The government has hired five banks to manage a stake sale valued at up to $1.5 billion in state-run Indian Oil Corp, IFR reported on Thursday, citing people familiar with the deal. The government tapped Citigroup, Deutsche Bank, JM Financial, Kotak and Nomura to handle the sale of a 10 percent stake in the oil company, which at current market prices would be worth up to 95 billion rupees, added IFR, a Thomson Reuters publication. Indian Oil didn't immediately respond to a Reuters request for comment on the share sale. 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 percent of gross domestic product in 2015/16. The government is aiming to sell a 10 per cent stake valued at around $3.7 billion in top coal miner Coal India Ltd through a stock market auction. The government, which owns 78.65 per cent of Coal India, has sought bids from banks by Sept. 2 to manage the share offering, according to a notice issued by the Department of Disinvestment, which oversees stake sales in state companies.
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Government will "any day" announce a decision to allow market price for part of gas discoveries made in future from difficult fields, Oil Minister Dharmendra Pradhan said on Monday (10 August). While approving a new gas pricing formula based on international hub rates in October last year, the government had decided that new gas discoveries in deep-water, ultra-deep sea or high-temperature and high-pressure fields will be given a premium over and above the approved price. "There is now an in-principle agreement over the issue of gas price premium between the ministry of petroleum and natural gas and the ministry of finance. It's resolved and it will come any day," he told reporters here. Based on a recommendation from its upstream technical arm, the ministry proposed to allow a fixed percentage of natural gas produced from difficult fields to be sold at market price and the remaining as per the approved price. The ministry had sent the gas price premium proposal to the Finance Ministry which had returned it, saying the Petroleum Ministry should decide on the issue on its own keeping in mind the October 2014 decision of Cabinet Committee on Economic Affairs. The Oil Ministry subsequently resubmitted the proposal to the Finance Ministry, saying CCEA had in October specifically directed that the gas price premium should be jointly decided by the two ministries based on recommendation of the Directorate General of Hydrocarbons (DGH). Pradhan, who had recently met Finance Minister Arun Jaitley on the issue, said all issues are settled and an announcement of the gas price premium can be made any day. "It can be done any day, even today," he said. While the domestic gas is priced at $4.66 per million British thermal unit, the market price as measured by the rate at which the fuel is imported is $7-8. The percentage of total volumes that can be sold at market price will be different for ultra-deep sea discoveries, deep-sea finds and high-temperature and high-pressure (HTHP) fields. All gas producers, including state-owned Oil and Natural Gas Corporation (ONGC), have stated that it was uneconomical to produce gas from difficult fields at the current price of $4.66 per mmBtu. As per the mechanism approved in October 2014, price of domestically produced natural gas is to be revised every six months using weighted average or rates prevalent in gas-surplus economies of the US/Mexico, Canada and Russia. Gas price, according to the formula, was $5.05 per mmBtu till March 31 and has subsequently been cut to $4.66, in line with international movements. The current price is among the lowest in the Asia-Pacific. China pays explorers $11.9 per mmBtu rate for new projects while Indonesia and the Philippines price the fuel at $11 and $10.5, respectively. Gas from offshore fields in Myanmar, where Indian firms ONGC and GAIL have a stake, is sold to China for $7.72. Thailand prices gas from new projects at $8.2 per mmBtu. Vietnam has a gas price of $5.2 and Malaysia $5.(PTI)
