth-largest for US LNG. The trend is expected to continue with Indian companies entering into more long-term contracts from this year.

India-Bangladesh form LPG joint venture

Source: The Economic Times, Jun 30, 2020

NEW DELHI: New Delhi: Indian Oil Corp has agreed to form an equal joint venture with Bangladesh’s Beximco LPG to set up a terminal to import liquefied petroleum gas in Bangladesh.

Indian Oil’s Dubai unit IOC Middle East FZE and Beximco’s holding company RR Holdings Ltd, Ras Al Khaimah, UAE have signed an agreement for LPG business in Bangladesh, as per a statement by Indian Oil.

The joint venture would begin with acquiring Beximco’s existing LPG assets in Bangladesh. “We intend to set up a large LPG terminal at a deep-water port in Bangladesh, which would facilitate receipt of LPG in Very Large Gas Carriers, leading to reduction in cost of imports. Reduction in cost of import would help make LPG available at an affordable price to the people of Bangladesh,” said Sanjiv Singh, Chairman, Indian Oil.

The JV also intends to diversify into other downstream oil and gas businesses such as lube blending plant, LNG, petrochemicals, LPG export to north east India through pipeline between two nations and renewable energy, the statement said.

GAIL, Petronet join India’s first gas trading platform

Source: LiveMint.com, Jun 16, 2020

Liquefied natural gas (LNG) terminal owners, state-run GAIL (India) Ltd and Petronet LNG Ltd (PLL), have joined India’s first natural gas exchange that went online on Monday, said Rajesh Kumar Mediratta, director, Indian Gas Exchange.

With others such as Manikaran Power, Torrent Power and Adani Gas on board, the exchange will help revive stranded gas fuelled power projects and reduce fertilizer prices and subsidy, Mediratta said.

The other members and clients of the exchange are Geeta Power, GMR Group, Piramal Glass, Asahi Glass, Gujarat State Fertilizers & Chemicals Ltd, Gujarat Narmada Valley Fertilizers & Chemicals, Krishak Bharati Cooperative Ltd, Saint Gobain, Kajaria Ceramics, Bhagyanagar Gas, Maharashtra Natural Gas Ltd, Haryana City Gas, and Gujarat Borosil.

The natural gas trading platform, which has been set up by Indian Energy Exchange, will also help discover market prices of gas on the exchange, launched by petroleum minister Dharmendra Pradhan.

“The Indian Gas Exchange will offer six market products beginning from day-ahead market and forward contracts, including daily, weekly, weekday, fortnightly and monthly, at three physical hubs in Dahej, Hazira in Gujarat, and Odoru in Andhra Pradesh to begin with while it plans to add more hubs soon,” the company said.

India consumes around 145 million standard cubic metres a day (mmscmd) of gas. India, along with China, is expected to be a significant driver of demand for natural gas post 2021.

Being the biggest emitter of greenhouse gases after the US and China, India aims to achieve its emission reduction commitments through the use of natural gas and green fuel.

“We as IEX desire to play in the overall energy basket of the country, which is beyond electricity. So, electricity is one and gas is the other and there could be many similar players of energy baskets,” said Rajiv Srivastava, managing director and chief executive officer, IEX. The government has been pushing for a gas-based economy. Gas accounts for around 6.2% of India’s primary energy mix against the global average of 24%. The government plans to increase this to 15% by 2030. India’s gas demand is expected to be driven by fertilizer, power, city gas distribution and steel.

India’ petroleum product demand doubles in May, after sharp drop in April

Source: LiveMint.com, Jun 10, 2020

NEW DELHI: With country’ petroleum product demand doubling in May, India’s largest refiner Indian Oil Corporation Ltd (IOC) on Wednesday said its refineries are operating at 83% of their capacity.

This comes in the backdrop of Indian economy slowing coming back to life after the world’s strictest lockdown. The state owned refiner had slashed its refining capacity to 39%, following a sharp drop in India’s petroleum product demand because of the coronavirus outbrea.

