| The Corporate Communications (CC) team of IndianOil team did it again. The group continued its winning streak at the 49th Association of Business Communicators of India (ABCI) Annual Award Function. Winning FIVE prestigious awards in various categories by IndianOil's "CC" teams all over India was distinct in a glittering function graced by the presence of His Excellency, Sankaranarayanan, and Hon'ble Governor of Maharashtra along with several other dignitaries including Dr. S. Gokarna, Dy. Governor, Reserve Bank of India. Ms. Padma Vibhushan, Mr. R. K. Laxman, renowned cartoonist and Mr. M. V. Kamat, veteran noted journalist was presented the coveted Lifetime Achievement Award at the hands of Hon'ble Governor.
IndianOil bagged a unique "FIFER" in the categories namely Silver Trophy for "E-Zine" category for IndianOilXpress News by Corporate Office CC group received by Ms. Anita Shrivastava, Sr. Mgr(CC), CO. Silver Trophy for the category "Social Responsibility" for a campaign on Oil Conservation by Head Office Branding group received by Mr. R. Chidambaram & Mr. John Prasad, Silver Trophy for "Corporate Film" category for a film on Kisan Seva Kendra (Energy of Heartland) by HO CC group received by Mr. R Chidambaram & John Prasad, Bronze Trophy for the category "Illustration" for Puja Guide Map by Eastern Region CC group received by Mr. Aloke Singh, Manager (CC), ER, Bronze Trophy for the category "Wall Paper" for Antarik Samachar Seva by Western Region CC group received by Mr. Ajit Morye, CC Manager, WR. DNA, Mumbai, March 24, 2010
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| IndianOil-OIL India | | | |
| | State-owned IndianOil and Oil Intlia Ltd today confirmed making an 'approach' to takeover the West Asia-focused oil firm Gulfsands Petroleum Pick for an undisclosed cash amount. OIL and IndianOil confirmed that they have jointly made an "approach regarding a possible all-cash offer for Gulfsands," the two firms said in a joint statement to the London Stock Exchange. Sources said the OIL-IndianOil combine did not make a formal bid, but had approached a major shareholder in Gulfsands offering around 315 pence pet share to buy its 22 per cent stake. | Statesman, Kolkata, March 24, 2010
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at Thursday, March 25, 2010
| Delhi shifts to Euro IV fuel tomorrow, others on Apr 1 | | | |
| | Induction of clean fuel may lead to upward revision in fuel prices
The national capital will shift to cleaner Euro IV compliant auto fuel from Wednesday, becoming the first city in the country to use the fuel. The induction of clean fuel courtesy Euro IV might lead soon to a revision of auto fuel price after this kind of fuel is sold in 12 other big cities from April 1.
The government is thinking on a differential pricing for Euro IV fuel. "We are thinking on it. We will soon take a view," Petroleum Secretary S. Sundareshan told reporters at the 6th Asia gas partnership summit in New Delhi on Monday.
The IndianOil is launching fuel that meets Euro IV emission norms from March 24, said an IndianOil official. The three oil marketing companies (OMCs) IndianOil, Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation Limited will start selling Euro IV fuel from April 1 in 12 other cities, which include Mumbai, Hyderabad, Chennai, Kolkata and Bangalore. At the same time, other cities will see Euro III fuel being available in a phased manner till October 1. "The tankers are ready and the pipelines have been flushed to implement the Euro IV compliant fuel," said Mr. Sundareshan. Country's state owned OMCs have spent nearly Rs 13,000 crore to upgrade their refineries to make them Euro III and IV compliant.
Earlier in 2005, when fuel with Euro III norms was introduced, prices of petrol were hiked by 30 paise per litre and diesel by 24 paise. In addition, petroleum secretary has said that government will soon take a decision to increase the price of gas produced from nominated blocks.
"I am told by the minister (petroleum) that the issue is in the final stages of decision making in the government. We expect a decision soon," said Mr. Sundareshan.
Price of gas supplied to companies ONGC and OIL from its nominated gas fields may be hiked to $4.2 per million British thermal unit (mBtu) from prevailing $1.82 per mBtu. Gas prices for power and fertilizer sectors will be done in three tranches over next three years. But for small and medium enterprises apart from city gas distributors, the hike may be immediate and in one go. "Over the next few months we will explore further how to make all parts of the country get gas at approximately the same price, Mr. Sundareshan said Gas being sold at administered rates is much lesser 1 than market price and below cost of production. This price is applicable to fields given on nomination basis prior to new exploration and licensing policy (NELP). About 97 per cent of ONGC's total gas production is sold under administered price, while in case of OIL it is approximately 85 per cent.
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Fuel price rise imminent in 13 major cities
Petrol and diesel prices in 13 major cities are set to go up, with the petroleum ministry considering a higher price for Euro-IV complaint fuels. This, in effect, would mean a second price hike for consumers in less than two months. Petroleum retailers in Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad and Ahmedabad, among other cities, will start supplying Euro-IV compliant auto fuel from April 1.
The sale of Euro-Ill compliant fuel will start in a phased manner between April 1 and October I in the rest of the country. Speaking at the sidelines of the sixth Asia Gas Partnership Summit, here, petroleum secretary Mr. S. Sundareshan said a proposal to increase the price for Euro IV was being considered. The introduction of cleaner auto fuel is aimed at reducing environmentally harmful emission of pollutants like sulphur and benzene.
In April 2005, Delhi, Mumbai, Kolkata, Hyderabad, Chennai and Agra moved to Euro IV norms at an additional cost of Rs 0.30 a litre and Rs 0.24 a litre on petrol and diesel, respectively. Oil marketing companies had increased petrol and diesel prices by Rs 2.71 and Rs 2.55 a litre, respectively, from February 27, following the increase in excise duty and restoration of the 5 per cent duty on crude oil State-owned oil retailers like IndianOil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation are investing around Rs 23,500 crore in upgrading their refineries to meet the demand for cleaner fuel The price hike has been proposed to help them partly recoup their costs.
