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Slowdown now hits oil sector; petrol, diesel consumption falls

The slowdown is coming at a time when international environment is very favourable, in terms of pricing of crude oil.

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New Delhi, Oct 17 : The oil sector seems to be latest addition to the list of sectors facing stress due to the ongoing economic slowdown. For the first time in many months, both oil demand and imports have witnessed a sharp fall indicating that poor health of the economy has now begun impacting a sector where the country relies a lot on imports.

As per latest the Oil Ministry data, petroleum products demand in India has slipped to its two-year low level in September at 105.7 million tones. The fall is largely on account of a consistent fall witnessed in the consumption of auto fuels – petrol and diesel. Both fuels have reached their lowest consumption level in September with consumption of petrol and diesel falling to 2.3 and 5.8 million tonnes level respectively in September. The consumption of the two products have fallen in each of the months in current financial year indicating the slowdown is taking its toll in the oil sector as well.

What is worse is that consumption fall has also resulted in slowing down of oil imports that have fallen by 0.5 per cent during April-August 2019 from a level of 94.9 million tonnes (MT) in FY19 to 94.4 MT in the five-month period of the current fiscal. While a slowdown in oil imports should be welcomed in a country that spends its foreign exchange to but crude oil, it is reflective of poor demand scenario that has slowed oil imports by refineries.

The refineries are using their inventories for meeting domestic supplies of petroleum products rather than buying additional quantities of crude oil from overseas even though buying at this juncture would be beneficial with international crude prices at a low of $58.9 a barrel.

“It is surprising that oil imports have fallen when global prices are stable and low. This means that consumption has declined and demand is not picking up. The sector has begun to feel the pain of an economy that several of the consuming industries such as automobiles are already facing,” said an executive of the Indian Oil Corporation asking not to be named.

Though it is difficult to derive conclusive relationship between oil imports/sales and economic activity, analysts are unanimous that current contraction is the result of a slowdown. Otherwise, sales of petroleum products should not have fallen when per capita consumption has been growing.

As per the Petroleum Planning and Analysis Cell (PPAC) of the Oil Ministry, except for bitumen and lubricants, consumption of all other petroleum products such as petrol, diesel, ATF, kerosene, LPG, naptha, and petroleum coke have fallen in September on a month-on-month basis. Some of the products have maintained a fall throughout the first half of current fiscal.

Total LPG consumption fell to 2.2 MT in September from a level of 2.4 in August, even though government Ujjwala scheme is fast expanding the reach of cooking gas to remotest corner of the country. Even kerosene consumption registered de-growth, falling to 1.76 lakh tonnes in September from over 2.3 lakh tonnes in August.

All is not good on oil export front as well with exports of petroleum products decreasing by 5.2 per cent during August 2019 as compared to the same period of the previous year. Decrease in petroleum products exports during August 2019 was due to decrease in all exports.

Indigenous crude oil and condensate production during August 2019 was lower by 5.4 per cent than that of August 2018. OIL, ONGC and PSC registered lower production of 4.2 per cent, 3.7 per cent and 9.5 per cent, respectively, during August 2019 as compared to August 2018. On cumulative basis, indigenous crude oil and condensate production of the country was lower by 6.1 per cent during April-August 2019 as compared to the corresponding period of the previous year.

The slowdown is coming at a time when international environment is very favourable, in terms of pricing of crude oil. The price of Brent crude averaged $59 per barrel during October 2019 and around $60 a barrel in September 2019 against much higher levels last year. The Indian basket crude price averaged $59.35/barrel during August 2019 as against $63.63/barrel during July 2019.

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Sensex adds 135 pts in early trade, PSU banks gain

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Mumbai, Nov 18 The benchmark Sensex advanced by 135 points during the early trade on Monday led by PSU bank stocks.

It opened higher at 40,431.08,from its Friday’s close of 40,356.69. The Nifty also added 35.80 pts to trade at 11,931.25.

“Indian markets showed some initial gains aided by continued momentum in telecom stocks over reports of the government considering a floor on tariffs,” said Deepak Jasani of HDFC Securities.

SBI, beneficiary of telecom sector respite and Essar steel resolution, and BPCL surged after FM’s statement of targeting completion of its divestment by March, Jasani added.

