Iraq overtook Saudi Arabia as the top crude exporter to India in September for the third time in 2015, according to tanker data obtained by Reuters, as the two biggest OPEC producers battle for market share in leading Asian buyers. Saudi Arabia also lost its top spot in China last month, with Russia overtaking the world's biggest crude exporter as the main supplier for the second time this year. Traders attributed the shift to a hike in Saudi's official selling price (OSP) of crude. India imported 640,300 barrels per day (bpd) of oil from Saudi Arabia last month, about 30 percent lower than in August and the weakest in a year, the data obtained by Reuters and compiled by Thomson Reuters Oil Analytics showed. The figure was still up 12.8 percent from a year ago. While Saudi's market share in India is shrinking, Iraq is expanding its hold over one of the world's fastest-growing markets by offering attractive pricing. "Saudi sells oil at OSP under term deals, while Iraqi oil is also sold in the spot market. And in an oversupplied market you often find Iraqi barrels trading at discounts to the OSP," said Ehasan Ul-Haq, senior analyst at London-based consultancy KBC Energy Economics. India shipped in about a fifth of its imports from Iraq in September, while Saudi Arabia's share dropped to 17 percent from about 22 percent in August. Faced with more competition in Asia, Saudi Arabia is trying to make inroads into new markets like Poland and along with other big exporters prepare for more competition from Iranian crude. "When Iran comes to market it will be a tough fight between Iran, Iraq and Saudi," said Haq. In the first half of India's fiscal year running from April to September, Saudi Arabia supplied nearly 19 percent more oil to India at about 776,000 bpd, while volumes from Iraq surged 36 percent to about 676,000 bpd. India is also stepping up purchases from Africa, where more crude is available after China raised shipments from Russia and the United States began processing its own shale oil. India imported nearly 27 percent more African crude in April-September, mainly from Angola and Nigeria. India, which is Iran's second-biggest customer behind China, bought about 17 percent more oil from Tehran in the April-September period, the data showed. Overall oil imports by India slipped 7.4 percent last month from August as Essar Oil, which rarely buys Saudi oil, shut its 400,000 bpd refinery for a month from mid-September for maintenance. (Reuters)
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Indian Oil Corp, India's top refiner, is expected to start commercial operation at its new 300,000 barrels per day (bpd) Paradip refinery around March 2016, a top executive said on Wednesday.When the refinery reaches full capacity, it could temporarily cut the refiner's dependence on gasoline imports, said Mathew C. George, Chief Manager of Petrochemicals-Exports."We have already taken the crude in. Commercial operation will most probably be in March 2016," he said at the sidelines of Downstream Asia, an annual event held in Singapore."We are running into a gasoline shortage and it is compounded by the fact that India will move into Euro V and Euro VI (gasoline specifications)."India, which has some of the world's most polluted cities, trails mature markets in the emission rules it follows.While the big cities follow what are known as Bharat Stage IV norms that are the equivalent of Euro IV controls, smaller cities follow Bharat Stage III. Europe currently follows stricter Euro VI norms.When the Paradip refinery hits full capacity, IOC would cut its gasoline imports but that would last a year or a year-and-a-half, after which it would have to rely on imports again as demand would outgrew its supplies, said George.India has surplus refining capacity, mainly because of Reliance Industries and Essar Oil, but IOC on its own is lacking in gasoline supplies for now and importing the fuel is more economical.IOC was not a regular gasoline importer until February this year. It has sought over 900,000 tonnes of gasoline for March to December delivery to various ports including Kochi and ParadipGasoline demand in the country has risen after a cut in diesel subsidies increased the attractiveness of petrol cars.IOC also operates a naphtha cracker in Panipat which has a capacity of more than 800,000 tonnes of ethylene a year.It is currently running at full capacity, said George.The unit consumes over 2 million tonnes of naphtha produced at IOC's Gujarat, Mathura and Panipat plants."Ultimately, we've got to do something with all that naphtha. Being a crude-oriented economy, you will produce naphtha whether you like it or not."(Reuters)