“The crude oil throughput of IndianOil refineries crossed 80% as on date, with consumption of all petroleum products put together almost doubling in May ’20 as compared to April ’20 levels,” IOC said in a statement.

India’s power and overall energy demand, which had nosedived, is also slowly getting to their pre-lockdown levels, Mint reported. Energy consumption, especially electricity and refinery products, is typically linked to overall demand in an economy.

“The Corporation has been able to gradually raise the throughput of its refineries from about 55% of rated capacity in the beginning of May ’20 to about 78% by the month end, and 83% as on date. Capacity utilisation of the refineries had dropped to almost 39% in the beginning of Apr.’20,” the statement added.

With the world slowly opening up for business, oil prices are up again after April’s downward spiral, when demand almost vanished in a world under lockdown. The international benchmark Brent crude was trading at $40.44 per barrel on Wednesday, and West Texas Intermediate (WTI) was at $38.06 per barrel at the time of going to press. Brent crude hit a 21-year low and US oil futures slumped to negative for the first time as the glut overwhelmed the world’s limited storage facilities, triggering a wave of selling by traders in April.

Transportation demand has come down with citizens cooped indoors, though there has been an increase in the demand for domestic cooking gas during the nationwide lockdown.

“While the consumption of all petroleum products put together almost doubled in May ’20 compared to April ’20 levels, growth of petrol was higher at about 70% and diesel at 59%. Compared to May ’19, or the early months of the current year prior to the lockdown, the growth percentage has still to catch up by 24% to 26% for all products. In the case of LPG, with the Corporation rolling out about 25 lakh cylinder refills a day, the average backlog is less than a day,” the statement said.

Mint reported on 5 June about traffic congestion, power generation, port activity, vehicle registration and other high-frequency data point to the economy perking up as India reopens, recovering from a devastating slump as factories went idle and people were ordered to stay at home amid the coronavirus pandemic.

“Along with growing consumption of white oils petrol and diesel (except ATF, which is still lagging at about 24% of normal level), the demand for black oils and specialty products like fuel oil, bitumen, petcoke and sulphur has also shown marked improvement, facilitating increase of refineries throughput,” the statement said.

The development is also important as India is a key refining hub in Asia, with an installed capacity of more than 249.36 million tonnes per annum (mtpa) through 23 refineries. Large Indian refiners include IOC, Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd, Nayara Energy Ltd (formerly Essar Oil) and Reliance Industries Ltd.

“With Guwahati Refinery coming online after maintenance shutdown, IndianOil refineries are geared to operate at about 90% of their capacities this month, as products demand in the market increases, together with strategic product exports,” the statement said.

The cost of the Indian basket of crude, which comprises Oman, Dubai and Brent crude, averaged $56.43 and $69.88 per barrel in FY18 and FY19, respectively. It was $19.90 in April, according to data from the Petroleum Planning and Analysis Cell. The price was $40.54 a barrel on 9 June.

Govt cuts domestic natural gas price by 26% for first half of FY21

Source: Business Standard, Apr 01, 2020

New Delhi: The government on Tuesday cut the domestic natural gas price for the April-September period to $2.39 per million British thermal unit (mBtu), the lowest in six years since the Narendra Modi government introduced the new pricing formula in November 2014.

The rate for gas produced from difficult fields will be $5.61 mBtu on gross calorific value basis. This ceiling price will be applicable for deepwater, ultra-deepwater, and high pressure-high temperature areas, including the under-development fields of Reliance Industries in KG-D6 block in Eastern Offshore.

On the other hand, the price of the majority of natural gas produced in the country, including by companies like Oil and Natural Gas Corporation and Oil India, will be up 26 per cent to $2.39 a unit for the six months, up from $3.23 a unit for the October 2019 to March 2020 period, according to a notification by the Petroleum Planning and Analysis Cell (PPAC).

