Top Stories
Oil PSUs rise on EGoM reports, subsidy relief buzz
Shares of oil & gas PSUs like ONGC, IOC, HPCL and BPCL gained on Friday after a business daily reported that the Government is contemplating scrapping the subsidies on cooking gas and kerosene from April 2012.
While ending subsidies will triple the price of kerosene and double that of LPG, the Centre is mulling giving direct cash compensation to the actual users of kerosene, according to a financial newspaper.
The scheme has been recommended for the consideration of the Empowered Group of Ministers (EGoM) on fuel prices, which is scheduled to meet on June 9.
Reports also said that prices of diesel, LPG and kerosene are likely to be hiked when the EGoM meets next month. The panel is being headed by Finance Minister Pranab Mukherjee.
EGoM on fuel prices on June 9: reports
The much-awaited meeting of the Empowered Group of Ministers (EGoM) on fuel prices is likely to take place on June 9, according to media reports. The EGoM on fuel prices is expected to announce an increase in diesel and LPG prices.
However, with the international oil prices having moderated in recent days it will be interesting to see how much is the eventual hike in diesel and LPG prices. The state-run oil marketing companies (OMCs) on May 14th hiked petrol prices by Rs. 5 per litre.
Petrol was de-regulated in June last year but the other petroleum products like diesel, LPG and kerosene are yet to be made market linked. Separately, media reports said that the Government could restore the share of the upstream oil & gas companies in the annual subsidy to 33%. It may be recalled that last week, the overall oil subsidy payout for the public sector upstream companies was hiked to 38.7% for the fiscal year ended March 2011.
In focus News
IIFL retains 'Add' on Reliance Industries
IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, retains 'Add' on Reliance Industries (RIL).
"Our analysis of Reliance's FY11 balance sheet shows a strong improvement in operating cashflows, a 125 bps YoY improvement in ROE (to 12.5%, despite large cash on the balance sheet)," IIFL says.
"Some large write-offs in 1P-reserves and capex spent on overseas blocks and telecom, negligible capex in domestic upstream business, a doubling of losses in its retail business, and a continued reduction in net debt," the report added.
The report stated that we are downgrading FY12-13 EPS estimates by 6-9% to factor in lower gas production from KG-D6 and lower polyester margins. Retain Add with a target of Rs. 1,010. Read More…
Rising oil prices may force auto firms to review strategy on EVs: PwC survey Collaboration between industry participants will be essential to bring alternative fuel applications to market, according to PwC's latest publication Charging Forward: Electric Vehicle Survey. While automakers continue to bring electric vehicles (EVs) to the marketplace, governments, local bodies and utility companies are challenged with building the infrastructure required to support these vehicles long before mainstream consumption will take hold.
PwC surveyed over 200 executives across multiple industries, including automotive, technology, utilities, energy and government. Approximately one-third (33.8%) of respondents felt the lack of investment to modernise the grid is a primary roadblock preventing the widespread support of EVs. In addition, the lack of capacity during peak energy consumption hours also is a concern, as indicated by 31.1 percent of those surveyed.
While there is little doubt that collaboration between relevant parties such as the government, utilities, local bodies, and private interests is needed to develop a sustainable EV infrastructure (35.3 percent of respondents felt each should share the financial burden), government agencies in particular will be creating ample financial incentive to other participants. In fact, this is already a reality as governments around the world have offered billions of dollars in the form of loans, grants, and rebates through various stimulus programmes. Read More…
BSE Oil & Gas index for the week
Indian stock indices recovered towards the end of the week from an 8-week low, as investors ignored the rise in food inflation and bought across sectors. Strong Q4 earnings posted by the likes of Tata Steel and Coal India boosted investor sentiment. On the whole, the Indian market was volatile through the F&O week. Finally, the Sensex and the Nifty closed flat at 18,264 and 5,476 respectively.
Oil & gas stocks advanced led by gains in ONGC after an oil ministry official said the government may raise diesel prices, a move that could reduce the company’s share of the cost to subsidize fuel prices. Most banking shares rose on bargain hunting after recent steep slide.
