Royal Dutch Shell said on Wednesday it had agreed to buy BG Group for 47 billion pounds ($70 billion) in a bid to close the gap on the world's biggest oil major, US ExxonMobil. In a joint statement, the two firms said that as part of the recommended deal Shell would pay a mix of cash and shares that would value each BG share at around 1,350 pence. It said this represented a premium of around 52 percent to the 90-day trading average. The deal, which should generate pre-tax synergies of around 2.5 billion pounds per year, will result in BG shareholders owning around 19 percent of the combined group. Setting out its longer-term thinking, the two groups said Shell would pay a dividend of $1.88 per ordinary share in 2015 and at least the same amount in 2016. Anglo-Dutch Shell also expects to start a share buyback programme in 2017 of at least $25 billion for the period 2017 to 2020. Shell said the deal would boost its proved oil and gas reserves by 25 per cent, and give it better prospects in new projects, particularly in Australia LNG and Brazil deep water. Shell also said it planned to increase asset sales to $30 billion between 2016-2018 on the back of the deal. The company said in January it was selling $5-6 billion worth of assets per year.
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Cairn India Ltd, India's largest private-sector oil producer, said on Monday it had moved the Delhi High Court against a $3.3 billion tax demand from Indian authorities related to its listing in 2007. The company, a unit of London-listed Vedanta Resources Plc, said it had filed a writ petition seeking "quashing/setting aside" of the order passed by the tax authorities. Cairn sought directions to the tax authorities not to take any coercive steps against it for recovery of the demand. Cairn India received last month the demand of about 204 billion rupees from Indian tax authorities for an alleged failure to deduct withholding tax on capital gains made by its former parent, Cairn Energy Plc, during a reorganisation ahead of its market listing. Vedanta said last month it would file a notice of claim against the Indian government under the UK-India bilateral investment treaty. Cairn Energy, which received a tax demand of more than $1.6 billion related to the same case, has also filed a notice of dispute under the bilateral investment treaty. Cairn India shares had gained 0.3 per cent in morning trade on Tuesday in a broader market that was up about 0.2 per cent. The tax notice came after Cairn Energy, the Indian company's former promoter, was slapped with a Rs 10,247 crore tax demand for an alleged Rs 24,500 crore worth of capital gains it made in 2006 while transferring all its India assets to a new company, Cairn India, and getting it listed on the stock exchanges. In a recent regulatory filing, Cairn India had said the demand comprised of Rs 10,248 crore in tax and the remainder Rs 10,247 crore in interest payout. Cairn India had also said that the demand notice was sent to it "for an alleged failure to deduct withholding tax on alleged capital gains arising during 2006-07 in the hands of Cairn UK Holdings Limited (CUHL)", its parent company which is a subsidiary of Cairn Energy Plc. This, it said, was in respect of the transaction of CUHL transferring the shares of Cairn India Holdings Ltd (CIHL) to Cairn India Limited as part of internal group reorganisation in 2006-07 to facilitate the initial public offer (IPO) of Cairn India Ltd. Cairn India said it "cannot be penalised by expecting that it ought to have withheld tax". "There was no taxable gains and accordingly, no liability to withhold tax on date of payment. Further, there cannot be any liability to withhold tax on consideration discharged by way of share swap," it said. (Agencies)
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After two consecutive hikes, petrol prices were Wednesday (1 April) cut by 49 paise per litre and diesel by Rs 1.21 a litre on softening international oil rates. The reduction in rates will be effective from midnight tonight. Prices of petrol in Delhi will be Rs 60 a litre from tomorrow as against the current Rs 60.49, while diesel will cost Rs 48.50 per litre as compared with Rs 49.71 currently, Indian Oil Corp (IOC), the nation's largest oil company, said. The reduction follows two rounds of price hikes in February and March -- first by Rs 0.82 a litre in petrol and Rs 0.61 per litre in diesel on February 16 and by Rs 3.18 per litre in petrol and Rs 3.09 a litre in diesel on March 1. Since the last price change, "the international prices of both petrol and diesel have declined. The Rupee-US Dollar exchange rate has, however, depreciated. The impact of both these factors warrants decrease in retail selling prices of both petrol and diesel," IOC said in a statement. Prior to these increases, petrol price had been cut on ten occasions since August 2014 and diesel six times since October 2014. Cumulatively, petrol prices had been cut by Rs 17.11 per litre in ten reductions since August and diesel by Rs 12.96 a litre since its deregulation in October. This trend was reversed when rates were raised on February 16.
