NEW DELHI: State-owned Hindustan Petroleum Corp Ltd (HPCL) today reported a four-fold jump in its net profit in the March quarter on back of lump sum subsidy it received from the government to cover for fuel losses in the 2011-12 fiscal.
Net profit in January-March quarter rose to Rs 4,630.99 crore from Rs 1,122.66 crore in the year ago period, the company said in a press statement here. HPCL got Rs 18,342.77 crore in cash subsidy from the government to make up for 60 per cent of the revenue it lost on selling diesel, domestic LPG and kerosene. It got another Rs 12,079.75 crore from upstream oil companies like ONGC to make up for the rest.
The company, however, posts a 40 per cent drop in its net profit in the 2011-12 fiscal to Rs 911.43 crore. This profit was on a turnover of Rs 188,131 crore. “The lower profit after tax was mainly due to increase in interest costs to Rs 2,139 crores, up from Rs 892 crores in the previous year, which was mainly due to increase in gross under-recoveries (revenue loss on fuel sales) and delay in receipt of compensation for the same,” it said. HPCL said sale of petroleum products in the domestic market were at an all time high of 27.75 million tons during the year 2011-12, registering an increase of 7.9 per cent over the previous year, which was the highest growth in the industry.
Its refineries at Mumbai and Visakh processed 16.19 million tons of crude during 2011-12 as compared to 14.75 million tons in the previous financial year. They earned USD 2.89 on turning every barrel of crude oil into fuel.
OIL PIPELINE TO WAGAH ON THE CARDS: REPORT
ISLAMABAD:Indiahas offered to build a pipeline to the Wagah land border and supply 50 million tonne of POL products a year to meetPakistan’s requirement, according to media reports on Tuesday.
The offer was made during talks on Monday between a visiting Indian delegation led by P Kalyanasundaram, Director (international cooperation) in the Petroleum Ministry, and a Pakistani team headed by joint secretary Shabbir Ahmed of the petroleum ministry.
The Indian team also met petroleum minister Asim Hussain, who saidPakistanis interested in importing furnace oil and diesel.
Indiaoffered to build a pipeline to the Wagah border to export oil to meet all ofPakistan’s needs ifNew Delhiis assured of purchases in large quantities over the long run, The Express Tribune quoted its sources as saying.
Officials saidPakistancan get oil supplies fromIndiaat prices that are 30% cheaper because of low transportation costs.
The News daily reported thatIndiahad come up with a “surprise offer” to cater to all of Pakistan¿s petroleum needs by exporting 50 million tonnes of POL products per annum. It also offered to provide POL products at prices lower than that paid byPakistanfor imports from the Gulf.
An unnamed Pakistani official told The Express Tribune that the two countries were expected to sign a memorandum of understanding relating to import of oil and liquefied natural gas (LNG) fromIndia. “Indiahas told us that it has a surplus capacity of 50 million tonnes of oil,” he said.
During the first day of technical-level talks inIslamabadon Monday, the Pakistani team expressed desire to import all petroleum products, including high-speed diesel, furnace oil, petrol and jet fuel.
At the same time,Pakistanoffered to export naphtha — a surplus product — toIndiaso that it could be converted into petrol and re-exported toPakistan. “Indiaalso needs naphtha for its industries,” an official told The Express Tribune. The two sides are expected to finalise prices of petroleum products and transportation charges, another official said.
Besides laying an oil pipeline to the Wagah border, the two sides discussed the possibility of oil being shipped by sea to meet the demand in southernPakistan. Though import of oil by ship was considered cheaper, the pipeline was described as the cheapest option.
The two sides are also expected to discuss the import of 200 million cubic feet of liquefied natural gas a day fromIndia.
Pakistani authorities believe the import of LNG fromQatarand other countries likeMalaysiawould take three years, whileIndiamight start supplies in six to eight months, an official said.
Indiahas the capacity to refine 250 million tonnes of petroleum products whilePakistan’s refining capacity currently stands at 20 million tonnes a year.
Pakistanconsumes 6.9 mt of diesel a year, of which domestic oil refineries produce 3.2 to 3.4 mt with the rest being imported.
Pakistan’s furnace oil demand is about nine million tonnes, of which domestic refineries produce about 2.5mt.Pakistanis working on new power plants that will increase demand for furnace oil in coming years.