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Oil and Natural Gas Corporation (ONGC) is expected to increase its upstream capital expenditure by 10 per cent next year and intensify its exploration activities, taking advantage of the current depressed global energy market. "We want to intensify our exploration activities," said Sahshi Shanker, director of technology and field services at ONGC. "We are securing more and more rigs," Shanker said at the annual Platts Top 250 Global Energy Company Rankings. Rig rates are down by 30-40 per cent on the year and other exploration services rates are down by 40-50 per cent, he said. Industry sources at the gala event said more and more rigs were being laid off while services companies seeking new contracts at discounted rates. According to Shanker ONGC is increasing its 2016 capital expenditure to about Rs 36,000 crores, up by about 10 per cent from the current Rs 33,000 crore. He pointed out that value of any exploration and production company increases through exploration activities. ONGC's intensified exploration is for the long-term growth. Meanwhile, 14 Indian energy companies were listed in the 2015 Platts Top 250 Global Energy Company Rankings, a financial performance roster of publicly traded companies with assets greater than $5 billion. With the first-time showing of National Hydroelectric Power Corporation LTD (NHPC) in the Top 250 Rankings, India scored a personal best in representation, with 14 energy companies on 2015 list, versus 13 a year ago. India's top three energy companies in the 2015 list were Reliance Industries at 14th position, ONGC at 17 and Coal India at 38. Last year, these three corporations were positioned at 22, 21 and 47 in global rankings which are based on assets, revenues, profits and return on invested capital for the prior fiscal year. Coal India was rated as the largest pure coal mining company in the world. Others in the list were Bharat Petroleum Corp Ltd, Indian Oil Corp Ltd, GAIL (India) Ltd, Power Grid Corp of India Ltd, Hindustan Petroleum Corp Ltd, Cairn India Ltd, Essar Oil Ltd, Reliance Infrastructure Ltd, NTPC Ltd and Oil India Ltd. (PTI)
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Countries should not bank on oil prices remaining low when formulating their energy policies, as supplies could tighten from mid-2016 due to a drop in investment and falling US output, a senior industry official said on Monday (26 October).Global oil prices have more than halved since June 2014 on rising US shale oil output and as members of the Organization of the Petroleum Exporting Countries (OPEC) decided to defend market share rather than cut production."It will be a great mistake to index our attention to oil security to the oil price trajectory in the short term," Fatih Birol, executive director of the International Energy Agency (IEA), said at the Singapore International Energy Week.If prices continued at current levels, oil investment was likely to decline again in 2016, mainly in high-cost regions, after sliding this year by more than a fifth, said Birol, who took over the top post at the Paris-based IEA in September."If it comes true, this will be the first time in two decades we will see oil investments declining for two consecutive years," he said. "One should think about medium and long term implications of this lack of investments."US production of light tight oil production had peaked and was expected to decline by 400,000 barrels per day (bpd) in 2016, he added, tightening supplies further.Birol said geopolitical risks in the Middle East that could disrupt supplies remained, although a lifting of sanctions on Iran could boost production by 400,000-600,000 barrels per day (bpd) within a year.Still, he added that oil supplies were ample until at least mid-2016 and the IEA did not expect a strong price rebound in the short term.The IEA was set up in 1974 by oil-importing nations as a counter to OPEC and is a leading forecaster for opaque energy markets, although major energy consumers China and India are not members.On liquefied natural gas (LNG), Birol said supplies would be ample as the market will expand to 500 billion cubic metres around 2020 with new production in Australia and the United States.Most of the investment in renewables would be in emerging economies led by China and India, a shift away from OECD countries, Birol said."Renewables are now a mainstream fuel and will be responsible for two-thirds of new power plants added in the next five years," he said.Asked about the possibility of China or India joining the IEA, Birol said he hoped ministers from both countries would be at a 17-18 November ministerial meeting in Paris as special guests "which will strengthen the ties we have with those countries."(Reuters)
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Oil prices rose on Friday (23 October), finding support from brighter economic data and a global stock market rally after the European Central Bank signalled more stimulus. Benchmark Brent crude oil was 20 cents higher at $48.28 a barrel by 0905 GMT after settling up 23 cents in the previous session. US crude for December was unchanged at $45.38 a barrel, having risen 18 cents on Thursday. The gains followed a raft of positive economic data and a statement by ECB President Mario Draghi on Thursday that new euro zone initiatives could be unveiled as soon as December. Draghi said the ECB was "open to the full menu of monetary policy" to stoke the economy. The euro saw its largest one-day percentage drop against the dollar in nine months on Thursday, a move that might have been expected to depress oil, which is traded internationally in the US currency. But Hans van Cleef, senior energy economist at ABN AMRO