Economic Times, New Delhi, March 22, 2010
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at Tuesday, March 23, 2010
Govt to restructure gas hydrate programme
India plans to revamp the National Gas Hydrate Programme and set up an agency to push the government's bid to extract fuel from the ocean-based source and reduce its dependence on imports. Gas hydrates are methan molecules trapped in ice. The hydrate blocks look like chocolate bars, with each slab containing the fuel. Theoretically, each cubic metre of hydrate contains around 164 cu. m of methane or natural gas. The National Gas Hydrate Programme was started in 1997 by the petroleum ministry. In 2000, the Director General of Hydrocarbons (DGH) became the technical coordinator of the programme, and through a scientific cooperation programme with the US, India acquired core samples of gas hydrates. After the US and Japan, India is the third country to have done this. While the current structure involves various officials on the payroll of different government organizations working on the programme guided by a steering committee of the petroleum ministry, the new system would bring them together under one organization - the National Research and Development Centre for Gas Hydrates to improve efficiency. The centre is expected to be set up in Navi Mumbai due to its proximity to a port. "We have made a proposal and within two months, what model comes up needs to be deliberated. We have established the reserves," said director general of hydrocarbons (DGH) Mr. S. K. Srivastava. According to government estimates, India has 1,894 trillion cu. m of gas hydrates in its waters. However, the technology to tap gas from gas hydrates is still experimental, and the extraction could come at a big environmental cost. One kg of methane has almost 23 times the greenhouse warming potential of carbon dioxide. At least half the methane in the world is believed to be trapped under the ocean floor, close to coast lines. The steering committee is headed by the petroleum secretary and consists of DGH along with heads of state-owned Oil and Natural Gas Corp. Ltd (ONGC), GAIL (India) Ltd, Oil India Ltd and Oil Industry Development Board among others as members. There is also a technical committee with DGH as programme coordinator and having operational sub groups. The board of directors of the new gas hydrate agency will comprise members of firms and institutes who will sponsor the programme along with eminent scientists. Along with an operational wing, it will have geology and geophysics lab besides a research and development wing, an engineering lab and an environment impact assessment lab. "To improve efficiency, we felt that it has to be done in a formal and time-bound manner," said Srivastava, who is also director of operations at state-run Oil India. The centre will conduct field implementation of R&D (research and development) finds, geoscientific surveys and address safety and environment issues. The petroleum ministry will nominate a full-time gas hydrate programme manager as part of the initiative. Blocks that were awarded before the new exploration licensing policy (Nelp) are to be studied by ONGC on the east coast and on the west by Oil India and GAIL, while the Andaman area is to be studied by DGH. The post-Nelp blocks are to be studied by DGH. The government auctions oil and gas blocks for exploration and extraction through Nelp; eight rounds of auctions have been held so far since 1999. India imports 75% of its oil needs and accounts for 3.5% of global consumption. It will become the third largest oil importer after the US and China before 2025, with energy demands expected to almost double by 2030, according to the International Energy Agency.
Mint, New Delhi, March 22, 2010
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In the past five months, crude oil prices, unlike that of other industrial commodities, traded in the range of $75-85 per barrel. While there have been recurrent upward revisions to demand estimates for 2010 by several market bodies like International Energy Agency (TEA) and Organisation of Petroleum Exporting Countries (OPEC), the current prices near $80 seem to have factored in these assessments. Moreover inventories in the US, a major consumer, and a leading indicator of the Organisation for Economic Co-operation and Development (OECD) demand, are currently running well above their five-year average. However, given the influence of the US dollar on the overall market liquidity and commodity prices in the past two years, a move towards $90 is likely if the cap of $85 is overtaken. The recent run in the prices of crude has come on the back of a pull-back in the US dollar index, a gauge of the dollar's strength against a basket of currencies, while the sentiment build-up towards the latest meet of OPEC accountable for nearly 40% of the world supply to decide the production quota for the members of the cartel also provided a boost This caused international prices to gain more than 4% from end-February. OPEC, in its recent periodic meet decided to keep the production quota of its member-countries unchanged. However, the cartel also expressed its concerns over the possibility of abundant supply affecting recovery in demand in' 10. Recently, the oil cartel expressed caution, as it said that the group is ready to use policy tools to promote recovery and price stability. The demand from OECD countries saw an average decline of 1.5% for the six quarters starting from 'OS and there was a bounce back by a similar average of 1.7% to 46 million barrels per day (mbpd) in the last twoquartersof'09. On the other hand, the demand from non-OECD countries, including develop ignore merging economies, increased and an average of 1% per quarter between the start of'08 and till the first half of'09. However, the past two quarters saw a flat growth. This demand could see a further pick-up due to rising imports by China, the biggest contributor to the non-OECD demand. As can be seen from the second chart the YoY change in Chinese imports has gained a pace since September '09, and particularly, in the first two months of' 10. While growing demand in the US looks encouraging, inventories have again started to build up. The year-on-year change total oil demand has started to inch up the negative gap. However, weekly inventories of crude oil have moved further up from its five-year average. Since May '09, inventories were on a declining trend to fill up the gap from their five-year average. However, since early February '10, they have again started to move away from this average, indicating price constrain on the high reside. In condusion a resistance near $85 curtails the recent run in prices, since positive fundamentals in terms of demand recovery are factored in. However, given the recent reactions from market participants to any positive news and the strong negative correlation of prices with the dollar index (of the order of 80%), a breach of this resistance could cause further consolidation in the $85-90 range.
Economic Times, New Delhi, March 22, 2010
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| IndianOil plans to enter Petrochemical business | | | | 
| | IndianOil plans to enter the petrochemicals business in June through its polymer products and expects to notch up a market share of 21 per cent in this new initiative.
