Reliance Industries has posted a 19 per cent jump in its first-quarter net profit at Rs 5,352 crore on back of stronger margins in its core oil refining and petrochem businesses.Net profit soared 18.9 per cent to Rs 5,352 crore, or Rs 16.6 per share, in April-June quarter from Rs 4,503 crore, or Rs 13.8 per share, a year earlier, the company said in a statement.Performance in Q1, Ambani said, reflects "higher operating rates and embedded options in crude sourcing and product placement, given the size and scale of the refining business."Reliance Industries Ltd (RIL), which operates the world's biggest refining complex at Jamnagar in Gujarat, reported a 84 per cent rise in revenue from its shale gas venture in US on rising production. Petrochemical margins improved while retail revenue rose 53 per cent.The company posted a better-than-expected gross refining margin of $8.4 per barrel in the first quarter ended June, 30. It had earned $7.6 on turning every barrel of crude oil into fuel in Q1 of 2012-13 fiscal.Read Also: Reliance Q4 Net Up On Refining MarginsHowever, gas production at its flagship KG-D6 field dropped by a steep 53 per cent to 49.2 billion cubic feet or 15.32 million cubic metres per day. RIL had produced about 33 mmcmd in April-June quarter last year and 49 mmcmd in Q1 of 2011-12."Fall in production is mainly attributed to geological complexity, natural decline in the fields and higher than envisaged water ingress," RIL said.Production at Krishna Godavari basin fields has since dropped 14.02 mmcmd this month and government's Directorate General of Hydrocarbons (DGH) predicts it will not rise before 2016-17."Reliance achieved strong results during the first quarter of FY 2013-14, while investing in projects that will provide sustainable advantage for a longer period," company Chairman and Managing Director Mukesh Ambani said.RIL is investing Rs 1.5 lakh crore in new projects.Ahead of the results announcement, RIL shares hit a six month high of Rs 923.15. Robust growth in petrochemical products demand augurs well for our biggest ever expansion programme, he said adding retail has seen "remarkable" progress with a 53 per cent growth in revenues in Q1 to Rs 3,474 crore.Sequentially, the company's performance was not good with a 4.2 per cent drop in net profit over Rs 5,589 crore profit in January-March quarter.Debt soared to Rs 80,307 crore at the end of Q1, up from Rs 72,427 crore at the beginning of the fiscal. At quarter end, it had a cash pile of Rs 93,066 crore, making the company debt free on a net basis. Cash in hand increased from Rs 70,252 crore at the end of March.The company, which has has invested an aggregrate of USD 6 billion in three shale gas projects in US, saw revenues from its American operations rose 84 per cent to USD 214.5 billion.Its revenue from oil and gas business fell 42 per cent to Rs 1,454 crore and segment earnings before interest and tax by 64 per cent to Rs 352 crore.Reliance's twin refineries at Jamnagar process slightly less crude oil at 17.1 million tonnes and saw segment revenue drop 4.6 per cent to Rs 81,458 crore. But the segment EBIT was up 38.5 per cent to Rs 2,951 crore.Petrochem EBIT was up 7.5 per cent at Rs 1,888 crore.Other income increased from Rs 1,904 crore to Rs 2,535 crore on account of a larger cash balance.Reliance, which operates the world's biggest refining complex in western India, was expected to post June-quarter net profit of Rs 5270 crore, according to Thomson Reuters I/B/E/S.The company reported average gross refining margin of $8.4 per barrel for the June quarter compared to $7.6 in the same period last year.Reliance Industries has rallied a little over 3 per cent this week ahead of Q1 results for the current fiscal which will be out later today after market hours.Shares of the oil and gas major rallied to Rs 917.25 (closing price as on July 18) from Rs 889.95 registered on July 12, translating into a gain of little over 3 per cent. (Agencies)
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India's gas output is expected to rise to 175 mscmd (million standard cubic metres per day) in 2016-17, from 105 mscmd in the current financial year, Oil Minister Veerappa Moily told reporters on Friday (19 July).In June, India took the unpopular step of approving a gas price rise for the first time in three years, a move which could inject much needed investment in local production.India's gas output has been falling since April 2010 because of geological complexities at Reliance Industries-operated D6 block in the east coast, while state oil and gas producers are struggling to arrest decline in aged fields. Reliance's gas output from the KG D6 fields is expected to rise substantially from 2016-17, Moily added. (Reuters)
