Wednesday / February 19.


ogNEW DELHI: India is likely to next month sign a deal to lay an oil pipeline to Nepal for supply of petrol, diesel and ATF, said Sunil Kumar Thapa, Commerce Minister of the Himalayan nation.


Prime Minister Narendra Modi during his visit to Nepal in August had “assured that India will assist in putting up a pipeline,” he told reporters after meeting Oil Minister Dharmendra Pradhan here.


He said he reiterated Nepal’s requirement for the pipeline in the meeting with Pradhan.


“We hope before Prime Minister (Modi) visits in November, we will be able sign an MoU on the pipeline,” he said.


Nepal will host the 18th SAARC Summit on November 26-27. Modi in his August visit signalled India’s willingness to build the Rs 200-crore pipeline to supply fuel.


Nepal is dependent on India for meeting all of its fuel requirement. Petrol, diesel, domestic LPG and jet fuel (ATF) are currently trucked from Indian Oil Corp’s (IOC) depot at Raxaul in Bihar to Nepal.


In 2006, a 41-km pipeline from Raxaul to Amlekhgunj in Nepal was proposed for transportation of the fuel. The pipeline was to be funded 50:50 by IOC and Nepal Oil Corp (NOC). But the project never took off as Nepal refused to fund its share of cost.


IOC in the meanwhile has decided to shift its oil storage depot from Raxaul to Motihari and the pipeline now proposed will be laid from Motihari to Amlekhgunj.


“The pipeline will take 30 months to construct… IOC has already done some studies,” he said.


The Raxaul-Amlekhgunj project was to cost about Rs 100 crore excluding the cost of land acquisition and the new line would cost almost double of that.


Thapa had first raised the issue when he met Pradhan on July 30.


“IOC is our main supplier of petroleum products. We want IOC to lay the pipeline,” he said. “The ministry is very positive about the pipeline.”


Nepal was keen on the pipeline from Motihari to Amlekhganj in view of the traffic congestion and frequent complaints of pilferage and adulteration during trucking.


An IOC official said the pipeline will now be built by the company.

(Source: Economic Times October 18, 2014)





NEW DELHI: Indian refiners will pay $500 million to Iran next week, the second installment in an interim deal that allows Tehran to recover part of overseas frozen oil revenues that are payments for oil it has sold, two industry sources said in Friday.


Iran and the United States, China, France, Germany, Britain and Russia agreed in July to extend a six-month interim accord until Nov 24 after they failed to meet a July 20 deadline for reaching a long-term deal to end their nuclear dispute.


“The process for the first installment of $400 million has been initiated and the second installment of $500 million will also be cleared next week,” said one of the sources.


Payment of $900 million by India was to be made in September, the sources said. It was not immediately clear why the process has been delayed.


Indian refiners together owe about $6 billion to Iran. They are depositing payments in rupees in an Indian bank. Iran uses these funds to pay for imports from India.


The sources declined to be named due to the sensitivity of the matter. The payments will be made using an existing mechanism based on a series of back-to-back transactions in different currencies that are initially channeled through the Reserve Bank of India (RBI).


On receipt of the funds from refiners, the RBI would buy dollars from authorised dealers. It would instruct the Federal Reserve to transfer dollars to the United Arab Emirates’ central bank account there, after confirmation that Iran had received a final payment in dirhams from Abu Dhabi.


Iran’s top oil client after China, India has imported 38 per cent more oil from Tehran in the first nine months of this year than in the same period last year, tanker data obtained by Reuters show.


Tehran has already received $1 billion from Japan under the interim deal, state news agency IRNA reported last month.


Iran and the United States said they made some progress in high-level nuclear talks on Thursday but much work remained to clinch a breakthrough deal by a late-November deadline.


The six powers want Iran to scale back its uranium enrichment programme to ensure it cannot produce nuclear bombs. Iran says the programme is for peaceful purposes.


In return for continuing action to curb its nuclear programme, Iran during the four-month extension has been granted access to $2.8 billion of its funds held in foreign banks, in addition to $4.2 billion paid between January and July.

(Source: The Economic Times, October 18, 2014)




NEW DELHI: The government’s Rs 43,425 crore disinvestment programme is on track and a schedule for sale of stake in state-owned firms will be announced shortly, Finance Minister Arun Jaitley said today.


“The process (of disinvestment) is well on the way and the schedule will be announced (soon),” he told reporters here.


He was responding to queries related to the government’s stake sale programme in Public Sector Undertakings (PSUs).