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Oil futures climbed more than $1 a barrel on Monday, after Saudi Arabia raised prices for crude sales to Asia for a second month, signalling better demand in the region. International benchmark Brent regained ground after tumbling as much as 5 percent on Thursday, when a preliminary nuclear deal was finally reached between world powers and Iran. More Iranian oil could enter global markets if that is followed by a comprehensive deal by June. But analysts warned a ramp-up in exports could take months and would likely not happen before 2016. "While clearly a bearish headline, a final deal and full lifting of sanctions still faces a number of obstacles," Morgan Stanley analysts said in a note. "Even if a final deal is reached, we do not expect any physical market impact before 2016," the analysts said. Brent crude for May delivery touched a high of $56.06 a barrel and was up 80 cents from Thursday at $55.75 by 0510 GMT. U.S. crude for May delivery was 92 cents higher at $50.06 a barrel, after earlier touching $50.35. There was no settlement in either Brent or U.S. crude futures on Friday as markets were closed for the start of the Easter holiday. Despite the sanctions on Iran, China's imports from the OPEC producer are set to rise from August as a Chinese state trader has signed a deal with the National Iranian Oil Company to buy more condensate. The world's top exporter Saudi Arabia kept output steady and cut its official selling prices (OSPs) sharply late last year in a fight for market share during a global supply glut. Its ability to raise prices for April and May suggests its strategy is working, although competition has kept its flagship Arab Light at a discount to Oman/Dubai quotes, analysts said. "There is still competition for the Asia market even though it is also a sign that some of the production elsewhere is less able to compete in the market right now," said Shunling Yap, a senior oil and gas analyst at BMI Research. On the supply front, the number of rigs drilling for oil in the United States declined by 11 last week to 802, the smallest drop since December, a weekly survey by oil service firm Baker Hughes showed on Thursday. Two weeks of small declines in the U.S. rig count have raised expectations that drilling activity is nearing a level that could dent output, bolster prices and coax rigs back to the field after a precipitous cull since October. (Reuters)
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Crude oil prices fell on Thursday (02 April) after six world powers and Iran announced they had agreed on a framework to curb Iran's nuclear drive.With the tentative deal, if confirmed, likely to allow Iran crude exports back on the markets, Brent North Sea crude for delivery in May, the global benchmark contract, slumped $2.15, settling at $54.95 a barrel in London trade.The US benchmark, West Texas Intermediate (WTI) for May delivery, shed 95 cents to close at $49.14 a barrel on the New York Mercantile Exchange.Traders have been following the marathon negotiations closely. Shortly before the New York market closed, the world powers and Iran said that Tehran has agreed to curtail its nuclear program in return for the lifting of US and European Union nuclear-related sanctions that have harmed its economy.Lifting sanctions could open up the flow of Iranian crude to an oversupplied global market. The glut has pushed crude prices more than 50 per cent lower since last June.The outline of the deal marked a major breakthrough in a 12-year standoff between Iran and the West, which has long feared Tehran wants to build a nuclear bomb. Iran has insisted the nuclear program is for peaceful purposes.At the beginning of the press conference in Lausanne, Switzerland, the price of WTI, which had been trading lower since the market opened, fell to $48.11 a barrel before paring its losses.The countries announced the drafting of a full agreement would begin immediately, with a June 30 deadline for completion.The sanctions would be lifted after the UN atomic agency verifies Iran has fulfilled the terms of the deal.Commerzbank analysts, citing shipping sources, said earlier this week that Iran has at least 30 million barrels of crude oil in storage onboard tankers that could quickly move onto the market if sanctions were lifted.Iran has the world's fourth-largest oil reserves. The OPEC member's crude exports have fallen from more than 2.2 million barrels per day in 2011 to about 1.3 million bpd because of the US-EU sanctions. (PTI)
