24 June 2010;dailypioneer.com:Sanghita Roychoudhury:Mumbai: As a strategic initiative to curb the misuse of heavily subsidised 14.2 kg domestic cylinder for commercial purposes, Indian Oil has decided to launch a 5 kg commercial LPG cylinder in and around Chennai. As confirmed to The Pioneer by an IOC official, the launch of 5 kg commercial cylinders will take place within a month’s time. Small commercial establishments like tea stalls, dhabas and roadside eateries, currently use the subsidised 14.2 kg domestic cylinder for commercial purposes as they found the 19 kg commercial cylinder prices exorbitant. Currently market prices for the 19 kg commercial cylinder works out to around Rs 60 per kg. In order to maintain parity in pricing across all SKUs, cost of 5 kg commercial LPG cylinder is expected to be approximately Rs 300 each, thereby lowering the ticket size for these users. In contrast LPG Cylinders for domestic usage are heavily subsidized and are normally pegged at Rs 22 per kg vis-a vis Rs 60 per kg per for commercial cylinder. The huge price difference between the two categories of cylinders, at times, leads to the misuse of domestic cylinders by the small commercial establishments. Post Chennai launch, Indian Oil plans to roll out the 5 kg commercial LPG cylinder across India in 9 other cities.
24 June 2010;timesofindia.indiatimes.com:Sanjay Dutta:NEW DELHI: The government appears to have resolved to lift its control on petrol pricing but may stagger the Rs 3.73 a litre rise in street prices that the move will entail. It also wants to raise diesel price by up to Rs 2 a litre but is being weighed down by concerns over stoking headline inflation which has already topped 10%. A marginal increase of Rs 25-50 in the price of cooking gas cylinders is also on the cards but the jury is still out on revising kerosene prices, even marginally. This is the picture that is emerging on Wednesday, two days before the ministerial panel on fuels under FM Pranab Mukherjee meets for the second time on Friday. The panel looks set to clear at least the revisions in petrol and diesel prices even if Trinamool leader and railway minister Mamata Banerjee or NCP supremo and agriculture minister Sharad Pawar do not attend the meeting, which is a distinct possibility. Oil minister Murli Deora declined to comment on the course the panel is going to chart or the common ground that has emerged among the UPA-2 partners. But he said: "There is no reason for the government to subsidize a car-owner to the tune of Rs 4-5 a litre of fuels they use. National oil companies are also losing so much on cooking gas but it is needed by every household. A litre of kerosene is cheaper than a bottle of water so there is huge diversion for adulteration." Political sources said efforts were on to reach an understanding with Mamata, who had been opposing any fuel price revision. Mukherjee and Deora are now learnt to be pursuing her to agree to freeing up of petrol pricing, emphasizing that the whole burden was not going to be passed on in one go. The Trinamool chief is unrelenting on cooking gas or kerosene till elections in her state, and is likely to stay off the panel's meeting just the way she had done in case of the Cabinet meeting in which sale of 10% government equity in Coal India Ltd was cleared. By staying away from the meeting, she once again, will ensure a plausible deniability of her role before the Bengal electorate. The sources said both Pranab and Deora have also spoken to the DMK chief and Tamil Nadu chief minister M Karunanidhi to bring him on board. The Centre's predicament vis-a-vis the mounting losses of state-run oilmarketing companies and the need to raise fuel prices have been communicated to the chief minister of Tamil Nadu also through DMK's Kanimozhi and telecom minister A Raja. As far as Pawar is concerned, Mukherjee had raised the issue when he went to visit the NCP leader in a Mumbai hospital before a surgery. Though it is not known whether the two have discussed the matter again, the buzz is that Pawar has acquiesced to motor fuel price revision.
