NEW DELHI: State-run oil firms including Oil and Natural Gas Corp (ONGC) will invest over Rs 76,565 crore on the project expansion during 2015-16, up 5 per cent over the previous fiscal.
ONGC, the nation’s most profitable company, will see its capital expenditure rise to Rs 36,249.37 crore as compared with Rs 34,813 crore in the current fiscal, according to the Budget 2015-16 document.
Its overseas investment arm, ONGC Videsh Ltd, will invest another Rs 10,402 crore in 2015-16. This, however, is lower than the investment of Rs 12,387 crore in the current fiscal. Oil India Ltd (OIL) has projected its capex rising by 11 per cent to Rs 3,917.64 crore.
Refining and marketing companies will invest Rs 20,256.02 crore with Indian Oil Corp (IOC) leading the pack with 10.5 per cent increase in the capex at Rs 9,407.80 crore. It will invest another Rs 1,000 crore in exploration and production as well as petrochemical business.
Hindustan Petroleum Corp Ltd (HPCL) will see a marginal decline in its capex of Rs 1,636.64 crore in 2015-16 when compared with Rs 1,763.56 crore in the previous year.
Bharat Petroleum Corp Ltd (BPCL) will see its refining capex go up by 11.6 per cent to Rs 5,101.32 crore besides another Rs 1,400 crore being invested in E&P business.
Gas utility GAIL India Ltd will invest Rs 2,704.51 crore as opposed to Rs 2,131.52 crore capex in 2014-15.
The Budget for 2015-16 provides for Rs 30,000 crore towards domestic cooking gas (LPG) and kerosene subsidy. Of this Rs 21,140 crore has been provided for transferring as direct cash subsidy to cooking gas users under the Direct Benefit Transfer for LPG (DBTL). Another Rs 860 crore has been provided for subsidy payable to North Eastern Region and project management expenditure.
For kerosene, it provided Rs 8,000 crore subsidy.
The subsidy provided compares with Rs 57,085 crore in the revised estimate for 2014-15. This was provided to state-owned oil companies to make up for losses incurred on fuel sales at government-controlled rate. The revised estimate of Rs 57,085 crore compares to Rs 57,335.95 crore provided in the Budget estimate of 2014-15. In 2013-14, Rs 80,772 crore was provided for subsidy compensation.
(Source: Millennium Post, March 2, 2015)
BUDGET CUTS PETROLEUM SUBSIDY BY HALF
NEW DELHI: The government has budgeted for petroleum subsidy to come down by a half to Rs 30,000 crore in the next financial year 2015-16 from Rs 60,270 crore in the current financial year aided, largely, by a historic decline in crude oil prices between June and December 2014. Also, oil firms’ capital expenditure in the new financial year is seen rising 5 per cent to Rs 76,565 crore, Budget documents show.
The Budget for the coming year provides for Rs 30,000 crore for government’s burden of petroleum subsidy towards liquefied petroleum gas (LPG) and kerosene. Of this, Rs 21,140 crore has been provided for transferring direct cash subsidy to cooking gas users under the direct benefits transfer for LPG (DBTL) scheme.
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For kerosene, it has provided Rs 8,000 crore subsidy for 2015-16. In addition, Rs 860 crore has been provided for subsidy payable to the Northeastern region. The government has also revised the current financial year’s budgeted petroleum subsidy expenditure of Rs 63,000 crore to Rs 60,270 crore. This subsidy is given to state-owned oil companies to make up for losses incurred on subsidised sales of LPG and kerosene.
The Budget also provides for a 5 per cent increase in oil companies’ capital expenditure to Rs 76,565 crore in 2015-16 as compared to the revise estimate of the current financial year. This includes ONGC’s Capex (capital expenditure) rising to Rs 36,249 crore from Rs 34,813 crore in current financial year and Oil India’s Capex rising 11 per cent to Rs 3,900 crore even as OVL’s Capex is seen dipping to Rs 10,400 crore from Rs 12,300 crore in 2014-15.
The downstream companies will invest Rs 20,256 crore in the new financial year with Indian Oil’s investment going up by 10.5 per cent to Rs 9,407 crore. It will invest additional Rs 1,000 crore in exploration and production. Hindustan Petroleum Corp’s Capex is seen dipping 7 per cent to Rs 1,636 crore and Bharat Petroleum Corp’s capex rising 11.6 per cent to Rs 5,101 crore. Gas utility GAIL (India) will invest Rs 2,704 crore in 2015-16 as compared to Rs 2,131 crore in the current financial year.
(Source: Business Standard, March 2, 2015)
GOVT SAYS PREPARING CABINET NOTE TO BOOST CBM EXPLOITATION
NEW DELHI: The government is preparing a detailed note for the Cabinet Committee on Economic Affairs (CCEA) on boosting exploitation and production of coal bed methane (CBM) reserves, according to the Budget documents presented in Parliament on Saturday.
“A comprehensive note for CCEA to seek amendment of the CBM policy is under preparation,” the government informed in the Implementation of Budget Announcements document, adding the amendments would address all the issues currently impacting exploitation of CBM blocks.
