The government has set a floor price for the sale of shares in top state-run refiner Indian Oil Corp Ltd at Rs 387 each, the company said, a two per cent discount from Friday's close. At the floor price, the 10 per cent stake sale in the company will bring in Rs 9,396 crore ($1.4 billion) for the government. New Delhi is seeking to raise as much as $11 billion by selling stakes in state-run companies this fiscal year, crucial to narrowing the fiscal deficit to a planned 3.9 per cent of gross domestic product in 2015/16. The government owns 68.6 per cent of IOC, whose stock hit a record high in July and has outperformed the broader market this year as the refiner benefits from cheaper global crude prices. It will sell about 242.8 million shares in Indian oil in Monday's auction. Individual investors can buy the stock at a 5 per cent discount to the final bid price, the government said in a regulatory filing. The government has missed its divestment target for the last five years in a row. Last month, the government raised about $260 million from the sale of a 5 per cent stake in Power Finance Corp Ltd, after the auction received bids for more than twice the number of shares on offer. Citigroup, Deutsche Bank, Nomura and Indian investment banks JM Financial and Kotak Securities are the managers of the Indian Oil share sale.(Reuters)
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Oil prices resumed their downward trend on Friday pulled lower by weaker global stock markets and a sharp contraction in China's manufacturing activity, with the U.S. benchmark on track for its longest weekly losing streak since 1986. Activity in China's factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled, adding to worries about lower demand for crude in the world's second biggest oil consumer. Asian stocks fell on Friday morning, following Wall Street down as fears took hold of a China-led deceleration in global growth. Key oil benchmarks were trading near 6-1/2 year lows, with the U.S benchmark headed for its eighth straight weekly decline, the longest weekly losing streak since 1986. In late 1985, oil prices slumped to $10 from around $30 over five months as OPEC raised output to regain market share following an increase in non-OPEC production. U.S. crude for October delivery was 59 cents lower at $40.73 a barrel at 0328 GMT. The September contract, which expired on Thursday, ended 34 cents higher. The U.S. benchmark hit a 6-1/2 year low of $40.21 a barrel on Thursday. Brent was on track for its seventh weekly decline in the past eight, trading 56 cents lower at $46.06 a barrel, after settling 54 cents lower on Thursday. The dollar continued retreating on shrinking expectations of an U.S. interest rate hike in September, providing some support for oil prices. U.S. crude inventories continued to rise last week, as imports rose and shale production fell slower than anticipated, despite falling prices. "The only silver lining we are seeing coming from the United States is that refining rates remain high and that crude production continues to fall," Singapore-based Philip Futures said in a note to clients. Despite the rout in oil prices, some mutual funds keep ploughing money into oil exploration and production companies in the United States in a bet that production will retreat sharply over the next 12 months, setting the stage for a rebound towards $65-70 per barrel. A glut of U.S. oil is about to repeat itself north of the border, with traders scrambling to secure more storage space in western Canada as crude stockpiles surge to record highs. Spot prices of Western Canada Select (WCS), a marker for heavy, diluted bitumen from Alberta's oil sands sank to a 12-year low near $20 per barrel. (Reuters)
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Strong Indian imports of petrol, boosted by a shift towards petrol car sales, are expected to underpin Asian margins for the fuel at least for the rest of the fiscal year to next March, industry sources say. India has surplus refining capacity, but there has been maintenance at some plants and petrol demand has risen after a cut in diesel subsidies increased the attractiveness of petrol cars. Petrol imports from April to June were the highest in more than four years, official data showed. As a result, Asia's average petrol profit margin for refiners, or the crack, in the first seven months of 2015 was $12.60 a barrel, the highest for the period since 2009, based on Reuters data going back to the second half of 2008. "Petrol imports are there as we are seeing a robust growth in demand," said B. Ashok, chairman of Indian Oil Corp (IOC), the country's biggest refiner, which undertook maintenance at its Koyali refinery from March to April. In the first six months of the year, India's petrol demand grew 14.17 percent, official data showed, and trade sources expect growth this year to reach 17 percent. Although India still exports more petrol than it buys, a government source said state refiners