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PetroScan-December 2011
PETROSCAN (Monthly e-newsletter)
December 2011
CONTENTS: FOREWORD OIL, GAS & ENERGY NEWS GENERAL
INTEREST
1. OIL DATA: China November Crude-Oil Imports Rise To 22.69
Million Tons 2. Iran Threatens to Block Oil Shipments, as U.S.
Prepares Sanctions 3. Oil hovers below $98 amid Europe economy
concerns 4. Oil companies invested a record $558 billion last year
5. OPEC Holds Output Firm at 160th Meeting 6. World Refinery
Capacity to Grow Despite Recession - Hart Energy Study 7. Canadas
Petroleum Refining Sector: An Important Contributor Facing
Global
Challenges 8. Energy Demand to Grow by More Than 30% from 2010
and 2040 ExxonMobil 9. Slavneft Switching to Euro-4, Euro-5 Fuels
10. First Megafloat Oil Storage in the Works in Singapore 11. Saudi
Kayan becomes the first producer of polycarbonates in the Middle
East, and
the pioneering effort opens 12. Offshores Top 5 Projects of 2011
13. Saudi Arabia's Diamond Era 14. Kuwait Petroleum Corporation -
Playing A Crucial Role In Economy 15. Iran threatens to stop Gulf
oil if sanctions widened 16. Prime The Pump And Bailout The Brent
17. Sept-qtr GDP growth seen slowest in over 2 years
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PetroScan-December 2011
NEWS LOCAL 1. Indian Oil Corp tops Fortune India 500 list; RIL
at second spot 2. Vedanta completes Cairn India deal 3. ONGC to
support in doubling Cairn's capacity: Anil Agarwal 4. India's
Petronet to complete Dahej LNG terminal expansion to 15 mil mt/year
by
Dec 2015 5. Indias Top Economic Adviser: Diesel Decontrol Would
Curb Inflation 6. Home grown Indigenous Innovations 7. Vedanta
appoints 3 directors on Cairn India board 8. Raiding PSU reserves
unsustainable way of plugging budget deficits 9. Crude, rupee
double whammy hits oil companies NEWS GLOBAL 1. High-tech drilling
rig arrives in the Gulf of Mexico 2. Marathon Oil grows capital
spending 24 percent 3. Chevron might inject steam into Arabian oil
field 4. Chevron To Spend Record $32.7 Billion In Capital Projects
In 2012 5. Sasol Plans Ethane Cracker in Louisiana 6. Anadarko:
Mozambique Gas Find One Of The Most Significant In 10 Years 7.
Libya's Waha Oil begins output at two fields 8. High-tech drilling
rig arrives in the Gulf of Mexico 9. Iran discovers natural-gas
field in Caspian Sea, Shana says 10. Shell, ENI buy Nigeria
offshore oil field rights 11. Repsol, Shell, Conoco offer high bids
for Alaska oil leases 12. Norway sees record oil spending in 2012
13. PetroPeru Plans Equity Sell-Off, Share Listing to Expand
Refinery 14. SOCAR Agrees to Buy ExxonMobils Swiss Subsidiary 15.
Bahrain oil refinery output hits record 16. Nord Stream completes
world's longest subsea pipeline
NEW & RENEWABLE ENERGY 1. National bio energy mission soon:
Farooq Abdullah 2. After quakes, shale fracking faces opposition in
U.K 3. GM and BMW in fuel cell talks; Amazon selling GE Wattstation
4. Oil sands operators turn to electric currents 5. For taller wind
turbines, generating power is a breeze : NREL 6. API blasts EPA
report on hydraulic fracturing 7. Solar power gains foothold in
country's energy mix 8. In solar power, India begins living up to
its own ambitions 9. China's Shale Gas Development Takes First
Steps 10. NZ Co LanzaTech to help IOC, JSPL set up bio jet fuel
plant 11. Update: Exxon says natural gas will support energy demand
growth 12. Peregrino producing heavy oil for Statoil offshore
Brazil 13. Marathon Wants Ohio Refinery to Run 15% Utica Shale
Crude
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PetroScan-December 2011
HSE 1. Brazil may fine Chevron $84 million for spill 2. HSE,
climate change and sustainability 3. BP products fined us$50
million for emissions release at Texas city refinery 4. Health and
nutrition 5. Revend Launches Light Bulb Recycling Vending
Machine
SUSTAINABILITY & CLIMATE CHANGE 1. Australian Government
introduces price on Carbon 2. The climate may not be as sensitive
to carbon dioxide as previously believed 3. Large differences in
the climate impact of biofuels, Swedish research finds 4. Carbon
capture and sequestration: off to slow start
RELIABILITY & ASSET MANAGEMENT
1. Nine leadership principles for a successful reliability &
maintenance program GENERAL READING
Bosses, stop caring if your employees are at their desks
Sodium-saturated diet is a threat for all Nutrition: 4 vitamins
that strengthen older brains
REPORTS:
EIA: Refiners Should Expect Triple-Digit Crude Through 2012 EIA:
Short-Term Energy Outlook
(http://205.254.135.7/forecasts/steo/pdf/steo_full.pdf)
DEADLIEST NATURAL DISASTERS OF 2011 CARTOON OF THE MONTH FOR NEW
YEAR RESOLUTION LESSER USE OF CELL PHONE
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PetroScan-December 2011
FOREWARD
Dear Patrons of Petrotech,
Change is eternal, non stoppable and so the year. 2011 started
with turmoil abroad and ended with at ho,e turf, with small cyclone
on the south eastern coast, which made almost entire county wet on
the day we stepped into 2012. In 2011 the natural and geopolitical
upheavals kept the oil and gas prices on the burner, and it is
likely, with the Iranian impasse, to remain on the boil.
Whereas, the high prices of energy affect growth and put lot of
hardship on the people all over globe, it also has some good
effect, in form of less use of oil and force conserve this scarce
natural resources, which also pollutes adding to the process of
climate change.
The cost and consequence of climate change on our planet will
define the 21st century. With the business as usual, it will have
serious implication on the sustainability of our coastal ecosystem,
erratic climatic conditions affecting agriculture and food
production etc. It will put great stress on the rising population
leading to migration and conflict around the world.
It also, however, provides great opportunity and induces
research and development for better recovery of oil, less harmful
methods of production, improved efficiencies and lifecycle of
plants and equipments, newer skills and knowledge etc.
Good or bad, let us thank 2011 for whatever it offered and
welcome 2012 , with hope for better. Change is good, and looking at
the history of civilizations, it has most of the times proved to
have been for good. So here we are in the times of change, and The
team Petrotech sends you it's Heartiest Greetings of the Season of
Change !!!
To CHANGE is the only way to SURVIVE the CHANGE, and
in order, to SURVIVE the Change, we must INNOVATE
ahead of CHANGE,
Let us go GREEN, Right Away, Right NOW,
Our shadow walks away with us,
but our action leaves behind its imprint, for ever,
Wishing you & your family Greener NEW YEAR, ......Filled
with Everlasting HAPPINESS & Eternal BLISS, (Anand Kumar)
Director
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PetroScan-December 2011
OIL, GAS & ENERGY NEWS GENERAL INTEREST
OIL DATA: CHINA NOVEMBER CRUDE-OIL IMPORTS RISE TO 22.69 MILLION
TONS
BEIJING -(Dow Jones)- China imported 22.69 million metric tons
of crude oil in November, equivalent to 5.54 million barrels a day,
preliminary data from the General Administration of Customs showed
Saturday. Imports were 8.5% higher than the 20.91 million tons of
crude shipped in during the corresponding month last year, and up
9.1% from 20.8 million tons in October, according to Dow Jones
Newswires calculations. In the first 11 months of the year, crude
imports rose 6.1% to 231.86 million tons. Refined oil product
imports in November totaled 3.35 million tons, down 4.8% from
year-earlier levels, the data showed. -By Wayne Ma, Dow Jones
Newswires; +86 10 8400 7714; [email protected]
IRAN THREATENS TO BLOCK OIL SHIPMENTS, AS U.S. PREPARES
SANCTIONS
By DAVID E. SANGER and ANNIE LOWREY, Dec 27, 2011 WASHINGTON A
senior Iranian official on Tuesday delivered a sharp threat in
response to economic sanctions being readied by the United States,
saying his country would retaliate against any crackdown by
blocking all oil shipments through the Strait of Hormuz, a vital
artery for transporting about one-fifth of the worlds oil
supply.
The declaration by Irans first vice president, Mohammad-Reza
Rahimi, came as President Obama prepares to sign legislation that,
if fully implemented, could substantially reduce Irans oil revenue
in a bid to deter it from pursuing a nuclear weapons program. Prior
to the latest move, the administration had been laying the
groundwork to attempt to cut off Iran from global energy markets
without raising the price of gasoline or alienating some of
Washingtons closest allies. Apparently fearful of the expanded
sanctions possible impact on the already-stressed economy of Iran,
the worlds third-largest energy exporter, Mr. Rahimi said, If they
impose sanctions on Irans oil exports, then even one drop of oil
cannot flow from the Strait of Hormuz, according to Irans official
news agency. Iran just began a 10-day naval exercise in the
area.