"IndianOil begins to foray into petrochemicals business through its polymer products Polypropylene and Polyethylene, in June 2010," a company release said. Business Standard, New Delhi, 22 March 2010 | This Message was sent from Indian Oil Messaging Gateway, New Delhi, India. The information contained in this electronic message and any attachments to this message are intended for the exclusive use of the addressee(s) and may contain proprietary, confidential or privileged information. If you are not the intended recipient, you should not disseminate, distribute or copy this e-mail. Please notify the sender immediately and destroy all copies of this message and any attachments.
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Govt mulls differential pricing for Euro IV The govt is considering differential pricing for Euro IV fuel to be sold in select cities from April 1. Government is considering differential pricing for Euro IV-compliant fuel to be sold in select cities from April 1, Oil Secretary S. Sundareshan said on Monday.
India is keen to cut emissions as Asia's third-largest economy expands rapidly and aim to catch up with fuel quality in Europe, which now follows Euro V standards. It has been gradually reducing sulphur from 2000, when fuel had 500 parts per million (ppm). Motorists in major cities will now move to Euro-IV norms, locally known as Bharat Stage-IV, that allow up to 50 ppm sulphur.
In January, India decided to adhere to an April deadline for the Euro IV launch in major cities. The roll out of Euro III specifications in the rest of the country has been staggered until October. ....from the pages of INDIAN EXPRESS newspaper.
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The department of science and technology of the state government has offered financial assistance on Rs 1 crore for the setting up of a renewable energy test centre at Deenbandhu Chhotu Ram University of Science and Technology, Murthal.
HS Chahal, vice-chancellor, informed the centre would have various laboratories like energy efficiency testing lab, solar photo voltaic testing lab and solar thermal testing lab. "It will be a unique centre in North India which will provide testing facilities for recently developed renewable energy appliances," he said, congratulating the centre chairman, Dr SK Singh, on this achievement of the University Centre of Excellence for Energy and Environment Studies.
Under this project, he said, financial assistance for the staff would be provided for three years and after that the university might charge testing fee and also raise resources by running various sponsored short-term capacity building courses in the area of energy efficiency and renewable energy, ECBC, green architect, repair and maintenance etc.
The VC also informed that the state renewable energy department, Haryana Renewable Energy Development Authority (HAREDA), Bureau of Energy Efficiency (BEE) and the Ministry of New and Renewable Energy, power utilities, and the department of architecture would help generate resources to conduct courses on short-term capacity building and also to train manpower in the area of renewable energy conservation.
Chahal disclosed that it had been decided to open four other centers of excellence which would cover areas identified as pertinent to present day and future needs of the country. The centre of excellence in highway safety would have academic programs, training facilities, research consultancy, motivational campaigns and a live traffic park to promote road safety education. "A trauma centre is being planned on NH-1 at Hasanpur village whose panchayat has already resolved to transfer land for use by the university to set up this centre," he added.
A centre for estate management offering courses like master in landscape design and planning is also to be set up soon, he said and added that a centre for community development was currently working on projects based on providing medical care, plant seedling, education and training in waste management and wastewater management. He also disclosed that the centre for business incubation was planned to play a nodal role in providing manpower both upstream and downstream the industry. BS Malik ....from the pages of TRIBUNE newspaper
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at Monday, March 22, 2010
Consumer can't be insulated from global prices for very long. Second month into his tenure as petroleum secretary, S Sundareshan is in the middle of a situation where oil marketing companies are seeking an increase in prices as well as higher subsidy from the government. The two demands, so far, have failed to move the political class. In an interview with Ajay Modi and Jyoti Mukul, he says the Kirit Parikh report is alive and the government will take care of its companies. Edited excerpts: What is your long-term view of the ministry on the petroleum sector?
The long-term outlook is extremely bright. First and foremost is our achievement in building refining capacity. We have already built annual capacity of 178 million tonnes (mt). Our domestic consumption is 135 mt. It is growing at a rate of 4-5 per cent. By 2012, we will build capacity to the tune of 255 mt. There has been tremendous achievement in terms of technology and risk-taking ability of the industry. After two-three years, 100 mt of petroleum products will be exported. In the public sector, three new refineries are coming up - Bhatinda by Hindustan Petroleum Corporation Ltd, Bina by Bharat Petroleum Corporation Ltd and Paradip by IndianOil. A private greenfield refinery is being built at Cuddalore. Essar refinery will be expanded. So, in the foreseeable future, there is going to be no shortage of any petroleum product for want of capacity. The huge surplus would be used to the country's advantage. In gas, the last year has been phenomenal in terms of increase in production. We are producing 60 million standard cubic metre a day more gas (total 142 mscmd) from 82 mscmd last year. This offers tremendous scope for increased supply to critical sectors. We also expect additional gas production from the discoveries of public and private sectors. Last year has been good as the facilities of a joint venture between Cairn and ONGC started production in Rajasthan and we hope it will produce 22 per cent more at its peak from the current level. In terms of acquisition of oil and gas assets abroad, OVL (ONGC Videsh Ltd) has been doing a remarkable job. It has made investments of over Rs 52,000 crore in 39 projects and had revenues of Rs 18,000 crore last year, with profits of Rs 2,800 crore. Considering the positive outlook, correct pricing policy is important. If prices are remunerative, there will be more investment, if not, more investment will mean more losses for the companies. What is the government's long-term outlook on pricing? Is the Kirit Parikh report on petroleum prices dead?
The oil marketing companies are losing over Rs 5 on every litre of petrol, over Rs 3 on diesel, Rs 16 on a litre of kerosene and over Rs 260 per LPG cylinder. It is impossible that the Indian consumer can be insulated from the movement of international oil prices. Ultimately, the consumer has to pay the price for what he consumes. The government could have a deliberate policy to subsidise the weaker sections, particularly kerosene and LPG, and a special scheme could be formulated for this purpose. A decision has to be taken in this regard. The Parikh committee report has offered certain suggestions, the basis of which is equity and sustainability. The government is examining the report. When are you going with the report to the Cabinet? Is it that the hike after the Budget has made price increase on account of international prices difficult?
