India looking at alternative banks for oil payment to Iran
12 April 2011;deccanherald.com:deccanherald.com:New Delhi: Jolted by Germany's refusal to route its payments to Iran, India is exploring using Dubai or Turkey based banks as conduit for paying for crude oil it imports from the Persian Gulf nation. "We are exploring if Indian oil firms can open accounts in banks like Dubai-based Noor Islamic Bank so they can undertake a direct transfer of money for oil they buy from Iran," a senior government official said. Under the scheme being discussed, state-run National Iranian Oil Co (NIOC) too will open an account in a UAE or Turkey based bank to receive direct money transfer from oil companies. "The mode of payment will be Euro," he said. "We have forwarded a list of banks to Iran... they have to choose the bank where both Indian firms and NIOC can open account." Indian firms opening account in the UAE or Turkey bank will however be subject to Reserve Bank of India nod. Last month, Germany under US pressure stopped accepting money from India for onward transfer to an Iranian-owned, Hamburg-based bank, towards payments for the import of crude. India in February had begun clearing past dues for Iranian oil imports by making euro payments through German-based Europisch-Iranische Handelsbank AG (EIH Bank). But EIH, which is owned by Iran, is a banned entity in the US and Washington persuaded Germany to stop payments. About euro 1.5 billion had been paid through EIH when Germany refused to accept any further payments. This has resulted in outstanding of USD 2.8 billion as on March end towards Iran, which has continued to supply oil on credit. The problem began after RBI in late December last year scrapped a long-standing payment mechanism used to pay for Iranian crude oil imports, which make up for 12 per cent of the nation's oil needs. In February, the two nation's decided to route payments through EIH and Oil Minister S. Jaipal Reddy in early March made a statement to Parliament saying "pending dues of NIOC are now being cleared and as of March 1, 2011, payment of euro 1.5 billion has been made to the Central Bank of Iran". But that was the last payment made to Iran as, soon after the news broke out, the US told Germany of the sanction conditionalities against the gulf nation for its nuclear policy. Oil supplies from Iran have, however, not been affected and the Persian Gulf nation continues to sell oil on credit backed by corporate guarantee. "We are considering various alternatives... making payments in rupee is one of them," the official said. Reddy on March 3 stated in the Lok Sabha that "consequent to the withdrawal of the Asian Clearing Union (ACU) mechanism by the RBI with effect from December 23, 2010, all payments to Iran for import of crude oil have to be settled in any permitted currency outside the ACU mechanism."
12 April 2011;hindustantimes.com:Anupama Airy:New Delhi: India will mark another milestone in its energy security journey when it signs an agreement sometime this week to secure a 25% stake in the Satpayev oil field on the Caspian Sea. With its huge dependence on oil imports, India has been seeking stakes in overseas oil blocks to secure energy supplies. Coming for a price of $400 million (approximately R1,800 crore), the stake will be purchased by ONGC Videsh Ltd (OVL). A contract for the same will be signed during Prime Minister Manmohan Singh’s three-day visit to Astana starting April 15. Singh will attend the bilateral summit meeting between India and Kazakhstan. With the focus on energy and trade, India and Kazakhstan are expected to sign at least six agreements, including the one on their civil nuclear cooperation besides OVL’s participation in the Satpayev oil block. The two sides will also ink an inter-governmental framework pact on non-military atomic cooperation. Confirming the move, senior ONGC officials said Kazakhstan plans to transfer a 25% stake in the Satpayev area to OVL and the balance 75% will be held by Kazakh’s national oil firm KazMunaiGas, which is also the operator of the field. The stake was originally awarded to ONGC Mittal Energy Ltd, a venture between India’s largest energy explorer Oil and Natural Gas Corp and ArcelorMittal chief Lakshmi Mittal. However, following Mittal’s exit from the venture in 2009, ONGC decided to take control of the entire 25% stake. The Satpayev oil field is situated in the highly prospective region of north Caspian Sea and in proximity to at least four fields. A peak output of 287,000 barrels per day (14.3 million tonnes a year) is envisaged from the 256 million tonnes of reserves in the field. OVL will pay $26 million as signing amount to the Kazakhstan government, officials said. It will also pay $80 million as a one-time assignment fee. Besides, OVL has committed a minimum exploration investment of $165 million and an additional optional expenditure of $235 million. The 1,582-sq km Satpayev block holds 1.8 billion barrel of inplace oil reserves. It lies in proximity to major fields such as Karazhanbas, Kalamkas, Kashagan and Donga, where significant amounts of oil has been discovered. Kazakhstan had initially planned to give 50% stake to OVL in the Satpayev and Makhambet blocks in the Caspian Sea. Later, it reduced the offer to 25%.
12 April 2011;business-standard.com:New York: The average price for a gallon of gasoline in the United States has moved closer to $4, jumping more than 19 cents since mid-March to a level less than 10 per cent below its all-time high, a widely followed survey said on Sunday. The Lundberg Survey said the national average price of self-serve, regular unleaded gas was $3.765 on Friday, up from $3.573 on March 18, and up 91.3 cents from $2.852 a year ago. Prices in several western US cities are already above $4 per gallon, led by San Francisco at $4.13. Chicago was close behind at $4.11 a gallon, the survey said. The national average would have been higher had refiners and retailers not resisted passing on rising crude oil prices as customers grow less willing to pay what it takes to fill their gas tanks, analyst Trilby Lundberg said in an interview. The record high average pump price is $4.112 set on July 11, 2008.