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The petroleum ministry has taken it upon itself to fight for the national oil companies (NOCs) in case the NOCs are called upon to share the possible increase in the government’s subsidy burden. M. Veerappa Moily, Union Minister for Petroleum and Natural Gas (MoPNG), declared his support for the NOCs in a seminar hosted by Assocham on Wednesday, 17 July. “I will fight out the subsidy,” said Moily in his endeavour to assure the chairman of ONGC, Sudhir Vasudeva when the CMD complained about the injustice of the subsidy system.During the seminar held in New Delhi, Vasudeva shared concerns regarding the possibility of an increase in subsidy burden in lieu of the government’s decision to help the power and fetiliser sectors with lower input costs of gas. “This would be very detrimental to us. In case our subsidy share is increased we will not be left with any resources to do further explorations,” said Vasudeva.He also stressed that if the government is serious about reducing its import bill it has to take care of NOCs. “A lesser susbsidy burden and a remunerative price will help us in putting in more investments in the sector,” said Vasudeva. Saying that more than 70 per cent of the MOPNG’s target for 100 per cent energy independence will come from the exploration of the domestic sources, he stressed for the need to keep the surbsidy burden light.The cracks in the recent policy decision to hike the price of all domestically produced gas are coming out. After the Cabinet Commission on Economic Affairs increased the price of gas with effect from April 2014, power sector had raised concerns on the higher price impacting the feasibility of the gas-based power projects. Giving into these concerns, the finance minister and the petroleum minister assured that steps will be taken to help the two regulated sectors — fertiliser and power — with the input costs. Some government sections are talking about the possibility of asking the NOCs to share the increase in the subsidy burden which will come as a consequence of lowering the gas price for the two sectors. This has raised the hackles of the NOCs which already share a huge percentage of the total Rs 1.60,000-crore subsidy given out to the petroleum sector.email: chhavityagi.bw (at) gmail (dot) com
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Major coal users may have given a thumbs down to Coal India's offer to import coal for them, but the black gold behemoth has set aside nearly $1 billion (Rs 6,000 crore) to acquire coal assets abroad. This is despite the fact that no coal user has yet given it a mandate to import coal on its behalf. Coal India, incidentally, commits a maximum of 75 per cent of a coal user's requirement from its own mines. For the remaining, it has offered to import coal from international markets. At present, CIL is spot buying coal from Australia, Indonesia to meet the shortfall in its commitments. It has now also shown interest in African mines. The company is looking to buy mines and develop them in order to meet the ever increasing demand in India. The details of these “talks” are unclear as the agreements are still at the “negotiation” level, says CIL Chairman S Narsing Rao.While refusing to disclose any details of the overseas deals, the CIL chairman at an informal meet with media persons on July 16, confirmed the signing of 3 non-disclosure agreements with Australian firms. He said, “It is premature to comment on the deals as we are still to decide whether we will be buying the coal, developing the mines, what quantity will we be taking etc.” The locations that CIL is negotiating contain 2.4 billion tonnes of coal reserves. The NDAs have been signed with private firms operating in Australia.Meanwhile, a national daily reported senior coal ministry officials confirming CIL is looking to work with the Botswana government to buy mines. The African nation has around 200 billion tonnes of reserves but is also a land-locked nation thus requiring heavy infrastructure development to ease transportation. Additionally, CIL also has recently acquired two blocks in Mozambique.mmatbworld(at)gmail(dot)com
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Natural gas output from Reliance Industries Ltd's D6 block offshore India has fallen to about 14 million cubic metres per day (mmscmd), Oil Secretary Vivek Rae said on Wednesday, 17 July.Output from the D6 block, jointly operated by Reliance and BP Plc, was expected to hit a peak of 80 mmscmd but never reached the target because of various issues including entry of water and sand into wells.Output has been declining steadily after reaching 60 mmscmd in 2010.(Reuters)