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PetroScan-December 2011
In recent interviews, Obama administration officials have said
that the United States has developed a plan to keep the strait open
in the event of a crisis. In Hawaii, where President Obama is
vacationing, a White House spokesman said there would be no comment
on the Iranian threat to close the strait. That seemed in keeping
with what administration officials say has been an effort to lower
the level of angry exchanges, partly to avoid giving the Iranian
government the satisfaction of a response and partly to avoid
spooking financial markets. But the energy sanctions carry the risk
of confrontation, as well as economic disruption, given the
unpredictability of the Iranian response. Some administration
officials believe that a plot to assassinate the Saudi ambassador
to the United States which Washington alleges received funding from
the Quds Force, part of the Iranian Revolutionary Guards Corps was
in response to American and other international sanctions. Merely
uttering the threat appeared to be part of an Iranian effort to
demonstrate its ability to cause a spike in oil prices, thus
slowing the United States economy, and to warn American trading
partners that joining the new sanctions, which the Senate passed by
a rare 100-0 vote, would come at a high cost. Oil prices rose above
$100 a barrel in trading after the threat was issued, though it was
unclear how much that could be attributed to investors concern that
confrontation in the Persian Gulf could disrupt oil flows. The new
punitive measures, part of a bill financing the military, would
significantly escalate American sanctions against Iran. They come
just a month and a half after the International Atomic Energy
Agency published a report that for the first time laid out its
evidence that Iran may be secretly working to design a nuclear
warhead, despite the countrys repeated denials. In the wake of the
I.A.E.A. report and a November attack on the British Embassy in
Tehran, the European Union is also contemplating strict new
sanctions, such as an embargo on Iranian oil. For five years, the
United States has implemented increasingly severe sanctions in an
attempt to force Irans leaders to reconsider the suspected nuclear
weapons program, and answer a growing list of questions from the
I.A.E.A. But it has deliberately stopped short of targeting oil
exports, which finance as much as half of Irans budget. Now, with
its hand forced by Congress, the administration is preparing to
take that final step, penalizing foreign corporations that do
business with Irans central bank, which collects payment for most
of the countrys energy exports. The sanction would effectively make
it difficult for those who do business with Irans central bank to
also conduct financial transactions with the United States. The
step was so severe that one of President Obamas top national
security aides said two months ago that it was a last resort. The
administration raced to put some loopholes in the final legislation
so that it could reduce the impact on close allies who have signed
on to pressuring Iran. The legislation allows President Obama to
waive sanctions if they cause the price of oil to rise or threaten
national security. Still, the new sanctions raise crucial economic,
diplomatic, and security questions. Mr. Obama, his aides
acknowledge, has no interest in seeing energy prices rise
significantly at a moment of national economic weakness or as he
intensifies his bid for re-election a vulnerability the Iranians
fully understand. So the administration has to defy, or at least
carefully calibrate, the laws of supply and demand, bringing to
market new sources of oil to ensure that global prices do not rise
sharply. I dont think anybody thinks we can contravene the laws of
supply and demand any more than we can contravene the laws of
gravity, said David S. Cohen, who, as treasury under secretary for
terrorism and financial intelligence, oversees the administration
of the sanctions. But, he said, We
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PetroScan-December 2011
have flexibility here, and I think we have a pretty good
opportunity to dial this in just the right way that it does end up
putting significant pressure on Iran. The American effort, as
described by Mr. Cohen and others, is more subtle than simply
cutting off Irans ability to export oil, a step that would
immediately send the price of gasoline, heating fuel, and other
petroleum products skyward. That would mean that Iran would, in
fact, have more money to fuel its nuclear ambitions, not less,
Wendy R. Sherman, the newly installed under secretary of state for
political affairs, warned the Senate Foreign Relations Committee
earlier this month. Instead, the administrations aim is to reduce
Irans oil revenue by diminishing the volume of sales and forcing
Iran to give its customers a discount on the price of crude. Some
economists question whether reducing Irans oil exports without
moving the price of oil is feasible, even if the market is given
signals about alternative supplies. Already, analysts at investment
banks are warning of the possibility of rising gasoline prices in
2012, due to the new sanctions by the United States as well as
complementary sanctions under consideration by the European Union.
Since President Obamas first months in office, his aides have been
talking to Saudi Arabia and other oil suppliers about increasing
their production, and about guaranteeing sales to countries like
China, which is among Irans biggest customers. But it is unclear
that the Saudis can fill in the gap left by Iran, even with the
help of Libyan oil that is coming back on the market. The United
States is also looking to countries like Iraq and Angola to
increase production. Daniel Yergin, whose new book, The Quest,
describes the oil politics of dealing with states like Iran, noted
in an interview that given the relative tightness of the market, it
will require careful construction of the sanctions combined with
vigorous efforts to bring alternative supplies into the market. He
said that it would add a whole new dimension to the debate over the
Keystone XL pipeline, the oil pipeline from Canada to the United
States that the administration has sought to delay. The only
strategy that is going to work here is one where you get the
cooperation of oil buyers, said Michael Singh, managing director of
the Washington Institute for Near East Policy. You could imagine
the Europeans, the Japanese, and the South Koreans cooperating, and
then China would suck up all of the oil that was initially going to
everyone else. A broader question is whether the sanctions even if
successful at lowering Irans oil revenue would force the government
to give up its nuclear ambitions. One measure of the effects,
however, is that the Iranian leadership is clearly concerned.
Already the Iranian currency is plummeting in value against the
dollar, and there are rumors of bank runs. Irans economic problems
seem to be mounting and the whole economy is in a state of
suspended expectation, said Abbas Milani, director of Iranian
studies at Stanford University. The regime keeps repeating that
theyre not going to be impacted by the sanctions. That they have
more money than they know what to do with. The lady doth protest
too much.
OIL HOVERS BELOW $98 AMID EUROPE ECONOMY CONCERNS By ALEX
KENNEDY, Associated Press Oil prices hovered below $98 a barrel
Tuesday in Asia amid expectations Europe's debt crisis will hurt
the continent's economic growth and demand for crude. Benchmark
crude for January delivery was up 4 cents to $97.81 a barrel at
midafternoon Singapore time in electronic trading on the New York
Mercantile Exchange. The contract fell $1.64 to settle at $97.77 on
Monday. In London, Brent crude was down 2 cents at $107.24 on the
ICE futures exchange.
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PetroScan-December 2011
Crude has slumped from $103 last month amid growing investor
concern European leaders may be unable to prevent contagion from
spreading from debt-ridden countries such as Greece and Italy.
Europe has proposed a new treaty to bind members to spending and
borrowing controls, but Britain has refused to consider it, raising
doubts that the plan will be instituted. Credit ratings agency
Moody's said Monday that its ratings for European countries could
be cut in coming months, echoing an earlier warning by Standard and
Poor's. Citigroup said slowing global crude demand growth and
supplies boosted by the gradual return of Libya's output will
likely keep oil trading next year within 10 percent of current
prices, or between $100 and $120 for Brent. "We are not very
optimistic on oil demand growth," Citigroup said in a report. "We
are, however, optimistic on supply." A possible supply disruption
from Iran and Saudi Arabia's shrinking spare capacity should
support crude prices next year, Citi said. In other energy trading
on the Nymex, natural gas rose 1.0 cent to $3.26 per 1,000 cubic
feet. Heating oil fell 0.4 cent to $2.89 a gallon and gasoline
futures rose 0.9 cent to $2.57 a gallon.
OIL COMPANIES INVESTED A RECORD $558 BILLION LAST YEAR Posted on
December 5, 2011 at 10:41 am by Dan X. McGraw in Commodity Prices,
Commodity Trading, Deepwater drilling, Oil and gas companies spent
a record $558 billion last year on finding and developing new
supplies because of acquisitions in the U.S. and Latin America,
according to an IHS Herold report. Expenditure rose by 47 percent
from the previous year, the unit of Englewood, Colorado-based IHS
Inc. said today in a statement. Spending on acquisitions rose
seven-fold to $125 billion, it said. Exxon Mobil Corp. invested the
most, spending $72 billion in 2010, including the purchase of XTO
Energy, according to IHS. Petroleo Brasileiro SA spent $62 billion,
mostly on securing rights to produce from so-called pre-salt
deposits that hold Brazils largest oil fields. These companies were
able to aggressively pursue these investments because they had
significant cash flow to invest, Nicholas D. Cacchione, director of
energy equity research at IHS, said in the statement. Spending and
cash flow were closely tied last year, and we expect the same for
2011.
OPEC HOLDS OUTPUT FIRM AT 160TH MEETING The 160th Meeting of the
Conference of the Organization of the Petroleum Exporting Countries
(OPEC) convened in Vienna, Austria, on December 14 and resulted in
a decision to maintain its current production level of 30 million
barrels per day including production from Libya now in the future.
In taking this decision, OPEC member countries confirmed their
preparedness to swiftly respond to developments that might have a
detrimental impact on orderly market developments. Given the
ongoing worrying economic downside risks, the Conference directed
the Secretariat to continue its close monitoring of developments in
supply and demand, as well as non-fundamental factors, such as
macro-economic sentiment and speculative activity, keeping Member
Countries abreast at all times. The conference decided that its
next ordinary meeting will convene in Vienna, Austria, June 14,
2012, immediately following the OPEC International Seminar on
Petroleum: Fuelling Prosperity, Supporting Sustainability that is
to take place at the Hofburg Palace, Vienna, Austria, on 13 and 14
June 2012.
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PetroScan-December 2011
The organizations release also noted that the Conference
exchanged views on, inter alia, recent developments in multilateral
environment matters and the outcome of the recent UN Climate Change
Conference held in Durban, South Africa, as well as the status of
the Organizations ongoing energy dialogue with the European Union.
