NEW DELHI: Oil marketing companies — IOC, HPCL and BPCL — have benefited from a fall in crude oil price in global markets since the beginning of the fiscal, although the depreciation in rupee against the dollar has severely restricted their relief from the softening of oil price.
The price paid for a barrel of crude oil in rupee terms softened from R 6,063 in the second fortnight of April to R5,897 on May 17 as crude inched down from $116.2 a barrel to $107.87, official data showed on Friday. The benefit from this easing of dollar price was limited to a large extent by a 6% depreciation in rupee against the dollar in the period to 54.39 on Thursday.
“For a depreciation of the domestic currency by one rupee, the increase in annual under-recovery for the downstream oil industry is R9,800 crore,” said an oil industry executive.
Since fuel retailers are not allowed to reset prices as per global trends, they are losing R509 crore a day in marketing diesel, kerosene and LPG in the domestic market. They are now incurring a loss of R13.6 on a litre of diesel, R31.5 on a litre of kerosene and R480 on a cylinder of domestic LPG.
The retailers, who incurred a loss of R1,38,000 crore last fiscal on their sale of sensitive petroleum products, are now awaiting an extra cash subsidy of R49,000 crore from the government before they could finalise their fourth quarter results for 2011-12. The government had already sanctioned R45,000 crore subsidy for the first three quarters.
Oil marketing companies also have large overseas borrowings, which are prone to mark-to-market losses. Upstream companies ONGC and OilIndiawould, however, gain from a weak rupee as they sell crude in dollar prices, but it may partly be offset by a higher outgo of oil subsidy to downstream firms. Consumption of oil field services which are to be paid in dollars, however, would limit the gains of state-owned upstream companies from a favourable rupee movement. Private sector refiner Reliance Industries, which exports petroleum products, as well as Mangalore Refineries and Petrochemicals (MRPL) that do not have retail operations, are also expected to gain from a weak rupee.
OIL MINISTRY REGULATES SALE OF RAW PETROLEUM COKE
The oil ministry has directed state refiners to auction raw petroleum coke or RPC and give preference to local consumers due to growing demand of RPC by aluminum and cement manufacturers.
The ministry has directed Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd ( HPCL), last week to auction RPC. “They so far sold it on adhoc basis directly from refineries,” an oil ministry official said.
“To ensure maximum revenue, the import parity price (after adjusting freight charges and marketing costs), should be used as the floor price in the bidding process,” the ministry directive said.
For equitable distribution of RPC, refiners have been told to restrict its sale to local industrial units.
The ministry has directed companies to auction RPC in two months and thereafter invite tenders frequently.
In order to ensure that consumers are not indulging in black-marketing, oil companies have asked not to supply them RPC in access to their installed capacity.
RPC, the “bottom of the barrel” product of refinery is sold only ex refineries as oil companies do not have storage or sales points for these products, executives in state oil firms said.
There are mainly two distinctive grades of RPC; calcination or green RPC, which is used in aluminum industry and fuel grade or pet coke, which is primarily used by cement plants.
IOC, which plans to enter into merchant power business, plans to use pet coke for power generation. IOC refineries produce about 2.5 MT pet coke annually.
EGOM MADE NO NEW ALLOCATION OF KG-D6 GAS: POWER MINISTRY
NEW DELHI: The Power Ministry on Friday said no new gas has been allocated to any projects from KrishnaGodavari(KG) D6 block by the Empowered Group of Ministers (eGoM) that last met on February 24. “As there is substantial reduction in the production of KG D6 gas, no gas has been allocated to any of the projects including ofGujarat,” the Minister of State for Power, Mr K.C. Venugopal, said a written reply in Lok Sabha on Friday. The Power Ministry has recommended allocation of 1.31 mmscmd of gas from RIL-operated KrishnaGodavari(KG) D6 block to 351-MW Hazira CCGT and 2.62 mmscmd to 702-MW Pipavav CCGT. Mr Venugopal also added that Gujarat Urja Vikas Nigam Ltd has requested for allocation of gas to meet shortages at existing plants. The Petroleum Ministry has allocated 0.05 million metric standard cubic meter per day (mmscmd) from ONGC’s Western Offshore gas fields to existing Dhuvaran Power Station of Gujarat State Electricity Corporation Ltd. (GSECL).