Last month, the government had approved diluting its equity stakes in Coal India Ltd (CIL), ONGC and NHPC. The stake sales in these three bluechip companies could fetch government about Rs 42,000-43,000 crore.


Sources say the disinvestment in the three companies would be done through the Offer For Sale (OFS) process, popularly known as the auction route.


The government has already selected merchant bankers for managing ONGC and NHPC disinvestment and is in the process for doing so for CIL.


In his Budget speech, Jaitley had set a disinvestment target of Rs 43,425 crore. Also, government is eyeing Rs 15,000 crore from sale of its residual stake in the erstwhile government companies, as per the Budget document.


In 2010-11 and 2011-12 fiscals, the government had raised Rs 22,144 crore and Rs 13,894 crore through divestment, against the budgeted target of Rs 40,000 crore in each year. In 2012-13, it had raised Rs 23,956 crore while the goal was Rs 30,000 crore.


In last fiscal, the government could raise Rs 16,027 crore, as against the budgeted target of Rs 40,000 crore. The target in revised estimates was scaled down to Rs 16,027 crore.

(Source: The Economic Times, October 18, 2014)




India is keeping close tabs on the elections in Mozambique and is ready to initiate fresh talks with the new government to further already-committed investments by Coal India Limited (CIL) and ONGC Limited in the African nation. Irrespective of the outcome of Mozambique’s fiercely contested national elections, India would have to engage with the new government as major Indian investments in the oil and coal sectors in the African nation were still at a nascent stage, a senior government official said. The Indian Petroleum and Coal Ministries were in touch with their counterparts in the External Affairs Ministry to be ready for interactions with the new Mozambique government even though available reports indicated that the country’s opposition party Renamo, had rejected the results of the elections, the official said.


The Indian government would have to be ready to build new bridges with any new government as most Indian investments had been firmed up during the regime of the ruling Frelimo party, he added.


Moreover, incumbent President Armando Guebuza, during whose regime all Indian investments in the country had been firmed-up, was constitutionally barred from seeking a third five-year term. Indian national oil exploration and production major ONGC Limited had lined up investments to the tune of $5-billion to develop the oil and gas reserves in the Rovuma area, in Mozambique. CIL, too, had firmed up undisclosed investments to be pumped in as soon as it completed the ongoing geological assessment of its Moatize coal blocks in Tete province. Earlier this month, an Indian consortium, International Coal Ventures Limited (ICVL), completed transactional formalities to pick up Rio Tinto’s coal assets in Mozambique for an estimated $50-million.


Considering that all these investments were at various stages of implementation, the companies would need the intervention of the India government to re-establish bilateral relations with Mozambique, particularly given conflict between the rival parties and post poll uncertainties, the Indian official said. ONGC has sought certain incentives from the Mozambique government, which once approved would enable ONGC to start investments by March 2015. The Indian government was closely watching whether the new government, after taking charge, would adhere to the new petroleum laws recently passed by the Mozambique Parliament, he said.


ONGC Videsh, the overseas arm of ONGC, had picked up a 16% stake in Rovuma oil and gas assets over the past year, while other Indian companies, such as Oil India Limited and Bharat Petroleum Corporation Limited, had bought a 4% and 10% stake respectively in the blocks operated by US-based Andarko Petroleum Corporation. CIL was also awaiting the results of Mozambique’s election before it finalised investment requirements and funding options, based on the outcome of exploration already conducted at Moatize and an ongoing geological survey, the official said.

(Source: Mining weekly October 18, 2014)





GUWAHATI: Chempolis Ltd, a Finland based bio refining technology corporation has inked partnership agreement with State-run oil refiner-marketer Bharat Petroleum Corporation Ltd’s Assam based refinery, Numaligarh Refinery Limited (NRL)to jointly partner to build a world class biorefinery.


According to NRL the agreement commits both the parties to set up the bio refinery using bamboo as main biomass which is abundantly available in the state of Assam in North-East India. Project implementation is expected to take approximately 2.5 years.


Navin Singhania President of Chempolis India stated: “Bamboo is an important raw material in North-East region of India accounting 66 per cent of the country’s bamboo resources. This agreement aiming at utilization of bamboo is completely in line with objectives of India.


P Padmanabhan (Managing Director, NRL) opined that this project would enable cultivation of bamboo on a commercially sustainable basis and would boost rural economy of the region.”

(Source: The Economic Times, October 18, 2014)




Indian refiners managed to export 10% more oil products in the first eight months of 2014, compared with a year ago, amid an increasingly challenging environment of declining demand and rising competition for the export markets, and despite a 12% slide in shipments to Europe, a Platts analysis shows. Saudi Arabia remained the single biggest destination for refined product cargoes from India over January-August. It took in nearly 11% more versus the same period of 2013, despite the startup of the 400,000 b/d grassroots refinery at Jubail in September last year.