The conference applauded efforts being made by member countries
climate change negotiators to safeguard the interests of developing
countries, in general, and oil-producing nations, in particular,
and recorded its appreciation of the crucial work carried out by
the secretariat in relation to this very important topic. For more
color on the climate-change topic, we direct readers to the related
report on comments by Saudi Arabias delegation at Durban in the
Compliance Section of this issue of Refinery Tracker. Greg Haas
WORLD REFINERY CAPACITY TO GROW DESPITE RECESSION - HART ENERGY
STUDY
Major global refining capacity expansion projects scheduled for
completion within three-to-five years, totaling 9 million barrels
per day, will add to refining industry distillation capacity
surplus, according to a new World Refining and Fuels Study (WRFS)
2011 report by Hart Energy, released December 12. This growth will
occur despite recession-related drops in demand for finished fuels
and closure of some existing capacity, according to the study. The
capacity surplus narrows when it is defined by refined product
finishing capacity, such as diesel production and desulfurization
capacity for 10-ppm [parts per million] sulfur for gasoline and
distillate fuels. This narrow balance of refining finishing
capacity is what is keeping global refining margins high. Within
India, for example, where export capacity soared in recent years,
there will be continued capacity growth (to nearly 5 million
barrels per day) prior to 2015. Even in low-growth regions of
Europe and North America, major projects initiated prior to the
more recent retraction in demand will soon come on-line (by
2012-13), according to the study. The analysis, which quantifies
both gasoline and diesel demand and trade flow by sulfur category,
concludes that expanding demand for low sulfur diesel will
challenge refining capability and be the primary driver behind
future refined product markets and margins, according to Hart.
Terry Higgins, Hart Energys executive director, refining and
special projects, added that growth in demand, led by developing
regions in Asia, will outstrip these short-term capacity expansions
by 2015-2017. Also, strong growth in Latin American markets,
coupled with limited near term refinery projects, will offer market
opportunity for surplus U.S. refined products. New Brazilian
refineries scheduled for later in the decade (2016-2017) will
supply a much larger portion of the regions needs. The study also
found that: oDeclining Atlantic Basin gasoline demand will lead to
severe competitive pressures in the U.S. East Coast market and
rationalization in East Coast and European refining centers;
oShale-oil development and increasing global condensate production
will provide for near-term improvement in average crude oil
quality; oVery heavy crude production, particularly crude from
Canadian oil sands, will also expand by as much as 4 million
barrels per day, requiring continued expansion of bottoms
processing capacity. For more information on the study findings,
methodology and geographical coverage, Terrence Higgins is
available for comment at 1-703-891-4815
[email protected]
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PetroScan-December 2011
CANADAS PETROLEUM REFINING SECTOR: AN IMPORTANT CONTRIBUTOR
FACING GLOBAL CHALLENGES The Conference Board of Canada, 52
pages, October 2011 Report by Todd A. Crawford This study
researches and presents the economic contribution that Canadas
refining industry currently makes and the challenges it faces. Our
findings suggest that even if oil production continues to grow
strongly in Canada, the future economic benefits, job creation, and
profits from oil refining and processing are much less assured.
Document Highlights Canadas refining industry has undergone a
massive restructuring over the past 30 years. Since the 1970s, the
number of operating refineries has dropped from 40 to just 18
today. While global demand for petroleum products continues to rise
and the outlook for Canadas upstream energy sector is bright,
Canadian refiners face a very particular set of challenges, since
North American and other OECD markets will likely be characterized
by declining demand. The Conference Board of Canada has published a
new report titled, Canadas Petroleum Refining Sector: An Important
Contributor Facing Global Challenges that researches and presents
the economic contribution that Canadas refining industry currently
makes and the challenges it faces. The report findings suggest that
even if oil production continues to grow strongly in Canada, the
future economic benefits, job creation and profits from oil
refining and processing are much less assured. Written by Todd A.
Crawford, the 52-page paper describes that Canadas refining
industry has undergone a massive restructuring over the past 30
years. Since the 1970s, the number of operating refineries has
dropped from 40 to just 18 today. While global demand for petroleum
products continues to rise and the outlook for Canadas upstream
energy sector is bright, Canadian refiners face a very particular
set of challenges, since North American and other Organization for
Economic Cooperation and Development markets will likely be
characterized by declining demand. According to report, Given the
competitive pressures that Canadian refiners face, we build a
hypothetical scenario under the assumption that, going forward,
Canada permanently loses 10 per cent of its refining capacity as
domestic production is replaced by imports. Under that scenario,
real GDP is reduced by a cumulative total of [U.S.]$4 billion,
while 38,300 person-years of employment are lost over the 2011 to
2015 period.
ENERGY DEMAND TO GROW BY MORE THAN 30% FROM 2010 AND 2040
EXXONMOBIL
CEO Rex W. Tillerson, chairman and CEO, ExxonMobil Corp. Photo:
20th World Petroleum Conference Future growth in world energy
demand is a cause for optimism because it will signal economic
recovery and progress, Rex W. Tillerson, chairman and CEO of Exxon
Mobil Corp., said December 6 in Doha, Qatar, where he was
addressing the 20th World Petroleum Congress. ExxonMobil is
forecasting the global economy to more than double in size between
2010 and 2040, and during that time energy demand will grow by more
than 30%. In order to meet that demand, the world needs to invest
in and develop all economically competitive sources of energy.
Projections of significant population growth combined with
expanding trade, new technologies and transformative economic
opportunities will drive economic expansion and rising standards of
living particularly in the developing world.
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PetroScan-December 2011
The energy and economic challenges the world will face in the
decades to come require a business and policy climate that enables
investment, innovation and international cooperation. Sound
policies and government leadership are critical. When governments
perform their roles effectively, the results are extraordinary
bringing enormous benefits in terms of investment, enterprise,
economic growth and job creation. Tillerson said that the key to
unlocking new economic growth was for industry, governments and
society at large to focus on their respective roles and
responsibilities. By understanding our strengths and proper roles
in economic expansion, we can clarify our policy choices, fulfill
our core responsibilities and open up economic opportunities for
decades to come, he said. Government has a responsibility to
provide a stable and fair legal, tax and regulatory framework;
industry needs to invest with discipline to develop energy in a
safe and environmentally responsible way; and the public also has a
role to play, Tillerson said. Citizens and consumers need to
understand the importance of energy, the vital role it plays in
economic and social development, and how sound policy supports
responsible energy development and use, he continued. The debates
and discussions in society at large need to be informed by the
facts and fundamental realities of the challenges before us.
According to Tillerson, the state of Qatar is a prime example of
what can be done when policies are in place to enable investment
and innovation. In just over a decade, Qatar has risen to become
the worlds leading supplier of liquefied natural gas. In the
process, the nation has unleashed its own economic growth,
supported innovation, spurred job creation and strengthened the
energy diversity that allows free markets to maximize the value of
national resources for producers and consumers. Qatar is a beacon
of energy prosperity. Tillerson also noted that the current
economic challenges will not last forever. There is reason for
optimism but it is more important than ever that we swiftly take on
these challenges with a sound and principled response, he said.
History proves that energy policies that are efficient and
market-based are the best path to economic growth and technological
progress.
SLAVNEFT SWITCHING TO EURO-4, EURO-5 FUELS Slavneft-Yanos
announced November 3 that it plans to drop all production of fuels
below Euro-4 (50 parts-per-million [ppm] sulfur) starting January
2102. According to a report from Prime-Tass news service quoting
Slavneft, starting from January, 2012, all fuels produced by
Slavneft-Yanos are to correspond to Euro-4 or Euro-5 [10-ppm
sulfur] standards. In 2012, Slavneft-Yanos is expected to produce
2.44 million tonnes of gasoline under the Euro-4 standard, plus
more than 4 million tonnes of diesel fuel, 2.8 million tonnes of
which are expected to correspond to Euro-5 standards, according to
the report. Slavneft plans to invest over US$1.2 billion into the
modernization of Slavneft-Yanos in 20112014, Slavneft said, adding
that of the total, $310 million is expected to be invested in 2011,
with over $910 million to be invested in 20122014. Slavneft, in
which Russian oil company Gazprom Neft and oil major TNK-BP each
hold a 49.48% stake, invested more than $1.5 billion into the
modernization of Slavneft- Yanos in 20022010, according to the
report.
FIRST MEGAFLOAT OIL STORAGE IN THE WORKS IN SINGAPORE
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PetroScan-December 2011
The first megafloat at Pulau Sebarok a pilot project to store
oil on very large floating structures (VLFS) in Singapore will be
government-led but private sector-run, as part of ongoing efforts
to develop alternative facilities for oil traders in the
land-scarce southeast Asian city-state. According to an October 31
Business Times (Singapore) report, the megafloat will be built and
owned initially by the JTC Corp. but operated by Netherlands-based
Royal Vopak, one of the largest terminal operators in the region.
Under the plan, Vopak will have the option to take over ownership
of the floating storage at a later date. Vopak has apparently
indicated its intent to do so, although company officials were not
available to confirm this, according to the Times. Typically, the
megafloat is a floating structure having at least one length
dimension greater than 60 meters. Horizontally large floating
structures can be from 500 to 5,000 meters in length and 100 to
1000 meters in width, and their thickness can be around 2-10
meters. Royal Vopak is reportedly the logical choice to run the
Sebarok megafloat since the VLFS site is located adjacent to an
existing surface tank farm. Its among four oil and chemical tank
farms which Vopak operates on Jurong Island. Others are located at
the Banyan, Penjuru and Sakra sectors, according to the report.