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Oil extended losses to multi-month lows on Monday (3 August) on worries of oversupply as OPEC pumped at record levels in July, while weak China data stoked concerns about slower growth at the world's second largest oil consumer. Oil output by the Organization of the Petroleum Exporting Countries (OPEC) reached the highest monthly level in recent history in July, a Reuters survey showed, with Saudi Arabia and other key members showing no sign of wavering in their focus on defending market share instead of prices. The lack of a plan by OPEC to make room for the return of more Iranian oil further fuelled supply worries. Iran expects to raise output by 500,000 barrels per day (bpd) as soon as sanctions are lifted and by a million bpd within months, its Oil Minister Bijan Zanganeh has said. "The market seems to again focus on the supply situation ... one of the difficulties is that Iran may be coming back and there is no obvious sign that OPEC will make room for them," Ric Spooner, chief market analyst at CMC Markets in Sydney said. Brent fell 50 cents to $51.71 a barrel by 0643 GMT after touching an intraday low of $51.50, the lowest since Feb. 2. It is on its longest weekly losing streak since late 2014. U.S. crude fell 39 cents to $46.73 a barrel after hitting the lowest in four months at $46.35. Front-month prices lost 20.8 percent in July, the biggest monthly drop since October 2008. Technical charts showed that Brent could fall further towards $50 in the near term while West Texas Intermediate (WTI) could head to lows of around $42.03 if it breaks a support level at $46.40, Barclays analyst Lynnden Branigan said in a note. Hedge funds and other speculators have slashed their bullish exposure to WTI to the lowest in nearly five years, trade data showed on Friday, as local drillers continue to add rigs and pump at full throttle despite a global oil glut. "The recent recovery in the oil rig count supports our expectation that U.S. producers can and will ramp up activity with WTI prices near $60/bbl, given improved returns with costs down 30 percent," Goldman Sachs analysts said in a weekly rig count report. "The current rig count implies that U.S. production will sequentially decline in 3Q15 although continue to grow in 2016." Growth at China's big manufacturing companies unexpectedly stalled in July as demand at home and abroad weakened, an official survey showed on Saturday, adding to worries from a recent slump in Chinese stock markets.(Reuters)
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Petronet LNG aims to lease out about two-thirds of the capacity at its Dahej import terminal in Gujarat over the next four years to boost revenue and prevent the facility falling into disuse. The company, which handles large volumes of liquefied natural gas (LNG) imported from Qatar for Indian companies, wants to lease space to other firms as domestic demand for its costly Qatari cargoes recedes. In April-June, Petronet operated its 10 million tonnes per annum (mtpa) Dahej terminal at 98.4 percent capacity despite lower demand for its oil-indexed, costly LNG sourced under a 25-year deal with Qatar's RasGas. Spot prices of LNG have collapsed by more than 60 percent over the past year, whereas oil-indexed LNG prices have remained more steady, reducing appetite for the expensive supply. Currently it buys 7.5 mtpa of LNG from RasGas under the long-term deal, and has leased 1.25 mtpa of capacity to state-run GSPC Group in Gujarat. It has also signed deals to lease out 6 mtpa of capacity to state-run firms by 2017, when the capacity of the plant will be raised to 15 mtpa. Petronet LNG is in talks with various companies to lease out 2.5 mtpa of capacity to be added in the next phase by 2019, its technical director Rajender Singh said, which if worked out will be about 63 percent of the expanded capacity. "Our risk is reduced through leasing ... we will get revenue through regasification charges and that's our strength," Singh said. Due to cheaper prices of Asian spot LNG, Petronet has been forced to import 68 percent less fuel than it is supposed to under the long-term deal with Qatar. Pricing of LNG under the long-term deal is linked to the 12-month rolling average of the Japan Crude Cocktail (JCC) price. While this formula reduces volatility, it does not reflect price falls as much as spot pricing. Petronet's head of finance, R.K. Garg, said the trend of lower offtake of gas under the long-term deal was continuing. Reuters on Thursday reported that Petronet has been forced to cut purchases under the long-term Qatar deal by 30 percent due to low domestic demand. Higher imports of spot cargoes helped Petronet improve operations at its Dahej plant, Garg said. (Reuters)