Singapore and Fujairah in the UAE were the second and third biggest buyers respectively, retaining their positions from last year. Brazil became the fourth largest market for Indian barrels this year, dislodging Rotterdam. In terms of regions, the Middle East remains the biggest buyer of Indian oil products. It absorbed about 3% more oil products in the first eight months compared with last year.

(Source: Platts October 18, 2014)





MUMBAI: Reliance-owned IPCL has agreed to pay almost a 50% higher premium this year to cover its plants and machinery and for any loss on account of business interruptions even though rates in the insurance market have softened. Insurers have demanded higher premium since they had received Rs 1,000 crore claim last year after one of its pipeline had burst.


Despite a merger between Reliance Industries and Indian Petrochemicals Corporation (IPCL) in 2007, RIL has been taking separate covers for IPCL and itself. Industry sources said that the Reliance-owned IPCL has agreed to pay a premium of Rs 108 crore against Rs70 crore paid last year.


IPCL has taken a cover of Rs 30,000 crore for material damage, and Rs 6,000 crore for business interruption. The cover is renewed with effect from October 1.


This year, New India Assurance outbid National Insurance to emerge as the lead insurer. The other co-insurers include ICICI Lombard, National Insurance and Bajaj Allianz and Bajaj Allianz General Insurance.


Officials from private and government-own ed insurance compa nies declined to com ment on the story , while officials from Reliance Industries did not respond to an e mail sent by ET.


According to the d between the firm and the terms agreed between the firm and the insurer, IPCL can make a claim for business interruption only if the interruption is for 35 days or more as against 21 days last year. Business interruption covers loss of income that the company may suffer after shutting plants or facilities due to a disaster. Last year, IPCL had made a claim for business interruption after one of its pipeline burst following heavy rains in Gujarat.


The insurers have set stiff conditions due to difference between the company and the insurance company on the claim, which had prompted each of the insurers to appoint their own surveyor to assess the extent of the damage.


GIC Re, India’s only reinsurer, which had provided reinsurance to this account, suffered a 4% dip in its net profit last year as its underwriting losses rose.


Its highest claim from the domestic market was from IPCL of Rs 1,000 crore.


IPCL, which was floated by the government, was subsequently taken over by RIL. It operated three petrochemical complexes, a naphtha-based complex at Vadodara and a gas-based complex each at Nagothane near Mumbai and at Dahej.

(Source: The Economic Times, October 18, 2014)




Falling crude oil prices might be good news for public sector oil and gas companies but investors start pondering over its impact on private firms like Reliance Industries (RIL). The significant decline in crude oil prices might not be good news for RIL, as it dampens sentiments and influences its fortunes.


RIL’s upstream oil and gas segment can see some more downside but it’s a smaller contributor to consolidated revenue and profits. It contributed only 2.15 per cent to gross revenues and about 11 per cent to total earnings before interest and tax (Ebit) in the September quarter. The domestic operations, which produce crude oil and gas, contributed a little less than half of this. As a result and given the subdued street sentiments due to delays in gas price rise, it might not get significant attention consequent to the fall in crude oil prices, feel analysts. Sentiments towards this business can revive if gas price is hiked or if the production potential improves significantly.


Comparatively, the refining and petrochemicals businesses contributed 74 per cent and 19 per cent to gross revenues and 52 per cent and 32 per cent to Ebit, respectively, and are more significant.


Though crude oil prices might not directly impact gross refining margins (GRMs), the soft demand outlook does. Subdued demand and excess capacities took a tool on Singapore-benchmark GRM’s, which averaged at $4.8/barrel during Q2’FY15 versus $5.2 in the September 2013 quarter and $5.8 in the June 2014 quarter. Analysts at Ambit say RIL’s GRM would be negatively impacted from the weakening gasoil, jet kerosene and naphtha cracks. They say GRMs would remain at mid-cycle levels over the next 12-18 months, as global capacity additions are likely to outpace weak demand growth. While this doesn’t sound well, for most of the past six years RIL has managed to sustain good premium over the benchmark. For Q2 FY15 as well, RIL’s premium to benchmark improved–it was $1 higher year-on-year at $3.5 a barrel. As a result, its GRMs came in at $8.3 a barrel in Q2 FY15. So, it remains to be seen if RIL can sustain the trend.


