World’s top infrastructure manager eyes India oil, gas pipeline assets

Source: LiveMint.com, Mar 25, 2020

The global slump in oil prices amid the coronavirus outbreak will push Indian state-owned firms to sell some assets, according to Macquarie Infrastructure and Real Assets, and the world’s biggest infrastructure investor is already in line.

“There is a fair bit of opportunity for the government to divest non-core oil and gas assets, like oil storage facilities, pipelines, transmission facilities,” Suresh Goyal who heads MIRA in India and Southeast Asia, said in an interview. “With our investment platforms, local teams, we are well placed on capitalizing this opportunity.”

While he declined to share investment projections, MIRA raised about $61 billion in capital globally last year — the highest in the world based on data from Infrastructure Investor –and has poured $2.5 billion into India over the past decade. Attracting foreign investment is crucial to meet Prime Minister Narendra Modi’s goal of spending $1.5 trillion on new roads, rail links and other infrastructure over the next five years as public finances deteriorate.

Canada’s Brookfield Asset Management last year acquired Reliance Industries Ltd.’s East West Pipeline via an infrastructure investment trust for 130 billion rupees ($1.7 billion). The government plans to split GAIL India’s transmission business into a separate entity that it could sell to strategic investors. GAIL owns more than 70% of the country’s 16,800 kms pipeline network.

“India’s energy consumption is likely to grow 60%-70% in the next decade and a half, leading to a significant jump in petroleum products and gas consumption,” said Deepak Mahurkar, leader, India oil and gas industry practice, at PricewaterhouseCoopers LLP. “This is an important story for investors, especially the global private equity firms and infrastructure asset managers.”

MIRA set shop in India in 2009, and so far more than half its investment in the country has gone to the road sector. It is now looking to exit several investments, Goyal said, while declining to share details or returns beyond saying that they were “profitable.”

One concern, however, is how quickly and strongly the economy will recover from the coronavirus-led disruption, Goyal said. Another is banks’ increasing unwillingness to lend to the infrastructure sector. Indian lenders are battling the world’s worst stressed-loan ratio, with much of the soured debt in the infrastructure space. Banks’ lending to the sector, which includes power, roads, telecom, contracted by 1.8% in the first 10 months of the fiscal year ending March 31 compared with 10.8% growth a year earlier. “The capital that we bring is in the form of equity but it does need the support of local banks for working capital,” Goyal said. “Hopefully measures taken by the government and the central bank will change things.”

India’s import of US oil jumps 10-fold to 2,50,000 bpd

Source: The Hindu Business Line, Feb 25, 2020

New Delhi: US oil supplies to India have jumped ten-fold to 2,50,000 barrels per day (bpd) in the last few years, visiting US Energy Secretary Dan Brouillette said on Tuesday.

Speaking at a business meeting alongside US President Donald Trump, he said Indian imports of US oil were 25,000 bpd a couple of year ago, and have now risen to 2,50,000 bpd. US is India’s sixth largest oil supplier.

India began importing crude oil from the US in 2017 as it looked to diversify its import basket beyond the OPEC nations. It bought 1.9 million tonnes (38,000 bpd) of crude oil from the US in 2017-18 and another 6.2 million tonnes (1,24,000 bpd) in 2018-19. Read the rest of this entry »

Natural gas prices in India likely to be cut by steep 25% from April

Source: Business Standard, Feb 21, 2020

New Delhi: Natural gas prices in India are likely to be cut by a steep 25 per cent beginning April, in line with the slump in global rates, sources said.

The price of most of the natural gas produced by state-owned ONGC and Oil India Ltd, which account for the bulk of India’s existing gas output, is likely to be cut to around USD 2.5 per million British thermal unit for the six-month period beginning April 1, from $3.23 as of now.

This will be the second reduction in six months and will reduce rates to the lowest in two-and-half-years. Read the rest of this entry »

Indian Oil to invest Rs 500 crore in Karnataka

Source: IBEF.org, Feb 17, 2019

Indian Oil Corporation (IOC), a public sector oil marketing major, plans to invest Rs 500 crore (US$ 71.54 million) at Chitradurga in Karnataka.

According to the company, the investment will be focused for setting up a terminal for receiving, storage and distribution of petroleum, oil and lubricants (POL) under a common user facility (CUF) spread across an area of about 120 acres.

A Memorandum of Understanding (MoU) was signed by the Executive Director and State Head, IndianOil, Karnataka, Mr DL Pramodh and Principal Secretary Commerce and Industries, Mr Gaurav Gupta, and exchanged in the presence of Chief Minister Mr BS Yediyurappa, Minister of Parliamentary Affairs, Coal and Mines Mr Pralhad Joshi, Minister of State for Railways Mr Suresh Angadi, and Minister for Large and Medium Scale Industries Mr Jagadish Shettar at the recently-concluded ‘Invest Karnataka’ meet at Hubballi.

Crude boost for India Inc as global oil demand dips over coronavirus epidemic

Source: LiveMint.com, Feb 16, 2019

New Delhi: The sluggish Indian economy and industries that are heavily dependent on crude oil such as aviation, shipping, road and rail transportation are likely to gain from a sudden drop in crude oil prices due to the coronavirus epidemic in China, the world’s biggest oil importer, said economists, chief executives and experts.

