Oil & Gas Round Up - February 14 to February 18, 2011

Top Stories
 
Cabinet to take up Cairn-Vedanta deal in 3 weeks
S. Jaipal Reddy, the Union Oil Minster was quoted as saying that the proposed oil assets deal between Cairn India and Vedanta Resources, valued up to US$9.6 billion, could go to the cabinet for approval in 2-3 weeks. According to reports, Cairn agreed in August to sell up to 51% in Cairn India to Vedanta, setting a target date of April 15 to seal the transaction, but the deal has been delayed as issues around royalty payments need to be resolved. The views of finance, law and corporate affairs ministries would be sought before the deal goes to the cabinet, Reddy added. Meanwhile, UK’s Cairn Energy Plc said that it will not seek an extension of the April 15 deadline to conclude the US$9.6bn deal. “I don’t intend to go back to shareholders to extend the deadline,” the Cairn Energy CEO, Bill Gammell, told reporters after meeting the Oil Minister. He said that the company continues to be in dialogue with the Government to secure the necessary approvals to conclude the deal by April 15. “I’m confident that things will move further satisfactorily,” he added 
 
The Oil Minister said that the Government can't follow any deadline set by Cairn Energy. "It's not easy for the government to work on a tight schedule for the deal," S. Jaipal Reddy told reporters, adding that there are issues relating to royalties and taxes. Reddy was responding to a query over local media reports that Cairn Energy has asked the Indian government to clear the proposed stake sale by Feb. 20. "We can't sacrifice our position for the deal," Reddy said. On Aug. 16, Vedanta proposed buying 51-60% of Cairn India Ltd. for about US$8.5-9.6bn in cash, but the deal has been delayed due to a lack of government and regulatory approvals in India.
 
Essar Oil to buy Shell UK unit for US$350-400mn: report
Essar Oil is reportedly said to buy Royal Dutch Shell's Stanlow refinery in the United Kingdom for about US$350mn to US$400mn. According to reports, the two companies have agreed on the terms and an announcement is expected soon. "Essar can confirm that it is still in talks with Shell for the purchase of its Stanlow refinery and associated marketing businesses. Talks are progressing but we cannot comment on details or timelines," an Essar spokesman said.
 
In focus News
 
Oil Ministry not mulling fuel price hike as of now
PSU oil firms are not mulling any hike in fuel prices as of now, Petroleum minister Jaipal Reddy said. The Government would share up to 50% of the revenue loss of OMCs for FY11, he added. The Union Oil Ministry has asked for the reduction in excise and customs duty in the Budget, Reddy said. Reddy said that the total amount of under-recoveries among the state-run oil retailers could reach Rs. 1 trillion, higher than a Rs. 750bn estimated by Indian Oil Corp. (IOC). The follow-on public offer (FPO) IOC is likely to take place in next fiscal year, Petroleum Secretary S. Sundareshan said. Last week, IOC head S.V. Narasimhan had said that the company's planned FPO of up to US$4.4bn would be delayed on account of volatile market conditions and rising crude oil prices.

Domestic News

IOC seeks roll-back of duty on crude: report
The Indian Oil Corporation has sought a roll-back of duty on crude to keep petroleum prices under check, according to a report. IOC chairman S V Narasimhan has reportedly said that the company was increasing petrol prices 'in doses' after deregulation, under-recovery in petrol now stood at about Rs. 2 per litre. In diesel, the under-recovery was Rs. 9.55 per litre, adds report.
 
RIL to invest US$30bn over 5 years: report

IG Petrochemicals Q3 net profit at Rs15mn

ONGC FPO set for a March launch: report

RIL may face up to Rs. 15bn SEBI fine: report
 
Global News
 
Oil climbs amid rising political unrest in Middle East
Crude oil futures traded near a five-day high in Asian trading on Feb. 18, as tensions escalated in the Middle East and reports continued to show steady improvement in the economic prospects for the United States. Crude for March delivery rose US$1.37 on Feb. 17 to settle at US$86.36 a barrel, the biggest one-day increase since Jan. 31. Prices have gained 12% in the past year. Protesters clashed with police in Bahrain, Yemen and Libya, and Iranian state-run television said that the country was sending two warships through the Suez Canal. The persistent civil unrest in the Middle East has stoked concerns that crude shipments from the oil rich region will be disrupted. Political risks to oil supply are “high and rising” amid unrest in the Arab world, JPMorgan Chase & Co. said in a report.
 
Earlier this week, Israeli Foreign Minister Avigdor Lieberman said that two Iranian gunboats planned to move through the Suez Canal. But, the canal authority’s head of traffic said no Iranian warships have applied to cross through the waterway. Pro-democracy protesters in Bahrain stepped up demands for the government to resign after a security crackdown left at least three people dead. Bahrain's military took control of the capital on Thursday, hours after riot police firing birdshot, rubber bullets and teargas stormed an anti-government protest camp, killing at least five people and wounding more than 230.
 
Libyan leader Muammar Qaddafi is facing the first protests against its regime, which started with a military coup in 1969. Libya’s “Day of Anger” protests on Thursday led to clashes with pro-government forces in which at least 19 people were reportedly killed. Thursday was the anniversary of a 2006 protest during which security forces killed at least 12 people.
 
Ecuador court slaps US$9bn penalty on Chevron
A court in Ecuador ordered Chevron to pay US$9.5bn for alleged environmental and social damage to Ecuador’s Amazon region caused by Texaco, which Chevron took over in 2001. The oil company has accused the plaintiffs’ lawyers of using a strategy of fraud. Courts in New York and The Hague have issued orders that suspend the enforcement of any judgment against Chevron in the case, which has been rumbling on since 1993. Lawyers for Chevron filed a 31-page request for clarification of the ruling, one of the largest environmental awards ever. James Craig, a company spokesman, said that the filing “has the same effect as an appeal in that it suspends the enforcement or execution of the verdict.” Meanwhile, the plaintiffs suing Chevron for contaminating the Amazon rain forest appealed the court ruling, saying that more money would be needed to clean up the mess.
 
Chesapeake and CNOOC close DJ Basin and Powder River Basin project cooperation agreement