NEW DELHI: State oil companies have deferred their decision to cut petrol rates from Thursday mid-night despite softening of international prices of the fuel as the move would give “undue credit” to BJP, government and industry officials said.
“Petrol prices would have reduced from June 1 in the normal course, but it is deferred due to the BJP-led ‘Bharat Bandh’. The government has not lost its mind to give the credit to the opposition,” one official said requesting anonymity.
Officials said the political leadership would decide the timing of the price cut. “It will be sooner than later,” another official with direct knowledge of the matter said.
BPCL chairman RK Singh confirmed that there is a downward trend in petrol rates. “There is a possibility of petrol price reduction, but its quantum and timing are yet to be decided,” Singh told ET.
He said the three companies could not meet on Thursday to decide petrol price revision. “The decision will be taken soon by oil marketing companies,” he added.
Officials say petrol prices could be revised as early as tomorrow.
Officials say that petrol would have been about Rs 2 a litre cheaper inNew Delhiif the price revision had taken place on Thursday.
Officials in Indian Oil, Bharat Petroleum and Hindustan Petroleum said average international petrol rates for current fortnight had dropped to around $115/barrel from previous average of $124/barrel when prices were raised sharply to unprecedented Rs 7.54 a litre, that invited political oppositions from both ruling and opposition parties.
Officials say a delay of couple of days may also increase quantum of the price cut as pump prices of petrol are fixed on the basis of volatile exchange and international petrol rates. “Both are volatile and even couple of days fluctuations would impact retail prices,” a senior official of oil marketing firm said.
Officials say petrol prices could have been reduced significantly seeing the decline in its average international rate. “But the gain is neutralized by significant depreciation of the rupee against dollar,” one official said. When petrol prices were raised last week, the average exchange rate was Rs 53 for one dollar, now it is about Rs 54-55.. Depreciation of the rupee raises cost of imports, as Indian refiners are dependent on imported crude oil.
A dollar fall in oil price means domestic petrol rates could be cheaper by about 35 paisa. But Re1 depreciation means a requirement to raise prices by about 75 paisa, company officials said.
IRAN REMAINS INDIA’S IMPORTANT SOURCE OF CRUDE OIL, SAYS KRISHNA
NEW DELHI: In the backdrop ofUSpressure to reduce oil imports fromIran,Indiaon Thursday said unilateral sanctions should not impact its “legitimate trade interests”withIran.
After talks with visiting Iranian foreign minister Ali Akbar Salehi, external affairs minister S M Krishna made it clear thatIranremainedIndia’s important source for oil given the growing domestic demand.
Asked about theUSsanctions onIranand its affect on trade, Krishna saidIndiahas always abided by the United Nations Security Council resolutions on theIranissue.
“As far as other sanctions, those decided unilaterally or regionally, we are aware of such measures. In a globalised world, these actions can have an impact on the markets,” he said.
“Our commercial entities take these into account. Such measures should not impact on legitimate trade interests,”Krishnasaid.
Salehi underlined thatIranhas been a reliable partner forIndiaon matters of energy security and will continue to be so.
He also urgedIndiato look at energy resources that were reliable.
“Iranis an important neighbour and crucial trade partner forIndia, and also a major source of our energy supplies,”Krishnasaid.
IndiaandIranshare an interest in the stability of Central Asia and the Gulf,Krishnasaid, adding that he and Salehi also discussed threats the two nations faced from terrorism and extremism.
Salehi is inIndiaas a Special Envoy of Iranian President Mahmoud Ahmedinijad to extend an invitation to Prime Minister Manmohan Singh to attend the Non-Aligned Movement (NAM)Summitto be held inTehranin August.
He is scheduled to meet Singh on Friday.
He also briefed Krishna on the recent discussions betweenIranand the P5+1 inBaghdadonTehran’s nuclear programme.
“Indiahas always held that the nuclear issue should be resolved through peaceful diplomacy and the framework of the IAEA provides the best forum to address the technical aspects of the issue,”Krishnasaid.