The decisions in the Budget are resource mobilization steps of the finance ministry and I have no comments to offer on that. The problem remains that in the current year oil marketing companies would have under recoveries close to Rs 45,000 crore. The under-recoveries on account of petrol and diesel (estimated at Rs 13,000-14,000 crore) will be absorbed by the upstream companies. The balance on account of kerosene and LPG have to be borne by the government. Already, Rs 12,000 crore have been released. So far as the balance is concerned, we are in constant touch with the Ministry of Finance and will have deliberations with them early in the next financial year once accounts are finalised. We are sure oil companies will be adequately compensated. Is there any thinking on changing the burden sharing mechanism in the next financial year, especially with regard to the upstream companies?
First and foremost, there is absolutely no panic from the observers of the industry on this account. In 2007-08, under-recoveries were to the tune of Rs 70,000 crore, which was fully compensated; in 2008-09 it was Rs 103,000 crore, which was compensated by the upstream companies and the government. We have ensured that no investment proposal of oil companies suffer for want of funds. These companies are building new refineries, upgrading facilities and completing major pipelines. So, the oil companies have been able to sustain both activities and investment. We have a formula on the basis of which we take decisions every year. The formula for the current period was known early in the year. For the last two years, it was that one-third of the under-recoveries were to be borne by the upstream companies. What is now required is a sustainable decision for the future. For 2010-11 and beyond, the Kirit Parikh report will be the benchmark. The government is studying it and the implications on various sections of the society. It is studying the need to subsidise the weaker sections and not subsidise the better-off. A decision will be taken keeping all these into account. There were reports that IndianOil wants to raise more funds through sale of shares. At one point, it sold some of its crossholdings to fund expansion. Is there any fresh proposal from any of the companies?
They have not sought permission. Such a requirement will be considered by the boards of respective companies. There is no proposal as of now. Is there any proposal for disinvestment in oil PSUs?
There is no scope for disinvestment in HPCL, BPCL and GAIL since the government holding in HPCL and BPCL is 51-52 per cent and in GAIL, it is 57 per cent. For IOC and ONGC, there is no proposal under consideration at this juncture. What about Engineers India Ltd, which has a Cabinet approval in place?
The process is on and it is likely to be kicked off in the next couple of months. There are talks about a sovereign fund for acquisition of assets. Is there any such proposal from the ministry?
OVL will continue to acquire assets abroad. Clear directions have been given to OVL to go for a couple of major acquisitions in the next fiscal. OVL's acquisition has not been hampered due to lack of funds. So far as a separate fund is concerned, it could be in the context of the need of the country to acquire assets not only in area of hydrocarbons, but also in other raw material assets such as coal, iron-ore, etc. We have written to the finance ministry a few months back. It is a general idea at this juncture and contours have to be finalized if found acceptable by the finance ministry. The ministry had plans to set up a national gas highway authority. What is the current status? Will the creation of such an authority lead to the Petroleum and Natural Gas Regulatory Board losing its power of authorization?
The government is committed to having a network of gas pipelines across the country to ensure availability. Currently, availability is largely restricted to the western and northern regions. South and East are starved. PNGRB can authorise new pipelines, which it has not been able to do due to various reasons. We have to resolve this issue and find a way for providing authorization for more pipelines. One way of doing it is the gas highway authority and in that context inter-ministerial discussions are on. When can we expect a revision in APM (administered price mechanism) gas prices? Will the ministry also go for a uniform gas price along with the revision in APM prices?
It has to be realized that monumental reforms like uniform gas price are not done overnight. One of the priorities that I have is that there should be uniform price for gas in the country. The first step was to increase the price of APM gas and a proposal in this regard is in the final stages of government decision-making. One of the ideas to ensure that consumers pay similar prices is pooling of gas. But it is a new idea and a complex task, which will have its repercussions for decades. We will study it carefully and come to a decision in course of a few months. Q&A: S Sundareshan, Petroleum Secretary.....by.....Ajay Modi & Jyoti Mukul / Business Standard newspaper.
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The Khurais field of Aramco in Saudi Arabia. The refinery is capable of pumping 1.2 million barrels a day.
Last summer, Saudi Arabia put the final bolt in its largest ever oil expansion project, opening a new field capable of pumping 1.2 million barrels a day - more than the entire production of Texas. The field, called Khurais, was part of an ambitious $60 billion programme to increase the kingdom's production to meet growing energy needs.It turns out the timing could not have been worse for Saudi Arabia.Only two years ago, consumers were clamouring for more supplies, OPEC (Organization of the Petroleum Exporting Countries) producers were straining to increase their output, and prices were rising to record levels. But now, for the first time in more than a decade, the world has more oil than it needs.
Recession effect
As demand slumped because of the global recession, Saudi Arabia was forced to shut about a quarter of its production.After raising its capacity to 12.5 million barrels a day, Saudi Arabia is pumping about 8.5 million barrels a day, its lowest output since the early 1990s."2009 was painful for us as it was for everybody else,'' said Khalid A. Al-Falih, the President and Chief Executive of Saudi Aramco, the kingdom's state-owned oil giant, and a company veteran who was promoted to the top post at the beginning of last year."We experienced the same cash flow constraints that everybody did. But we adjusted quickly and, certainly everything that was strategic to us was not touched.''The recession also precipitated a milestone for Saudi Arabia and the global energy market. While China's successful economic policies paved the way for a quick rebound there, the recession caused a deeper slowdown in the U.S., slashing oil consumption by 10 per cent from its 2005-07 peak. As a result, Saudi Arabia exported more oil to China than to the U.S. last year.While exports to the U.S. might rebound this year, in the long run, the decline in American demand and the growing importance of China mark a fundamental shift in the geopolitics of oil.