Finance Minister Arun Jaitley had said in his Budget speech in July last year that the government intended to accelerate production and exploitation of CBM reserves and explore the possibility of using modern technology to revive old or closed wells. The amendment being sought would allow exploration and exploitation of CBM from areas under coal mining leases allotted to companies in the public and private space. Also, the contractors would be allowed to sell gas based on price bidding without following any allocation priority.
Through the amended CBM policy, the government also wants to simplify the existing contracts to eliminate micro-management of operations and put in place a workable mechanism for resolving the issue of overlap of CBM blocks with coal, oil or gas acreages.
CBM is largely methane gas trapped in between coal seams, a valuable energy source that must be harnessed before mining. Otherwise, the gas escapes in the atmosphere and gets wasted. India has 92 trillion cubic feet of CBM reserves, spread over 26,000 sq km of coal-bearing area.
CBM blocks were offered through international competitive bidding for exploration and production for the first time in May 2001. So far, the government has awarded 33 CBM blocks under four rounds of bidding to state, private and joint venture companies. In addition, two blocks were awarded on nomination and another through the Foreign Investment Promotion Board route.
These blocks are in the states of Andhra Pradesh, Assam, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Maharashtra, Odisha Rajasthan, Tamil Nadu and West Bengal. Commercial production of CBM commenced from July 2007 in the Raniganj (South) block in West Bengal, operated by Great Eastern Energy Corporation.
The Raniganj (South) block is currently producing around 0.35 million standard cubic metres a day (mscmd). Two other blocks are also producing gas — Raniganj (East), operated by Essar Oil and producing 0.22 mscmd, and Jharia, operated by Oil and Natural Gas Corp and producing 6,200 standard cubic metres a day.
(Source: Business Standard, March 2, 2015)
HIGH PROFILE OIL & GAS SECTOR GETS NO MENTION BY FM JAITLEY
Barring duty rejig for petrol and diesel, Finance Minister Arun Jaitley did not mention the high profile oil and gas sector in his Budget speech Saturday. This happened against the backdrop of certain inputs by the Petroleum Ministry being found among the stacks of stolen documents. Jaitley, presenting the Budget for 2015-16 on Saturday in the Lok Sabha, did not mention of any initiative in the oil and gas sector other than an excise duty rejig on petrol and diesel to make available Rs 400 billion for roads and highway construction.
A dozen persons were arrested last month for allegedly stealing official documents from the coal, power and oil ministries. The stacks of stolen documents recovered included details of exploration sites, natural gas pricing and the Oil Ministry’s arbitration with Reliance Industries Ltd. Among these were inputs given by the ministry to be included in the Budget speech. Jaitley said in the Budget speech that existing excise duty on petrol and diesel is being converted “to the extent of Rs 4 per litre into Road Cess to fund investment in roads and other infrastructure. An additional sum of Rs 400 billion will be made available through this measure for these sectors”.
Petrol attracts a total excise duty of Rs 17.46 per litre, including Rs 2 a litre road cess. Similarly, diesel attracts Rs 10.26 a litre total excise duty, including Rs 2 per litre road cess.
(Source: PTI March 2, 2015)
A MIXED BAG FOR OIL AND GAS SECTOR
The government on Saturday proposed reduction of customs duty on some petrochemical intermediaries that could marginally reduce their prices, but refrained from announcing dramatic policy changes in the oil and gas sector, leaving some companies a little disappointed. “The finance minister has not addressed many of our genuine expectations,” said LK Gupta, MD & CEO of Essar Oil. “We wanted the government to remove basic custom duty on imported natural gas, currently at 5%, as it is an inverted duty.”
Gupta said, “The government has also not provided relief to E&P companies for their demand of service tax credit. Service tax drains away a substantial part of their funds, and since crude oil/natural gas produced are not liable to excise duties, companies cannot take CENVAT credit of service tax incurred for exploration and production.” The budget for 2015-16 has proposed scrapping of the basic customs duty on ulexite ore and halved that on isoprene and liquefied butane. On ethylene dichloride, vinyl chloride monomer and styrene monomer, it has been reduced to 2%. Similarly, butyl acrylate and anthraquinone will now attract lower customs duties of 5% and 2.5%, respectively.
SAD on naphtha, ethylene dichloride, vinyl chloride monomer and styrene monomer for manufacture of excisable goods has been halved to 2%. “For an integrated player, the duty reduction will not have much impact, but for a standalone petrochemicals maker, the margin will get slightly squeezed,” Mehul Thanawala, an oil and gas sector analyst with JM Financials, said. The government rejigged the duty structure for petrol and diesel that would have no impact on the final excise duties paid on the two commodities. The rejig exercise has been done “only to the extent of subsuming the quantum of education cess presently levied on them”, Finance Minister Arun Jaitley said in his budget speech.