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Oil prices fell to their lowest in nearly six months on Tuesday (28 July), as a rout in the Chinese stock market cast further doubt over the outlook for crude demand in the world's top commodities consumer. China's already-volatile benchmark stock index, with a combined market capitalisation of $4.6 trillion, has lost 10% in the last two days of trade. Most household debt is linked to real estate rather than the stock market, but with Chinese economic growth struggling to stick at 7%, analysts say demand for crude may not be enough to help mop up a global supply glut. "Typically, equity markets do have a high correlation to quarterly GDP growth," Deutsche Bank strategist Michael Lewis said. "Naturally, there is some risk that this could spill into the real economy. The more these things go down on a day-by-day basis, that is starting to affect the potential of Chinese demand growth being weaker." Brent was down 72 cents at $52.75 a barrel by 1054 GMT, having hit a session low of $52.28, its lowest since early February, bringing the losses for July to nearly 18%. Brent crude is on track for its longest stretch of daily losses since March, when the price hovered just dollars away from six-year lows. US crude was last down 33 cents at $47.06 a barrel after ending the previous session down 75 cents. Adding to the uncertainty over the health of the Chinese economy is concern about rising global oil production in a market already oversupplied by some 2 million barrels a day. Investors are watching for weekly data on US inventory levels to gauge the strength of demand. US commercial crude oil stocks likely slipped last week after crossing the five-year seasonal average build in the previous week, a preliminary Reuters poll of analysts showed ahead of industry and official weekly reports. Crude stocks fell about 300,000 barrels to 463.6 million barrels in the week ended July 24, analysts estimated. "We're not seeing the level of demand in the US one usually expects related to the summer drive-time," said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance. "The world is awash with oil."(Reuters)
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Oil prices fell towards four-month lows on Tuesday (28 July), dropping for a fifth straight session on persistent worries about a global supply glut, while stock market sell-offs on both sides of the Pacific also rattled investor sentiment.Asian stocks fell to three-week lows, with a deepening rout in Chinese stocks heightening fears about the financial stability of the world's second biggest economy and top energy consumer.Uncertainty over the health of the Chinese economy, reflected in the sell-off in the stocks, lacklustre US oil demand and increasing oil supplies all added to investors' negativity about oil prices, said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance"Technical levels continue to break. It's a trend which says investors are selling," Barratt said. "It's all about sentiment - it's a one-way traffic."Brent dropped 36 cents to $53.11 as of 0430 GMT after 2 per cent drop in the previous session. It dipped to $52.89 earlier, hovering close to a four-month low of $52.83 reached on Monday.US crude dropped 20 cents to $47.19 a barrel after ending the previous session down 75 cents. It fell below $47 post-settlement, the lowest since March 24.The bearish sentiment will continue, testing technical support levels, although oil prices are expected to end 2015 higher than at current levels, according to a note from Phillip Futures on Tuesday."For today, we believe the next support for WTI and Brent to be at $46.73 and $52.40. Provided the bearish trend continues, lower supports of $45.90 and $50 could be tested," it added.Investors are now eyeing weekly data on US inventory levels for further trading cues.US commercial crude oil stocks likely slipped last week after crossing the five-year seasonal average build in the previous week, a preliminary Reuters poll of analysts showed ahead of industry and official weekly reports.Crude stocks fell about 300,000 barrels to 463.6 million barrels in the week ended July 24, analysts estimated."We're not seeing the level of demand in the US one usually expects related to the summer drive-time," Barratt said."The world is awash with oil," he added.(Reuters)