23 June 2010;Kalpana Pathak:Mumbai: Shell India, the domestic arm of Royal Dutch Shell Plc, has offered for sale around 20 of its 80 operational retail outlets and around 20 sites acquired for setting up such outlets. It has approached oil marketing companies, both public and private, regarding this. Shell India confirmed the move, but did not comment on the numbers. “The primary reason for putting these retail outlets on offer is differential pricing and the selective subsidy policy that the government has in place with regard to fuel retailing in the country,” said Deepak Mukarji, Group communications head for Shell India. “The properties on offer include a combination of vacant lands and petrol stations across various cities. We are, however, constantly reviewing our retail strategy and would continue to build a desired network of retail chains. While we are selling in some areas, we are also acquiring in other regions to scale up.” Shell India in July 2004 had acquired a marketing licence from the government to set up a network of up to 2,000 fuel retail stations. Shell India Markets Pvt Ltd (SIMPL), a fully-owned subsidiary of Royal Dutch Shell Group, is implementing the licence in India. Oil marketing companies told Business Standard they did not find Shell’s offer attractive as the valuations of the retail outlets and assets attached to these facilities were relatively high. “We did the due diligence and found the properties, some fuel retail outlets and some prospective sites between 1.5 and two acres too expensive for us,” said a senior official at one of the private sector oil companies, requesting anonymity, as he was not authorised to talk to the media. According to him, as they are already present in some of the regions where Shell offers its retail outlets, they decided not to go ahead with the deal. Depending on location, setting up of a fuel retail outlet costs anywhere between Rs 8 crore and Rs 10 crore in a metro city and Rs 2-3 crore in a rural area. Last year, Shell — present across Bangalore, Hyderabad and Chennai and parts of Gujarat and Maharashtra — shut some of its retail outlets, owing to mounting losses in fuel retailing due to rising crude oil prices. Other private companies, Reliance Industries (RIL) and Essar Oil, also felt the heat when crude oil prices touched a record high of $147 in July 2008. While this made RIL suspend operations at its 1,432 retail outlets, Essar Oil continued operating some outlets and closed others. The private sector players sell fuel at market-determined prices. Unlike their public counterparts, they are not entitled to get oil bonds from the government as means of compensation. With crude hovering around the $70 a barrel mark, RIL and Essar Oil have around 650 and 1,341 retail outlets operational, respectively. These companies are waiting for the government’s decision on deregulation of fuel prices, which would allow them to regain their market share in fuel retailing and also help them make a gross margin of Rs 1,000 per kilolitre.
22 June 2010;deccanherald.com:Bangalore: GM India, on Tuesday, announced the ‘Cashless Ownership Offer’ to enable customers to own a Chevrolet in an affordable way. As part of the scheme customer will have to pay one-time subsidised amount to avail free maintenance & service of car for the next 3 years or 45,000 kilometers, whichever is earlier, to ensure low ownership and maintenance cost. This offer will cover all the periodic maintenance services and running repairs. The offer will be applicable to the newly launched Chevrolet Beat as well at a mere cost of Rs 13,499 covering all services and maintainence for a period of 3 years/45000 kms whichever is earlier.
23 June 2010:business-standard.com:San Francisco/chandeleur Islands:The White House stepped up its legal battle on Wednesday over a key part of its response to the Gulf of Mexico oil spill after a US judge blocked its six-month ban on offshore drilling. Interior Secretary Ken Salazar said he would order a new moratorium on deepwater drilling "in the coming days" to reinstate a temporary ban aimed at ensuring offshore safety after the worst oil spill in US history. "We see clear evidence every day, as oil spills from BP's well, of the need for a pause on deepwater drilling," Salazar said in a statement late on Tuesday. Salazar will testify to a Senate subcommittee on Wednesday, along with Michael Bromwich, the new head of the Bureau of Ocean Energy. The bureau is the new name of the Minerals and Management Service, the troubled regulator blamed for failing to police the energy industry adequately. Bromwich, a former Justice Department inspector general, is assigned to overhaul it. But President Barack Obama, also dealing with his top general in Afghanistan over insulting comments in a magazine article, postponed a meeting with senators set for Wednesday to discuss the process for passing energy and climate laws this year. The 65-day-old disaster, which threatens fishing and tourist industries in the Gulf as well as fragile ecosystems, has shattered investor confidence in BP Plc, the British-based energy giant blamed squarely for the spill. The price of BP's stock, a stalwart of investment portfolios in Britain and the United States, has been slashed in half since the start of the crisis. BP shares fell to 13-year lows in London on Tuesday amid uncertainty about the company's value as it grapples with the containment, clean-up, lawsuits and mounting costs. The entire sector is also under scrutiny "given the new politicization of the oil industry," said Michael Cuggino, chief executive of Pacific Heights Asset Management in San Francisco, which holds BP shares. "I think we're all trying to find out what the company's worth right now," he said. "It could go lower certainly. It could also bounce back and the fog clears and you begin to have some clarity with respect to what the problem is." TOP OF OBAMA'S AGENDA Seeking to restore confidence and rehabilitate BP's image, Managing Director Bob Dudley will take over the day-to-day response to the spill from Chief Executive Tony Hayward, who was criticized for a series of gaffes. The crisis has thrust its way to the top of Obama's crowded domestic agenda and he has evoked it to rally support for his efforts to craft a clean energy and climate change policy. The high-stakes legal battle over deepwater drilling began after the BP well ruptured on April 20, spewing millions of gallons (litres) of crude into the Gulf of Mexico and killing 11 workers. Obama imposed the ban while officials checked that other wells were operating safely. But in granting a request by more than a dozen oil services companies for the moratorium to be overturned, the judge challenged its "immense scope." A new Reuters/Ipsos poll found most Americans still support offshore drilling despite the spill. Other skirmishes are taking place, pitting local against federal officials. Forty miles (65 km) off the Louisiana coast, on the north end of the Chandeleur Islands, a sand dredge sat idled late on Tuesday after the US Fish and Wildlife Service ordered operators to stop pumping sand to create new barrier islands. The agency wants local officials to put the dredge farther out but they complain that will waste time, a common complaint about the federal response to the effort. "Adaptive management and common sense are critical to the success of this project if we are going to prevail in protecting our precious marsh," Billy Nungesser, president of Plaquemines Parish, said in a letter to Obama complaining about the delay.
