Rupee snaps three sessions of losses

Updated 05 July 2013

Rupee snaps three sessions of losses

MUMBAI: The Indian rupee eked out minor gains yesterday, snapping three sessions of losses, but sentiment was dented after the Reserve Bank of India chief said the bank would not defend any particular exchange rate, which dealers read as likely absence of any heavy intervention.
RBI chief Duvvuri Subbarao’s comments on the exchange rate, which would be read as innocuous in other circumstances, led to a sharp sell-off in the rupee, which the market took as a signal that any significant intervention was unlikely despite the currency hovering near record lows.
The absence of any strong comments from the governor to support the rupee was also a dampener for the markets, dealers said.
The rupee is likely to take its next cue from the US non-farm payrolls data, due today, which will be an important data point for the Federal Reserve’s decision to slow down its bond purchases.
“The RBI governor’s comments on not protecting any particular rupee levels and concerns on the deficit did not go down well with the currency market,” said Uday Bhatt, a senior manager at UCO Bank. “The non-farm payrolls data will be the key. If it’s strong, the rupee may see 61 levels.”
The rupee was supported by a strong stock performance with local stocks gaining 1.2 percent.
The partially convertible rupee closed at 60.13/14, compared with its previous close of 60.215/225. It fell to as much as 60.38 after the governor’s comments.
The battered Indian rupee will remain under pressure against the US dollar over the next year as a wide current account deficit and policy inaction dissuades foreign investment into the country, a Reuters poll showed.
In the offshore non-deliverable forward PNDF, the one-month contract was at 60.51, while the three-month was at 61.21.
In the currency futures market INRFUTURES, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed around 60.46 with a total traded volume of $ 4.9 billion.
The battered rupee will remain under pressure against the US dollar over the next year as a wide current account deficit and policy inaction dissuades foreign investment into the country, a Reuters poll showed.
The rupee is expected to trade at 59.0 in a month and 58.0 in six months, before reaching 57.5 in a year from now. That would be just over 4 percent stronger than the 60.0 it was trading at earlier yesterday.
Still, that would mark only a modest rebound for emerging Asia’s worst performing currency so far in 2013.
The rupee has lost over 8 percent so far this year and has practically been on a one-way street since mid-2011. It hit an all-time low of 60.76 last week.

Exxon faces setback in Iraq as oil and water mix

Updated 20 April 2018

Exxon faces setback in Iraq as oil and water mix

  • Exxon’s talks with Iraq on water project hit problems
  • Losing the contract could deal a blow to Exxon’s broader Iraqi plans

LONDON: Talks between Exxon Mobil and Iraq on a multibillion-dollar infrastructure contract have reached an impasse, Iraqi officials and two industry sources said, in a potential setback to the oil major’s ambitions to expand in the country.

More than two years of negotiations on awarding the US firm a project to build a water treatment facility and related pipelines needed to boost Iraq’s oil production capacity have hit difficulties because the two sides differ on contract terms and costs, the officials and sources told Reuters.

Unless the differences can be resolved, the project could be awarded to another company in a tender, the officials said, without elaborating on the points of dispute.

Losing the contract could deal a blow to Exxon’s broader Iraqi plans, as it would be handed rights to develop at least two southern oilfields — Nahr Bin Umar and Artawi — as part of the deal.

Exxon declined to comment.

Further delays to the project could also hold back the oil industry in Iraq, OPEC’s second-largest producer; the country needs to inject water into its wells or risk losing pressure and face severe decline rates, especially at its mature oilfields. As freshwater is a scarce resource in Iraq, using treated seawater is one of the best alternatives.

The Common Seawater Supply Project (CSSP), which would supply water to more than six southern oilfields, including Exxon’s existing West Qurna 1 field and BP’s Rumaila, was initially planned to be completed in 2013 but has now been delayed until 2022.

“The CSSP would be expensive and challenging but there’s opportunity here (for Exxon) ... to get access to resources on a very large scale and to achieve something and really make a difference to its own business,” said Ian Thom, principal analyst at consultancy Wood Mackenzie.

Many of the world’s biggest oil companies, such as BP, Total, Royal Dutch Shell and Eni, have operations in Iraq, where a low-return environment and strict contract terms have squeezed returns in recent years.

With total oil production at West Qurna 1 at around 430,000 bpd, Exxon’s presence in Iraq is small compared with dominant player BP whose Rumaila oilfield accounts for around a third of the country’s total production of about 4.4 million bpd.

While the Texas-based firm is looking to grow in Iraq, its geographical focus remains on the Americas, including US shale fields and Brazil, in contrast to rivals such as France’s Total and Italy’s Eni who have been significantly expanding their activities in the Middle East in recent years.

The talks between Iraqi authorities and Exxon are still ongoing, according to the industry sources and officials from the Iraqi oil ministry.

However the state-run Basra Oil Company (BOC), which is overseeing the project, said it could now tender the project this month in a parallel process with the aim of completing a first phase by 2022.

“We have this one approach but we can have another approach as well,” Abdul Mahdi Al-Ameedi, head of the Iraqi oil ministry’s licensing and contracts office, told Reuters.

Iraq chose Exxon to coordinate the initial studies of the CSSP in 2010. At the time, Baghdad aimed to raise its oil production capacity to 12 million barrels per day (bpd) by 2018, rivalling Saudi Arabia. That target has been missed and been cut to 6.5 million bpd by 2022 from around 5 million bpd now.

Negotiations with Exxon fell through in 2012 due to red tape and cost disputes. In 2015, the company re-entered talks with the oil ministry, this time in partnership with China’s CNPC and with the CSSP folded into a much bigger development project known as the Integrated South Project. 

CNPC did not reply to a request for comment.

For Iraq, going down the non-Exxon route raises two major concerns: How to integrate the project between the water treatment facility and the oilfields and how to finance the project, Thom said.

Two Iraqi oil sources told Reuters that taking the non-Exxon path would raise financing concerns for Iraq.

Projected costs of the scheme have not been disclosed, but engineering studies have put the cost of treating 12.5 million bpd of seawater transported to six oilfields at $12 billion.

The capacity has been revised downwards, with the first phase set to have a 5 million bpd of water, and in the second phase an additional 2.5 million bpd of water will be added for additional fields.