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Oil prices fell on Monday (27 July) after closing the previous session at their lowest levels since March on renewed oversupply concerns from the United States and Iraq, although a weaker dollar helped to limit deeper losses.Investors are looking to the US Federal Reserve for direction this week. The central bank starts a two-day policy meeting on Tuesday that could result in a September interest rate hike that would strengthen the greenback."The markets are looking for price guidance from Janet & Co," said Ben Le Brun, market analyst at Sydney's OptionsXpress, referring to Fed Chair Janet Yellen and the bank."There is scope for the dollar bulls to be disappointed this week (which) might be a driver for oil prices and the commodities complex overall," Le Brun said.A weaker dollar makes dollar-denominated commodities, including oil, cheaper for consumers using other currencies.Brent crude for September fell 6 cents to $54.56 a barrel as of 0340 GMT after dropping 65 cents in the previous session to $54.62, its lowest close since March 19.U.S. crude for September was down 12 cents at $48.02, after briefly dropping below $48 a barrel. U.S. oil fell 31 cents in the previous session to $48.14, its lowest settlement since March 31.Sparking new worries about a global glut, US oil producers added 21 drilling rigs last week, the biggest rise since April 2014, according to Baker Hughes.The increase in drilling activity came despite a 21 per cent collapse in US crude prices from about $61 a barrel in mid-June. A 20 per cent downturn is considered by many traders to constitute a bear market.In Iraq, exports from its southern oilfields are on course for a new monthly record, having topped 3 million barrels per day so far this month, according to loading data and an industry source.The expectation of continued abundant oil supplies, including an output increase from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries, led the National Australia Bank on Monday to revise its oil price forecasts in a monthly report."We now expect oil prices to stay below $70 a barrel for the rest of 2015 and 2016," the bank said.Speculators cut long bets on US crude futures and options to the lowest level in five years last week, the US Commodity Futures Trading Commission said on Friday.(Reuters)
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State-owned Oil and Natural Gas Corp (ONGC) plans to invest over $8.8 billion in bringing to production its much-touted KG-basin oil and gas discoveries by 2018-19. ONGC has divided 12 oil and gas finds in the block KG-DWN-98/2 or KG-D5 and gas discovery in an adjacent G-4 block the Bay of Bengal into three clusters to quickly bring them to production, a senior company official said. The 7,294.6 sq km deepsea KG-D5 block has been broadly categorised into Northern Discovery Area (NDA - 3,800.6 sq km) and Southern Discovery Area (SDA - 3,494 sq km). The company plans to develop the 11 oil and gas finds in the NDA together with one gas find in G-4 block at an investment of USD 8.843 billion, he said. "The investment will be for drilling 45 development wells, an array of sub-sea pipelines carrying gas to a fixed platform for processing and a pipeline to carry gas form it to an onshore terminal. Oil will be transported to a floating production system (FPSO) that will transfer it to ships for taking to refineries," he said. ONGC plans to develop the discoveries in the block in three clusters -- 14.5 million standard cubic meters per day of gas for 15 years from Cluster-1 comprising of D&E finds of NDA in KG-D5 block and G-4 find in the a neighbouring area. Cluster-2A mainly comprises of oil finds of A2, P1, M3, M1 and G-2-2 in NDA which can produce 75,000 barrels per day (3.75 million tonnes per annum). Cluster 2B, which is made up of four gas finds -- R1, U3, U1, and A1 in NDA -- envisages a peak output of 14 mmscmd of gas, with cumulative production of 32.5 bcm of gas in 14 years. "We plan to get first gas by mid-2018 and first oil by mid-2019," he said. Cluster-3 is the UD-1 gas discovery in SDA. "UD-1 lies in water depth of 2400-3200 meters and there is no technology to produce from such depths. And so Cluster-3 is presently not being pursued for development," he said. Gas produced from Cluster-1 is proposed to be taken to a Fixed Platform in shallow water depths through an 18-inch, 16.1 km pipeline and treated and subsequently evacuated to Odalarevu onshore terminal in Andhra Pradesh through 20-inch, 35.5 km pipeline for sales. Oil produced from Cluster-2 is proposed to be taken on to an FPSO (Floating Production Storage and Offloading) anchored in high-sea through an 18-inch, 21.5 km pipeline. While oil will then be transfered to tankers for transportation to refineries, gas produced alongside will be evacuated on to Fixed platform through an 18-inch, 21.4 km pipeline. The official said there is an existing terminal at Odalarevu, for processing of hydrocarbons received from offshore fields: G-1, Vasishta and S-I. (Agencies)
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