Long-term transition
"We believe this is a long-term transition,'' Mr. Al-Falih said in a recent interview. "Demographic and economic trends are making it clear - the writing is on the wall. China is the growth market for petroleum.''Saudi officials have said they favour prices of around $80 a barrel.Despite soft demand and high inventories, oil futures in New York have averaged $75 a barrel over the last six months. On Friday last, they closed at $80.97.In the U.S., some experts believe that energy efficiency measures, as well as the government's push for bio-fuels and its plans to limit carbon emissions, are putting the nation on a long-term path to lower oil consumption.The American talk about energy independence rankles Saudi officials who maintain the goal is unrealistic and could end up damaging energy markets by undermining current investment, and thus leading to higher prices in the long run.Mr. Al-Falih said he welcomed energy efficiency measures but insisted that fossil fuels would dominate energy demand for decades."I was here in the 1980s after the 1970s price shocks, and I remember all the debates,'' Mr. Al-Falih said. "But ultimately the policies were reasonable. And the U.S. continues to search for that reasonable ground.''
Cutting U.S. ties
Saudi officials have recognised that structural changes are taking place in the U.S. A few months ago, Aramco sold its storage depots in the Caribbean, a signal that it was abandoning the East Coast market, according to analysts. (The Saudis stopped striving to be the top foreign supplier to the U.S. years ago. The kingdom trails Canada, Mexico and Venezuela for exports to the U.S.)That is not to say the Saudis are cutting ties with the U.S. Aramco is expanding its Motiva refinery, in Port Arthur, Texas, which it owns with Royal Dutch Shell, to increase its capacity to 6 lakh barrels a day. That will make it the largest refinery in the U.S., overtaking Exxon Mobil's Baytown refinery.Edward L. Morse, an energy expert who heads global commodity research at Credit Suisse in New York, said the transformation was a healthy development in relations between Saudi Arabia and the U.S. It also means the end of the "U.S. discount,'' where Aramco sold oil to American refiners for about one dollar a barrel less than to Asia."The Saudis don't see the need to subsidise their oil exports to the U.S. anymore,'' Mr. Morse said.Last year, Saudi exports to the U.S. fell to 9.89 lakh barrels a day, their lowest level in 22 years, down from 1.5 million barrels a day the previous year, according to the Energy Information Administration. Meanwhile, Saudi sales to China surged above one million barrels a day last year, nearly doubling from the previous year. The kingdom now accounts for a quarter of Chinese oil imports.
Refinery in Fujian province
Saudi Aramco recently inaugurated a huge refinery in the Fujian province, in the southeast coast of China, which is projected to receive 2 lakh barrels a day of Saudi crude, and is looking at a second project in the northeast city of Qingdao. It is also planning to build two refineries in Saudi Arabia, as joint ventures with Total and ConocoPhillips that are primarily destined to ship products to Asia.China is not alone in courting Saudi attention. After a visit in March to Riyadh by India's Prime Minister, Saudi Arabia outlined a goal to double its exports to India. The kingdom already accounts for 25 per cent of the Indian market after its exports grew sevenfold from 2000 to 2008."Oil flows are shifting from West to East, and Saudi supplies that used to go to Europe and the U.S. are now headed for Asia,'' said Jean-Jacques Mosconi, the Senior Vice-President for strategy at Total of France.Brad Bourland, a former State Department official who heads research at Jadwa Investment in Riyadh, said: "Saudi Arabia used to be very much an American story, but those days are gone forever. That's just a reflection of a globalised world and the rise of Asia. They now see their relationship with China as very strategic and very long-term.''
Some energy and security experts have pointed out that the Saudi government is keen on displacing Iranian oil sales to China to persuade Beijing to back tougher sanctions against Iran's nuclear programme, a position that has the support of the U.S."We know the Saudis and others have delivered the message to the Chinese that instability in the Gulf is not in their interest,'' Douglas C. Hengel, the Deputy Assistant Secretary for energy, sanctions, and commodities at the State Department, said last week during a conference in Houston.But Jon B. Alterman, a Middle East expert at the Center for Strategic and International Studies in Washington, said that the falling dependence of the U.S. on Saudi oil could turn into a problem for the Saudis, because the U.S. guarantees their security in the Persian Gulf."The Saudis are particularly concerned about the shape of the global market where all the growth comes from the east and all the security comes from the west,'' Mr. Alterman said.
China's oil demand is set to grow by 9 lakh barrels a day in the next two years. Chinese oil consumption reached 8.5 million barrels a day last year, compared with 4.8 million barrels in 2000. It will account for a third of the world's total consumption growth this year.While China is by far the fastest-growing oil market in the world, the U.S. is still the top consumer.Despite the slump, Americans consumed 18.5 million barrels a day in 2009. That amounts to 22 barrels of oil a year for each American, compared with 2.4 barrels for each Chinese."To me, this is a long-term business,'' said Mr. Al-Falih during the interview. "And that is how I look at the U.S. and China as markets for commodities that will be in demand for years.'' A paradigm shift in oil geopolitics ...from the pages of the HINDU newspaper.