JTCs lead in the project will help promote floating oil storage
which has no proven track record yet, as far as its commercial
viability is concerned, sources told the Times. It is not unlike
the Jurong Rock Cavern (JRC) project to store oil underground, with
the US$850-million, first phase already being built by JTC. The
project is expected to be completed in the first half of 2013,
according to the report. JRC has already found its first customer
in Jurong Aromatics Corp., which is building a $2.4-billion
petrochemicals complex on the island. According to the Times, JTC
is expected to call a tender for an operator to run the underground
storage facility in coming weeks. The shortage of storage capacity
in Singapore with little land available for building more surface
tank farms has led many international oil traders to resort to
using tank farms sprouting up in neighboring Johor. These include
farms at Tanjung Langsat, Pasir Gudang, Tanjung Bin and Pengerang
and a $1-billion tank farm that Vopak is building with Malaysias at
Pengerang, according to the report. JTC studies on the project
started back in 2007, with the first phase covering a preliminary
conceptual design of an attached-to-land VLFS. This progressed to
phase two covering areas such as environmental impact, marine soil
investigation and sea-current monitoring completed in 2010,
according to the report. SAUDI KAYAN BECOMES THE FIRST PRODUCER OF
POLYCARBONATES IN
THE MIDDLE EAST, AND THE PIONEERING EFFORT OPENS NEW INDUSTRIAL
DEVELOPMENT POSSIBILITIES IN THE REGION
Sabic recently marked a historic milestone in the regions
industrial development when its world-class manufacturing affiliate
Saudi Kayan Petrochemical Company (Saudi Kayan) began production
trials of polycarbonate (PC) at its plant in Jubail Industrial
City. This is the first time that the material is being produced in
the Middle East. Mohamed Al Mady, Sabic vice chairman and CEO,
ceremonially received the first sample of PC produced in Saudi
Kayan at the corporate headquarters in Riyadh. A Saudi Kayan
delegation of senior executives presented the sample to celebrate
the startup of PC in the region, and to express the affiliates
gratitude to Sabics leadership for its unlimited support in
executing the project.
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PetroScan-December 2011
Al Mady congratulated Saudi Kayans management and staff, and
handed over the first-run PC sample to The Sabic Experience, the
permanent exhibit at the headquarters. Al Mady and other senior
Sabic executives have since visited the plant and inspected the
production process. With Saudi Kayan becoming the first and only PC
pellet producer in the Middle East, Sabic has become the largest PC
producer in the global market. Saudi Kayans 260,000 tonnes per year
production capacity makes it the fifth largest PC manufacturer in
the world. Sabics Innovative Plastics SBU which recently announced
the addition of new production lines of its world-renowned Lexan
polycarbonate (PC) resins and films in Shanghai and Nansha, China
has long established its leadership position in the global PC
market. Al Mady says the pioneering effort of Sabic to initiate PC
production in the region will contribute to industrial
diversification in Saudi Arabia and the Middle East, especially in
the field of engineering plastics. Our PC grades are extremely
versatile and our Innovative Plastics SBU and Technology and
Innovation have been very successful in coming up with innovative
new applications for the product. Sabic will continue to explore
product innovation and material substitution opportunities to
ensure continued growth for this important portfolio, he says. The
Saudi Kayan plant is using the most advanced PC manufacturing
technology from renowned Japanese technology licensor, Asahi Kasei
Company. The green technology has won international praise for
effectively recycling and using the greenhouse gas (CO2) produced
during the manufacturing process. The Saudi Kayan PC production is
also cost effective, offering a vast array of competitive
customer-centric PC products for various applications and adding
value to other intermediate chemicals produced at the complex, such
as phenol, bisphenol-A, CO2 and ethylene oxide. According to
general estimates, PC demand is expected to grow at the rate of
five percent per annum. However, several new plants are scheduled
to come on stream over the coming years in different parts of the
world, which raises the possibility of supply growing faster than
demand, resulting in tougher competition among producers. Sabic
Innovative Plastics ...leading the way PC has diverse applications
around the world across multiple industries. The long list of PC
applications includes everything from CDs and DVDs to mobile
phones, medical devices and automobiles. Globally, the biggest
market segments for PC today include CDs and DVDs (estimated to
consume 25 per cent of production), blends (15 per cent), sheet
extrusion products (15 percent), electrical and electronics (10 per
cent) and automotive (8 per cent). It is also finding new
applications in aeronautics, military, safety equipment and food
storage sectors. PC is known for its unique properties such as
durability, strength, high transparency, lightness and high heat
resistance. Mahdi Habab Al Bogami, president of Saudi Kayan, says
the Saudi plant has started producing various grades of high
quality PCs for diverse applications to meet the increasing global
demand. We have started producing polycarbonates of general purpose
(GP), extrusion, resin and optical film (OQ) grades. Initially,
Saudi Kayan PC production will focus on meeting the demand in two
key segments: CDs and DVDs and blends, he says. The uniqueness of
our PC pellets production is that it is free of phosgene and
solvent, and is the greenest PC production technology available, he
adds. Al Bogami says that Saudi Kayan is extremely proud that its
PC plant marks the beginning of an engineering thermoplastics
industry in Saudi Arabia and the region. The PC plant has
already
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PetroScan-December 2011
initiated and implemented measures across process, quality,
production, logistics and marketing fields to ensure product
consistency and highest product standards. Our product mix boasts
flexible grades and are cost-competitive, innovative and customer
application-friendly, he says. In Europe, Sabics PC manufacturing
plants have traditionally exported a significant part of their
output to the Asia Pacific (APAC) region. Saudi Kayans PC startup
is likely to change that pattern with the affiliate exporting much
of its production to the region. Sabics European manufacturing
plants are located at Bergen op Zoom in The Netherlands and
Cartagena in Spain. During the Chinaplas exhibition in May, Sabics
Innovative Plastics SBU announced plans to add new production lines
to the companys worldrenowned Lexan* PC resins and films in
Shanghai and Nansha, China. These additions are part of the
companys strategy to support the dynamic growth of key plastics
sectors in this region, particularly the consumer electronics,
electrical, solar, security and automotive industries. Announcing
the expansion, Sabic stressed that it was building on a powerful
legacy in the plastics industry with Innovative Plastics flagship
PC material. It is continually developing distinctive new Lexan
material solutions to meet evolving technological, environmental,
performance and regulatory challenges. Our nearly 60-year-old
commitment to polycarbonate remains unmatched from a relentless
focus on innovation, to continued investments in global capacity,
to a team of polycarbonate experts including a highly trained sales
force, application development specialists, and process development
engineers around the globe, William Russell, polycarbonate business
leader, Innovative Plastics, said at the time. The size and
diversity of our performancerich Lexan polycarbonate material
portfolio is an excellent case in point, illustrating how we
deliver tailored materials solutions to meet our customers specific
needs. These expansions will enable Innovative Plastics to provide
a stronger, localised supply of Lexan resin and film to meet Asias
accelerating demand of these tough, high-performance and versatile
material technologies. Sabic is adding dedicated compounding
production lines to the Innovative Plastics Lexan PC resin Shanghai
facility in early 2012. This capacity increase will ensure ample,
reliable supplies of Lexan resins and Lexan speciality copolymers
to help drive Asian customer growth. This addition comes on the
heels of a similar Lexan compounding expansion in Nansha in late
2010. Lexan resin is known for its broad, global portfolio and is
produced to meet increasing capacity demand for key industries
including consumer electronics, electrical, solar and automotive.
Lexan speciality copolymers provide extreme high heat resistance,
excellent flow/ductility and virtually unbreakable impact
strength.
OFFSHORES TOP 5 PROJECTS OF 2011 Published: Dec 21, 2011 The
editors of Offshore have made their choices for the winners of the
Five Star Award, the top five offshore field development projects
for 2011. The projects were selected on the basis of best use of
innovation in production method, application of technology, and
resolution of challenges, along with safety, environmental
protection, and project execution. Selecting the winners was no
easy task. The geographic distribution of candidates stretched from
the Americas to Europe, Africa, Asia, and Australia. Technological
innovation was widespread as well. After careful consideration, a
consensus has been reached. In no particular order, the top five
offshore field development projects of 2011 are:
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PetroScan-December 2011
Nord Stream With the completion of Line 1, developers of the EU
7.4-billion ($10-billion) Nord Stream project have realized the
ambitious goal of moving Russian gas to European markets directly
through the Baltic Sea. First announced in 2001, the project calls
for the construction of two parallel 759-mi, 48-in. pipelines that
will move natural gas from Vyborg, Russia, to Lubmin near
Greifswald, Germany. The Nord Stream consortium includes Gazprom,
Wintershall, E.ON Ruhrgas, Gasunie, and GDF SUEZ. Bruce Beaubouef,
managing editor, gives the full details in his report Nord Stream
completes worlds longest subsea pipeline. Pazflor The Pazflor field
offshore Angola boasts a number of firsts. Foremost among them is
that it is the first-ever project to deploy a development plan
based on gas/liquid separation at the mudline spanning several
reservoirs. This technological innovation is what will make it
possible to produce the heavy, viscous oil contained in three of
the four reservoirs in this gigantic development in the Angolan
deep offshore. Pazflor, operated by French oil company Total, lies
150 km (93 mi) off Luanda in water depths ranging from 600 to 1,200
m (1,968 3,937 ft) and has estimated proved and probable reserves
of 590 MMbbl. Eldon Ball, senior editor, technology &
economics, further details the project in Pazflor development
relies on subsea separation system handling four reservoirs. Karan
Saudi Aramcos $8-billion Karan gas field project offshore Saudi
Arabia is the first-ever non-associated gas development in the
country. Currently, five wells are flowing 120 MMcf/d on the way to
a design capacity of 1.8 bcf/d by 2013. The field produces gas via
a 110-km (68-mi) long subsea pipeline to the onshore Khursaniyah
process facility. Plans call for approximately 20 total wells
spread over four production platforms that tie in to a main
platform with associated electrical power, communications, and
remote monitoring and controls. Gene Kliewer, technology editor,
subsea & seismic, provides additional project information
inKaran marks first-ever non-associated gas project offshore Saudi
Arabia. Peregrino The achievement of first oil from the
Statoil-operated Peregrino heavy oil field in Brazil in April
marked a major milestone for the operator. It is the first field to
be brought onstream by the company in Brazil and its largest
operated field outside of Norway. And by bringing Peregrinos 14API
crude to the surface, Statoil provided convincing testimony of its
heavy oil expertise. Nick Terdre, contributing editor, gives the
full details in his report Peregrino producing heavy oil for
Statoil offshore Brazil. Who Dat Discovered in December 2007, the
LLOG Exploration-operated Who Dat field lies in an average water
depth of 3,200 ft (975 m) in Mississippi Canyon blocks 503, 504,
and 547, in the Gulf of Mexico. Three wells two in MC 503 and one
in MC 547 have been completed, with 10 more infill wells to be
drilled and completed in the coming months using the
semisubmersible rig Noble Amos Runner. Notable achievements for the
field development include the first use of the OPTI-EX design; the
first use of an FPU built on spec; and the first use of a privately
owned FPU. Jessica Tippee, assistant editor, provides further
information in her report Who Dat initiates production in GoM in
post-Macondo era.