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India is likely to delay share sales in state-run oil firms ONGC and Indian Oil Corp by up to six months as low crude oil prices have hit their value, denting the chances of raising about $11 billion from such sales this financial year, two government sources said. The government hopes to sell shares in these companies to raise nearly $3.5 billion, roughly one-third of the total annual share-sales target of about $11 billion, which is crucial to meet a fiscal deficit target of 3.9 percent of GDP in the 2015/16 fiscal year that started on April 1. New Delhi has missed its target for partial privatisations for the past five years and now wants to break with the usual practice of bunching up sales towards the year-end. A shortfall in receipts from stake sales and taxes has led to cuts in public spending of about $48 billion in the past three years, which has slowed economic recovery. The government had originally intended to sell off part of state refiner IOC and oil and gas explorer ONGC in the financial year that ended on Tuesday but it ran into opposition from the oil ministry. "It is not the right time to divest shares," said A.K. Sharma, IOC's finance director. IOC incurred inventory losses of about $2.5 billion between April and December because it did not hedge against falling crude prices, down by half since June last year. ONGC is hurting because, to help meet the federal fiscal deficit target, the finance ministry is making it pay for a high level of subsidies, despite the low oil price. The subsidy burden on oil companies has hurt valuations, oil ministry officials say. IOC's share price has rallied about 10 percent this year following a fall in inventory losses but it is still 7 percent lower than in September last year. "Indian Oil Corp is not in a good shape. We will have to wait for at least six months before shares could be sold in the market," a senior government official with knowledge of the matter told Reuters. Sharma said the deregulation of diesel prices and lower borrowing costs had trimmed IOC's losses in part, and it planned to diversify in other sectors to cushion against volatile prices. ONGC's share price has fallen more than 11 percent this year, while the benchmark BSE Sensex has risen 3.4 percent. Analysts said waiting for a rally in the stock markets before selling big-ticket stakes could be a mistake, since investors are likely to remain cautious for some time about developments in the Middle East and worries over U.S. rate rises. "It might be an uphill task for the domestic stock market to do a replay of the scale of gains seen last year," said Radhika Rao, an economist with DBS Bank in Singapore. "In the absence of another strong bull run, achieving the divestment target might prove to be a challenge if more big-ticket sales are not brought forward," she said. Merchant bankers engaged by the government said a recent decision to lower domestic gas prices and the slump in crude prices will have a bearing on potential receipts if the government decides to go ahead. April Stake Sale?Another official said the government may kick-start the process with the sale of shares in a smaller company such as Power Finance Corp or engineering equipment maker Bharat Heavy Electricals. "If market conditions remain stable, we may sell a stake in a small company in April," the official said. So far, Finance Minister Arun Jaitley has cabinet approval to sell shares in 10 companies, including a 10 percent stake in IOC and 5 percent in ONGC. Other companies on the list include National Minerals Development Corp and National Aluminium Co Ltd (NALCO). (Reuters)
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As India launches an $18 billion plan to spread the information revolution to its provinces, the problems it faces are a holdover from the past - electricity shortages, badly planned, jam-packed cities, and monkeys. The clash between the old world and the new is sharply in focus in the crowded 3,000-year-old holy city of Varanasi, where many devout Hindus come to die in the belief that doing so will give them salvation. Varanasi is also home to hundreds of macaque monkeys that live in its temples and are fed and venerated by devotees. But the monkeys also feast on the fibre-optic cables that are strung along the banks of the Ganges river. "We cannot move the temples from here. We cannot modify anything here, everything is built up. The monkeys, they destroy all the wires and eat all the wires," said communications engineer A.P. Srivastava. Srivastava, who oversees the expansion of new connections in the local district, said his team had to replace the riverside cables when the monkeys chewed them up less than two months after they were installed. He said his team is now looking for alternatives, but there are few to be found. The city of over 2 million people is impossibly crowded and laying underground cable is out of the question. Chasing away or trapping the monkeys will outrage residents and temple-goers. Varanasi is part of the parliamentary constituency of Prime Minister Narendra Modi, a Hindu nationalist leader who came to power last May. A shortage of electricity is further complicating efforts to set up stable Wi-Fi in public places - daily power cuts can last for hours during the sweltering summer in Varanasi and across much of India. Modi's government has pledged to lay 700,000 kms (434,960 miles) of broadband cable to