(Source: The Economic Times March 2, 2015)
ATF PRICE HIKED BY 8.2%; NON-SUBSIDISED LPG TO MORE
Jet fuel price was today hiked by a steep 8.2 percent while the rates of non-subsidised LPG was increased by Rs 5 per cylinder on firming international oil rates.
The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was hiked by Rs 3,849.97 per kilolitre, or 8.2 percent, to Rs 50,363 per kl, oil companies announced today. The rate hike follows seven consecutive monthly cuts since August, the last being by 11.27 percent (Rs 5,909.9 per kl) from February 1.
Prior to today’s increase, ATF price had been cut by Rs 23,648.73 or 33 percent in seven reductions since August 2014. Even after today’s hike, jet fuel rates are lowest since February 2011. Jet fuel constitutes over 40 percent of an airline’s operating costs and the price increase will raise the financial burden of cash-strapped carriers.
No immediate comment was available from airlines on the impact of the price hike on passenger fares. Simultaneously, the oil firms also hiked the price of non-subsidised or market-priced domestic cooking gas (LPG) by Rs 5 to Rs 610 per 14.2-kg cylinder in Delhi. The increase comes on back of seven straight reductions in rates of non-subsidised or market-priced LPG since August.
The customers buy non-subsidised after exhausting their quota of 12 cylinders at subsidised rates. A subsidised LPG refill currently costs Rs 417 in Delhi. The price of non-subsidised LPG was last cut on February 1 by Rs 103.5 per 14.2-kg cylinder.
In the seven monthly reductions, non-domestic LPG rates had been slashed by Rs 317.50 per cylinder, bringing the price to a three-year low. State-owned fuel retailers, Indian Oil Corp ( IOC ), Bharat Petroleum Corp ( BPCL ) and Hindustan Petroleum Corp ( HPCL ) revise jet fuel and non-subsidised LPG prices on the first of every month based on average imported cost and rupee-dollar exchange rate.
(Source: Moneycontrol.com March 2, 2015)
PETROL, DIESEL PRICES HIKED BY AT LEAST RS3/LITRE
New Delhi: Indian Oil Corp said it would raise the retail price of petrol by 5.5% and that of diesel by 6.6% from Sunday, as global prices of the two fuels have risen since the last revision.
Retail prices of petrol will be raised by Rs3.18 a litre and that of diesel by Rs3.09 a litre, it said in a statement on Saturday. Prices may vary in different cities due to local taxes and levies.
India’s three state-controlled fuel retailers: IOC, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd, tend to move their prices together.
Brent crude prices on Saturday rose $2.53 to $62.58 a barrel. February’s 18% gain was the biggest monthly percentage rise since May 2009.
(Source: Mint March 2, 2015)
PETROLEUM DEALERS CALL FOR 15-MINUTE BLACKOUT ON MAR 21
New Delhi: The All India Petroleum Dealers Association has called for a 15-minute blackout on March 21 to create awareness about the issues faced by the dealers.
The Association flagged off concerns about the frequent unplanned price fluctuations of public sector oil marketing companies. It also demanded a fixed 5 per cent commission amongst other issues.
“During the blackout, all lights will be switched off and sales will be suspended for this duration. The agitation is to highlight and push the following issues which are being raised again and again,” the Association said in a statement.
After March 21, the dealers have called for a no purchase day on March 31. This would happen if required. Further, a ‘no purchase, no sale’ day has also been called for at a future date.
(Source: Business Line March 2, 2015)
CPC MIGHT FINALLY GET US SUITOR TO UPGRADE ITS AGEING REFINERY
Power and Energy Ministry Secretary Dr. B. M. S. Batagoda would submit a detailed report to Prime Minister Ranil Wickremesinghe on how to go about upgrading the ailing Sapugaskanda Oil Refinery. The Ceylon Petroleum Corporation (CPC) engineers prepared their proposal following a request from the Prime Minister for a comprehensive report last week. A senior engineer said the project would be entrusted to a US based company. However, no final decision had been made, he added.
Economic and Commercial Affairs of the US embassy in Colombo, Allison Areias-Vogel, told The Island that they had held talks with very senior officials of the newly appointed government expressing their willingness of making use of the US companies to upgrade the Sapugaskanda Oil refinery. She said that they were waiting for a positive response from the government. Their chart for the past three years, showed over billion dollar American blue-chip companies which had their own financing and best technologies in world waiting for ventures here. What they wanted from the government was a fair and transparent process, she said.
CPC Chairman, Ranjith Wickremasinghe, contacted for comment, said that they would be submitting a proposal to the Prime Minister through the Power and Energy Ministry Secretary. He said that the project would cost about USD 2 billion. During the past two years the top CPC technocrats had held discussions with a number of companies from US, India, China, Czech Republic and Malaysia and they had shown an interest in upgrading Sapugaskanda oil refinery. Many of them did not have the required know-how, but they were willing to undertake the task by buying the know-how from mainly American firms on licence. The lack of local finances or the unsuitability of the suitors prevented the CPC from going ahead with the urgently required upgrading.
(Source: The Island March 2, 2015)