The BSE Oil & Gas Index for the week ended (up 2.4%), the top gainers in the oil & gas space were Great Offshore (up 4.8%), Hindustan Petro (up 3.3%), ONGC (up 3.3%), Chennai Petroleum (up 2.5%) and Reliance Industries (up 2.4%).
The top losers were Shiv-Vani Oil (down 7.6%), GSPL (down 3.4%), Gujarat NRE Coke (down 3.4%), MRPL (down 3.2%) and Jindal Drilling (down 0.1%).
Domestic News
HPCL to make Prize Petroleum a wholly owned subsidiary: report
Hindustan Petroleum Corp Ltd (HPCL) is said to buyout shares of financial institutions ICICI Bank, ICICI Venture and HDFC in Prize Petroleum Co Ltd to make the oil exploration firm its wholly owned subsidiary.
Earlier in 1998, HPCL and its partners had floated Prize Petroleum to explore and produce oil and gas in India and abroad. HPCL owns 50% stake in the company, while ICICI Bank held 35 per cent interest. ICICI Venture had 10 per cent stake in and HDFC the remaining 5 per cent.
The Board of HPCL on April 15 approved acquisition of balance 50% shares held by other joint venture partners in Prize Petroleum Company Limited. Read More…
RIL joins race for Australia's Premier Coal: report
ONGC will bear ~Rs.38.32bn towards upstream discount: AK Hazarika
IOC to automate all its petrol stations: R.S Butola
Hindustan Petroleum stock gains 2.7%
Gulf Oil Corporation FY11 net profit rises 20%
Chennai Petroleum Q4 net profit at Rs. 3.14bn
OVL production during FY11 up 7%
Gail (India) Q4 net profit dips 14%
Global News
Niko announces Multi-Block Farmout to Statoil
Niko Resources Ltd. is pleased to announce that it has reached an agreement with Statoil ASA in which Statoil, through its subsidiaries, will become a joint venture participant in the North Makassar Strait, West Papua IV and Halmahera-Kofiau Production Sharing Contracts (PSC) in Indonesia. As a result of the agreement, Statoil will earn a 40% working interest in each PSC. The transfer of interest is pending approval by the Government of Indonesia.
Niko is the operator of the PSCs and has acquired a total of approximately 5100km(2) of 3D seismic data and 2900km of 2D seismic data on the blocks. Niko is planning to drill wells on all three PSCS as part of an extensive Indonesian deepwater drilling campaign, set to commence early 2012. Read More…
BP to invest US$10bn in Indonesia in 10 years
BP Plc said it will invest US$10bn in Indonesia in the next 10 years to boost output at the Tangguh liquefied natural gas (LNG) plant and expand into coal-bed methane, CEO Bob Dudley said.
BP plans to build a third LNG production line, or train, at Tangguh and possibly a fourth, Dudley told reporters after meeting Indonesia’s President Susilo Bambang Yudhoyono in Jakarta.
BP, which has operated for more than 35 years in Indonesia, has invested US$7bn in the country to date, he said.
“Our focus in investment is Tangguh in Papua, which we know we handle with great care as that’s already a very large project for BP,” Dudley said.
BP will submit a proposal to the Indonesian government in the next two months for the construction of the third train.
Glossary
Alkylation
Refining process for converting light, gaseous olefins into high-octane gasoline components (reverse of cracking).
Aromatics
Class of hydrocarbons that have at least one benzene ring as part of their structure. Generally describes benzene and benzene derivatives.
Associated Gas
Natural gas associated with oil accumulations, either dissolved in oil or found as a cap of free gas above oil in reservoir.
Benzene
An aromatic hydrocarbon present to a minor degree in most crude oils. (Products manufactured from benzene include styrene, phenol, nylon and synthetic detergents.)
Butane (C4H10)
Either of two saturated hydrocarbons, or alkanes, with chemical formula. In both compounds carbon atoms are joined in an open chain.
Carbon
Atomic number is 6; element is in group 14 (or IVa) of periodic table. Carbon content of a hydrocarbon determines, to a degree, hydrocarbon's burning characteristics and qualities.