ONGC Q4 NET MORE THAN DOUBLES TO RS. 5,644 CRORE
NEW DELHI: State-owned Oil and Natural Gas Corporation (ONGC) on Tuesday reported a 102% jump in net profits for the fourth quarter of 2011-12 at R5,644 crore as a large part of its oil subsidy liability to retailers like IOC had been paid in the previous quarters, unlike the last quarter of the previous fiscal, during which it had bunched up.
ONGC’s turnover for the quarter rose 22% to R18,976 crore from the same time a year ago. Net profit for the whole fiscal jumped 33% to R25,123 crore on a record turnover of R66,152 crore, which was a 15% improvement from a year ago.
ONGC chairman Sudhir Vasudeva told reporters that despite crude oil price fetching $121.6 in world markets, the company could realise only $50.29 a barrel in the fourth quarter of 2011-12 and $47.95 in the whole fiscal due to the subsidy burden. ONGC paid the highest ever discount to retailers IOC, HPCL and BPCL at R44,466 crore in 2011-12, which was 79% more than what it gave the previous year.
That adversely impacted the exploration major’s profit after tax to the tune of R25,535 crore. In the fourth quarter of 2011-12, the company paid R14,170-crore subsidy compared to R12,136 crore in the corresponding period a year ago.
“Our cost of crude oil production is $44 a barrel with the increase in the cess on the commodity. With the post discount rate of $44.32 a barrel, we are just breaking even,” Vasudeva said. He said that such subsidy assistance to retailers for keeping consumer prices low has eaten into the company’s resources for buying natural resource assets abroad.
ONGC director (finance) AK Banerjee said that with the depreciation of the domestic currency by every rupee, the positive impact on turnover is R1,600 crore.
But the company does not entirely benefit from this as most of the benefit from high global crude price and the currency depreciation is passed on to retailers as discounts to protect consumers.
The board of directors approved an extra 40% dividend, that takes the entire fiscal’s payout to R8,342 crore.
MRPL TO CUT IRANIAN OIL IMPORTS BY 20 PER CENT THIS YEAR
NEW DELHI: MRPL, the nation’s largest buyer of Iranian crude oil, will cut oil imports from thePersian Gulfnation by over 20 per cent this fiscal but uncertainties remain on how the oil will be shipped from July in absence of insurance cover.
“MRPL reduced crude oil import fromIranto 6.3 million tons in 2011-12 from 7.1 million tons in 2010-11. This year it will import 5 million tons,” MRPL Chairman Sudhir Vasudeva told reporters here.
Vasudeva, who is also the Chairman and Managing Director of Oil and Natural Gas Corp (ONGC), said MRPL was increasing imports from Kuwait and Abu Dhabi to make up for shortfall from Iran.
Mangalore Refinery and Petrochemicals Ltd or MRPL is a unit of ONGC.
Separately, Hindustan Petroleum Corp Ltd (HPCL) said it will cut imports fromIranby 15 per cent to 1.5 million tons this fiscal.
Essar Oil, the second largest user of Iranian oil in the country, too is reducing imports from 100,000 barrels per day (5 million tons) to 85,000 bpd.
However uncertainties remain on shipping of oil from next month end. FreshUSlegislation that targetsIran’s oil industry is to come into force on June 28. Also, European Union states are to impose a total ban on shipments of Iranian crude oil in July.
Indian refiners are finding ships with insurance cover, to ferry oil fromIran. Insurance companies are refusing to cover for risk.
“There is a possibility of stoppage of oil from July if we don’t get insurance,” HPCL Chairman and Managing Director Subir Roy Choudhary said here.
Vasudeva said there are difficulties but “local insurance companies” are likely to provide cover.
Indian refiners are currently paying in euros for Iranian crude imports throughTurkey’s Halkbank.
(Source: The Economic Times, May 30, 2012)
REFINERS COULD CUT PETROL PRICES FROM JUNE: HPCL
NEW DELHI: Indian state-fuel retailers could cut retail prices of gasoline by about two rupees a litre from next month if global oil prices and the rupee stabilise at current levels, said S.Roy Choudhury, chairman of Hindustan Petroleum Corp.
State-fuel retailers are slated to review retail petrol prices on May 31. Indian firms last week raised retail gasoline prices by 6.28 rupees a litre excluding taxes, translating to a hike of 7.54 rupees/litre at the retail level.
To soften the blow of the steep rise, many states including the national capitalDelhihave reduced local taxes on the increased component, restricting the rise to 6.28 rupees a litre.