Bank, said hopes that European economic stimulus measures would boost oil demand were supporting fuel globally. "Draghi's comments are supportive," van Cleef said. "Nevertheless, with the dollar finding support, the upside for oil prices will be limited." Jonathan Barratt, chief investment officer at Ayers Alliance, said markets had decided governments would not allow economies to falter. "These expectations suggest more active economic development will force consumption to go up," Barratt added. Data from the United States on Thursday showed a strong rebound in home resales in September and new applications for unemployment benefit hovering around 42-year lows. European stock markets joined a global share surge that buoyed overall sentiment. Japanese manufacturing activity expanded in October at what could be its fastest pace in 19 months, according to Markit/Nikkei Japan Flash Manufacturing PMI data on Friday. China's commercial crude oil stocks at the end of September rose 2.38 per cent from August, while diesel stocks saw a record 15.68 per cent drawdown and refined fuel stocks overall dropped 7.46 per cent, the official Xinhua News Agency reported on Friday without giving actual volumes. Rising US oil inventories, which climbed by a larger-than-expected 8 million barrels to 476.6 million last week, were a potential headwind to oil prices, helping to fuel concern over global oversupply. Investors also awaited rig data on Friday for guidance on how US oil production has responded to recent price falls.(Reuters)
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The foreign investment arm of India's top oil explorer ONGC is targeting $10-$12 billion of oil and gas asset purchases over the next three years, including more corporate acquisitions, its managing director said.ONGC Videsh Ltd (OVL) hopes to capitalise on cheaper assets after a slump in oil prices and Prime Minister Narendra Modi's diplomatic efforts to boost the global presence of Indian firms."Earlier it was an asset-based (strategy) but now we are giving good consideration to M&A," Narendra K Verma, managing director of OVL, told the Reuters Global Commodities Summit."Our mandate is huge and we can acquire a larger portfolio through the corporate acquisition route," added Verma, who has overseen $7 billion in deals over four years.OVL, which produces about 175,000-180,000 barrels per day (bpd) from its overseas assets, wants to double output by 2018 and increase it six-fold by 2030.The firm has stakes in 33 oil and gas projects from Venezuela to South Sudan but its first corporate investment in 2008, buying Russia's Imperial Energy for $2.6 billion, did not turn out as planned with output slumping to 8,000 bpd from an estimated 60,000 bpd.Still, Verma said the firm was not put off and was "working on some opportunities where we could see a broader portfolio being available to us."HotspotsOVL last month concluded a deal to buy a 15 percent stake in Rosneft's Vankor field to secure access to about 66,000 bpd of oil production at the Siberian field.But Verma said Africa and Latin America were likely to be the hotspots for new investment with some companies financially stressed due to high capital expenditure and low oil prices.OVL is also better placed than some of its global peers to invest due to the financial strength of its parent, state-run Oil and Natural Gas Corp (ONGC).The firm was in talks with overseas partners to reformulate exploration and development expenditure as current revenue at oil firms had halved due to weaker oil prices, he said.OVL also hoped to wrap up talks in two months to refinance $1.7 billion in loans at LIBOR plus 120 basis points maturing in 2021, versus the current LIBOR plus 195 basis points running to 2020, he said.ONGC and its Indian partners have submitted a $5-billion revised plan to Iran seeking development rights of Farzad B gas field, Verma said.The revised contract offered more flexibility and included a mix of production sharing and service contracts, he said, adding investment could double if infrastructure is built to supply gas to New Delhi.(Reuters)
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State oil giant Saudi Aramco said on Sunday that an attempted fraud that targeted its trading unit Aramco Trading and India's Oil and Natural Gas Corp (ONGC) had been foiled. In a brief statement in Arabic, Aramco said: "The attempted fraud has been foiled and did not have any financial impact on either the two companies or on trading relations between them." The Indian Express reported on Wednesday that cyber criminals had duped Aramco into making a payment for an order of naphtha from ONGC into their own bank account. Citing the police team looking into the case, the newspaper reported that ONGC had an order to deliver 36,000 metric tonnes of naphtha to Saudi Aramco. The fraudsters communicated with Saudi Aramco using an email ID that appeared almost identical the one used by an ONGC official. Aramco officials did not notice the difference. "The communication from ONGC was done using the e-mail ID patel_dv@ongc.co.in. The fraudsters merely created an e-mail address patel_dv@ognc.co.in," police inspector S. Mahadik was quoted as saying.