On the importance ofNAM, Salehi underlined the need for a voice for developing nations to speak for justice, fairness and equal sharing of management of world affairs.
Asked about allegations againstIranin connection with the attack on an Israeli diplomat here in February, Salehi refuted them and said thatIranneed not bother itself on such charges.
GOVERNMENT APPOINTS PANEL TO REVIEW OIL FIRM CONTRACTS
NEW DELHI: Government on Thursday set up a panel headed by C. Rangarajan, chairman of the prime minister’s economic advisory council, to review production sharing contracts in the oil and gas sector.
The committee will submit its recommendations by Aug 31 this year.
The six-member committee will look into “all modifications necessary for future production sharing contracts so as to enhance production of oil and gas and the government’s share of this while minimising procedures for monitoring the expenditure of producers”, according to a statement released by the Prime Minister’s office.
Prime Minister Manmohan Singh has approved the constitution of the committee on the request of Petroleum and Natural Gas Minister Jaipal Reddy.
The committee has been asked to review the existing production sharing contracts, including in respect of the current profit-sharing mechanism with the Pre-Tax Investment Multiple (PTIM) as the base parameter.
The government has also asked the committee to suggest structure and elements of the guidelines for “determining the basis or formula for the price of domestically produced gas, and for monitoring actual price fixation”.
Members of the committee include B.K. Chaturvedi, member Planning Commission, Jagannadha Rao, former judge of the Supreme Court, Ramprasad Sengupta, professor at Centre for Economic Studies and Planning, JNU, J.M. Mauskar, former IAS officer, and Joeman Thomas, managing director of ONGC Videsh Ltd.
MIXED SIGNALS FROM GOVT ON PETROL PRICES
MUMBAI/NEWDELHI: Even as the Bharatiya Janata Party-led NDA grouping and the Left parties called a ‘Bharat Bandh’ on Thursday to protest against the petrol price rise, there were mixed signals from the government on the issue.
Sources said a meeting of heads of the oil marketing companies — Indian Oil, Bharat Petroleum and Hindustan Petroleum — was called off. Senior officials from the OMCs said they’d been directed by the government not to announce any reduction in petrol prices this week, as this might amount to buckling under pressure from the opposition.
News agencies, however, reported a likelihood that petrol prices might be revised tomorrow. The OMCs have over the past week been indicating scope for reducing rates from June 1. The price is benchmarked against international rates, which have fallen from $124 to $114-115, allowing the room to reduce the petrol price by Rs 1.50-1.60 a litre.
R K Singh, chairman and managing director of Bharat Petroleum, told a television channel there was a possibility of reduction in the prices. “In the last fortnight, petrol prices have come down. Therefore, there is a possibility of reduction to the extent of about Rs 1.50 or so,” he said. He added, this would have been more, but the rupee depreciation had worsened the situation. “Despite that, there is possibility of reduction on the basic price to the extent of Rs 1.50. So, including the tax, it could be around Rs 2 or so. We will take a call by the end of the day,” Singh said.
The empowered group of ministers on the subject was earlier expected to meet on June 1 to decide on raising the prices of diesel, kerosene and cooking gas. The meeting has been postponed. An official said it was because of unavailability of some ministers.
ONGC TARGETS SIX-FOLD RISE IN FOREIGN PRODUCTION
MUMBAI: State-run Oil and Natural Gas Corporation (ONGC), through the Perspective Plan 2030, has set ambitious long-term targets. In 18 years, ONGC would seek to double its exploration and production growth, triple its revenues and earnings before interest, taxes, depreciation, and amortisation, and quadruple its market capital. It also plans a six-fold rise in international exploration and production (E&P).
To achieve this, ONGC plans to invest Rs 11,00,000 crore by 2030. “An enabling factor to achieve these goals would be focus on foreign E&P, with a target of 60 million tonnes of oil equivalent (mtoe) a year, against the current nine mtoe. Other focus areas are alliances for developing new types of hydrocarbon resources and exploration for over 450 mtoe of yet-to-find domestic hydrocarbons,” Chairman and Managing Director Sudhir Vasudeva had said at a meeting of analysts earlier this week.
