Qatar plans change in crude oil official selling prices in Q1 2020
Qatar Petroleum (QP) has told some term crude buyers in Asia this week that it plans to change the way it prices its oil early next year to align with other Middle East producers, sources with knowledge of the matter said on Thursday. The change follows the Abu Dhabi National Oil Company (ADNOC) saying on Monday that it plans to build a new international exchange for its flagship Murban crude which will start pricing its oil on a forward pricing basis. QP currently prices two of its grades – Qatar Land and Qatar Marine – on a retroactive basis but will move this to forward pricing, a more popular approach used by other Middle East crude exporters such as Saudi Arabia that better matches the trading cycle of crude, the sources said. For example, QP announced OSPs for October earlier this month while Saudi Arabia has set its prices for December. Middle East sour crude grades are typically traded two months forward in the Asia market, meaning that January-loading crude cargoes are currently being traded in the November spot market. By moving prices for Qatari grades forward, it allows traders to compare prices among Middle East supplies, traders said. QP aims to implement the pricing formula change in the first quarter and will set the prices at differentials to the monthly average of Platts Oman and Dubai quotes, the sources said. One of the sources said QP will set dummy prices for a few months to obtain feedback from customers before the change. The producer has released its first set of dummy prices for December, he said. The company did not immediately respond to a request for comment. As part of its efforts to determine market value for its crude, QP offered one 500,000-barrel cargo of January-loading Qatar Marine crude in a rare tender, traders said. Bids can be priced based on Dubai quotes.
Govt mulling to cut stake in IOC to below 51%
The government may cut its stake to below 51 percent in the Indian Oil Corporation, ET NOW reported quoting agencies. ET Now in a report said the government is looking to become a minority shareholder in the company. It currently hold 51.5 percent in the oil major. The central government has been on a divestment spree and is considering to cut stake in a number of companies. Indian Oil is the third oil company in which it is thinking of cutting stakes. State-owned oil and gas explorer ONGC is looking to sell its stake in recently-acquired refiner HPCL to a strategic investor, possibly an overseas oil company, to regain the debt-free status of the company existing prior to the expensive buy. The plan for Hindustan Petroleum Corporation Ltd (HPCL) follows the government’s go-ahead to invite a strategic investor for Bharat Petroleum Corporation Ltd (BPCL) where the Centre owns 53 percent stake. The divestment is important from the fiscal math perspective. India’s fiscal deficit at the halfway mark in 2019-20 stood at 92.6 percent of budgeted estimates, lower than 95.3 percent in April-September, 2018-19, helped by transfers from the RBI. With muted tax revenues, the government will have to undertake spending cuts and divest to achieve FY20 fiscal target of 3.3 percent of GDP, say economists.
IEA sees India’s oil demand doubling, import dependence rising to 90% by 2040
India’s oil demand will double to more than 9 million barrels a day, marking largest absolute consumption growth for any country, and its dependence on imports will rise to 90% by 2040, according to the International Energy Agency’s latest World Energy Outlook. This means the Indian economy will continue to depend in the near term on oil or fossil fuels in spite of the government’s stress on renewable energy and electric vehicles. This does not augur well as the suggested price trends in business as usual or stated policy environment scenarios do not offer much comfort on the price front in spite of subdued demand growth from other economies and rising exports from new players such as the US and Brazil. Oil is one of the key elements of the government’s fiscal math. Costlier fuel cramps government’s fiscal room for social spending or stimulus as it disturbs macro-economic parameters by raising costs for consumers, farmers, transporters and manufacturers. The report says a third of the growth in India’s oil will come from trucks. Another quarter will come from passenger cars, with the Indian car fleet growing by a factor of seven between now and 2040. Use of oil as a petrochemical feedstock will contribute the remaining 15% demand. On the global stage, the Outlook sees the oil trade becoming increasingly centred on Asia, with China soon overtaking the European Union as the world’s largest oil importer and holding that position to 2040, despite the flattening of its oil demand in the 2030s. But this also poses a challenge as the growing concentration of trade flows to Asia increases the amount of oil passing through major global chokepoints, with implications for global oil security. The Outlook also sees the influence of traditional players on the oil market waning, with the US output pushing down the share of OPEC countries and Russia in total oil production. This share drops to 47% in 2030, from 55% in the mid-2000s, implying that efforts to manage conditions in the oil market could face strong headwinds. Pressures on the hydrocarbon revenues of some of the world’s major producers also underline the importance of their efforts to diversify their economies.