INDIA LOOKS TO UAE TO MEET ITS ENERGY NEEDS
NEW DELHI: With theUScontinuing to nudgeIndiato reduce its dependence on oil fromIran,Indiatoday indicated that it was looking at the possibility of increased oil supplies from the United Arab Emirates (UAE).
Addressing a joint press conference with his UAE counterpart Shiekh Abdullah bin Zayed al Nahyan here, External Affairs Minister S M Krishna underlined that ‘’The UAE is our largest trading partner, significant contributor to our energy security and hosts about 1.75 million Indian expatriates.’’
Earlier, the issue ofIndia’s energy security needs is understood to have figured prominently during the talks between the two ministers. They are also learnt to have discussed bilateral and international issues, including maritime security cooperation to tackle piracy and India-Pakistan relations.
The two countries decided to set up a high-level joint task force to further explore opportunities in investments. The task force will be headed by Commerce Minister Anand Sharma and Abu Dhabi Investment Authority Managing Director Sheikh Hamad bin Zayed al Nahyan.
Krishnasaid the UAE leadership was keen to address the issue of investments so as to bring them on par with the multi-faceted relationship between the two countries.
He said he had discussed with his UAE counterpart the forthcoming third India-Arab Economic Conclave to be hosted inAbu Dhabion May 21-22 and the proposed road show on investments inAbu DhabiandDubaiwhich Indian officials propose to undertake in June so as to exchange information and clarify issues related to the investment climate inIndia.
On the issue ofIndia’s energy needs, Krishna said the need to increase import of oil and other energy sources was of critical importance and in the UAE,Indiahas a dependable supplier.
The UAE minister assuredIndiathat his country, one of the largest suppliers of crude oil, would like to see more energy exports toIndia. “We would like to see UAE presence in downstream investments inIndia, including petrochemicals.
The UAE’s assurance to assistIndiacomes at a time whenIndiais looking at alternate sources of energy in view of the difficulties it is facing in doing business withIranbecause of the sanctions imposed against the Islamic republic by the UN and theUS.
INDIA IN TALKS WITH US FOR LNG IMPORTS
NEW DELHI: Taking energy co-operation forward,Indiaand theUSare discussing import of LNG from theUS. TheUScurrently has a surplus, whileIndiahas a deficit, with many of its gas-based power plants languishing.
At a recent meeting between officials of the two countries, theUSdelegation made a detailed presentation on oil and gas markets, including the impact of LNG and shale gas on the integration of gas markets.
The possibility of export of shale gas in the liquefied form from theUStoIndiawas also raised, a senior Government official said.
But, high transportation costs could be a problem, as these work out to around $5.5/million British thermal unit (mBtu).
Adding liquefaction cost of $3/mBtu, the landed cost could be over $7/mBtu, provided Indian taxes are waived.
TheUShas said that it will considerIndia’s request.
Indiaimports liquefied natural gas (LNG) on long-term and medium/short-term contracts as well as on spot purchase basis.
Currently, 7.5 million tonnes a year of LNG is imported on long-term contract basis by PLL fromRasGas,Qatar. PLL has also tied up for import of 1.4 mt fromGorgon,Australia, for its Kochi LNG terminal.
GAIL has signed an agreement for importing 3.5 mt of LNG from the Sabine Pass Terminal in theUS.
India’s gas companies in the recent years have sourced LNG on a spot basis from Oman, Trinidad & Tobago, Malaysia, Nigeria, Australia, Egypt, the UAE, Russian Federation, Equatorial Guinea, the US, Algeria, Yemen and Norway.
CELL TO MONITOR LPG SUPPLIES
THIRUVANANTHAPURAM: The State government has notified the formation of agency-level social monitoring committees to prevent hoarding of domestic gas (LPG). Members of the committee are: members of local food advisory committee; elected representative to the respective panchayat/ municipality/ corporation, who is also a consumer served by the agency; two representatives from local non-governmental organisations; and the ration inspector of the area (as convenor). President of the local body would be chairman of the committee, which will meet once every two months to take stock of supply and availability. Complaints pertaining to service, delay in supply and such other issues will be taken up for resolution.
ONGC READY TO FORAY INTO HYDROPOWER SECTOR
NEW DELHI/DEHRADUN: Oil major ONGC is showing interests in participating in hydel power projects by expanding the scope of the ONGC-Tripura Power Company Ltd (OTPC).