The company also targets a production growth rate of four to five per cent, against the current two per cent. “If we want to grow at four per cent, we would have to go abroad. Prospects of Indian basins are limited, and these have not been explored enough. The perspective plan is to double our growth rate. We know this is difficult to achieve, but we are committed,” Vasudeva said.
ONGC’s stand-alone net worth rose 18 per cent to Rs 1,35,266 crore in 2011-12, from Rs 1,14,531 crore in 2010-11. The company, which recorded a 102 per cent rise in net profit for the March quarter, owing to better realisation and a favourable exchange rate, gave a domestic oil production guidance of 27.54 million tonnes and a gas production guidance of 25.73 billion cubic metres for 2012-13. ONGC’s ultimate reserve accretion of 84.13 mtoe was the highest in two decades, the company said.
The foreign production target, if achieved, would see the ratio of the company’s domestic to foreign production change from 85:15 to 50:50 or 54:46 by 2030.
ONGC VIDESH LTD MULLS OPTIONS OF STAYING PUT IN CUBA
NEW DELHI: ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), is evaluating options of staying put inCubaafter its Spanish partner Repsol YPF failed to find an oil and gas in an offshore well.
“There were two prospects identified for drilling. It is true that one has turned out to be dry. The partners will now have to evaluate if the second prospect has to be drilled,” a company official said.
Repsol, OVL and Statoil of Norway – the third partner in a grouping of six deepsea exploration block inCuba, would meet shortly to evaluate results of the Jaguey-1 exploration well.
“If Repsol decides to exit from the block, OVL management will take a call separately if the company needs to stay put considering we have other deepsea block inCuba,” he said.
The Jaguey-1 exploration well drilled by Repsol and partners Statoil of Norway and OVL on deepsea Block N26, inCuba’s Exclusive Economic Zone (EEZ) in theGulf of Mexico, did not yield any oil and gas find.
The three partners had initially been due to drill a total of two wells using the Chinese-built offshore drilling rig Scarabeo 9, which had been specially contracted so as not to contravene theUStrade embargo.
Repsol announced on May 18 that its long-anticipated well in the Florida Straits nearHavanahad come up dry, which followed its first unsuccessful well in the same area in 2004. They are only offshore wells drilled inCuba.
OVL holds 30 per cent interest in an offshore exploration block inCubacovering the six areas (N25/26/27/28/29/36). Repsol holds 40 per cent in the 11,231 sq km block. Statoil Oil andGasAShas the remaining 30 per cent interest.
The Indian firm has so far spent about $ 27 million as its share of investment in the block.
The official said OVL is not abandoning deepwater Blocks 34 and 35, where it holds 100 per cent interest with operatorship.
The Blocks located inCuba’s Exclusive Economic Zone (EEZ) cover an area of 4,300 sq km. The Production Sharing Contract (PSC) for the Blocks was signed on September 10, 2006.
The company has so far invested about $ 42.99 million in the blocks.
OIL COMPANIES REDUCE JET FUEL PRICES BY 2%
NEW DELHI: State-owned oil companies today cut jet fuel prices by 2 per cent, the fourth straight reduction in rates since April.
The price of aviation turbine fuel (ATF), or jet fuel, inDelhiwas reduced by Rs 1,376.81 per kl, or 2 per cent, to Rs 65,670.14 per kl with effect from midnight tonight, Indian Oil Corp, making the announcement on behalf of the industry, said.
The reduction comes on back of Rs 753.8 per kl cut in rates in three previous fortnights.
Even after today’s reduction, ATF prices are still not at level before the steep increases effected in March and early April.
ATF rates were increased by 3.2 per cent on March 1, Rs 1,298.88 per kl on March 16 and by another 2.8 per cent on April 1. Jet fuel was priced at Rs 62,557.12 per kl before the three price increases.