Growth in global oil demand to slow from 2025: IEA
Growth in global oil demand is expected to slow from 2025 as fuel efficiency improves and the use of electric vehicles increases, but consumption is unlikely to peak in the next two decades, the International Energy Agency said on Wednesday. The Paris-based IEA, which advises Western governments on energy policy, said in its annual World Energy Outlook for the period to 2040 that demand growth would continue to increase even though there would be a marked slowdown in the 2030s.The agency’s central scenario – which incorporates existing energy policies and announced targets – is for demand for oil to rise by around 1 million barrels per day (bpd) on average every year to 2025, from 97 million bpd in 2018. Demand is then seen increasing by 0.1 million bpd a year on average during the 2030s to reach 106 million bpd in 2040. “There is a material slowdown after 2025, but this does not lead to a definitive peak in oil use,” the IEA said, citing increased demand from trucks and the shipping, aviation and petrochemical sectors. The IEA has been criticised by groups concerned about climate change who say the outlook underplays the speed at which the world could switch to renewable energy and undermines efforts to keep increases in global temperatures within 1.5-2 degrees Celsius. This year, the IEA renamed its main scenario “Stated Policies”, instead of “New Policies”, to clarify that it reflects current policies. It is one of three scenarios used to show how energy demand could evolve over the next two decades. This change is an improvement, said Joeri Rogelj of the Grantham Institute at Imperial College London. However, the IEA’s most ambitious scenario “remains inconsistent with 1.5 C and several aspects of the Paris Agreement and doesn’t present a scientifically consistent narrative”, he added. NO EMISSIONS PEAK The IEA outlook sees primary energy demand growing by a quarter by 2040, with renewable energy accounting for half of the rise and gas for 35%. The IEA’s central scenario also does not see energy-related carbon dioxide emissions peaking by 2040 due to economic growth and population increases. “Although emissions are rising, some governments are pushing major policy changes,” IEA executive director Fatih Birol told journalists in Paris. An expected rise of just over 100 million tonnes a year between 2018 and 2040, although lower than the average rate of increase since 2010 of 350 million tonnes a year, would not be enough of a reduction to curb global temperature rises. The IEA expects there will be 330 million electric cars on the road by 2040, up from an estimate of 300 million in last year’s outlook. That would displace around 4 million bpd of oil use, it said, compared to the 3.3 million bpd forecast previously. The largest increases in oil production are seen coming from the United States, the world’s biggest producer, as well as Iraq and Brazil. U.S. tight crude oil production is seen rising to 11 million bpd in 2035 from 6 million bpd in 2018. The share of oil production by members of the Organization of the Petroleum Exporting Countries plus Russia is seen falling to 47% for much of the next decade, a level not seen since the 1980s. “The oil price required to balance supply and demand in this scenario edges higher to nearly $90 a barrel in 2030 and $103 a barrel in 2040,” the report said of the IEA’s central scenario.
World’s thirst for oil to keep growing until 2030s
The world’s thirst for oil will continue to grow until the 2030s and climate-damaging emissions will keep climbing until at least 2040 – unless governments rethink how we fuel our lives, according to an important global energy industry forecast. Growing demand for SUVs could negate the environmental benefits of the increased use of electric cars. And current investment in renewable energy is “insufficient” to meet the needs of growing populations, notably in cities across Asia and Africa. This is according to the latest annual long-term outlook released Wednesday from the Paris-based International Energy Agency. The World Energy Outlook is closely watched by the oil industry, but it’s also increasingly important to governments because of its relevance to climate policy. And this year its report, while still focused on forecasting energy needs in the next 20 years, took a stronger-than-usual stand on climate change, calling for “strong leadership” from governments to bring down emissions. The IEA said that almost 20% of the growth in last year’s global energy use was “due to hotter summers pushing up demand for cooling and cold snaps leading to higher heating needs.” Environmental advocates say the IEA still isn’t doing enough to encourage renewable energy. Oil Change International notably criticized the IEA’s “over-reliance” on natural gas as a replacement for coal, saying that will lead to “climate chaos” because gas too contributes to emissions. Based on current emissions promises by governments, the IEA forecast global oil demand of 106.4 million barrels a day in 2040, up from 96.9 million last year. Global oil demand would slow in the 2030s, and coal use would shrink slightly. Emissions would continue to rise, if more slowly than today, and wouldn’t peak before 2040. The U.S. is central to whatever happens next. U.S. consumers and businesses were a leading source of growing oil demand last year, the IEA says. Also, the U.S. will account for 85% of the increase in global oil production by 2030, thanks to the shale boom. The report also lays out a more ambitious forecast if governments were to meet the goals in the 2015 Paris climate accord. That would require a big boost in wind and solar power, the IEA says, and a new push for energy efficiency, which has slowed in recent years. “The faltering momentum behind global energy efficiency improvements is cause for deep concern. It comes against a backdrop of rising needs for heating, cooling, lighting, mobility and other energy services,” the report said. The more ambitious scenario would also require work on new coal plants in Asia to capture their emissions, or by closing them early. And all that would lead to a big drop in oil demand – with repercussions for oil-producing countries that depend heavily on hydrocarbon income. “Governments must take the lead,” the report said. “Initiatives from individuals, civil society, companies and investors can make a major difference, but the greatest capacity to shape our energy destiny lies with governments.”