For the October-March period, the price for difficult field was at $8.41 per mBtu. Earlier the lowest price is the last six years was $2.48 a mBtu for the period of April-September 2017.

After coming to power in 2014, the Modi government had scrapped a pricing formula suggested by a panel headed by C Rangarajan, based on the average of netback price that LNG exporters to India got and the rate commanded by global gas producers. Instead, a new pricing was introduced in November 2014, based on the average rate prevailing in exporting countries like the US, the UK, Canada, and Russia.

“The new pricing will definitely make exploration unviable for domestic producers. With international prices coming down, the government should have considered a lower cap to boost production.

Anything below $3 a unit will make it difficult for producers,” said a senior executive of a private sector oil and gas major.

According to the government data, gross production of natural gas for February 2020 was 2,341 MMSCM (million metric standard cubic meters), which was 8.8 per cent lower than the corresponding month of the previous year. The cumulative gross production of natural gas of 28,769 MMSCM for FY20 until February was 4.3 per cent less than the corresponding period of the previous year. Besides the drop in prices, the current lockdown is likely to make business difficult with less demand. According to a report by Emkay, the current lockdown has led to a 15-20 per cent hit on demand due to the closure of most factories in sectors, excluding fertilizer, power and refineries. GAIL may see a 15-20 million standard cubic meter per day (mmscmd) decline in marketing volumes as the lockdown progresses, while transmission volumes may fall up to 10-15mmscmd, the report said.

Centre’s ambitious oil & gas output target hits environment hurdle

Source: Business Standard, Dec 18, 2019

New Delhi: India’s ambitious target to increase domestic oil and gas production has hit the environment roadblock now.

Several assets under the discovered small fields rounds (DSF I & II) and open acreage licensing policy (OALP) are facing hurdles in getting clearances from environment, forests and wildlife departments.

According to sources, a few companies that got blocks under DSF-I are considering surrendering their blocks, too.

This is because they are left with only three months to start production, based on the initial contract with the government. Read the rest of this entry »

Import dependence rises as crude oil & gas output declines

Source: The Economic Times, Aug 04, 2019

NEW DELHI: Crude oil and gas output has declined in the first quarter of the current fiscal year, further increasing India’s dependence on imports to meet its energy needs.

Crude oil output fell 6.8% to 8.2 million metric tonnes (MMT) while gas slipped 0.5% to 8.03 billion cubic meters (BCM) in the first quarter from a year earlier. This raised India’s import dependence in oil to 85.2% from 83.8% in the yearago quarter. In gas, it increased to 50.4% from 48.7%.

Crude oil output in April-June shrank 4.74% from a year earlier for ONGC and 6.8% for Oil India. For private operators, the fall was sharper at 6.8%. Natural gas production rose 3.7% and 1.5% at ONGC and Oil India respectively during the quarter but this was more than offset by declines at private operators such as Reliance Industries and Vedanta where output slipped 18%. Read the rest of this entry »

India explores for crude oil on sweeter terms after end of Iran oil waiver

Source: LiveMint.com, Apr 23, 2019

New Delhi: India is trying to leverage its robust ties with West Asian crude oil producers such as Saudi Arabia, Kuwait and the United Arab Emirates (UAE) to source additional volumes at terms similar to those of its annual contracts in a bid to avert any sharp rise in its domestic oil prices.

India, the world’s third-largest oil importer, is in discussions with oil producers in West Asia as well as in other geographies to procure a total of about 15 million tonnes of extra crude over the year to urgently bridge a supply gap that will be caused by the exit of Iran from its energy basket.

US secretary of state Mike Pompeo on Monday announced that the Donald Trump administration would no longer grant exemptions to some countries to import Iran oil with the conditional waiver set to expire on 2 May.

India’s attempt to boost crude supplies from the Gulf nations also comes at a time when they plan to increase their investments in India. Read the rest of this entry »