SAUDI ARABIA'S DIAMOND ERA Saudi Arabia hits oil bonanza in
momentous year
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PetroScan-December 2011
SaudiAramco marks the 75th year of oil exploration with a fresh
initiative to tap more oil and expand its refineries
http://www.oilandgasnewsworldwide.com/pages/article.aspx?aid=24652
SAUDI Arabia celebrates the 75th anniversary of the May 29, 1933,
concession agreement with American company, Socal seeing a record
oil bonanza of $260 billion and an ambitious five-year master-plan
by its flaghip oil company Saudi Aramco to increase its fresh
drilling activity by a third and hike investments levels by 40 per
cent. Oil revenues were at an average of $43 billion per year
throughout the 1990s and amount to nearly $700 million per day. The
lower oil prices in 2009 and 2010 mean that some of the headline
numbers will not look as good, but the underlying picture will
remain very healthy and in real terms economic growth will be
stronger. Rising oil prices are expected to have a positive impact
on the Saudi economy. The current account surplus may touch an
all-time high this year and economic growth and the budget surplus
will also be exceptionally strong. Total exports are now projected
at $290 billion, compared with just $39 billion in 1998. Aramco
will bolster the number of wells drilled around Saudi Arabia to
248, compared with an original target of 187. Investment on
projects will be increased to $13.7 billion from $10.7 billion
under the plan. Much of the increase in drilling activity will be
aimed at sustaining the kingdoms production target of 12.5 million
barrels per day, which it expects to reach by the end of 2009.
However, given Saudi Arabias success in both discovering fresh
finds and redeveloping previously mothballed fields, such as
Manifa, it appears the company may seek to boost capacity beyond
12.5 million bpd. Saudi Oil Minister Ali Al Naimi says that as
long-term oil demand forecasts fell and alternative fuel supplies
increased, there was no need to go beyond next years production
capacity level. Saudi Arabia has previously said it could take its
production capacity up to 15 million bpd. Naimi says the world has
plenty of oil enough reserves today to satisfy demand over the next
50 years and said insufficient investment posed the biggest threat
to meet the worlds rising energy needs. The Saudi Aramco plan also
includes a $4.1 billion commitment to upgrade existing facilities
at the kingdoms landmark Ras Tanura refinery, compared with an
initial investment of $2.39 billion. Aramco recently cancelled a
planned 125,000-bpd refinery upgrade at Ras Tanura, increasing
speculation it is considering a partnership with Saudi Basic
Industries Corporation (Sabic) to integrate the refinery with a
petrochemicals plant. However, the budget for some plans has been
cut. The oil giant has committed $1.45 billion to the Karan gas
facility to hit prod-uction of 1.5 billion cubic feet a day (cf/d)
by 2012. This marks a $50 million drop from its previous budget and
comes despite rapidly rising demand for gas across the region,
which has provoked concerns over a potential shortage of supply for
industrial users and power plants. In Saudi Arabia alone, natural
gas demand is expected to reach 14.5 billion cf/d by 2030, compared
with the current 5.5 billion cf/d. The national oil company will
spend $2.58 billion on offshore maintenance and new drilling,
compared with $2.25 billion previously, marking a new emphasis on
the kingdoms offshore fields. Much of Aramcos offshore development
has focused on the Safaniyah, Marjan, Berri and Zuluf fields, but
further devel-opment is needed, mostly to provide relief to the
ageing Ghawar field, the worlds largest onshore field. Aramco has
devoted $1.15 billion for maintenance of Safaniyah, the largest
offshore oil field in the world, which boasts production of about
1.7 million bpd. It includes the installation of 67 kilometres of
crude transmission lines, along with a substation and an offshore
sub-sea cable.
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PetroScan-December 2011
Other parts of the five-year programme include a $3 billion
investment to cover maintenance work and drilling on Aramcos
onshore fields, compared with a previous estimate of $2.2
billion.
KUWAIT PETROLEUM CORPORATION - PLAYING A CRUCIAL ROLE IN ECONOMY
Sheikh Ahmad Al Fahad Al Sabah, Minister of Energy and Chairman of
KPC's board of directors, highlights the key initiatives of
Kuwait's oil sector. Sheikh Ahmad Al Fahad Al Sabah, Minister of
Energy and Chairman of Kuwait Petroleum Corporation's (KPC) board
of directors, broadly surveys the strategic directions of the oil
sector in an interview. He optimistically enthused that the
corporation is going through one of its best phases, which promises
overall prosperity and development. He believes that the
corporation forms the backbone of Kuwait's economy, thus it has an
immense responsibility to enhance its performance in all realms so
as to become an effective contributor to Kuwait's prosperity. Q. In
your opinion, what role does the corporation play in enhancing the
national economy? The corporation plays a crucial role in
supporting and stimulating the national economy. One of the most
important ways it does this is to endeavour to provide good
investment opportunities for the private sector in the oil industry
by the following means: 1 Privatising some of the corporation's
activities: Recently, the corporation conducted several studies on
the privatisation of its activities and 'the possibility of
involving the private sector with the Corporation's subsidiary
companies in whole or in part'. Currently, we are waiting for the
required approvals of the outcomes and recommendations of these
studies, so that we may proceed with their implementation.
Meanwhile, the corporation is taking the required executive steps
to privatise the oil blending and local marketing activities. The
oil blending activity has peen sold to a private sector company
while the first Local Fuel Marketing Company has been established
and has offered 76 per cent of its shares for public subscription.
In addition, steps have been taken to transfer the whole of the
calciner coke project to the private sector. The project tender has
been awarded to the Al Mal Group for production of calciner coke. 2
Promoting the participation of the private sector in the
corporation's operations: The private sector now participates in
the Kuwaiti Petrochemicals Compound, and many steps have been taken
to give the private sector a certain share in future petrochemical
projects (such as Olefins and Aromatics), and in construction of
the proposed new refinery. 3 Relying on the private sector in the
contracting and engineering works and in the support services. 4
Encouraging the private sector to exploit the output of the
corporation's activities for the creation of a subsequent
transformational industry. Q. How do you forecast the corporation's
future in light of the increasing world demand for oil? The
increasing world demand for crude oil creates several challenges
for the corporation; the major one facing us today being to
increase production to meet this demand. This will be achieved by
developing exploration, development and production work in Kuwait
so as to increase reserves and raise extraction rates, by
finalising capital projects such as the crude exportation
facilities construction project and by increasing exploration,
development and production of non-accompanying gas, so that this
gas can be substituted for oil in energy production. Q. What future
plans and projects would you like to carry out? The corporation and
its subsidiaries have defined the strategic goals, which the
Kuwaiti oil sector aims to realise in the future. The capital costs
for the realisation of such goals have been estimated at KD16.2
billion over the coming 20 years.
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PetroScan-December 2011
Reaching a production level of three million barrels of crude
oil per day by the year 2005, and four million barrels per day
(bpd) by 2020 is one of the major objectives. To achieve this,
several projects will be implemented, some of which have already
been identified and will be implemented during the coming five
years as follows: 1 Construction of new crude exportation
facilities in the Northern and Southern tank farms and at Mina Al
Ahmadi and tanker fuel
IRAN THREATENS TO STOP GULF OIL IF SANCTIONS WIDENED TEHRAN:
Iran threatened to stop the flow of oil through the Strait of
Hormuz if foreign sanctions were imposed on its crude exports over
its nuclear ambitions, a move that could trigger military conflict
with economies dependent on Gulf oil. Western tensions with Iran
have increased since a November 8 report by the UN nuclear watchdog
saying Tehran appears to have worked on designing an atomic bomb
and may still be pursuing research to that end. Iran strongly
denies this and says it is developing nuclear energy for peaceful
purposes. Iran has defiantly expanded nuclear activity despite four
rounds of UN sanctions meted out since 2006 over its refusal to
suspend sensitive uranium enrichment and open up to UN nuclear
inspectors and investigators. Many diplomats and analysts believe
only sanctions targeting Irans oil sector might be painful enough
to make it change course, but Russia and China big trade partners
of Tehran have blocked such a move at the UN. Irans warning came
three weeks after EU foreign ministers decided to tighten sanctions
over the UN watchdog report and laid out plans for a possible
embargo of oil from the worlds No 5 crude exporter. If they (the
West) impose sanctions on Irans oil exports, then even one drop of
oil cannot flow from the Strait of Hormuz, the official Iranian
news agency Irna quoted Irans First Vice President Mohammad Reza
Rahimi as saying. The US State Department said it saw an element of
bluster in the threat but underscored that the US would support the
free flow of oil. Its another attempt to distract attention away
from the real issue, which is their continued non-compliance with
their international nuclear obligations, spokesman Mark Toner
said.
