31 Dec 2011;business-standard.com:New Delhi: For the second time this month, state-owned oil companies today cut jet fuel (ATF) price by over 1% in step with softening in the commodity's international rates. The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was cut by Rs 622 per kilolitre (kl), or 1.03%, to Rs 63,077 per kl with effect from midnight tonight, an official at Indian Oil Corp said. IOC and other fuel retailers, Hindustan Petroleum and Bharat Petroleum had on December 16 reduced ATF price by 1.3% to Rs 63,739.10 per kl. Jet fuel in Mumbai will cost Rs 64,054 per kl from tomorrow as against current rate of Rs 64730.23 per kl, a decrease of over Rs 676 per kl. The reductions this month comes on back of a steep 3.7% hike in rates effected from December 1. Prior to that, ATF rates had been increased by Rs 1,195 per kl from November 16 and by 3.8% or Rs 2,845 per kl from November 1. The official said the reduction was possible because fall in international jet fuel prices has offset weakening of the rupee against the US dollar. Jet fuel makes up for 40% of an airlines' operating cost and the marginal cut in prices will slightly ease burden on the cash-strapped airlines. No immediate comment was available from airlines on the impact of the price reduction on passenger fares. The three fuel retailers revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.
30 Dec 2011;economictimes.indiatimes.com:NEW DELHI: State-run oil firms plan to raise petrol prices by about Rs 2.25 a litre from Sunday unless the government asks them to defer the move in view of assembly elections, company executives said. Oil companies revise petrol prices every two weeks but in the middle of this month, the government told state firms to refrain from any increase as the move could cause uproar during the winter session of Parliament. As a result, the price rise would be relatively steeper as oil firms need to make up for the losses, they said. Companies' executives say that compared to the landed price of imported petrol, domestic rates need to be raised by Rs 1.90 per litre, excluding local taxes. "If the entire loss is passed on to the consumer, with 20% state duties, the fuel will be costlier by 2.28 a litre in the Capital," one executive said. State levies vary from state to state. Executives said a decision in this matter was expected on Saturday after securing an informal nod of the government. "There is some uncertainty as assembly elections have been declared in five states and companies may not get a green signal," an executive said. Elections will be held in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur between January 28 and March 3. Officials in the petroleum ministry claimed that they would not intervene. "Oil companies are free to charge market rates for petrol and they should not hesitate in exercising their pricing freedom," a ministry official said, requesting anonymity. The government allowed state oil firms to align petrol price with international rates on June last year, but companies always informally consulted it before taking any pricing decisions. Until November, domestic petrol rates were cut or raised whenever it seemed politically acceptable. Subsequently, oil companies have systematically revised prices every two weeks, except for the fortnight ended December 15. "Had oil firms not deferred the price revision, petrol would have become costlier by 1.02 per litre," executives said. Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum raised domestic retail prices of petrol by Rs 1.80 a litre on Nov 4 in Delhi. They cut the price by Rs 2.22 per litre and Rs 0.78 a litre in the following two fortnights.
29 Dec 2011;hindustantimes.com:Washington: The US on Thursday warned Iran against disrupting oil shipments at the mouth of the vital Persian Gulf waterway, after Tehran threatened to shut the Strait of Hormuz if the West imposed sanctions on its crude exports. "This is not just an important issue for security and stability in the region, but is an economic lifeline for countries in the Gulf, to include Iran," Pentagon Press Secretary George Little said. About 40 % of the world's tanker-borne oil passes through the Strait of Hormuz which links the Gulf - and the oil-producing states of Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates (UAE) - to the Indian Ocean. "Interference with the transit or passage of vessels through the Strait of Hormuz will not be tolerated," Little said in a strongly worded message to Iran. Little's remarks came after Iranian Vice-President Mohammad Reza Rahimi warned that "not a drop of oil will pass through the Strait of Hormuz" if sanctions are widened and Iran's navy chief Admiral Habibollah Sayari said that closing the strait would be "easier than drinking a glass of water" Iranian navy has been staging wargames in international waters to the east of the strait which at its narrowest is just 34 miles wide. "The free flow of goods and services through the Strait of Hormuz is vital to regional and global prosperity," said Navy 5th Fleet in Bahrain spokeswoman Cmdr. Amy Derrick Frost. "Anyone who threatens to disrupt freedom of navigation in an international strait is clearly outside the community of nations; any disruption will not be tolerated," she said. Derrick said the 5th Fleet which is based in Bahrain, maintains a robust presence in the region to deter or counter destabilising activities.