With various industries realigning their strategy amid energy demand forecasts being slashed due to the coronavirus outbreak, major oil importers such as India are seeking to drive a better bargain. India is the world’s third-largest oil importer and the fourth-largest buyer of liquefied natural gas (LNG).

The oil market is currently facing a situation called contango, wherein spot prices are lower than futures contracts.

“Estimates by several agencies are suggesting that Chinese Q1 crude demand will be down by 15-20%, resulting in a contraction of global crude demand. This is reflecting in the prices of crude and LNG, which are both benign for India. This will help India in its macroeconomic parameters by containing current account deficit, maintaining stable exchange regime and consequently inflation,” said Debasish Mishra, partner at Deloitte India.

The International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (Opec) have cut global oil demand growth outlook following the coronavirus outbreak.

“Sectors such as aviation, paints, ceramics, some industrial products, etc. would benefit from a benign price regime,” Mishra added.

India is a key Asian refining hub, with an installed capacity of more than 249.4 million tonnes per annum (mtpa) through 23 refineries. The cost of the Indian basket of crude, which averaged $56.43 and $69.88 per barrel in FY18 and FY19, respectively, averaged $65.52 in December 2019, according to data from the Petroleum Planning and Analysis Cell.

Govt identifies 44 new areas for city gas distribution auctions

Source: Financial Express, Feb 06, 2019

The Petroleum and Natural Gas Regulatory Board (PNGRB) has proposed 44 new geographical areas for the upcoming 11th round of bidding for city gas distribution (CGD).

According to the new tentative list, the highest number of CGD areas will fall in Tamil Nadu (eight), to be followed by Maharashtra (seven) and Madhya Pradesh (six). At present, the CGD network covers 232 geographical areas spread over 407 districts in 27 states.

Under the ninth and 10th rounds of bidding for CGD networks, the numbers of CNG stations and domestic piped natural gas (PNG) connections are expected to increase by 8,181 and 4.2 crore, respectively, in the next 8-10 years. The present share of gas in the energy basket of the country is 6.2%, and the target is to take it to 15% by 2030.

As of September 2019, there were 1,815 CNG stations and 54.2 lakh domestic connections across the country. Currently, about 76% of the compressed natural gas (CNG) stations and 80-90% of the PNG connections are concentrated in Delhi, Gujarat and Maharashtra.

The Ministry of Petroleum and Natural Gas (MoPNG) has prepared a draft policy for CGD, which, the government expects, will become a template for every state to come up with their own CGD policies. CGD network operators are seen to benefit from a sustained weakness in global spot LNG prices and an expected decline in domestic gas prices.

Kotak Institutional Equities expects domestic gas prices to decline by around $1/mbtu in the upcoming revision for the first half of FY21. Apart from state-run GAIL Gas, Gujarat Gas, Indraprastha Gas, Mahanagar Gas, Indian Oil, Hindustan Petroleum and private entities such as Adani Gas and Torrent Gas have significant presence in the sector. According to Kotak, CGD companies source around 15% of their domestic gas requirement from the Panna-Mukta-Tapti fields and after the expiry of production sharing contract from this field in December 2019, the fuel extracted from this field is seen to fall to $3.6 per million British thermal units (mbtu), against its earlier contracted price of $5.7/mbtu.

Al-Kharafi to invest Rs 49,000 cr to set up petroleum refinery in TN

Source: Business Standard, Jan 23, 2019

Chennai: Kuwait-based Al-Kharafi is likely to invest around Rs 49,000 crore to set up a petroleum refinery and petrochemical products facility at Thoothukudi in Tamil Nadu. The investment is one of the several pouring into the state.

Chief Minister Edappadi K Palaniswami said that Al-Kharafi is expected to set up a petroleum refinery in compliance with BS-VI emission norms adhering to the environmental standard to manufacture petrochemical products.

“This will bring in economic growth in the southern part of the state similar to that which took place in Jurong Island in Singapore and Dahej and Jamnagar in Gujarat,” the chief minister said after laying the foundation stone for DLF Down Town Chennai. “I assure the captains of industries present here that we will continue to fully support all your investments in Tamil Nadu.”

The state has seen 59 projects begin commercial operations in a year after the second Global Investors Meet held in Chennai last January, while another 213 are in various stages of development. Besides, the electric vehicle manufacturer BYD and major mobile phone designing and manufacturing firm Wintech have also started taking steps to set up their manufacturing facilities in Tamil Nadu, he added.

After the global meet, the state has signed 63 agreements to attract investments around Rs 19,000 crore. After setting up a high-level committee headed by the chief minister, 36 industrial projects worth Rs 14,728 crore have been awarded various approvals to start operations. This will create 22,763 employments.

Foreign Direct Investment into the state has seen an increase of around Rs 47,000 crore in the last three years, pegging it at around Rs 1,80,000 crore now, he added. The state has been constantly attracting new investments across sectors including Information Technology. The recent investments by TCS and Infosys alone, are expected to create 31,000 direct IT sector jobs in the State, he said.