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India is betting a gas price hike will boost supply and help fix the country's chronic power shortages, but the plan may falter unless the debt-laden industry can pass on higher energy costs to consumers or win government subsidies.The government last week set out a formula that could double gas prices from next April to around $8.40 per million British thermal units (mmBtu), bringing them nearer to globally traded prices in a bid to lift imports of liquefied natural gas (LNG) and spur investment in local output.The move follows similar steps in coal and is the latest effort to reform India's troubled power sector. Massive blackouts in Asia's third-biggest economy have hampered growth, which is at a decade-low. A third of the 1.2 billion population has no access to electricity.India wants to double the proportion of gas in its energy mix by 2020 from 10 per cent now. It uses coal for nearly 56 per cent of its needs. Oil, mostly imported, accounts for 26 per cent.But the success of the latest plan lies in determining who will pay. Generators and distributors remain mired in debt and passing on politically unpopular electricity prices will prove difficult, particularly in an election year.Who Will Pay?The price hike is a win for producers, such as privately owned Reliance Industries which operates one of India's biggest gas fields with international partner BP in the KG basin, where production has declined sharply. The companies have long argued that a higher gas price would support investment to reverse the fall."It is a very positive and encouraging decision which will really incentivise oil and gas companies to pursue exploration activities," said S.K. Srivastava, chairman of state-run energy producer Oil India.Better supplies should help power companies. Gas fuels only about 7 per cent of power stations, but many plants lie idle or operate at low capacity because there is not enough fuel available to keep their turbines running."There are a lot of projects which have been idling and they have been desperately in need of gas supplies," said Dipesh Dipu, a partner at Jenissi Management Consultants.Lanco Infratech, a power producer mired in losses and debt because its plants are running at a fraction of their capacity, has cut operations at one 366 MW unit to just four per cent of capacity for lack of gas.It may take at least two years to boost fuel supplies as investments in output and import facilities bear fruit, but even then the key to the plan may lie with cash-strapped distribution companies.The state-owned distributors - known as discoms - will have to stump up funds to buy the more expensive electricity from power stations. But passing on too much of the costs to consumers will be politically unpopular and the discoms may opt instead to simply halt supply.Utilities are already rationing electricity supplies to consumers in an effort to improve their finances to qualify for a $32 billion government bailout package that aims to address massive losses racked up through years of corruption, populist pricing policies and mismanagement. To balance their books, eight-hour stoppages could even double as the discoms try to rein in their losses, said Vinayak Chatterjee, head of Feedback Infra consultants."The discoms don't have enough money to buy the power, therefore they are resorting to power cuts," T. Adibabu, chief operating officer of Lanco, told Reuters. "Unless the discoms' financial health is improved, the power situation cannot improve suddenly."Finance Minister P. Chidambaram has already conceded that the government might need to cushion utilities from the gas price increase, which would effectively mean subsidising them. That is a practice India, which is trying to narrow a bloated fiscal deficit, can ill-afford and it leaves power sector reform still at the starting gates.(Reuters)
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Adani Group has pulled out from a $1.7-billion coal railway project with Indonesian state coal miner PT Bukit Asam in South Sumatra due to Indonesia's tough restrictions on licensing, said Bukit Asam's chief executive.Bukit Asam's CEO Milawarma also said that it is still in ongoing discussions with Indonesia's Rajawali Group to start another $2-billion South Sumatra coal railway project, which has also been delayed for years on licensing and valuation issues.The setbacks show the difficulty for investors in developing large infrastructure projects in Southeast Asia's biggest economy due to uncertain and overlapping rules, despite government commitments to