PRIME THE PUMP AND BAILOUT THE BRENT Phil Flynn Oh sure, now you
go and bail out Europe and drive the Brent Crude versus West Texas
Intermediate spread back above $25 wide! Brent crude gets pumped up
as global central bank pumps dollar liquidity in to European banks.
The reduced risk of bank default and kicking the Greece default can
further down the road had the Brent crude supply demand
fundamentals tightened in a minute. The decision of the five
largest central banks to dump dollars into European banks added to
the support for oil but created fears of a tightness of supply in
the Brent. Weak production from the North Sea and conflicting
reports on the return of Libyan crude seems to be adding to the
Brent woes. There is some short term confidence coming out of the
Euro zone and this will increase demand or at least expectations of
demand almost instantly. The spread between Brent crude and West
Texas had previously come in, especially after U.S. commercial
crude oil inventories (excluding those in the Strategic Petroleum
reserve) fell by 6.7 million barrels which put US supply at 346.4
million barrels which is still well above the five year average.
Robert Campbell of Reuters News says writes, "Looking back at the
impact of the Libyan civil war on the oil market the most
remarkable fact is that the situation did not lead to an oil
super-spike. After all, a scramble for sweet crude in 2007 is
widely seen as the trigger for the spiral in oil prices until they
hit nearly $150 a barrel. Although the data are still coming in, it
would appear that the
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PetroScan-December 2011
Atlantic basin refining sector is now more flexible, in part due
to weaker demand and in part due to investments in new capacity.
Sweet refiners may be suffering because of high crude costs, but
the system as a whole is not breaking down." He goes on to say,
"The resilience of the market is all the more impressive once the
other supply disruptions to the European short-haul sweet crude
market are considered. Normal decline of the aging fields in the
North Sea is well known, as is the extraordinary sequence of
problems at several important production facilities in the area.
Less discussed is the reduction in crude oil production in
Azerbaijan, an important supplier of very-low sulfur crude.
Combined with the conflict in Libya a huge amount of sweet crude
oil production was lost to European refiners, many of which rely on
short-haul cargoes. In the first half of the year sweet crude
output from Azerbaijan, Britain, Libya and Norway was 215 million
barrels less than in 2010. With this number in mind, the response
of the International Energy Agency to the crisis --a release of 60
million barrels of strategic stocks-- seems almost timid.
Doubtless, the IEA would argue that the problems in Azerbaijan,
Britain and Norway were not the classic supply disruptions the
agency is meant to guard against." Mr. Campbell makes some great
points and also provides justification for this year's earlier
release of oil from the International Energy Agencies strategic
reserves. That was a move that was criticized by many but now looks
lke it was important to stop a super spike! We still feel the low
for WTI oil is in for the year! Time to call me and open your
account and get a trial to my daily trade levels. What are you
waiting for? Just call me - Phil Flynn - at 800-935-6487 or email
me at [email protected]. Get the "Power to Prosper" by tuning into
the Fox Business Network where you can see me every day!
SEPT-QTR GDP GROWTH SEEN SLOWEST IN OVER 2 YEARS Mon, Nov 28
2011 REUTERS FORECAST - The Indian economy probably grew an annual
6.9 percent in the quarter through September, at its weakest pace
in more than two years, the median forecast from a poll of 22
economists showed. Gross domestic product (GDP) growth in Asia's
third-largest economy slipped from 7.7 percent clocked in the
previous quarter, dragged down by the central bank's 13 interest
rate increases in the past 18 months to contain near double-digit
inflation and faltering global growth. The forecasts ranged from
5.6 percent to 7.5 percent. The last time the economy grew at sub-7
percent was in the quarter through June 2009, when western
economies were stepping out of the global financial crisis of 2008.
FACTORS TO WATCH * India's industrial output grew by a meagre 1.9
percent in September from a year earlier, the slowest pace in two
years. * The Indian services sector contracted at its fastest pace
in over two years during October, knocked by a slump in global
demand and tight monetary policy. * The partially convertible rupee
hit a record low of 52.73 against the U.S. dollar on Nov. 22, as
investors fled risky assets and its recent weakness is expected to
spike India's import bill and in turn, push up prices. * The
Reserve Bank of India may hold rates in its December policy review
as growth risks from a slowing economy and a fragile global
economic environment take centre stage. It had said in the October
review that further rate increases may not be needed, if inflation
starts to ease from December.
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PetroScan-December 2011
* Indian exports in October probably slowed to just over 10
percent from a high of 82 percent in July, reflecting risks to
growth coming from the euro zone beset with sovereign debt woes.
MARKET IMPACT * Government bond yields are likely to ease if GDP
growth slips below 7 percent, traders said, adding the new
benchmark 10-year bond yield could trade in a 8.70-8.75 percent
range. * The short-term overnight indexed swaps (OIS) rates are
also likely to fall, and the one-year rate is seen trading around 8
percent, traders said. * If the number comes around 7 percent or a
tad higher, the markets are likely to shrug it off, traders said.
(Reporting by Deepti Govind; polling by Bangalore polling unit;
editing by Malini Menon)
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PetroScan-December 2011
NEWS LOCAL
INDIAN OIL CORP TOPS FORTUNE INDIA 500 LIST; RIL AT SECOND
SPOT
Published: Monday, Dec 12, 2011, 19:37 IST :: Place: New Delhi |
Agency: PTI : State-run Indian Oil Corp has emerged as the
country's biggest company in terms of annual revenue, followed by
Mukesh Ambani-led private sector giant Reliance Industries at the
second place, as per an annual list of Fortune 500 companies in
India. This year's list of the country's 500 largest corporations,
compiled by the global business magazine Fortune's Indian edition,
features as many as 57 new entities. All the 500 firms together
recorded a collective turnover of Rs45,79,911.38 crore in the
latest financial year. Indian Oil Corp (IOC) was the biggest with
annual revenue of Rs3,23,113.12 crore, followed by Reliance
Industries (RIL) with a full-year revenue of Rs2,72,923.36 crore.
Both IOC and RIL have retained their top-two ranks from the
previous year, Fortune India said. In this year's list, the two are
followed by Bharat Petroleum (Rs1,56,580.12 crore) at the third and
State Bank of India (Rs1,47,843.92 crore) at the fourth place.
Other entities in the list are Hindustan Petroleum (5th rank), Tata
Motors (6), Oil & Natural Gas Corp (7), Tata Steel (8),
Hindalco Industries (9) and Coal India (10).There are as many as
six state-run companies in the top-ten positions, as against four
from the private sector. The magazine said that the total sales of
the country's 500 top corporations have grown by 21.5% from the
last year, while their median growth has been even higher at about
25%. "The good news, however, is that many of the Fortune India 500
companies are now beginning to shape the world's opinion of India
for the better. And they may just be doing a better job than their
Chinese counterparts," it added. However, Fortune India said, some
hint of impending trouble can be seen in profit growth, which has
fallen from 27.1% last year to 21.6% this year."For most of the
Fortune India 500 companies, erosion in profitability has been
severe. This is evident from a low 6.4%profit growth for a
median-sized Fortune India 500 company. "These could be early
signals of a deterioration in financial ratios, with all sizes of
companies reporting a slower growth in their networth and asset
creation," Fortune India said about the list. Companies have been
ranked by their latest annual audited total income for the
financial year ending on or before June 30, 2011.For the ranking,
audited results declared before October 31, 2011, have been used.
Other companies in the list include ICICI Bank (12th spot), Bharti
Airtel (13), Essar Oil (15), Bharat Heavy Electricals Ltd (17),
Infosys (27), Reliance Communications (35) and Tata Power (40).
VEDANTA COMPLETES CAIRN INDIA DEAL Published on Thu, Dec 08,
2011 at 15:56 | Source : Reuters Vedanta Resources Plc completed
its long-delayed USD 8.7 billion purchase of a majority stake in
Cairn Energy Plc's Indian unit, more than a year after the deal was
first announced, in a move that turns India-focused Vedanta into a
diversified resources group. London-listed Vedanta now holds 58.5%
of Cairn India , it said on Thursday, of which 20% is held through
its Sesa Goa unit. Cairn Energy, which will retain a 22% stake in
Cairn India, confirmed it would return around USD 3.5 billion to
shareholders. Cairn Energy agreed in August last year to sell a
majority stake in Cairn India to Vedanta. But the sale, one of the
largest in India's energy sector, was delayed for months due to a
disagreement over royalty payments.
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PetroScan-December 2011
"Today marks a key milestone for Vedanta as it puts to bed a
deal drawn out for well over a year that has contributed to
underperformance on fears of deal terms uncertainty and balance
sheet stress," analysts at Liberum said in a note. "Oil has been a
solid performer over the course of 2011 ... we see the Cairn India
inclusion as the key factor in repairing Vedanta's balance sheet
and boosting bottom-line performance."
ONGC TO SUPPORT IN DOUBLING CAIRN'S CAPACITY: ANIL AGARWAL
Published on Thu, Dec 08, 2011 Moneycontrol.com Anil Agarwal,
Chairman of Vedanta Group is breathing a sigh of relief after16
months labour. Vedanta today finally acquired a controlling stake
inCairn India , 16 months after announcing this proposed
transaction. In an interview to CNBC-TV18, Agarwal said that the
group is going gung ho on Cairn and has all infrastructure to
double its production. He, however, points out the group has to
complete certain government formalities before ramp-up. On a very
confident note, Agarwal says, " ONGC is going to fully support us
in doubling capacity." Cairn energy, which had in July sold a 10%
stake in Cairn India to Vedanta for about USD 1.4 billion, got
another USD 4.1 billion from the sale of the remaining 30%. Vedanta
group now holds nearly 60% in Cairn India and Cairn Energy has
retained 22%. The Vedanta group funded 50% of this USD 8.67 bn deal
via debt and remaining 50% from its own resources. Here is an
edited transcript of his interview with CNBC-TV18s Shereen Bhan.