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at Monday, March 8, 2010
Democratic ideas and business strategies sometimes do not go hand-in-hand. A similar storm has hit the country's oil and gas sector. On one side, government-run petroleum firms are waiting for a transparent policy for compensation for under-recoveries, while private players expect a level playing field for fuel retailing. But both look unlikely to see the light of the day anytime soon. Oil marketing companies (OMCs) are in no condition to handle the burden of extra duties. Therefore, the government last month hiked the prices of petrol by Rs 2.71 per litre and diesel by Rs 2.55 per litre. This is an aftereffect of Mukherjee's budget that has restored the basic duty of 5 per cent on crude petroleum, 7.5 per cent on diesel and petrol and 10 per cent on other refined products. He also increased the central excise duty on petrol and diesel by Re 1 per litre each. Duty impact
The new duties on crude oil and other petroleum products will help the government earn nearly Rs 6,000 crore. The Congress-led government has justified the upward revision in fuel prices by saying it is inevitable to finance development projects and pursue the 8.5 per cent growth agenda. The recent price hike didn't make any difference to oil firms. "The present hike in petrol and diesel prices is the result of an increase in custom duty on crude and custom and excise duty on these products. Because the full impact of the hike has been passed on to the end consumer, this is largely neutral to the financial health of the oil companies, and the status quo continues for them," said Dilip Khanna, partner (oil and gas) at Ernst & Young. Also, the opposition's uproar made no real difference to the United Progressive Alliance-led government. On Friday Ram Naik, the former petroleum minister during NDA regime, had expressed his unhappiness in an article in an English newspaper by saying, ".When the NDA was in power, we had actually evolved a scheme by which we had brought, by April 2002, petrol and diesel under price control in a particular way. Every fortnight, we looked at the international prices of crude, and if they increased, we would increase the prices of petrol and diesel, and vice versa...When the new government took over, the earlier petroleum minister Mani Shankar Aiyar and then Murli Deora both said that they would bring out a policy for petroleum pricing. But that just hasn't happened even after all this time." The much bigger problem -- non-existence of a transparent policy for state-owned marketing companies - persists. The price of four important fuels - petrol, kerosene, diesel and cooking gas are determined by the Union government. The country's largest OMC, Indian Oil Corporation (IOC) and its peers - Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) - are losing Rs 196 crore everyday by selling fuel below market cost. IOC, with a market share of nearly 55 per cent, is incurring a loss of Rs 107 crore daily. At present, petrol is sold at a loss of Rs 4.97 a litre, diesel at Rs 3.27 a litre, kerosene at Rs 16.91 a litre and cooking gas at a loss of Rs 267.39 per 14.2 kg cylinder. In the present financial year, it was decided that losses incurred on petrol and diesel will be compensated by upstream companies - Oil and Natural Gas Corporation Limited (ONGC), Oil India Limited (OIL) and GAIL (India). On the other hand, under-recoveries in kerosene and LPG (liquefied petroleum gas) will be compensated by government. Mukherjee has promised cash compensation of Rs 12,000 crore but the total losses is close to Rs 30,000 crore. No decision has come to light on ways to compensate for the total losses. Interestingly, government has appointed three high-level panels to study and bring out a framework for deciding petroleum prices, the latest one being chaired by former Planning Commission member Kirit Parikh. Parikh recommendations
Parikh in his report recommended deregulation of auto fuel prices and increase in LPG by Rs 100 per cylinder and kerosene by Rs 6. Petroleum minister Murli Deora is leaving no stone unturned to improve liquidity of cash-strapped state-run oil companies. He is all set to decontrol prices of auto fuel and pass on a minimal hike in kerosene and cooking gas prices. But, with Mukherjee levying duties and the subsequent price hike pushed Deora's plans to the backburner. After the Union budget, Deora said some decisions on Parikh's recommendations will be taken in a week's time. But there are clear indications from North Block, as well from the petroleum ministry, that plans for further reform in the pricing of petroleum products and also the proposed hike in the price of gas produced from nominated fields have gone to cold storage. "What is perplexing is, if the government is willing to risk the political fallout of raising prices, why does it not free the prices and let them be market determined?" Parikh told Financial Chronicle after the budget. "Petrol and diesel prices were hiked to offset the duty increase (budget) on crude oil and products. We believe this would significantly expand uncertainties in the sector because we are still in the under-recovery zone and further price increases may be extremely difficult," said Niraj Mansingka, analyst at Edelweiss Securities. Having a transparent framework for the setting of these prices is very important to create a level playing field for the public and private sector and also to improve investor sentiment in the sector, said Khanna. Government-run companies such as IOC, BPCL and HPCL have gone back to their drawing board and are extra cautious on their expansion plans. Non-clarity on compensation of under-recoveries has hit company's liquidity, said B M Bansal, chairman of IOC. Private fuel retailers such as Reliance Industries (RIL) and Essar Oil are forced to sell petrol and diesel almost at par with government companies. They were expecting a level playing field because of absence of any cushion from increase in global crude prices. "While the changes in the duty of crude and petroleum products will have some negative impact on the profitability of the domestic refineries, there are clear cut sign of a move towards deregulation in the auto fuel sector, which will have a positive impact on private sector marketing companies," said Naresh Nayyar, managing director and chief executive officer of Essar Oil. Indian simple gross refinery margins (GRMs) eased to $1.6 per barrel from $1.9 per barrel last month, while complex GRMs followed a similar trend by easing to $8.1 per barrel, Edelweiss Securities said in its March 4 report. In a submission to Kirit Parikh Committee, ONGC suggested that retail prices of petroleum products should be calibrated with the international prices of crude oil and petroleum products and rupee-US dollar parity up to a specified level for crude prices, said R S Sharma, chairman and managing director of country's largest public enterprise ONGC. It was further suggested that beyond the specified level, all stakeholders should share total under-recoveries in an equitable manner. In case any such scheme is implemented, the share of the central government shall be reduced to large extent, which can be compensated in cash from the Union budget, Sharma added. According to the International Energy Agency (IEA) forecast, there is a possibility for oil demand to increase by about 1.5 million barrels per day in 2010, which is a 1.7 per cent increase from the total world consumption of nearly 85 million barrels per day in 2009. India shares close to 4 per cent of the total global crude consumption. India's production mostly comes from nominated and pre-new exploration licensing policy (NELP) fields. These fields are decades old and production from ageing fields are dipping. India, which imports close to 80 per cent of its crude, needs new oil and gas producing assets. Only RIL's has brought NELP to fields in the Krishna Godavari Basin. "We intend to increase the global recovery factor to 40 per cent by 2020 and these matured fields will continue to contribute for a sufficiently long period," said Sharma. Besides prudent reservoir management practices, it has been our endeavour to bring new discoveries to production at the earliest. At the same time, we are focusing on expeditious monetisation of marginal fields. Over the next two years, G-1 field on the East Coast, B-series fields (eight fields) and C-series (eight fields) on the West Coast will be brought onstream. These fields will be producing 42 million tonne of oil equivalent (MTOE) over 15 years, chairman of the country's largest oil explorer added. Production of more natural gas will help India move towards energy security. But absence of adequate pipeline network hampers equal distribution of gas. For development of the sector, the government proposes to empower the Petroleum & Natural Gas Regulatory Board (PNGRB) to authorise companies that can bid for city cooking gas supply contracts. Stock performance
Year-to-date, the BSE oil & gas index is down 6.72 per cent compared with a 2.69 per cent fall in the BSE Sensex. All the oil stocks in the 10-member index have given negative returns during this calendar year. Stocks of BPCL and HPCL have plummeted 14.65 per cent and 12.75 per cent this calendar year after the duty hike. Following suit, shares of ONGC, RIL, RNRL and Cairn India have plunged 7.29 per cent, 7.01 per cent, 5.61 per cent and 4.73 per cent, respectively. Aban Offshore, Gail, Essar Oil and IOC have dipped 3.49 per cent, 1.05 per cent, 3.11 per cent and 0.41 per cent, respectively.