Bharti Airtel advanced over 3 per cent to claim the top gainer’s spot followed by State Bank of India, by nearly 2 per cent.

Foreign Portfolio Investors sold Rs 1,008.37 crore worth of stocks on Friday while the Domestic Investors bought scrips worth Rs 537.74 crore.

Yes Bank, Mahindra and Mahindra, ONGC were the top losers during the early trade.

The US markets closed higher as investors remained positive on progress seen in US-China trade talks.

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Saudi Aramco flotation values oil giant at $1.7 trillion

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Riyadh, Nov 17 Saudi Arabia on Sunday placed a preliminary valuation on state oil company Aramco of between $1.6 trillion and $1.7 trillion.

The company has published an updated prospectus for its initial public offering (IPO), seeking more than $25 billion for the sale of 1.5 per cent of its shares, the BBC reported.

That would make it the world’s biggest IPO, coming from the world’s most profitable company

It is short of the $2 trillion valuation that Crown Prince Mohammed bin Salman was reportedly keen to achieve.

“The base offer size will be 1.5% of the company’s outstanding shares,” the state-owned energy giant said in a statement on Sunday, adding that it set the price range at 30-32 Saudi riyals per share ($8-$8.5).

Individual retail investors, as well as big institutions, will have a chance to buy shares.

Aramco was initially expected to sell some 5 per cent of its shares on two exchanges, with a first listing of 2 per cent on the Kingdom’s stock exchange or Tadawul bourse, and then another 3 per cent on an overseas exchange.

The firm added that there were now no current plans for an international sale.

The Crown Prince is seeking to sell the shares to raise billions of dollars to diversify the Saudi economy away from oil by investing in non-energy industries, the BBC said.

In its prospectus released last week, the company lists a variety of investment risks ranging from terrorist attacks to geopolitical tensions in a region dominated by Saudi-Iran rivalry.

The 600-page prospectus also includes the government’s control over oil output as another potential risk.

After the flotation, Aramco will not list any more shares for six months.

The sale of the company, first mooted four years ago, has been overshadowed by delays and criticism of corporate transparency at Saudi Arabia’s crown jewel.

Aramco last year posted $111 billion in net profit. In the first nine months of this year, its net profit dropped 18 per cent to $68 billion.

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India may soon have personal data protection law

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New Delhi, Nov 17 (IANS) India may soon have a law on personal data protection as the government plans to take up the bill during the upcoming winter session of Parliament starting Monday.

Information Technology Minister Ravi Shankar Prasad has already said that the government plans to soon introduce the Personal Data Protection Bill, 2018 in Parliament after public consultations.

The draft bill was released last year and was immediately opposed by several global technology companies. Their contention was that it would affect their business in the country apart from driving cost of operations. The proposals are mostly out of a report submitted by Justice B.N. Srikrishna in July 2018. The final draft of the bill is still not known.

But the draft bill which was made public last year for comments said businesses were required to seek explicit consent for the data they collect on consumers, mandatorily obtain consent from consumers to use their data sparingly and only for the purposes stated, apart from storing sensitive consumer data only within Indian borders. It did not mention what will be sensitive information in legal terms.

In recent times several cases of user privacy intrusion cases have come to light, including WhatsApp data-protection failure and privacy breach, creating a public outrage and debate over data security in the country.

The bill suggests a fine of up to Rs 15 crore or 4 per cent of the firm’s turnover in the case of a breach and setting up of a data protection authority.

Recently at the Commonwealth Law Ministers Conference in Colombo, Prasad said: “In India, we view privacy seriously and informational privacy is also integral to that. It means a person must have control over his data and its commercial usage.”

According to the minister, any data protection law should be technology agnostic, must be based upon the element of free consent, no abuse of consent beyond the permissible limits, requisite data protection authorities, and a fair mechanism for data processing.

In October WhatsApp confirmed that Indian human rights activists and journalists were among those targeted by an Israeli spyware and the government had asked the company to explain the breach that had targeted Indians amongst others.

Those targeted by the WhatsApp hacking in India included human rights activists who were arrested over their alleged involvement in the Bhima-Koregaon Dalit riots near Pune in January last year and some journalists. Of 1,400 affected users, over 20 are academics, lawyers, Dalit activists and journalists from India.


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