HYDERABAD: The HPCL board will consider signing crude import agreement with the State Oil Company of Azerbaijan Republic (SOCAR), a top official has said.
The Azerbaijani company has come forward to supply crude and the proposal will be taken up with the HPCL Board, said K Murali, Director Refineries, Hindustan Petroleum Corporation Ltd.
“We are already in touch with them. We will take their offer to the board and take its approval. If everything goes well, we will start importing crude from this year itself in small quantities to start with,” Murali said without indicating when the Board will take up the issue.
HPCL’s move to import crude from the CIS nation indicates the oil PSU’s intention to diversify its sources of crude oil imports and to reduce its dependence on any particular region, particularly in the wake of sanctions imposed by theUSand EU onIran, an industry analyst said.
Murali said the initial quantities fromAzerbaijanwill be in the range of 0.5 million tons, adding that if everything goes well the quantity can be increased.
“The Azeri crude is also economical for us. Rate is also competitive. That is the reason we may prefer,” he explained.
Another state-owned oil company, Indian Oil Corporation has also started importing fromAzerbaijanfrom January.
Sources in IOCL said currently the imports fromAzerbaijanare in the range of 20,000 barrels a day (equivalent to 2800 tons).
ONGC TO FORAY INTO CITY GAS, PLANS TO SET UP ONGC GAS
NEW DELHI: In an attempt to de-risk its exploration business, state-owned Oil and Natural Gas Corp (ONGC) plans to foray into gas retailing business through a new subsidiary—ONGC Gas Ltd.
ONGC would use the new subsidiary for its foray into city gas distribution business and sale of imported liquefied natural gas (LNG), company officials said here.
The new unit may be aimed at making amends to the company letting go lucrative opportunities to enter gas business.
Though being the country’s largest natural gas producer at around 55 million cubic meters per day, ONGC has virtually no presence in marketing of the environment friendly fuel.
All of its gas is marketed by state-owned GAIL India Ltd. It had let go marketing rights on gas from even newer fields as also of LNG imported by Petronet LNG Ltd.
ONGC holds 12.5% stake in Petronet LNG, the nation’s largest liquefied natural gas importer. This is the same as the stake held by GAIL and refiners Indian Oil Corp and Bharat Petroleum Corp. While others market a share of LNG imported by Petronet, ONGC had never demanded sale rights.
Also, plans to set up a LNG import facility at Mangalore were shelved. But under Sudhir Vasudeva, ONGC is renewing its focus on natural gas, whose share inIndia’s primary energy basket will almost double to 20% by 2025.
ONGC is part of a consortium which is vying for British energy group BG’s stake in Gujarat Gas, which retails CNG to automobiles and piped cooking gas to households in cities like Ahmedabad and Surat in Gujarat.
Officials said ONGC Gas would bid for city gas distribution (CGD) licences and explore possibility of setting up a LNG import facility. Also, it may import LNG at one of the terminals in the country and market the fuel to consumers directly.
ONGC believes that the nation’s dependency on imported LNG, now estimated at 30%, would rise as production of older domestic fields falls.
ONGC had few months back appointed A T Kearney to chart out its city gas foray. He suggested setting up of ONGC Gas for bidding for licence to retail CNG to automobiles and piped cooking gas to households.
RIL’S NET PROFIT MARGIN PLUNGES TO 10-YEAR LOW
MUMBAI: Reliance Industries Ltd (RIL)’s net profit margin, or net profit as a percentage of revenue, fell to a 10-year low of 5.9 per cent in 2011-12, shows the company’s annual report. Its market capitalisation also declined by Rs 100,000 cr, say analysts.
The last time its net profit margin reached below this level was in 2001-02, at 7.1 per cent. In 2000-01, the margin was at 12.8 per cent.
Mukesh Ambani, RIL’s chairman and managing director, called 2011-12 a challenging year due to an unprecedented economic uncertainty in Europe, geopolitical upheaval in West Asia and slowing down of economic growth acrossAsia. “For the first time in the past 20 years, RIL posted a net profit lower than that of 2010-11. It has always reported a higher net profit over a previous year,” said an analyst. “Operating profit margin (operating profit as a percentage of revenue) was at 11.7 per cent, the lowest level in 20 years, showing the company has to work hard to generate income from operations,” he said.
The profitability of the refining business, which accounts for two-thirds of RIL’s net sales and 40 per cent of profit before interest and tax, is under pressure.
The report says: “The company is taking steps to strengthen its competitive position by cutting costs. These include petcoke gasification to achieve a sharp reduction in the energy cost. These measures are being supplemented by many others that seek to improve the refinery yield pattern.”