would continue importing at least until the end of this fiscal year to March 31 2016. Higher domestic demand meant that total petrol exports for January-June 2015 fell about 5.2 percent to 7.2 million tonnes or 337,400 barrels per day (bpd), while imports have spiked to about 23,400 bpd from about 2,850 bpd. For all of 2015, consultancy JBC Energy expects India's petrol surplus to fall to around 310,000 bpd and drop below 300,000 bpd in the next few years, versus 345,000 bpd in 2014. IOC, the key importer of petrol, has sought almost 700,000 tonnes for March-September delivery. State refiners also buy petrol and diesel from private firms Reliance Industries and Essar Oil, but since they charged more for coastal supplies an IOC source said his firm had switched to imports. Further tightening the market, has been a switch by some north Indian states to less polluting Euro IV petrol. IOC's Panipat refinery is only able to meet 75 percent of demand for Euro IV, the IOC source said. India's strong petrol demand comes as major consumers Japan and Australia shut refining capacity and switch instead to imports. Overall demand is also growing. ESAI Energy research agency expects global petrol consumption to grow by 50,000 bpd to 420,000 bpd this year. (Reuters)
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US crude oil fell to its lowest in almost six-and-a-half years on Friday (14 August) as huge stockpiles and refinery shutdowns heightened concerns about global oversupply and slowing economies in Asia.Oil had already tumbled more than 3 per cent on Thursday, driven by a report that stocks at Cushing, Oklahoma, the delivery point for US crude futures, rose more than 1.3 million barrels in the week to 11 August.US crude was down 24 cents at $41.99 a barrel by 1045 GMT. The contract earlier hit an intraday low of $41.35, its lowest since 4 March 2009. Brent crude traded at $49.12, down 10 cents and some way off its 2015-low of $45.19 reached in January. The front month September Brent contract expires today.US crude is much weaker than the North Sea benchmark, partly due to refinery outages sapping US demand. The largest of those refineries - BP PLC's 413,500 barrels per day (bpd) facility in Whiting, Indiana, shut two-thirds of its capacity for repairs that could last a month or more.Robin Bieber, director and technical analyst at London brokerage PVM Oil Associates, said the US crude oil contract, also know as West Texas Intermediate or WTI, had become somewhat dislocated from Brent:"The contracts are not all on the same technical page and this causes a lack of clarity," Bieber said. "WTI could plunge but the rest hold steady."Commerzbank analyst Carsten Fritsch said he didn't expect an accelerated drop in prices, but rather "a slow grind lower":"As long as (Whiting) refinery is out of service this will add to stocks in the US which is WTI's main driver now."Goldman Sachs said that a weaker Chinese yuan was putting downward pressure on all commodity markets, signalling a change in global macro-economic conditions."We believe the net commodity market effects are bearish," it said in a note to clients.Analysts said prices could fall further still unless oil production started to fall, particularly in North America."The lowest crude prices in six years might not be enough to put the brakes on the U.S. supply growth. US shale players are actively cutting costs and some players are profitable at less than $30 per barrel," ANZ Bank said.On the demand side, China's crude oil imports have so far remained strong as authorities take build up strategic reserves and consumers keep spending despite the slowing economy.(Reuters)
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India's top energy explorer Oil and Natural Gas Corp could spend up to $7 billion to develop its block off the country's east coast and expects to begin gas production there in 2018, its chairman said on Thursday. ONGC's block in the Krishna-Godavari basin should produce 77,000 barrels per day of oil and up to 17 million cubic metres a day of natural gas at peak rate, DK Sarraf told reporters, after ONGC reported a 14 percent jump in quarterly net profit. He added that the investment figures were based on preliminary estimates and that the company had "no plan" currently to bring in a foreign partner for the deepwater development. The company, which has struggled to maintain production from its ageing wells off India's west coast, is counting on the potentially large reserves of oil and gas from the KG-D5 block to boost future profits. ONGC, majority-owned by the government, reported a 14 percent rise in net income to 54.59 billion rupees ($839.59 million) in the quarter ended June 30, its fiscal first. The jump was driven by a much lower burden of government-imposed discounts on crude sales to state-run refiners. ONGC's share of the subsidy for the quarter was 11.33 billion rupees, compared with 132 billion a year earlier. India keeps a lid on retail prices