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India is highly energy starved. Since nature has not been benevolent to the country as neither is the country endowed with rich deposits of oil or gas nor with energy rich uranium. Consequently, to power a 1.25 billion people India spends a whopping $160 billion annually for importing oil and gas to meet the surging domestic demands. Frozen crystalline methane deposits also called 'fire ice' could offer a real hydrocarbon bonanza when it gets tapped. It would be a clean fuel and most importantly sourced from India so would help lasting in energy security. Today more than 85 per cent of India's domestic demand of oil and gas is met through imports. A 2014 Goldman Sachs report said, "India has a fifth of the world's population, but only a 30th of its energy." Commenting on the current situation, noted energy expert Ratan K Sinha, chairman of the Atomic Energy Commission, says, "India cannot perpetually depend on imported energy, very soon the country will have to look at options that will give the country energy independence." Amid this gloomy prognosis, there is one hydrocarbon source that is available in plenty but remains untapped, since technological challenges of commercially mining it are yet to be overcome. This is a hydrocarbon 'diamond' called gas hydrate which is a form of solidified natural gas that occurs at the bottom of the ocean. A just concluded Indo-Japanese expedition on board a world-class ship called Chikyu has again reinforced the huge potential of this energy rich deposit. In the 150 day, cruise of Chikyu that cost about Rs 616 crore exploratory drilling was done in the Bay of Bengal to map the hidden hydrocarbon resource. The seas of the country are home to some rich beds of what are called 'gas hydrates', these are essentially solidified lumps of the commonly occurring 'marsh gas'. This highly-inflammable gas called methane under certain very specific conditions solidifies along with water and forms a white 'ice cream' like substance. Methane DepositsThis white mass has been discovered in large quantities in the seas around the Krishna-Godavari-Mahanadi basin; in the Andaman Islands; off the coast of Saurashtra; and in the Kerala-Konkan region. When tapped it could power India with an abundant supply of natural gas for a long time. It should be noted that methane is a highly potent green house gas and hence its mining has to be done with great care to ensure none leaks out. These hydrocarbon rich deposits occur at times at depths of one km below the sea and in locations where the temperature is just right about 5-6 degrees Celsius. The enormous pressure at such depths forces the methane to solidify and it occurs intermixed with the soil and sand. Dr S.W.A. Naqvi, director of the National Institute of Oceanography in Goa, feels it is "exceedingly important" for India to tap this hydrocarbon goldmine since the country's exclusive economic zone is richly endowed with gas hydrates but they are difficult to mine as the technology for tapping them is still not developed. Naqvi says, "India needs to invest heavily in mastering this technology as the oil import bill is a huge burden on the country." Moreover, he says if this is successfully tapped, it could add to India's energy security. Gas hydrate resources in India are estimated at 1894 Trillion Cubic Metres (TCM). Last year, Prime Minister Narendra Modi forged a five-year partnership with the US for cooperation in gas hydrates. According to the Ministry of Petroleum and Natural Gas, cooperation with the United States Department of Energy in the field of gas hydrates, would facilitate active participation of the National Gas Hydrate Programme of India (NGHP) and American scientists in joint data collection, analysis and identification of sites for pilot production testing. Exchange of scientific and technical information will help Indian scientists enhance understanding of Indian gas hydrates and keep them abreast with international developments. Speaking in Parliament, Minister of State for Petroleum & Natural Gas Dharmendra Pradhan informed that the National Gas Hydrate Programme (NGHP) expeditions have established the presence of gas hydrates on the east coast deep-water basins of Krishna Godavari, Mahanadi and Andaman in the Bay of Bengal. He added at present, here the mapping of the resource is still under way but as of now, "there is no assessment of gas hydrate potential in Bay of Bengal." Gas HydratesHowever, Pradhan noted that 'Hydrate Energy International' has estimated resource potential of gas hydrate in India at 933 TCF. For the exploration and development of gas hydrates, NGHP was formulated by the government in 1995. The first NGHP expedition was carried out in 2006, where coring and drilling at 21 sites in western offshore, eastern offshore and Andaman sea were done to know the occurrence of gas hydrates in offshore areas. Back in 2006, the presence of gas hydrates was first established in Krishna-Godavari