Also watch the accompanying video. Q: Its been over a year that you
have been labouring to get this deal done. You finally got this
done. How relieved are you feeling today? A: I am feeling great. I
was always confident that this is going to go through. This is a
question of energy security of our country. We only produce 14% of
our oil. Even China produces 50%. I am looking forward to double
Cairns capacity and making it a very important for the oil and gas
area to make more discoveries. Q: You talked about doubling the
capacity at Cairn India and this has been a long-standing issue. It
was held back on account of differences with your partner ONGC, all
sorts of other clearance issue and regulatory approvals. Now that
everything seems to really have been put behind you, how soon do
you believe you are going to be able to hike production at Cairn?
A: Very soon. We have the entire infrastructure. We have certain
formalities to complete. Of course we have to take the permission
of the government and which we are working on it. ONGC is going to
fully support and we will start as soon as all the clearances. Q:
So, what is the initial estimate? By when do you actually believe
you are going to be physically hike the production and by how much?
A: We believe that we can go up to 240 thousand barrel probably in
2012-2013. Q: Now going to be a net debt company and atleast you
will be net debt company for the next two to three years. So far
that hasnt been the case. Is there any plan to raise equity at the
Vedanta level? A: Not at all, we are gearing below 40% which is
very comfortable. We have enough dividends down the line in the
company to throw the dividend to service all our debt. Out of the
total, we have put 50% of our own money to acquire Cairn and the
rest is funded through debt. W are very comfortable about it and
have no plan to raise equity.
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PetroScan-December 2011
Q: You have no plans to raise equity, but you also talked about
dividend. Cairn India has not had a history of paying any dividend.
Is that going to change now with you being the new owner. Are we
actually going to see a dividend policy by Cairn? A: Absolutely,
you said it. There will be a dividend policy, which the Cairn India
management will put through the board because there was no
production.. They have very good cash flow and surplus and they
will be proposing for the dividend in coming year. Petronet LNG
Output FY 12 at 11m tonne; may rise in FY13: Published on Fri, Dec
09, 2011 Moneycontrol.com RK Garg, director of finance at Petronet
LNG tells CNBC-TV18 that he is happy with the deal that LNG has got
with GDF (GAZ de France) at 13-14% of crude price. Supply is likely
to start in 2012, he says. Garg sees spot prices softening for
crude. Below is the edited transcript of the interview. Also watch
the accompanying video. Q: There are some rumors in the market that
the Petroleum and Natural Gas Regulatory Board (PNGRB) has actually
initiated discussions to put a control on marketing margins. Have
you heard anything in this regard? A: No, I dont think so. As per
the adjusting regulation of PNGRB, they have the right to register
the RLNG terminal, but as far as the regulation of that part is not
there, it is not happening. We had neither received any
communication nor has there been any information with us that there
is anything happening on that account. Q: What would your marketing
margin be? A: Basically, we are doing the regasification for
long-term cargo, and the regasification charge is a likely charge
as per the contract. In addition to that, when we bring away spot
cargos, those spot cargos depend on a particular market situation,
and accordingly, small marketing margins are added. Since we take a
call at that particular time based on risk at that time, these are
not very big margins. However, since there is a spot deal, and
depending upon where we are buying and where we sell, we have small
margin on that. Q: Whats your sense on pricing? You recently signed
a deal with GAZ de France (GDF) at 13-14% of crude. The recent deal
at Taiwan and Qatargas happened at 15%. You have had a lot of spot
cargos selling at 17 per mmbtu. What do you think is the pricing
trajectory for LNG? A: There are different markets for different
kind of cargo. If you are buying spot cargo, the spot prices are
applicable at that particular point of time, and when we deal for a
short-term cargo, like you have mentioned for GDF, yes, of course
we had a good deal. Supply will be coming in 2012; its a very good
deal in this current market. Yes, of course, these LNG suppliers
are looking for prices linked with crude, and those are ranging
between 14-15%. So there are different prices, but we have seen
over the last few days that the spot market is softening up. We are
hopeful that maybe we will be able to get some better deal in
future. Q: What kind of volumes are you expecting to do in second
half of FY12, but more importantly FY13? A: We are operating
currently in more than 100% of capacity. In fact, last November, we
even touched 105-108%. There is a limitation up to which we can
stretch ourselves and we cant go beyond this. Yes, we are bringing
our second LNG jetty, which is likely to be commissioned sometime
in October 2013, then there is a possibility that we will increase
our output from our existing terminal probably by 12-12.5 million
tonne. Currently, we cant go beyond 11 million tonne. Q: Whats your
expectation on total volumes in the 3rd quarter? How may spot
cargos have you already done and would you be looking at a capacity
utilization of somewhere around 110% this time?
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PetroScan-December 2011
A: We will be definitely doing the capacity at the same level as
we have done in the first half. I think we will operate at this
level, maybe a little bit better. The market is good and we have
already tied up the cargos for the next half year. As far as
capacity is concerned, if our input and the output remain quite
constant, then we can do better, but the market conditions actually
work differently. We are hopeful that we will be able to manage our
output very close to what we have done in the first half and better
hopefully. Q: You are sitting on a decent amount of cash. Will you
want to lower debt or for that matter plan more expansions? A:
Actually, we have lowered the debt. We have done early repayment of
Rs 500 crore to our inland lender last month. Yes, of course there
is a possibility. Q: So whats the debt now? A: Our debts are quite
low. The Debt-equity ratio is more or less 1:1. So we are very
comfortable. Q: Any word on the possibly the Gaz-prom deal? Any
deals in the works that you would be signing soon? A: Yes, we are
discussing. Actually, a long-term deal generally takes a longer
time, and the Gaz-prom in any case, they are going to supply from
their new facility which they are creating. So supply would
commence sometime in 2016-2017, so we have plenty of time. This
Memorandum of Understanding (MOU) was signed nearly six months ago
and now we are in discussion with them with respect to specific
terms and conditions, so matter is moving positively. And of
course, we will continue to raise certain rates as the market would
need more gas and we are ready with our capacity. INDIA'S PETRONET
TO COMPLETE DAHEJ LNG TERMINAL EXPANSION TO 15
MIL MT/YEAR BY DEC 2015 Mumbai (Platts)--14Dec2011/150 am
EST/650 GMT India's Petronet LNG has received approval from its
board to raise the capacity of its LNG import and regasification
terminal at Dahej to 15 million mt/year and expects to complete the
expansion by December 2015, R.K. Garg, the company's finance
director said Tuesday. Work on the expansion has begun, though
formal approval from the board came through just on Monday. The
Dahej terminal in the state of Gujarat, west coast of India, has
been consistently operating above its nameplate capacity of 10
million mt/year with the utilization rate averaging 105-108% over
the last two quarters. Global demand for LNG continues to be strong
and two buyers -- utilities GAIL and Gujarat State Petroleum Corp.
-- have committed to take part of the increased supply from the
Dahej terminal following the expansion, Garg said, without
providing further details. The terminal's nameplate capacity is
likely to increase to 12.5 million mt/year by October 2013, when it
commissions its second jetty, Garg said. Petronet will also add two
storage tanks at the terminal with completion expected by December
2015, he added. The cost of expansion is estimated at Rupees 30
billion ($565 million) and the company plans to raise around Rupees
21 billion through domestic or overseas debt just before it awards
the engineering, procurement and construction contracts, Garg
said.
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PetroScan-December 2011
Petronet LNG is also working on setting up a 5 million mt/year
LNG terminal on the east coast and is likely to finalize a location
by the end of January 2012, he said. Meanwhile, it is in the
process of setting up a 5 million mt/year greenfield LNG terminal
at Kochi, on the west coast, likely to be commissioned by the
fourth quarter of 2012. The company is also looking for a minority
stake in LNG and natural gas companies overseas, including the US,
mainly to ensure LNG supply, Garg added. "Our main objective is to
get committed LNG supplies. But these plans are not at a stage
right now to be discussed," he said. The major shareholders in
Petronet are state-owned GAIL, Oil and Natural Gas Corp., Indian
Oil Corp. and Bharat Petroleum Corp., each with 12.5% equity.
France's GDF holds a 10% stake and the Asian Development Bank
5.25%, with the public holding the remaining 34.8%. --M.C.
Vaijayanthi, [email protected] Similar stories appear in Oilgram
News. See more information
athttp://www.platts.com/Products/oilgramnews
INDIAS TOP ECONOMIC ADVISER: DIESEL DECONTROL WOULD CURB
INFLATION
Indias chief economic advisor Kaushi Basu announced November 4
that the government ought to decontrol diesel prices in order to
cut government fiscal deficits and (as a consequence) suppress
inflationary pressures. I personally believe that we should
decontrol diesel prices, which will take some pressure off the
fiscal burden. And in the long run, it will cause inflation to go
down, Basu said in an interview with Express India. The government
needs to explain to voters that if we subsidize diesel
artificially, by running up a large fiscal deficit, that would also
exert an upward pressure on prices, he added. In September, Indias
inflation was measured at 9.72%, according to the report. Indias
oil companies raised gasoline prices last week, as allowed by
government policy, but the government still doesnt allow price
freedom on diesel, kerosene on liquefied petroleum gas (LPG).
Earlier this month, Petroleum Minister S Jaipal Reddy has sought a
meeting of the Empowered Group of Ministers (EGOM) to devise ways
to cut the mounting losses to oil [refining and marketing]
companies due to the pricing of diesel, domestic LPG and kerosene
as oil companies. Prices of the cooking fuel and diesel were last
revised in June, according to the report. Basu, who also heads a
Prime Minister-appointed panel on inflation, said deregulating
diesel prices will make India a more responsible country
environmentally, because then we will not encourage
over-consumption of diesel vis--vis other more environment-friendly
energy substitutes, according to the report.