The petrochem segment can see some stress on revenue and profitability on lower crude oil price, feel analysts. But, over the medium term, the upcoming refinery off-gas cracker at the Jamnagar can mitigate the impact, as the company will have globally low-cost advantage and can gain by sharply reducing its blended ethylene cost, which will reflect positively on the margin.


Analysts at JPMorgan believe the stock lacks positive catalysts in near term in light of their sluggish refining and petchem outlook, while uncertainty around gas prices and telecom profitability remains. Analysts at Jefferies have cut their EPS estimate for FY15-17 to factor in lower domestic gas price, slightly lower upstream volumes, higher capex on telecom and slower petchem ramp up.

(Source: Business Standard October 18, 2014)





London: Brent crude oil rose above $86 a barrel on Friday, bouncing from near four-year lows as investors bought back into a market they said was oversold, and as fighting in Iraq increased political risk.


Oil has lost more than a fifth of its value since June on heavy oversupply, signs of weak demand growth and indications that key oil producers, particularly Saudi Arabia, have a limited appetite to intervene on prices.


“Prices have likely overshot to the downside,” said Jeffrey Currie, head of oil analysis at Goldman Sachs. “This leaves us near-term constructive despite being bearish as we look further out.”


The oil sell-off had been driven by “expected fundamental shifts as opposed to currently observable shifts”, Currie and his colleagues said in a note to clients.


Brent for December rose $1.52 to a high of $87.34, before slipping back to around $86.25 a barrel by 1330 GMT, but was still on track for its fourth weekly loss in a row. The November Brent contract expired on Thursday.


US November crude, heading for its third weekly decline, was up 55 cents at $83.25.


The optimism was also felt in European stock markets, which jumped the most in seven months after weeks of sharp losses.


“We see prices averaging around $85 in 2015, so we have been advising customers to hedge when 2015 prices approach that level,” said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo.


Developments in Iraq also supported prices, as Islamic State fighters showed their strength despite an extensive air campaign by the US and other Western and regional powers.


Militants carried out a series of attacks in Baghdad on Thursday, killing at least 47 people. Islamic State has consolidated its position in the western province of Anbar in recent weeks.


“There’s an added risk premium now that Islamic State is only 20 km away from Baghdad,” said Schieldrop.


Iraqi pilots from the era of former president Saddam Hussein have joined Islamic State and are flying captured fighter jets in Syria, a group monitoring the war said, indicating co-operation between the radical Sunni group and former military officers.


Analysts said oil was in a downtrend in the longer term.


“Oil prices are likely to resume their downswing after this brief interlude because market participants will doubtless take advantage of the higher price level to jettison their long positions,” said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.


Leading oil analysts across Wall Street have raced this month to slash their price forecasts by as much $12 a barrel as old assumptions about Saudi Arabia’s readiness to defend a $100 crude are radically revised.


The head of Kuwait’s national oil company on Wednesday said that the oil-rich Gulf country had no plans to cut output, even as prices fell below $83 a barrel.


Libya called for output cuts on Friday, but remains the only African Opec (Organization of the Petroleum Exporting Countries) member, out of four, to do so.

(Source: Mint October 18, 2014)




Venezuelan President Nicolas Maduro has blamed Washington for the slump in global oil prices. Washington was “flooding” the market with cheaper shale oil to bring down prices and ultimately impact Russia and other oil-producing nations, Xinhua cited Maduro as saying at a televised cabinet meeting on Thursday. “The US and its allies want to affect oil prices to harm Russia, which produces around 10 million barrels per day, and that is the vital income of their economy,” said Maduro.


Market analysts say a 20-percent dip in oil prices since June was driven by lower economic growth and weak demand for crude in Europe, along with signs that the core Gulf members of the Organisation of Petroleum Exporting Countries (OPEC) are in no hurry to cut production. Maduro called for an extraordinary meeting of the group to explore ways to stabilise international oil prices. The OPEC daily basket price closed at $81.89 a barrel Wednesday. A barrel equals 159 litres.

(Source: Indian Oil & Gas October 18, 2014)




The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 82.83 per barrel (bbl) on 16th October, 2014. This was lower than the price of US$ 83.85 per bbl on previous publishing day of 15th October, 2014. In rupee terms, the price of Indian Basket decreased to Rs 5092.39 per bbl on 16th October, 2014 as compared to Rs 5124.07 per bbl on 15th October, 2014. Rupee closed weaker at Rs 61.48 per US$ on 16th October, 2014 as against Rs 61.11 per US$ on 14th October, 2014.

(Source: Indian Oil & Gas October 18, 2014)


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