connect India's 250,000 village clusters within three years, build 100 new "Smart Cities" by 2020 and shift more public services like education and health to electronic platforms to improve access and accountability. Varanasi was the first of an eventual 2,500 locations singled out for street-level Wi-Fi. Industry experts predict that the broadband initiative, along with a surge in smartphone ownership, will mean about a third of Indians will have access to the internet by 2017, from about 20 percent, or 250 million people, now. Expanding internet connectivity and making access cheaper could add up to 1.6 percentage points, or about $70 billion, to India's GDP over a four-year period, consultants at McKinsey have estimated. Global InterestGlobal technology companies see opportunity in Modi's commitment to a digital future and are adapting their products to India's varied climates and external threats. IBM is in discussions to provide software to help several cities make the leap into the digital age. Network provider Cisco Systems is working with the government in the eastern city of Visakhapatnam to bring more education and healthcare services online, and has developed a "ruggedised" Wi-Fi box to survive India's varied climates and cut down on the need for cables that will be at the mercy of the elements - or monkeys. "We've built outdoor Wi-Fi-access routers specifically keeping in mind Indian environmental conditions," Dinesh Malkani, Cisco's India country head, said in an interview. "You cannot predict what challenges you are going to come up against." Bringing some order to India's chaotic cities with technology is a daunting task. India's urban population is forecast to swell by an additional 220 million to 600 million by 2031, potentially overwhelming already inadequate infrastructure. Many of the new digital projects are simply aimed at improving existing civic amenities: time traffic information to help people better plan their journey, or systems that allow individuals to monitor water leakages or waste management and then inform local authorities. Vinod Kumar Tripathi, an urban planning expert in Varanasi, said Modi's initiatives needed to be coupled with huge investments in improving basic services like housing, roads and waste management. "Everything here is old, outdated and the population pressure just makes it worse. This place was a small temple town and is now a commercial centre," Tripathi said in his office overlooking the Banaras Hindu University. The free Wi-Fi service that started in February is certainly stimulating the consumer economy. Boatman Sandeep Majhi makes a living ferrying pilgrims and bereaved families who scatter ashes in the river after performing cremations. He recently purchased his first smartphone to download music and exchange videos with friends, and promote his boat business to tourists on Facebook. But he said the government needed to pay equal attention to the municipal services in a city where cars, rickshaws and carts fight for space through narrow, potholed roads lined with litter. Varanasi remains dependent on a 500-year-old, leaky drainage system for its sewage. "Free Wi-Fi is a good facility for tourists but I think the officials should think about cleaning the ghats," said the 20-year-old, referring to the steps down to the river, which are often caked with cow dung. (Reuters)
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After two consecutive hikes, petrol prices were on Wednesday (01 April) cut by 49 paise per litre and diesel by Rs 1.21 a litre on softening international oil rates.The reduction in rates will be effective from midnight tonight.Prices of petrol in Delhi will be Rs 60 a litre from Thursday (02 April) as against the current Rs 60.49, while diesel will cost Rs 48.50 per litre as compared with Rs 49.71 currently, Indian Oil Corp (IOC), the nation's largest oil company, said.The reduction follows two rounds of price hikes in February and March, first by Rs 0.82 a litre in petrol and Rs 0.61 per litre in diesel on February 16 and by Rs 3.18 per litre in petrol and Rs 3.09 a litre in diesel on March 01.Since the last price change, "the international prices of both petrol and diesel have declined. The Rupee-US Dollar exchange rate has, however, depreciated. The impact of both these factors warrants decrease in retail selling prices of both petrol and diesel," IOC said in a statement.Prior to these increases, petrol price had been cut on ten occasions since August 2014 and diesel six times since October 2014.Cumulatively, petrol prices had been cut by Rs 17.11 per litre in ten reductions since August and diesel by Rs 12.96 a litre since its deregulation in October.This trend was reversed when rates were raised on February 16.Fuel prices would have been lower but for four consecutive excise duty hikes since November toTrading in Ranbaxy shares will be suspended from Monday ahead of its merger with Sun Pharmaceutical.(PTI)
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