of liquefied petroleum gas and kerosene, with upstream companies including ONGC and Oil India offering discounts on crude sales to help cut losses of state refiners. A prolonged period of low crude oil prices coupled with the government's decision last year to deregulate the price of diesel, the country's most widely consumed fuel, has significantly lowered these discounts. That also helped the company improve net realisation, or earnings per barrel of crude, to $58.92 from $47.15 a barrel a year ago. Net sales for the quarter rose 4.4 percent to 226.96 billion rupees. Shares in ONGC, which has a market valuation of $35.59 billion, closed up 0.15 percent on Thursday, largely in line with the broader Mumbai market which closed up 0.14 percent. (Reuters)
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State explorer Oil and Natural Gas Corp reported a 14 per cent jump in quarterly net profit, as it significantly cut discounts on crude oil to refiners after global oil prices fell.Net income for the company's fiscal first quarter ended June 30 rose to 54.59 billion rupees ($839.59 million) from 47.82 billion rupees a year earlier.Upstream state companies such as ONGC and Oil India typically sell crude oil at discounted rates to partly compensate retailers for losses they incur on selling fuels such as gasoline and cooking gas (LPG) at government-set rates.The impact of the discounts on profit after tax was 6.28 billion rupees during the quarter, compared with 73.96 billion rupees in the year-ago quarter.Net sales for the quarter rose 4.4 per cent to Rs 226.96 billion.($1 = 65.0200 rupees)(Reuters)
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India's top state-owned refiner Indian Oil Corp could pay a part of its oil import dues to Iran as early as this month, a senior company executive said on Thursday (13 August).Indian refiners had got approval to pay Iran $1.4 billion in oil dues, Reuters reported earlier, in one of the first signs a nuclear deal with six major world powers is helping Tehran unlock frozen funds.The company's finance director A.K. Sharma told reporters that while there was no immediate timeline for the payment, a partial payment could be possible this month.Indian Oil has still to pay around $500 million to Iran, Sharma said.India, the world's fourth-largest oil consumer, has run up a $6.5 billion bill for Iranian oil that it has been largely unable to pay because banking channels were blocked by Western financial sanctions.(Reuters)
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Iran has said the development rights for its Farzad-B gas field will be available to Indian companies after concerns in New Delhi that cash-rich European firms could clinch the contract. A consortium headed by ONGC Videsh, the overseas investment arm of Oil and Natural Gas Corp, in 2008 discovered the Farzad-B gas field in the Farsi offshore block. The consortium, which also include Oil India and Indian Oil Corp, has been seeking development rights for the field. An Indian delegation that went to Iran in the last week of July was told Tehran was working out a new production sharing contract, said B. Roy, head of business development at Oil India Ltd.. "The outlook is upbeat," he said. Iran has asked Indian firms to submit a development plan for the Farzad-B gas field, Roy said, adding Tehran had offered a draft contract, known as the Iran Petroleum Contract (IPC), to Indian companies. The new contract for the block is a mix of production sharing and service contract, he said. The delegation also renewed talks over the purchase of Iranian liquefied natural gas (LNG) once sanctions against the country are lifted and Tehran sets up a liquefaction facility, Indian Oil Minister Dharmendra Pradhan told lawmakers on Wednesday. India signed a deal with Iran in 2005 to buy 5 million tonnes a year of LNG but the contract was never implemented. Separately, Oil India said the first delivery of LNG cargo from Mozambique's offshore Area 1 Block in the Rovuma basis was expected in the first quarter of 2020. "There is a delay of 7-8 months in LNG supplies from Mozambique, as their parliament only recently passed the law supporting development of (an) LNG hub," Roy said. He said Mozambique's Area 1-operator Anadarko Petroleum had signed initial deals with Japan, South Korea and Singapore-based entities to sell 60 percent of the gas to be produced from the phase 1 of the project. Reuters last month reported that Anadarko was in talks with Japanese joint-venture vehicle Jera, set to become the world's biggest buyer of LNG, to sell long-term supply from its Mozambique export scheme. Roy said banks had committed $16 billion for the project that would cost about $23 billion. "The financial closure for the project is expected by the end of this year or early next year," he said. The project also include setting up two LNG trains of an annual capacity of 6 million tonnes each. (Reuters)
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