HOME GROWN INDIGENOUS INNOVATIONS Sujit John, Times of India|
Nov 29, 2011 He learnt from his father early on that many
challenging intellectual tasks could be accomplished by people who
do not have major academic degrees. So in 1990, after an MA in
economics from JNU in New Delhi and an MBA from Wharton, when Aroon
Raman wanted to start an R&D unit in
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PetroScan-December 2011
Mysore, he turned to very ordinary people. Youngsters from the
villages around Mysore who had only completed standard 10 or 12, or
had a diploma. Today, Raman runs a Rs 25-crore business that does
materials and composites research, and manufactures materials for
companies like ABB, Rane, Exide, Amco, and for institutions like
the Defence Research & Development Organization (DRDO). "They
have become masters in the manipulation of materials," Raman says
of the youngsters he hired. "They may not be masters in theoretical
chemistry. But they do experiments that run into hundreds. A smart
youngster doing experimental work for years and years picks up a
fantastic feel of the interrelationships between compounds. So, he
has an instinctive feel of what is required to solve a problem.
People always think of an R&D unit as white-coated folks with
PhDs, but that doesn't have to be." Today, his head of R&D, G K
Natesh, is someone from Udipi with a polytechnic diploma in
plastics and rubber. Krishnachari, who joined Raman early, was a
carpenter in Nanjangud near Mysore. His used to make crates. Raman
saw that the way he sawed, he used the minimum amount of wood.
"That was application of thought. His ability to envisage how a
crate would look was high." So Raman picked him and trained him. He
started with drawings, later did tooling, and over the years
Krishnachari has been key to the development of many value added
products. "Among my other top people are Girish and Krishna, both
of who have passed no more than class 12. They are in their mid-30s
now and they have filed four patents between them this year." Raman
looks for locals with a sense of curiosity, high IQ and native
intelligence. Some youngsters grasp very quickly, others take time.
Raman picks the exceptionally bright ones. And this strategy keeps
costs and attrition low. "If we hired PhDs, we wouldn't be able to
retain them. A GE or Akzo Nobel or Dupont could come and take them.
Or they would go for post-doctorals. Since my boys are from local
villages, their parents are around, and they have no incentive to
move. But I send them to events in places like Mumbai to open their
eyes to bigger things." Raman's firm Raman FibreScience has
multiple capabilities in the area called wet-laid composites.
Normal papers, tissue paper, cardboard are all made by a wet-laid
process. In wet lay, you take a fibre, mix it with water and
additives, and run it through a mesh-like conveyor belt. When the
slurry moves along the mesh, the water runs off, and you are left
with a wet mass on the belt, which is then dried, and made into the
final product. You can also wet-lay glass, carbon fibre and organic
fibres. When you do that and combine them with performance
additives, you can get very special products, such as high-end
filtration solutions. These can give you very pure air or be used
for blood filtration, or in a nuclear power station that requires
air filters that must trap very fine particles, including bacterial
content. Raman's firm grew out of his conviction that there is
scope for a full-service independent R&D unit, a rarity in
India. Most Indian companies do their R&D in-house,
occasionally approaching universities for help. Indian research
institutions like CSIR typically do not have the ability to
commercialize their research. "I can make a material in a lab, but
how do I start making it in tonnes, at a cost that the market will
accept? For that, you need to build special purpose machines, you
need a host of skills, engineering skills, plant development
skills, process skills, costing ability." Raman FibreScience
combines these skills. The company has had particular success with
a unique separator (filter) developed for backup power batteries.
"We developed the separator in 2-3 years; a global company like
Nippon Sheet Glass still does not have such a product. For us it is
innovate
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PetroScan-December 2011
or die. We don't have deep pockets, so we have to be on our
toes. For Nippon, they are so big, even if they do not innovate,
they think they will survive," Raman says.
VEDANTA APPOINTS 3 DIRECTORS ON CAIRN INDIA BOARD Close on the
heels of completing acquisition of Cairn India, London-based mining
group Vedanta has appointed three nominees, including its vice
chairman Navin Agarwal and Priya Agarwal, on the company board.
Billionaire Anil Agarwal, Chairman of Vedanta Group, has decided to
stay away from Cairn India and has in stead put his brother Navin
as the head of the company. His close confidant Tarun Jain and
daughter Priya Agarwal will be the other nominees on the company
board, Cairn India informed the stock exchanges today. "This is to
inform you that post the sale of majority shareholding by Cairn UK
Holdings Limited to the Vedanta Group, the Vedanta Group Companies,
i.e. Twin Star Mauritius Holdings Limited, Sesa Goa Limited and
Sesa Resources Limited are the new Promoters of the Company," Cairn
India said in a regulatory filing to the stock exchanges.
"Consequent to this change, the Board of Directors has today
appointed Navin Agarwal, Tarun Jain and Priya Agarwal, as
Additional Directors on the Board of Cairn India Limited. Navin
Agarwal has also been appointed as the Chairman of the Board," it
said. Bill Gammell, Chairman of Cairn Energy plc, which sold 40% of
its stake to Vedanta Group, has resigned as Chairman of Cairn
India. Jann Brown, the other nominee Director of Cairn UK Holdings
Limited, too has quit. Cairn Energy, which still holds 22% stake in
Cairn India, will not have any representative on the company board.
"All the existing independent Directors and Rahul Dhir, Managing
Director & CEO will continue to be Directors of the Company,"
Cairn India said. The four independent directors on Cairn India
board -- Omkar Goswami, Ed Story, Aman Mehta and Naresh Chandra --
will continue on Cairn India board.
RAIDING PSU RESERVES UNSUSTAINABLE WAY OF PLUGGING BUDGET
DEFICITS
The fiscal deficit looks like widening by at least one
percentage point above the budgeted 4.6% of GDP. Economic growth
could slow down next year. Meanwhile the government has ambitious
but expensive new schemes in mind, for food security and universal
health. So, many analysts want the government to take advantage of
tens of thousands of crores lying in the reserves of public sector
undertakings (PSUs). When a private sector owner is in trouble,
without a second thought he transfers sums from profitable
companies to meet his current spending. Many analysts think the
government should do the same. However, such transfers are one-off
affairs and cannot be sustained over time. They can be justified in
difficult times, but should not become a habit. Spectrum sales have
in the past been taken to be current revenue, whereas they should
actually be shown in the capital account as a reduction of assets.
In the case of manufacturing PSUs, their cash surpluses are not
large in relation to their investment plans, and these should not
be commandeered by the government. But many PSUs in mineral
extraction have large, rising surpluses well in excess of
investment needs. It makes sense to save part of this for future
generations by investing abroad (as ONGC, Coal India and OIL have
been doing) and spending part of it for current social purposes via
the
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PetroScan-December 2011
budget. We need a policy on how to apportion that bonanza. There
are three ways in which PSU reserves can be transferred to the
government. One is the declaration of huge special dividends. The
second is a buy-back of shares by the PSU. The third is for PSU to
use their surpluses to buy out minor stakes of the government in
other PSUs. A special dividend will benefit all shareholders. A
buy-back could in theory be restricted to buying back government
stakes and not publicly-held stakes, but that would be unethical
and Sebi should say no. The third route also cuts out private
shareholders and should be avoided altogether. Better than all
these will be quick enactment of a goods and services tax, which
can bring in additional revenue and plug the fiscal deficit
sustainably.
CRUDE, RUPEE DOUBLE WHAMMY HITS OIL COMPANIES Murali Gopalan
...from the pages of HINUD BUSINESS LINE newspaper. The fear within
oil industry circles is that if the status quo persists over the
next six months, there will be serious liquidity issues which could
affect daily operations. Mumbai, Dec. 14: Oil companies are wilting
under the double whammy of the weakening rupee and high crude
prices. It is just not the losses on sale of subsidised fuels which
are an area of concern. Combined borrowings of IndianOil, Bharat
Petroleum Corporation and Hindustan Petroleum Corporation are
rapidly inching towards Rs 140,000 crore. At this rate, they could
even touch Rs 160,000 crore by the end of this fiscal. What is
especially worrying is the complete sense of inaction by the
Government. With Parliament in a permanent state of disarray, we
are expected to fend for ourselves in these difficult times, an oil
sector official told Business Line. Things have come to such a head
that the companies are believed to be in no mood to comply with
advance tax payments or the mandatory interim dividend to the
Government, their owner and majority shareholder. How can we
possibly be expected to cough up money when there are no profits to
show? the official asked. The fear within oil industry circles is
that if the status quo persists over the next six months, there
will be serious liquidity issues which could affect daily
operations. In the process, bigger and more critical investments
relating to infrastructure will be put on hold. This is happening
at a time when the estimated spend of IOC, BPCL and HPCL over the
next four years is nearly Rs 200,000 crore. The other concern for
the refining trio relates to policymaking, which has literally
screeched to a complete halt. Nobody within the Government has a
clue on what to do at a time when the oil companies are facing
their worst-ever crisis in recent times. All we can do is to borrow
more and more because we have no idea if we will get any
compensation for losses incurred. The interest burden is gradually
killing us in the process, an executive said. In contrast, 2008-09
almost seems sedate though this period is better remembered as the
worst year for the oil industry when crude touched $147 a barrel.
The rupee was not in the best of health either except that this
state of affairs did not last too long. During the latter part of
the year, crude prices started falling and the rupee settled to a
more comfortable mid-40s (to the dollar) level. Crude prices
However, this time around, crude prices have been constantly over
the $100/bbl-mark and there is nothing to suggest that they will
fall