support development.The projects are in theory straight-forward and should be easy to get going, the soft-spoken Milawarma told Reuters in his Jakarta office. "But there are lots of sectors involved ... mining regime changes and this scare off investors."Officials with the Adani Group were not immediately available to comment.The delay in the projects has hurt expansion plans from the state coal miner, which owns one of the nation's largest coal deposits at 7.3 billion tonnes.Bukit Asam will produce around 17 million tonnes in 2013, a 30 percent increase from 2012. But that is far below the expected production by Asia's biggest thermal coal exporter PT Bumi Resources at 77 million tonnes this year.The future of the projects also faces other risks, including weak coal prices and concerns China will reduce imports of low-calorie coal, Milawarma said.He said that the company plans to shift its coal shipments to India if China declines to take it.(Reuters)
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Moves by China and India to raise local gas prices will pave the way for increased imports of liquefied natural gas (LNG), as the two nations try to ensure they can meet rapidly increasing demand for the fuel.Gas prices in both countries have been kept artificially low at levels well below globally traded LNG costs, meaning either LNG importers suffer a loss or local LNG users have to pay a big premium to domestic prices.India last week nearly doubled the price from around $4.20 per million British thermal units (mmBtu) to a pricing formula that will bring prices to around $8.40 per mmBtu from 1April 2014.China made a more modest reform, increasing non-residential natural gas prices by 15 per cent, but prices will be higher at up to $10-$12 per mmBtu in many coastal provinces.Chinese and Indian gas demand is expected to soar in the coming decade, driven by growing energy demand and efforts by China in particular to increase the amount of cleaner burning natural gas in its energy mix.Higher gas prices will make LNG imports more attractive and provide incentives for domestic gas developments."It's broadly positive for LNG, as most (Chinese) LNG players are nervous of low (cost) competing gas sources," said Beijing-based senior gas analyst Gavin Thompson of Wood Mackenzie. "We'll start to see a little more of the China influence in the spot, short-term LNG markets than the past few years."LNG spot prices into China are around $14.50 per mmBtu, while India's gas imports are at $13 to $14 per mmBtu."I am expecting there will be some change in (India's) consumer psychology and demand pattern," said R.K. Garg, the head of finance at Petronet LNG.India imported 15.17 million tonnes of LNG in 2012, which is expected to rise to 50 million tonnes by 2020, while demand in China, which bought 14.7 of LNG last year, is expected to hit 60 million tonnes by 2020, said consultancy Tri Zen International."We had assumed higher prices in the forecasts so don't think the latest hikes in the two countries will trigger any changes to the forecasts," said Tri Zen analyst Tony Regan.The price hikes will also provide an incentive for investment in LNG importing infrastructure. "A formal indication of a hike in domestic prices will give regasification terminal developers more clarity about future supply potential," said Gautam Sudhakar, senior analyst with IHS in Washington DC.Within days of the gas price hike, Indian firm H-Energy called for bids from EPC contractors for building an 8 million tonnes-per-year LNG terminal in Maharashtra state.India has plans for an additional 83 million tonnes of LNG import capacity on the books for 2020, much of which may hinge on whether developers feel they can get market prices for LNG.Chinese importers may be more willing to sign up short-term supplies with export facilities planned in East Africa, Canada and the United States, as well as the more traditional suppliers such as Australia and Qatar, experts say.The lift in domestic prices will also trim losses at PetroChina's Rudong and Dalian import terminals, which have contracted pricey term LNG from Qatar, and at CNOOC Ltd's Zhanjiang and Fujian terminals which will import LNG from Australia and Indonesia.Gas company GAIL India has already contracted around 8 million tonnes of US LNG imports, raising concerns about who would pay for the expensive imported gas."All the uncertainties have been put to rest now... paying a few dollars more per mmBtu for a more certain 20-year profile isn't going to be a hard sell," said Karthik Sathyamoorthy, head of Asia Pacific at energy consultancy Galway Group. (Reuters)
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