RIL to pick up 45% in Texas shale gas field for Rs 6,500 crore
23 June 2010;economictimes.indiatimes.com:MUMBAI: RELIANCE Industries (RIL) will make its second investment in two months in a large shale gas field in the US, as it tries to cash in on a boom in a vast new energy resource that is threatening to change the global energy balance. The company is close to buying a sizeable minority stake in a shale gas field in Texas from US-based Pioneer Natural Resources, people close to the development said. India’s largest company will buy 45% in the Eagle Ford shale gas field for about Rs 6,500 crore. It will make an up-front payment of nearly Rs 1,400 crore and the balance in the next four years, said a person close to the matter. In April, RIL had acquired a 40% stake in Atlas Energy’s Marcellus share acreage in the US, gaining access to approximately 343,000 acres of undeveloped land with estimated gross resources of over 13 trillion cubic feet of gas. “We will continue to pursue such joint development opportunities with the best operators as well as on our own to build a substantial upstream business in North America,” RIL chairman and India’s richest man, Mukesh Ambani, had told shareholders at the company’s annual general meeting on Friday. Shale gas is extracted from a common rock formation found in most parts of the world by pumping water and sand. Till recently, it was not considered economically viable to extra gas from shale formations but the emergence of new drilling technologies has changed the game. The sudden increase in the production of shale gas in the US has changed the dynamics of the US gas industry. Gas prices have dropped with companies such as ExxonMobil and Royal/Dutch Shell joining in the rush. According to the website of Pioneer, the Eagle Ford gas field has around 310,000 gross acres of prospective gas. Pioneer has another shale gas field in Barnett, near Fort Worth in Texas. “RIL wants to consolidate its position in gas as it will be tomorrow’s fuel,” said Deven Choksey, managing director of KR Choksey Securities.” RIL will create such assets in the US, the best destination for alternate energy, by utilising part of its cash flow so that its balance sheet remains unstretched.” RIL, which owns the world’s biggest refinery complex and India’s largest gas field in the KG basin, has cash and cash equivalent of more than $6 billion, and a projected annual cash flow of $7-8 billion. The expansion of RIL’s footprint in shale gas is in line with the investors’ expectations, said Ambarish Baliga vice-president of Karvy Stock Broking. “The acquisition cost of such assets is cheap, making more sense for the company.” Unconventional energy gets big UBS is learnt to be RIL’s advisor for the deal. The RIL spokesman declined to comment while the Pioneer spokeswoman could not be reached. Led by ExxonMobil, which bought shale gas specialist XTO for $41 billion in December last year, any big energy company worth its salt is getting into the unconventional energy space in the US. The list includes BP, Statoil and Total. “Shale Gas is the most promising development in the energy area in North America,” Mr Ambani had said in its AGM speech. “It is likely to overtake both conventional gas as well as liquid fuels as a source of energy within the next decade. Shale gas development represents a low level of geological risk as the gas is trapped in rock across a wide geographical region in excess of tens of millions of acres.” Reliance aspires to build a significant position in the shale gas business, Mr Ambani had said at the AGM. “ We will enhance efficiencies across the chain by drawing on our experience in drilling and project management. We will commit capital alongside proven low-cost operators to accelerate the development of this resource.” RIL has been looking for assets in a range of areas. It made an abortive attempt to buy bankrupt petrochemical company LyondellBasell early this year. Earlier this month, RIL acquired a 95% stake in Infotel for Rs 4,800 crore after the HFCL Group firm bagged the national licence for broadband wireless access (BWA) radio waves. International rating agency Moody’s Investor Service on Monday said the risk profile of RIL has increased following its entry into telecom with the acquisition of Infotel Broadband Services, but has retained the stable outlook of the company.
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