In Mumbai, jet fuel will cost Rs 66,587.90 per kl from tomorrow against Rs 68,022.08 per kl now.
Jet fuel constitutes over 40 per cent of an airline’s operating cost and the reduction in prices will ease the burden of the cash-strapped airlines.
No immediate comment was available from the airlines on the impact of the price reduction on passenger fares.
The three fuel retailers – IOC, Hindustan Petroleum and Bharat Petroleum – revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.
LPG TOPS PETROLEUM PRODUCT IMPORTS FOR APRIL
Liquefied petroleum gas (LPG) hogged the lion’s share ofIndia’s import bill for finished petroleum products in April.
Around 5.53 lakh tonnes of LPG were imported during the month, valued at Rs 2,836 crore. The country’s total bill on imports of petroleum products during the period stood at Rs 4,736 crore. LPG constituted around 40 per cent of the volume.
Besides LPG, the import bill included 1.32 lakh tonnes of diesel worth Rs 720 crore and 1.30 lakh tonnes of naphtha costing Rs 297 crore.
Of the finished product imports, the public sector’s inward shipments totalled 6.98 lakh tonnes, valued at Rs 3,735 crore. While the volume of finished products imported by the private sector was of the same order, at 6.49 lakh tonnes, they were valued at just Rs 1,001 crore.
Despite the sizeable imports,Indiawas a net exporter of finished petroleum products such as petrol, diesel, aviation turbine fuel and fuel oil in April. The country’s exports of finished petroleum products such as petrol, naphtha, diesel, fuel oil, vacuum gas oil, aviation turbine fuel and others stood at 4.1 million tonnes (mt), cumulatively valued at Rs 15,687 crore. Petrol accounted for the bulk of the exports, at 1.1 mt, valued at Rs 5,062 crore, followed by 1.4 mt of diesel worth Rs 4,397 crore.
Sizeable exports of 5.42 lakh tonnes of naphtha worth Rs 2,679 crore and 4.91 lakh tonnes of fuel oil worth Rs 1,826 crore, besides 1.94 lakh tonnes of aviation turbine fuel valued at Rs 920 crore, helped the country maintain a positive balance of trade for finished petroleum products.
However, ifIndia’s imports of crude oil — the raw material used for making finished petroleum products — are taken into consideration, the country was a net importer of 11.8 mt of petroleum, with the negative balance of trade amounting to Rs 48,992 crore.
Indiaimported 14.6 mt of crude oil at a total cost of Rs 60,943 crore in April. Of this amount, public sector oil refiners imported 8.4 mt for Rs 39,197 crore, while the private sector’s imports amounted to 6.2 mt at a total cost of Rs 21,746 crore.
RELIANCE POWER, SHELL TO BUILD LNG TERMINAL
NEW DELHI: A consortium of Anil Ambani-controlled Reliance Power and energy major Shell will build a terminal off the Andhra Pradesh coast to import 5 million tonne a year of liquefied natural gas (LNG) from 2014.
The consortium will build a floating terminal, which can be set up quickly. It will be located near RIL’s D-6 block. A sharp fall in output from the block has hit several power plants in the region. The terminal will help customers on the east coast who built plants in anticipation of gas supply from the RIL block.
“We are pleased to have reached an agreement with Reliance andKakinadaSeaPortsto implement the LNG terminal in AP,” Royal Dutch Shell global head of LNG De la Rey Venter said in a statement.
Several power projects in the region with a combined capacity of 8,000 MW urgently need natural gas. These include Reliance Power’s 2,400 MW Samalkot unit, and others being built by GMR Energy, GVK Power and Lanco Infratech.
Reliance Power, which is setting up a 2,400 MW gas-based power plant in Andhra Pradesh, is one of the largest consumer of natural gas in the region. “Kakinada, with its proximity to our Samalkot power plant and several other gas consumers, is a natural choice for setting up an LNG terminal,” Reliance power CEO JP Chalasani said.
“The floating unit would not require land, besides, such terminals are faster in commissioning,” he added.