Basin when drill ship 'Joides Resolution' did some surveys at a cost of USD 36 million which according to the government showed the presence of sizable reserves of good quality gas hydrates in the sedimentary basins in India. Results from the second site in KG basin are particularly remarkable it noted. These showed the presence of a 128m thick gas hydrate layer indicating massive to dispersed gas hydrates. Speaking about this success, the then petroleum minister Murli Deora remarked "this marks a very significant development in the country. R&D work is in progress to develop a commercially viable technology to produce natural gas from gas hydrates, which is so far not available anywhere in the world. Development of this unconventional source of energy could meet a large part of our ever increasing demand for gas in the decades to come." According to the ministry of petroleum, the gas hydrate samples had been physically collected for the first time in India in 2006, making New Delhi the third country in the world after USA and Japan to do so from its deep waters. Experts like Dr Aninda Mazumdar, a well-known a marine hydrocarbon scientist working at the National Institute of Oceanography, Goa, who was onboard the ship Chikyu on its mission this year, says, "As of now the economics may be against exploiting gas hydrates but once oil and shale gas becomes scarce, the cost of extracting gas hydrates may become attractive so India needs to invest in R&D to be ready to overcome the forthcoming oil shock." (PTI)
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India's fuel demand in September rose at the fastest pace in more than a decade, providing further evidence of a pick up in industrial activity in Asia's third-largest economy. Fuel consumption, a proxy for oil demand, surged 15.1 per cent in September from the same month a year ago, the biggest rise since August 2005, according to data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry. The fuel consumption figures come days after data showing India's industrial production expanded at its fastest pace in nearly three years, helped by a surge in capital investment. Fuel sales in the world's fourth-largest oil consumer totalled 14.70 million tonnes last month, the data showed, led by robust sales of diesel and petrol. Diesel consumption, which accounts for about 40 per cent of refined fuels used in India, rose 20.1 percent to 5.89 million tonnes, the strongest rise since August 2005. Weak monsoon rains spurred demand for diesel-fuelled generators used to power pumps for wells, as roughly half of India's farmland lacks irrigation. The South Asian nation suffered its first back-to-back drought in three decades this year, with the rainfall deficit of as high as 47 per cent in some regions. Construction activity also likely rose due to the drier conditions with the data showing consumption of bitumen, used for making roads, up by 51.6 per cent, while fuel oil usage was up 7.1 per cent in September. Sales of petrol, widely used for transportation, climbed 25.4 per cent to 1.9 million tonnes from a year earlier, the sharpest rise since May 2013, as demand for passenger vehicles rose in the month. Cooking gas sales increased 4.1 per cent to 1.6 million tonnes, while naphtha sales rose 38.4 per cent to 1.2 million tonnes.(Reuters)
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Optimistic about the commercial commissioning of its Rs 35,000 crore refinery project at Paradip in Odisha "very soon," the IOCL has said the industry is looking at the project because of its volume and uniqueness. "The Paradip refinery is an important project for us and we are going to commission it very very shortly. The entire world is looking at the project as IOCL has made it as the world's largest facility," Indian Oil Coporation Ltd's Chairman B. Ashok said in Bhubaneswar. Ashok, however, declined to reveal the date for the refinery's commissioning. Asked about the tax exemption for Indian Oil's refinery project, Ashok saidL "It will be applicable on sale of products within Odisha. Concession on VAT is only a deferment and we will pay it back to the state government after a certain period. VAT is not an issue as the state government has promised full support to the project." He said said besides investment of Rs 35,000 crore in the refinery project, the oil major would invest around Rs 75,000 crore in associated projects. "We also expect investment of equal amount by others in Paradip," Ashok said. "A lot more economic activities will follow in the state of Odisha and Paradip with commissioning of the refinery project," Ashok said adding, work would soon start for the Rs 3,000 crore Polypropylene project at Paradip. The Indian Oil refinery would produce 5.97 million tonne of diesel, 3.4 million tonne of petrol, 1.45 million tonne of kerosene and ATF (aviation turbine fuel), 5,36,000 tonne of LPG, 1,24,000 tonne of naphtha and 3,35,000 tonne of sulphur.
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