28 Dec 2011;economictimes.indiatimes.com:Shruti Choudhury:NEW DELHI: The antitrust watchdog will launch its own probe into whether the petroleum ministry and state-run oil marketing companies have suppressed the market for bio-diesel, over-riding a report on the contrary by the Director-General of Investigation and Registration. "The 2,500 crore of investments made by the bio-diesel industry is lying idle, as the government has not let the clean-fuel market grow in the country," a top official of the Competition Commission of India (CCI) told ET. India has no commercial market for bio-diesel, the cleaner diesel fuel made from natural renewable resources that can help cut dependence on costly crude imports and reduce greenhouse gases. The government allows producers to sell it as transport fuel only to oil marketing companies. It also regulates its price and has imposed curbs on its transportation. Disgruntled bio-diesel producers such as Royal Energy Ltd had earlier complained against the curbs. When the matter was transferred to the CCI in 2009, after the Monopolies and Restrictive Trade Practices Act, 1969 was repealed, the regulator referred it to the Director General of Investigation and Registration (DGIR). The DGIR's report said there was no need for a further inquiry, according to another CCI official. "The DG has sent us a lukewarm report stating that no further inquiry is needed, but the commission is of the opinion that there is a strong case of anti-competitive agreements between the ministry and oil marketing companies to keep the bio-diesel market from growing," the official said. "We will start our own investigation," the official added. Sections 3, 4 and 26 of the Competition Act allow the regulator to probe further, including government enterprises and ministries. This is the second time the regulator is initiating action on its own. Data from the industry lobby shows that the domestic industry, which has 1.2 mt of unutilised capacity, has registered flat growth since 2009, when commercial sales of the fuel were banned. According to reports, diesel imports may rise by up to 30% in 2011. Experts say easing the regime will help cut dependence on diesel. "Given the current demand of diesel, the bio-diesel sector has huge opportunity to grow, but the price set is too low to sustain the investment. Until companies are allowed to sell it directly to bulk consumers, there wouldn't be parity in the market," Bio-Diesel Association of India president Sandeep Chaturvedi said. "It's crucial for bio-diesel to be freed of diesel prices," he added. In India, the price of bio-diesel is regulated by the petroleum ministry, which uses the retail price of diesel for its calculation. It is currently sold at about 30 a litre. "Even in case of a government enterprise, including ministries, the regulator can impose fines up to 10% of the turnover of an enterprise engaged in such conduct, said Samir Gandhi, competition partner at Economic Law Practices, a legal consultancy.
Petroleum ministry to refund $120mn to Cairn India & Ravva Oil
28 Dec 2011;economictimes.indiatimes.com:Shuchi Srivastava:MUMBAI: The Indian government will have to refund $120 million to Cairn India and Ravva Oil, the joint venture partners operating an oil and gas block in the Krishna-Godavri basin, after Malaysia's top court ruled in their favour. "The oil ministry will have to pay close to $120 million to Cairn and Ravva," a person close to Cairn India told ET. This follows a recent Federal Court judgement setting aside a Malaysian High Court order directing Indian companies to deduct the outstanding amount of profit petroleum - the share of crude oil or gas that the government gets from operators - from the payment due to the Ravva consortium. The Ravva block, the second most valuable asset for Cairn after its Rajasthan oil fields, produces 28,000 barrels of oil and over 30 million cubic feet of gas a day. Cairn India holds 22.5% stake and is the operator of the block while ONGC holds 40% stake, Videocon Petroleum 25% and Singapore-based Ravva 12.5%. ONGC had explored and developed the Ravva field before the production-sharing contract was signed in October 1994. The legal dispute centered on the alleged short payment of profit petroleum by the consortium for past expenses incurred in the field by ONGC. These expenses were meant to be reimbursed by the other consortium partners when they bought into the field under the pre-New Exploration and Licensing Policy regime as recoverable costs while calculating the post-tax rate of return (PTRR). This had the impact of lowering the investment multiple in the field, thereby reducing the government's entitlement of profit petroleum, which the ministry protested against. In January, the Malaysian High Court issued a directive to refineries owned by Hindustan Petroleum and Bongaigaon Refinery & Petrochemicals, which lifted Ravva crude, and Gas Authority of India, which bought gas, to deduct consortium members' share of profit petroleum from the sales proceeds and remit the amount to the petroleum ministry. But this was challenged by Cairn and Rawa in the Court of Appeals, Malaysia.
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