RIL, as of March 2012, was a debt-free company, as the cash it had was more than its debt. Its total debt was at Rs 68,259 cr ($13.4 bn). Its cash and cash equivalents amounted to Rs 70,252 cr ($13.8 bn). The increase in cash was primarily driven by a receipt of the balance consideration from BP, RIL said in the report. Loans and advances to related parties stood at Rs 10,243 cr, against Rs 7,108 cr in 2010-11. RIL paid Rs 1,508 cr as hire charges and electric power, fuel and water charges to 138 related entities that are its subsidiaries or associate companies.
EXXON MOBIL BEATS WAL-MART TO TOP FORTUNE 500 FIRMS’ LIST
NEW YORK: Oil major Exxon Mobil has toppled Wal-Mart to become the biggest American corporation in the Fortune magazine’s list of top 500UScompanies, that also features as many as six entities led by Indian-origin individuals.
Vikram Pandit-run Citigroup was ranked 20th on the list, followed by Pepsico (41) which is headed by Indra Nooyi. Among other major US corporations run by persons of Indian origin include Motorola Mobility Holdings led by Sanjay K Jha, which was positioned at the 206th rank, MasterCard run by Ajaypal S Banga was at the 370th slot, Cognizant Technology Solutions run by Francisco D’Souza was at 398th and SanDisk headed by Sanjay Mehrotra was at 430th rank.
Exxon Mobil bumped off Wal-Mart from the first place, which the retail giant held on to for two years in a row, thanks to rising oil prices, particularly during the last quarter of 2011. It is the 13th time that Exxon has taken first place, and the sixth time that Exxon and Wal-Mart have traded the top two positions during the past decade, Fortune said.
Shares of Exxon Mobil rose by 20 per cent and profits surged by 35 per cent to $41.1 billion. Revenues jumped 28% to $452.9 billion, helping Exxon reclaim the top spot in the Fortune 500. Two other petroleum companies — Chevron and ConocoPhillips — were ranked in the third and fourth position in the coveted list. Auto giant General Motors jumped three spots in the list, to the fifth position from number 8th last year. Others in the top 10, include General Electric (6th), Berkshire Hathaway (7th), Fannie Mae (8th), Ford Motor (9th) and Hewlett-Packard in the 10th rank.
“…the Fortune 500 are thriving as a group. Unlike theUSeconomy, they’ve shown quicksilver agility, rapidly shifting their product mix and producing more goods at little new cost,” Fortune’s senior editor-at-large Shawn Tully said. The Fortune 500 generated a total of $824.5 billion in earnings last year, up 16.4% over 2010. That beats the previous record of $785 billion, set in 2006 during a roaring economy, the magazine said.
Notwithstanding the fact that theUSeconomy expanded again in 2009, the Fortune 500 firms have been reluctant to hire more workers, who account for almost 70% of their total costs. At present, the Fortune 500 employs 25.8 million people worldwide, up by less than 1% since 2007.
EXXON VALDEZ OIL SPILL TANKER BANNED FROM INDIA
AHMEDABAD: The Exxon Valdez tanker that was involved in a huge oil spill offAlaskain 1989 has been banned from enteringIndiawhere it was due to be dismantled, state officials said Wednesday.
The Gujarat Maritime Board said it had refused permission for the ship, now renamed the Oriental Nicety, to berth in the state after the Supreme Court inNew Delhiasked for reassurances over pollution fears.
“Permission has not been given,” a board official in Ahmedabad,Gujarat’s main city, told AFP on condition of anonymity, adding that the vessel was already in Indian waters.
An Indian ship-breaking company recently purchased the tanker to dismantle it for scrap at the Alang shipyard inGujaraton the country’s west coast.
Environmentalists had petitioned the Supreme Court seeking information on whether the ship had been stripped of all toxic material in line with the United Nations’Baseltreaty on hazardous waste management.
“The ship cannot enter any Indian port if it is not in compliance with the UN convention on trans-boundary movement of hazardous waste and their disposal,” Gopal Krishna, of the Toxics Watch Alliance, told AFP.
“It is a landmark order from the Supreme Court.”
The court directed the government to inform it on “steps being taken to prevent the ship berthing in any of the ports inIndia, without following the conditions indicated in the Basel Convention.”
The Basel Convention, which has been signed byIndia, governs international movements of hazardous waste and is designed to prevent dumping in the developing world.
The Exxon Valdez spilt around 11 million gallons (40 million litres) of oil intoAlaska’sPrince William Sound, polluting 1,300 kilometres (800 miles) of coast.
According to theUniversityofAlaskaonly a quarter of marine wildlife survived the disaster.