Kakinada Sea Ports, which operates theKakinadadeepwater port in Andhra Pradesh, will be a minority partner in the project that industry officials say would require an investment of about $1 billion (Rs 56,000 crore). ET reported this first on January 3.
According to industry sources, Shell and Reliance Power would hold about 40% equity stake each, whileKakinadaPortwould hold the balance. The companies, however, did not disclose their equity holdings in the consortium. The partners had agreed to set up the venture in December 2011.
The oil ministry estimatedIndia’s gas demand to soar to over 356 million standard cubic meters per day by 2014-15 while domestic output would almost remain static at about 113 mmscmd. Most of the shortfall would be met through imported LNG.
GULF OIL POSTS RS 21-CRORE PROFIT IN Q4, DECLARES 110%
HYDERABAD: Gulf Oil Corporation Ltd has posted a net profit of Rs 20.93 crore for the fourth quarter ended March 31, 2012, against Rs 18.89 crore for the corresponding quarter last year.
The company revenues for the fourth quarter were Rs 299.98 crore against Rs 250.78 crore for the corresponding period last year.
Gulf Oil, a Hinduja group company, recorded a profit after tax of Rs 62.11 crore, a growth of over 15 per cent over last year’s profit of Rs. 54.19 crore.
The company closed the financial year ended March 2012 with a turnover of Rs 1,074 crore against Rs 999.54 crore for the pervious financial year.
The company board declared a dividend of 110 per cent.
The lubricants division registered a turnover of Rs 231 crore for the quarter against Rs 184 crore.
The division’s profit was up 21 per cent in spite of pressure on margins due to raw material costs and price reductions in the market.
The lubricants arm logged revenues of Rs 822 crore for the year against Rs.588 crore.
The sales of co-branded range of oils with Ashok Leyland and Mahindra and Mahindra also contributed to volumes.
The company had partnered with Chennai Super Kings during IPL-5.
The company has recently taken up works on the real estate venture inBangalorewhere it plans to invest up to Rs 1,800 crore in association with Hinduja Realty Ventures Ltd.
Plans are under way forHyderabadproject.
The company shares closed at Rs 71.60 down 1.85 per cent.
PETRONAS POSTS 62 PER CENT PROFIT RISE, WARNS ON OUTLOOK
KUALA LUMPUR:Malaysia’s state oil firm Petroliam Nasional Bhd (Petronas) posted a 61.7 per cent increase in first-quarter profit on Thursday, saying the rise was mainly due to higher margins and the company’s sale of its stake in Centrica Plc.
The unlisted company said its net profit for the three-month period ended March 31, 2012 rose to 20.7 billion ringgit ($6.5 billion) from 12.8 billion ringgit a year ago. Revenue in the three months climbed 14.6 per cent to 75.2 billion ringgit year on year.
Petronas said the outlook in the coming months was challenging as political instability in theMiddle Eastand the protracted European crisis weakened demand for oil.
“We do not see much improvement from the first quarter going forward,” Petronas’ President and CEO Shamsul Azhar Abbas told reporters.
The company is facing diminishing oil and gas reserves inMalaysiaand plans to spend 300 million ringgit over the next five years to step up its deep-water exploration activities as well as re-exploring marginal fields.
Shamsul said Petronas will announce the award of the next round of risk services contracts (RSC) for the development of marginal oilfields inMalaysiain a few days.
Petronas awarded the first RSC to a consortium, comprising UK-based Petrofac Ltd and SapuraKencana Petroleum Bhd , for the development of the Berantai marginal field, off Terengganu state in January last year.
Meanwhile, Shamsul said the halt in itsSudanproduction is expected to cost Petronas some 3 billion ringgit in earnings to be reflected starting from the second quarter.
“We are lucky we have additional production in gas coming fromTurkmenistan,” he said, adding the production of the gas will be higher in the second quarter.