This was indicated after a meeting between ONGC chief Sudhir Vasudeva and Uttarakhand chief minister Vijay Bahuguna here last evening.
K S Jamestin, ONGC’s Director-Human Resource, who was also present during the meeting told Business Standard “We are interested in developing small hydel projects which are run-of-the-river projects as well as environment-friendly. We are going for the expansion of OTPC and exploring the possibility of developing hydel projects in this regard,” he said.
ONGC Tripura Power Company Ltd is a joint venture between ONGC, Infrastructure Leasing and Financial Services Limited (IL&FS) and the Government of Tripura for implementation of the 726.6 MW CCGT thermal power project at Palatana in Tripura to supply power to the power deficit areas of the north-eastern states. After the meeting, Bahuguna asked the power department toprepare a blue print for all those power projects which has received clearances from the union ministry of forests and environment.
He asked them to hold another meeting with ONGC officials for the development all these projects.
Faced with acute paucity of funds, Uttarakhand has been trying to attract private players in the hydropower sector by offering joint ventures with Uttarakhand Jal Vidyut Nigam, the state-run power generation company. The sector received a severe jolt after the Centre scrapped several big hydel projects including NTPC’s 600 MW Lohari Nagpala project on Bhagirathi river on environmental and religious grounds.
RELIANCE INDUSTRIES WANTS $1 BILLION FIVE-YEAR LOAN: REPORT
MUMBAI: Indian energy conglomerate Reliance Industries is seeking a $1 billion five-year loan for capital expenditure, Thomson Reuters publication Basis Point reported on Friday, citing sources with knowledge of the situation.
Banks are engaged in a competitive bidding process and will submit proposed term sheets and commitments by May 30, it said.
Reliance last week signed a $2 billion, 13-year term loan from nine banks and covered by German credit insurer Euler Hermes Deutschland, for financing goods and services from German suppliers.
Reliance, which holds cash balances of $13.8 billion as at end-March and has outstanding loans of around $15.8 billion, has seen its growth outlook marred by falling gas output from the KG gas fields off India’s east coast.
Its capital expenditure plans include $8 billion to expand its refining and petrochemical capacity and $4 billion to build a petcoke gasification project, Basis Point reported, citing a recent note by Moody’s.
Reliance is rated BBB by Standard & Poor’s, Baa2 by Moody’s and BBB- by Fitch, it said.
PETRONET LNG ISSUES GLOBAL TENDER TO PRE-QUALIFY FOR CHARTERING SHIP
CHENNAI: Looking to charter a liquefied natural gas (LNG) ship on a long-term basis? Book it four years ahead of time. That’s what Petronet LNG Ltd is doing.
According to the plan, the company is to commence LNG transportation from Kochi Regasification Terminal between January and June 2016.
However, to achieve that, it has issued a global notification to pre-qualify ship owners and operators to provide an LNG ship.
The owners and operators will be responsible for shipping-related activities — right from loading and unloading.
Mr C.S. Mani, Director (Technical), said that while the plant is ready for commissioning, the full-fledged movement of LNG would commence in 2016 only.
“We need to order now to make sure we have the ship ready by then. It takes such a long time,” he said.
Petronet LNG is a joint venture company promoted by Oil and Natural Gas Corporation, Indian Oil Corporation and Bharat Petroleum Corporation. It is setting up agreenfieldLNG Regasification Terminal atKochiin Kerala with an annual capacity of five million tonne.
It has signed a long-term LNG sale and purchase agreement for supply of 1.44 mtpa of LNG fromGorgon,Australia, toKochion free-on-board basis for a period of 20 years.
According to Mr Hemant Bhattbhatt, Senior Director, Deloitte inIndia, typically LNG ships are custom-built and designed for the user’s specific requirements if they are to be given on long-term charter.
As such the chartered ships must be getting built and will require time for construction.
Hence, the tie-up four years in advance, he said.
By 2017 it is expected that 175 new ships will need to be added to the current global fleet of 365 to address the demand for LNG transportation.
Currently, only 70 are on order and given the generally depressed shipping market conditions and a degree of scepticism around the ‘bubble-like growth’ in demand for LNG carriers, further orders for about 100 more ships are difficult to materialise. Hence a supply shortage is anticipated and this could well be influencing the decision to tie-up the ships four years ahead.
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