12 April 2011;business-standard.com:Mumbai: Riding on higher refining margins, Essar Oil on Monday reported a 78 per cent rise in fourth-quarter net profit at Rs 321 crore, compared to Rs 180 crore a year earlier. Revenues for the January-March period jumped 24 per cent to Rs 14,846 crore. Refining margins, or earnings on converting a barrel of crude oil into products, were $8.15 a barrel compared with $5.37 a year ago. “This is a strong financial result, driven by record refinery throughput of 14.76 million tonnes per annum and a healthy uplift of over 80 per cent in gross refinery margins,” Essar Oil Chief Executive Officer and Managing Director Naresh Nayyar said in a conference call. Essar Oil said its Vadinar refinery on the west coast continued to operate well above its nameplate capacity of 10.5 million tonnes per annum. It processed a record 14.76 million tonnes of crude oil in 2010-11, nine per cent higher than last year. The company said the expansion of Vadinar refinery was on schedule. It is expanding the refinery to 18 million tonnes a year by 2011 and to 20 million tonnes by September 2012. “Demand for petroleum products in India is expected to continue to grow sharply and we remain focused on delivering our key projects, which in 2011 includes the first phase of our Vadinar refinery expansion,” Nayyar said. Essar Oil has 1,635 petrol pumps, of which 1,381 are operational and 254 are in various stages of construction. For 2010-11, the company’s net profit jumped to Rs 654 crore from Rs 29 crore in the previous year. Gross revenues rose 25 per cent to Rs 53,119 crore from Rs 42,402 crore. Essar Oil shares closed 2.93 per cent down at Rs 135.70 on the Bombay Stock Exchange.
11 April 2011;economictimes.indiatimes.com:HYDERABAD: SpiceJet, India's second-largest budget airline, is considering increasing passenger fares as runaway fuel costs threaten the carrier's weak margins. The airline is expected to announce the jump shortly. It will be done in phases to ensure the demand is not affected, SpiceJet officials said. "We will do it at a time when the consumer is able to absorb it so that the demand does not take a hit," said the carrier's chief commercial officer, Samyukth Sridharan. International crude oil prices have risen by more than 30% since September 2010 to over $100 per barrel mark this month owing to the unrest in the Middle East and the civil war in Libya, a major oil exporter. As a consequence, state-owned oil firms in India hiked jet fuel prices by 1.4% last week, the 12th increase in rates in a row since October last year. SpiceJet, Kingfisher and Jet Airways had increased the fuel surcharge component of the air ticket last month by a couple of hundreds of rupees to recover the extra outgo. SpiceJet reported a decline of 13.31% in its net profit for the December quarter due to higher costs of fuel and other operating expenses. Aviation turbine fuel, or ATF, constitutes over 40% of an airline's operating costs, a percentage that keeps rising as jet fuel prices zoom. The low-cost carrier is also looking at cost efficiencies to ensure the margins are not impacted. "Fuel prices are progressively rising and we are not comfortable. Apart from increasing fares, we will take a relook at every cost to make sure we are efficient operationally," said the chief executive officer, Neil Raymond Mills. All airlines have asked the government to reduce the sales tax on ATF, which at times are as high as 30%. They have also demanded that the government include ATF into new Goods and Service Tax (GST) or should make it a "declared goods" under the present central sales tax regime, which will allow a uniform 4% sales tax on ATF across the country. Goods of special importance are called declared goods and the state government cannot levy sales tax on these goods exceeding 4%. SpiceJet enjoys a 13% market share among the LCCs and operates 186 flights daily to 20 Indian cities and two international cities.
11 April 2011;economictimes.indiatimes.com:NEW DELHI: State-owned Hindustan Petroleum Corporation (HPCL) has finally decided to make Prize Petroleum Corporation (PPCL) its 100% subsidiary and will buy stakes of its partners ICICI and HDFC Bank, the company's chairman told ET. HPCL and its partners floated PPCL in 1998 to establish a presence to explore and produce oil and gas in India and abroad. HPCL owns 50% in PPCL, while ICICI Bank , ICICI Ventures and HDFC bank hold 35%, 10% and 5% each. "We will be taking over the equity holdings of our joint venture partners ICICI and HDFC bank in Prize Petroleum and have already informed the Securities Exchange Board of India (Sebi)," said Subir Roychoudhury, chairman and managing director, HPCL, told ET. "HPCL and the financial institutions had contributed 10 crore each as equity so we will be doing a simple takeover and there will be no other cash transaction," he added. This move has been in the making for a while. Earlier, senior officials in HPCL had told ET that HPCL could merge PPCL with its internal exploration and production arm, HP E&P. A decision that was primarily an outcome of both HPCL's and PPCL's inability to find a suitable joint venture partner which would pick up ICICI, ICICI Venture and HDFC's stake in the company and have a proven track-record in the global E&P arena. Last year, ICICI Bank, ICICI Venture and HDFC bank had put their 50% equity stake in PPCL on the block, which resulted in HPCL's search for a suitable partner, who could bring in technical expertise as well as funds to invest in the business. But the quest did not result in a suitable marriage as companies that evinced interest were not of the calibre that HPCL was looking for. "Whether we will continue to look for a partner now will depend on how the company performs," said K Murali, director, Refineries, HPCL. "After the takeover we will continue with our stated objective to become a strong player in the global and domestic E&P business," said M R Pasrija, managing director, PPCL. Sources say that ICICI and HDFC wanted to exit the joint venture as they wanted to limit their exposure to the high risk exploration business, "...the financial institutions had not invested any additional money and they requested us to take over," added Roychoudhury. Also, reportedly around two years back PPCL had approached steel tycoon Lakshmi Mittal, Essar Oil, Larsen & Toubro and Jaiprakash Associates for a possible stake-sale discussion which had not yielded any results.
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