Separately, HPCL’s head of marketing K. Murali said HPCL plans to import 264,000 barrels per day (bpd) of crude oil in 2012/13 as against 250,000 bpd in the last fiscal.
HPCL has reduced the size of its annual deal withIranby about 15 percent to 30,000 barrels per day (bpd) for the current fiscal year and is looking at diversifying its crude import basket.
The company’s board has approved signing its first-ever annual import deal withAzerbaijan’s national oil company SOCAR to buy 10,000 barrels per day (bpd) of oil in this fiscal year, Murali said.
HPCL is currently paying in euros forIrancrude imports viaTurkey’s Halkbank, it head of finance B. Mukherjee said.
The state-run refiner operates a 166,000 bpd refinery at Vizag in southernIndiaand a 130,000 bpd plant in Mumbai, in westernIndia.
It also has a stake in 180,000 bpd Bathinda refinery in northernPunjabstate.
RIL BUYS BACK SHARES WORTH RS 500 CR IN 10 SESSIONS
Mukesh Ambani’s Reliance Industries Ltd (RIL) has bought back shares worth a little over Rs 500 crore in just 10 trading sessions. Between May 11 and 24, the country’s second-highest valued company purchased 7.78 million shares.
As on May 24, RIL had purchased a total of 19.22 million shares, shows data on the Bombay Stock Exchange website. Rough calculations show the company has so far bought shares worth Rs 1,364 crore, about 13 per cent of the maximum buyback amount. RIL’s Rs 10,440-crore buyback offer is the largest ever in India Inc’s history. The programme started on February 7 and is scheduled to continue till January 19, 2013.
According to the new rules, a company will have to buy back at least 25 per cent of the maximum buyback amount. Though the buyback programme began in February, it gained momentum only in May. The company picked up 12 million shares this month as against three million in April. Interestingly, a fourth of the share trading volume in the RIL counter this month has come from the buyback.
But the buying has still done little to boost the stock price, almost unchanged at Rs 695 per share. However, the rising momentum is seen as a positive development by analysts, who feel it will protect the stock. Foreign broking house Morgan Stanley has upgraded RIL from ‘underweight’ to ‘equal weight’. The US-based firm has said that with the buyback programme gaining momentum, one will see little downside for the stock. And, that the stock trading at multi-year lows make its valuations “compelling”.
On May 16, RIL shares fell to a three-year low in intra-day trade, at Rs 673, on production concerns at its D-6 block in the Krishna-Godavari (KG) basin. Recently, the company had revised downward the assessment of its proven natural gas reserves at the block.
The stock closed on Tuesday at Rs 700.95, down Rs 0.70, or 0.1 per cent. S P Tulsian, an independent equity analyst, said chances of further downside to the stock from the current levels were minimal due to the buyback. “The stock is looking attractive in terms of valuations and Rs 700 looks to be a strong support level,” he said.
OIL LOWER AMID FEARS OF SPAIN BAILOUT
SINGAPORE: Oil prices edged lower in Asian trade today as concerns that debt-plaguedSpaincould be forced to seek a bailout roiled the markets.
Prices were under pressure after the euro plummeted, making dollar-priced oil more expensive and dampening demand.
New York’s main contract, West Texas Intermediate crude for delivery in July was down 41 cents to $90.35 per barrel while Brent North Sea crude for July shed 43 cents to $106.25 in morning trade.
“Spainremains the key worry for the eurozone debt crisis, eclipsing optimism inGreecethat the pro-bailout conservatives are leading the polls ahead of next month’s election,” said analysts from DBS Bank in a commentary.
“As far as the eurozone crisis is concerned, the market does not see the light at the end of the tunnel,” it added.
The Spanish government yesterday announced new bonds to finance debt-struck regions. As banks scrambled to clean up bad loans, investors feared the country may be inching closer towards seeking international aid.
Across the Atlantic, analysts forecastUScrude inventories to remain at the highest level for this time of the year in 22 years, indicating faltering demand in the world’s largest oil-consuming economy.
Early forecasts call for US crude stocks to drop by 400,000 barrels after rising by more than 35.4 million barrels over the past eight straight weeks, Dow Jones Newswires reported.
“AsUSstockpiles hit their highest level for more than 20 years, confidence is falling off a cliff,” said Justin Harper, market strategist at IG Markets Singapore.