(With inputs from Amit Mudgill)
Rajesh Abraham / Financial Chronicle newspaper.
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KOCHI: Availability of affordable and clean energy will become a decisive factor for the development of global economy, Hans Muller-Steinhagen, Director of the Institute of Technical Thermodynamics of German Aerospace Centre, has said. In his keynote address at the Indo-German dialogue on 'Accelerated Dissemination of Solar Energy Technologies in India' at the Rajagiri School of Engineering and Technology here recently, Prof. Muller said the world today relies mainly on relatively cheap gas and oil, a resource, which would become increasingly scarce in the next 20 to 40 years. He said solar energy represented an abundant source of energy, large enough to cover the whole future world energy demand without constraints. Fortunately, there was an excellent match between the availability of solar radiation resources in the fast growing economies in northern Africa, the Middle East, India and China, Prof. Muller said.
Stating that solar thermal plants used 100-3,000 times concentrated solar radiation to produce superheated steam or hot air, he said that cheap electricity was also the key to fresh (desalted) water, cooling and air-conditioning. This justified the worldwide research and development efforts combined with market penetration programmes in this area, Prof. Muller said. In his address, Bibek Bandyopadhyay, Adviser, Solar Thermal Programme, Ministry of New and Renewable Energy, said the government was at present in the process of setting up enabling policy environment and regulatory framework to create favourable conditions for solar manufacturing capability and large-scale deployment. The large target was expected to bring down the cost and consequent rapid deployment of solar technologies in the country apart from intense research and development to be taken up indigenously and in collaboration with international research centres, Dr. Bandyopadhyay said.
Pointing out that the government had recently approved a new policy for development and promotion of solar energy through Jawaharlal Nehru National Solar Mission, he said the objective of the programme was to ensure country's energy security with environmental compatibility. It provided a policy framework for large-scale deployment and aggressive research and development for reducing the cost of solar power generation, Dr. Bandyopadhyay said. Some of the topics being discussed as part of the programme included advanced solar thermal technologies, state-of-the-art solar thermal technologies and solar thermal market. Staff Reporter from the page of THE HINDU newspaper.
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at Friday, March 5, 2010
Govt says no to petrol, diesel duty rollback
The finance ministry has ruled out any rollback of excise duty hike on petroleum products, despite mounting pressure from the opposition parties and UPA allies to do so. Ruling out the rollback, revenue secretary Sunil Mitra told a gathering of industrialists at a post budget seminar at Assocham that fiscal consolidation and growth would continue to be the priorities of the government.
The union budget for 2010-11 had hiked customs duty on petrol and diesel to 7.5 per cent from 2.5 per cent while excise duty was raised by one rupee on non-branded (normal) petrol and diesel. This has led to widespread protest across the political spectrum with a strong demand for the duty rollback. Mitra said fiscal consolidation would only be achieved "with no tinkering in excise and customs duties proposal announced for petroleum sector in this year's budget." He dispelled fears in this regard while arguing that the hike in excise and customs duties would not fuel inflation in the long run. Food inflation is mainly due to supply side constraints. There will only be a marginal impact on prices due to duty hike, Mitra argued. On the minimum alternate tax (MAT) issue, the revenue secretary pointed out that the government not only relaxed surcharge on corporate tax but also substantially raised income tax rebate for common man, the impact of which would be that consumers would have greater purchasing power, and would be able to save. Therefore, the three per cent hike in MAT should be taken by the industry in right spirits as it would marginally increase their tax burden, Mitra asserted. By Shruti Verma, Financial Chronicle, New Delhi, 4 March 2010
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at Thursday, March 4, 2010
New Delhi: Feeling the strain on its finances due to mounting under-recoveries from below the cost sale of key petroleum products like petrol, diesel, domestic and PDS kerosene, the country's largest refining and marketing company Indian Oil Corporation (IOC) has been forced to review its future investment plans. The company has decided to prioritise new projects. It would take up only those projects where investment requirement is relatively small and rate of returns are high. Meanwhile, there is fear that the company might have to dilute equity in its upcoming Paradeep Refinery and Petrochemical project in Orissa at a less-than-premium price, in desperation to raise funds. IOC is looking at an internal rate of return (IRR) of 15-16% from new projects. "We have identified some petrochemical projects for review. If the investment requirement is high, we will not take up project," BM Bansal said in his first media briefing after taking over as IOC's acting chairman. He, however, declined to name these projects. IOC has targeted an investment of Rs 43,000 crore in the current 11th Plan. The company has offered 5% equity to Saudi Aramco in the Paradeep project. "We have a plan to offer equity at a premium later. But if financial position does not allow, we might have to offload it sooner," Bansal said. The company is implementing the Paradeep project with an estimated investment of Rs 29,777 crore. It cannot delay the project as it has already tied up significant investment there. The company is also implementing fuel quality upgradation projects at its various refineries to comply with Euro III and Euro IV norms for petrol and diesel from April 1. The company cannot delay these projects as they are unavoidable for compliance with the mandatory schedule. The company has planned to foray into nuclear power generation business as part of its strategy to become an integrated energy company. Despite fund crunch, it is not in favouring of going slow on the new venture because of lucrative IRR from the business. So IOC's new petrochemical projects, which are still at the stage of conceptualisation, will bear the brunt. The company's outstanding debt has reached the high level of Rs 50,000 crore as IOC resorted to heavy market borrowing in the current fiscal to meet capital expenditure requirement of its ongoing projects pending disbursement of compensation by the government toward under-recoveries incurred by the company. If the company keeps on borrowing, its interest burden would also rise commensurately, impacting future cash flows. The government has said that it would compensate the public sector oil marketing companies' (OMCs) under-recoveries in cash and not issue any oil bonds. However, finance minister Pranab Mukherjee has not made adequate provision in the Budget 2010-11 to cover OMCs' under-recoveries.