Petronas is part of Chinese-Malaysian oil firm Petrodar. South Sudan said in February it had expelled the head of Petrodar, which is the main oil firm in the country, after accusing Chinese firms of helpingSudanto seize the southern oil. Oil fromSudanaccounts for about 20 to 30 per cent of Petronas’ international oil production, making it the single largest contributor.
Shamsul said Petronas is requesting a cut in the annual dividend it pays to the Malaysian government to 28 billion ringgit this year from 30 billion in a move to preserve cash to help shore up production.
“Mind you, the government is fairly aware of Petronas’ need to have our own funding for growth, they respect that and they will agree to our request,” he said.
Shamsul said the time could be ripe for mergers and acquisitions as oil prices are expected to trend lower.
“We are doing opportunity scanning now and building cash for it,” he added.
OIL ENDS WITH BIGGEST MONTHLY LOSS SINCE DECEMBER 2008
NEW YORK: Crude oil futures dropped on Thursday by more than 1 percent, ending May with their biggest monthly decline in more than three years as bloatedU.S.stockpiles and weak economic data added to worries about the euro zone crisis, all dampening oil demand prospects.
Oil pared sharp losses of more than 2 percent in afternoon trading, after Dow Jones reported that the International Monetary Fund was considering a rescue loan to beleagueredSpainif it failed to bail out a big bank.
But an IMF spokesman later said the fund was not in talks withSpainabout a possible financial report, though an IMF mission was going toMadridnext week for scheduled econonic consultations.
“The latest series ofU.S.data has snuffed out recent silver linings that had kept growth moving, though at a slow pace, and Europe is imploding,” said Mark Anderle, trader at TAC Energy inDallas.
“Technical support has also vanished, so now you have a perfect cocktail for selling,” he added.
Crude futures slumped to seven-month intraday lows after official data showed thatU.S.crude oil stockpiles swelled last week, hitting the highest level in nearly 22 years.
Oil prices trudged downwards earlier on disappointingU.S.economic reports that worsened the outlook for global oil demand prospects, already dampened by the worsening euro zone crisis, and slower growth inChinaandIndia.
U.S.crude oil inventories, excluding strategic reserves, rose much more than expected last week to hit their highest level since July 1990, U.S. Energy Information Administration (EIA) date showed. That quickened the day’s selling.
The euro sank in volatile trading against the dollar, touching a 23-year low against the greenback on concerns aboutSpain’s banking troubles and weakU.S.economic data.
In turn, investors pared their holdings in riskier commodities and equities assets.
InLondon, ICE Brent crude futures for July delivery settled at $101.87, down $1.60, the lowest finish for front-month Brent since Oct. 4.
Front-month Brent fell 14.7 percent for the month, its biggest monthly decline since December 2008, after slipping 3 percent on Wednesday. Brent has fallen more than 21 percent from its 2012 high of $128.40 hit in March.
U.S.crude for July delivery settled at $86.53, falling $1.29, and marking the lowestU.S.front-month close since Oct. 20.
Front-monthU.S.crude sustained a 17.5 percent loss for May, its biggest monthly decline since December 2008. It has dropped more than 22 percent from its 2012 peak of $110.55 struck in March.
Brent’s premium against U.S. crude rose as high as $15.99, but narrowed at the close to $15.34 as U.S. government data showed that crude oil stockpiles at the U.S. delivery point in Cushing Oklahoma, while reaching a new record, edged up only modestly from the previous week’s levels.
Traders expect that the reversal earlier this month of the Seaway pipeline from theU.S.delivery point inCushing,Oklahoma, to the mainU.S.refining center inGulfCoast, will help ease the glut of oil in the U.S. Midwest and possibly moveU.S.and Brent crude prices closer. .
Brent’s volume topped more than nearly 670,000 contracts, 23 percent above its 30-day average, ahead of theU.S.trading volume of almost 612,000 contracts, 18 percent atop its 30-day average, according to Reuters data.
The crisis in the euro zone continued to dominate market sentiment.
“Markets have been fairly tight but it’s all these euro zone worries that have really spooked the oil markets,” said Rob Montefusco, a trader at Sucden Financial.
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