OIL SOVEREIGNTY
Indiahas done well to gently rebuke US attempts to force it to reduce oil imports fromIran. While it is inIndia’s interest to prevent the Islamic Republic from acquiring nuclear weapons capability, which can potentially set off an arms race in an already sensitive West Asian region, this is something that must be done as part of multilateral efforts. The United Nations’ (UN) sanctions againstIran’s refusal to halt its uranium enrichment programme now do not cover oil. While theUSand the European Union (EU) may have imposed embargoes targeting Iranian oil sales, these surely cannot pass off as international law binding on a third country.Indiabought almost 17.5 million tonnes of crude fromIranin 2011-12, which represents over a tenth of its total imports. AlthoughIranmay have ceded its No. 2 supplier slot (afterSaudi Arabia) toIraqandKuwaitin the last one year, the absolute quantum of purchases byIndiafrom it is still quite large. There are obviously limits to reducing these imports or further diversifying the sources of crude supplies, notwithstanding the visitingUSSecretary of State, Ms Hillary Clinton’s, exhortations toIndiato “do more”.
It is in this context that one must appreciate the firm and balanced position ofIndia, forcefully articulated by the External Affairs Minister, Mr S.M. Krishna. At a joint media interaction in the presence of Ms Clinton, the Minister maintained that whileIndiais committed to “rigorously implement” UN Security Council resolutions with regard toIran, any decision on cutting crude imports is for the individual refineries to make “based on commercial, financial and technical considerations”. In other words, without a clear UN mandate, there is nothing stoppingIndiafrom doing oil business withIran. It is another thing that theUSsanctions curtailingIran’s access to global banking systems may impose practical difficulties in importing. But that should not force a change in stance rooted in principle. A two-pronged approach — whereinIndiawould insist on its right to import Iranian oil, while quietly working to augment supplies from other countries — is the most sensible strategy. In this, the country is thankfully not alone: Unilateral US and EU sanctions againstIranhave not found favour withChina,RussiaorBrazileither.
The above approach is also consistent with the need for more credible evidence ofIranpursuing a nuclear weapons programme or sponsoring international terrorism. TheUSclaims aboutIran’s direct involvement in recent attacks on Israeli diplomats inIndiaandGeorgiaare as nebulous as attributing the 2011 Mumbai blasts to some amorphous ‘non-state actors’ inPakistan. TheUScannot have two different standards forIranandPakistan, and expectIndiato still toe its line. Right now, it would seem that oil importers likeIndiaare paying a premium largely for Western security concerns.
US TO SEND EXPERT TO HELP INDIA CUT IRAN OIL IMPORTS
WASHINGTON: TheUSwill send its top energy expert toIndianext week to help the country reduce dependence on Iranian oil, secretary of state Hillary Clinton has said as she lauded the steps taken byNew Delhion the issue.
Carlos Pascual, the state department’s special envoy and coordinator for International Energy Affairs, will be inIndianext week with a team of experts for talks with Indian officials on the Iranian issue.
‘‘We are working with them to help them in any way that we can offer technical assistance, and next week my energy coordinator, Ambassador Carlos Pascual, will be in India with a team of experts,’’ Clinton was quoted as saying by CNN.
Clinton’s comments came after her visit toIndiaduring which she askedNew Delhito restrict its trade and energy ties withTehranto meet international demands on its disputed nuclear programme.
After talks Clinton, external affairs minister SM Krishna had said, ‘‘I conveyed our vital stakes in peace and stability in the Persian Gulf and wider West Asian region, given the six million Indians who live there and the region’s importance to our economy.’’
Clintonappreciated the steps being taken byIndiato reduce its dependence on Iranian oil while acknowledging that it is ‘‘hard’’ forNew Delhito do so.
‘‘Well,Indiahas reduced its dependence on Iranian oil. I know their refineries have stopped asking for orders to purchase Iranian oil. So they certainly have taken steps,’’Clintonsaid.
She said, at the same time, acknowledged that doing this is going to be a bit tough forNew Delhi.
‘‘Because we know that this is hard forIndia, just like it’s been hard for some of the European countries that were very dependent upon Iranian oil, forJapan. And we have worked with them and offered suggestions about alternative sources of supply at an affordable cost,’’Clintonsaid.
‘‘So we appreciate the steps thatIndiahas taken, and we’re continuing to consult with them,’’Clintonsaid.
India, she noted, shares exactly the goals of theUnited StatesonIran.
She saidNew Delhihas put itself on the line to getTehranback to the negotiating table.
‘‘They have put themselves on the line to getIranback into the P-5+1,’’Clintontold the National Public Radio (NPR) in an interview when asked ofIndia’s role in theIranissue.
TheUShas been urgingIndiaand other countries to slash oil imports fromIranaimed at stepping up pressure onTehranto comply with international demands over its nuclear programme.
India, which imports 80% of its crude oil and relies onTehranfor 12%of those imports, has said it needed to continue to buy Iranian oil to meet its domestic requirements.
ThoughIndiahas publicly not said it was aiming to cut back on oil imports fromIran, the country’s top oil importers have been pushed to reduce Iranian oil imports by 15-20%.
Crude imports fromIranfell to 18.5 million tonne in 2010-11 from 21.2 mt in 2009-10. Last fiscal (2011-12), Iranian oil imports dropped to less than 16 mt. This year they may further come down to 14 mt.
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