.........Noor Mohammad / The Financial Express
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at Wednesday, March 3, 2010
Domestic airlines will have to pay more for filling up aviation turbine fuel (ATF) in their aircraft. The increase in ATF prices, combined with the implementation of the Budget 2010-11 proposals of imposing a 10 per cent service tax on all passengers, is likely to see domestic flying become more expensive. Late on Sunday night, the domestic oil companies increased ATF prices with the increase in price ranging from Rs. 1.32 a litre in Delhi to Rs. 1.42 a litre in Chennai. The increase in prices of petrol and diesel by Rs 2.71 and Rs 2.55, respectively, on account of an increase in customs duty on crude oil and increase of Re 1 in excise duty for both these products will make it difficult for the government to take another increase to cut the under recoveries of oil marketing companies (OMCs). In the current fortnight, the OMCs are estimated to lose Rs 4.72 on every litre of petrol and Rs 1.94 on every litre of diesel. The petroleum sector had expected some clarity on the government's position on the Kirit Parikh committee's report (which asked for freeing of petrol and diesel prices from government control), said Mr. R. S. Sharma, Chairman and Managing Director of ONGC. "We were expecting some price revision because of under recoveries on petrol and diesel," said Mr. S. V. Narasimhan, Director (Finance), IndianOil. He noted the Budget just made a provision of Rs 12,000 crore for under recoveries in the current financial year and none at all for those in 2010-11. In the current year, the OMCs IndianOil, Bharat Petroleum and Hindustan Petroleum are estimated to have a total under recovery of Rs 31,000 crore on sale of kerosene and domestic LPG at government-capped prices. "It is a concern to us, since for every quarter we will have to ask the government to compensate the under recoveries," he said.
Business Line, New Delhi, 1 March 2010
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at Tuesday, March 2, 2010
Paris: As sludge from an oil spill began polluting the Po, Italy's longest river, raising fears of contamination of specialised farm products such as Parma cheese, ham or the famous arborio rice used in making risotto, central authorities in Rome struggled to find answers who could have deliberately set off the oil leak from an abandoned refinery near the town of Monza.
Prosecutors have begun an investigation into the spill, while president of Monza province Dario Allevi called the incident "a true act of environmental terrorism". The spill was caused by a "criminal act" after tampering occurred at eight tanks used for oil storage, said Mr. Allevi. Several tanks had been deliberately ruptured, Italian newspapers reported. The spill was triggered in the early hours of Tuesday after saboteurs broke into the depot of the former Lombardi Petroli refinery in Villasanta and opened the valves, according to the ANSA news agency.
The oil slick, several kilometres long, moved downstream with the Lambro river from Villasanta, crossed the town of Monza, passed by the Milan area and then flowed into the Po. Monia Maccarini, a spokeswoman for the Lombardy region's environmental protection agency (ARPA), said the spill involved at least 260,000 gallons of oil and probably much more. The spill is said to be made up of diesel and home heating oil, known to be heavy and extremely sticky. Inhabitants of the region have been told not to drink tap water. By Wednesday, despite efforts to contain the slick with absorbent pads and the closure of hydraulic locks, the oil seeped from the Lambro into the Po, considered my many to be Italy's lifeline, which flows west-to-east across the country.
Coldiretti, one of Italy's farmers' unions, insisted that the food chain was safe since the Po is not being used for irrigation. But another group of farm owners, Confagricultura, warned that the spring planting season - particularly for water-intensive rice crops - might be at risk unless clean water is ensured. The Po river valley, which extends 71,000 sq. km. across several northern regions, produces a third of Italy's agricultural output and represents 40 per cent of the GDP. Because of its economic importance, officials are warning that farm output might be affected, in addition to the already extensive damage the slick has caused to the area's wildlife."We are facing a true environmental disaster. The problem does not concern only the Lambro river, but the Po throughout its length, right until it becomes a delta" said Legambiente, Italy's largest environmental organisation.
Though an investigation is on police are totally mystified by this act of sabotage and the motives behind it. Ecological organisations are raising embarrassing questions why, with the tanks holding such large quantities of fuel, the site was left unguarded.
Italy oil spill termed eco-terror ...............Vaiju Naravane ...from the pages of THE HINDU.
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