Opec-allies’ output cut may not amount to big shift in oil prices
The good news for a major importing country like India is that oil prices are unlikely to touch October highs of around $85 a barrel anytime soon. Global oil markets can have a small celebration. The Organization of the Petroleum Exporting Countries (Opec) has agreed to cut oil output by 800,000 barrels per day (bpd) starting January. Simultaneously, non-Opec friends will cut production by 400,000 bpd. Together, the output cut amounts to 1.2 million bpd and is broadly on expected lines. On Friday, Brent crude prices increased by 2.7% to $61.67 a barrel. According to an analyst who did not want to be named, the current deal would support Brent crude prices in the range of $60-65 a barrel from a near-term perspective. “It is possible Brent may inch towards $70 a barrel provided demand is consistent and these countries are compliant with the cuts,” he added. However, the good news for a major importing country like India is that oil prices are unlikely to touch October highs of around $85 a barrel anytime soon. That’s because oil markets are well supplied at the moment. The US turned into a net oil exporter last week, breaking 75 years of continued dependence on foreign oil, said a Bloomberg report last week. This was helped by record production in the country. Watered-down American sanctions on Iran, as waivers were granted to eight countries for a few months, meant more-than-initially-anticipated Iranian oil supply in the market. Additionally, Opec and non-Opec friends were producing more in recent months in anticipation of lower Iranian oil exports post- US sanctions. Another reason which will limit a meaningful spike in oil prices is that there are concerns on the demand front. There are slowdown concerns in the US and China, two large oil consumers, and that can weigh on prices. In its oil market report in October, the International Energy Agency had reduced its demand growth forecast for this year and the next. Further, an escalation in the US-China trade war post the 90-day truce is something investors will have to watch for. Meanwhile, Opec and non-Opec members will meet in April to review market conditions. Until then, news flow on global macroeconomic growth and US production could offer meaningful clues on oil prices.
Firms set up LNG trading desks in Singapore to capture Asian growth
Several energy firms are setting up dedicated gas trading desks in Singapore as they try to capture the fast growing liquefied natural gas market (LNG) in Asia. As of September, Singapore has over 45 companies with an LNG trading or business development presence here, Enterprise Singapore told Reuters on Monday. This is up from the nearly 40 companies set up in the city-state in May this year, according to local media. “We are looking to develop Singapore’s LNG industry further, as LNG becomes a more important component of Asia’s energy mix,” Enterprise Singapore told Reuters in an emailed statement on Monday. Singapore has been expanding its LNG infrastructure by increasing storage capacity and also adding capabilities to bulk-break cargoes, an Enterprise Singapore spokeswoman said. “As such, increasing numbers of energy traders in Singapore have begun expanding into LNG,” she added. Asia’s appetite for the super-chilled fuel, led by China, is expected to grow rapidly over the next few years, attracting investment and triggering new LNG trading desks opening globally. A recent push for more transparency in the sector has boosted spot trades of Asian LNG. Singapore, which is the Asian oil trading hub, is seen as a natural hub for LNG especially for companies that already have a presence in the city-state and are looking to expand into LNG. The gas and power division of China National Offshore Oil Co (CNOOC) has set up an office in Singapore, which it will officially open on Monday, several sources familiar with the matter told Reuters. It will have about five staff including two people handling commercial matters, one of the sources said. Singapore business registry records show Shen Yiming and An Zichun as directors of the company, which was registered in the city-state in September with a paid up capital of $10 million. A CNOOC spokesman did not immediately reply to a Reuters query on the matter but the sources said the Singapore office will handle spot LNG trading for one of China’s biggest importers of the fuel. China’s Beijing Gas, whose Singapore office was incorporated in early 2017, beefed up its headcount this year to a total of five people, a source familiar with the matter said. The company recently received approval from the central Chinese government to build a LNG terminal which is expected to be ready by 2022. It is aiming to secure import cargoes for when the terminal is ready, the source added. Aramco Trading Company and Japan’s JERA are also some of the companies adding headcount to their Singapore offices.
Maruti drives past 0.5 million cumulative sales mark for CNG models
Auto major Maruti Suzuki India (MSI) on Monday said it has crossed cumulative sales milestone of 0.5 million CNG vehicles in the country. The company currently offers compressed natural gas (CNG) option in seven of its models, including Alto 800, Alto K10, WagonR and Celerio. Currently, WagonR is the highest selling CNG model in the Maruti Suzuki CNG portfolio. MSI introduced its first fleet of factory-fitted CNG vehicles in 2010. “The benefit of low-cost of ownership comes along with environment friendly fuel option of CNG. The government’s resolve to rapidly expand countrywide CNG will enable many more customers to own an environment-friendly transport,” MSI MD and CEO Kenichi Ayukawa said in a statement. MSI’s range of factory-fitted CNG vehicles are popular in Delhi NCR and across select cities in states of Gujarat, Maharashtra, Andhra Pradesh, Telangana, Odisha, UP and Punjab. In 2018-19, the company expanded its CNG vehicle availability to 26 new cities to reach over 150 cities across the country.
India’s energy sector to attract $300 bn investment in coming decade: Pradhan
Oil Minister Dharmendra Pradhan today said that the global investor industry has its eyes on India’s growing energy sector and investments in the tune of $300 billion is expected in the sector in the coming decade. “The global investor industry is today keenly looking at Indian energy sector as an attractive investment destination. About 300 billion dollars would be invested in coming decade,” Pradhan said, speaking at KPMG’s annual energy conclave – ENRich 2018. He added that Asia’s biggest greenfield oil refinery-cum-petrochemical complex is being set up collectively by Oil Marketing Companies (OMCs) along with Saudi Aramco and ADNOC in the state of Maharashtra at a cost of about $40 billion. Speaking on city gas distribution network, Pradhan said that work on 174 districts has begun which will further expand to cover over 400 districts in next 2-3 years covering 70 per cent of the population and 52 per cent of India’s geography. Talking about boosting India’s natural gas infrastructure and connecting the north-east part of the country with natural gas Pradhan said, “work is underway on 2600 km long Jagdishpur-Haldia and Bokaro-Dhamra pipeline project also known as Pradhan Mantri Urja Ganga project. This project is being further extended from Barauni to Guwahati for connecting the other areas of the Northeast with the gas grid. Approximately Rs.13,000 crores will be spent on these projects.” He added that in order to connect north eastern states with gas grid, Indradhanush Gas Grid Ltd has been formed to lay 1500 km pipeline with an investment of Rs 6000 cr. Pradhan said that the government will soon be setting up a gas trading hub that will allow easy and ready access to gas suppliers and buyers to freely trade natural gas and in turn help India to develop its own hub based pricing. He added that the proposal to set-up the hub will be sent to the cabinet soon. Petroleum and Natural Gas Regulatory Board (PNGRB), India’s downstream oil and gas regulator, has appointed ratings agency CRISIL as consultant to prepare regulations for the planned Natural Gas Trading Exchange. PNGRB will be working with Oil Industry Development Board (OIDB) to work out the complete regulation, operations and location of the upcoming gas exchange platform.
India’s falling oil and gas production is a concern: Minister Pradhan
India’s falling oil and gas production is a matter of concern, Oil Minister Dharmendra Pradhan said, adding the government will soon set up a gas trading hub. India’s crude oil production in October dropped 5 percent from a year earlier to about 2.89 million tonnes, while natural gas output was down 0.4 percent at 2.80 billion cubic metres, provisional data issued by the government showed last month. The government also plans to invest $300 billion in the oil and gas sector in the coming decade, Pradhan added.