IEA sees oil market stuck between no major slowdown but stalled recovery
The global economy is likely not headed for any major slowdown due to COVID-19 but piled-up storage and uncertainty over China’s oil demand cloud oil markets’ recovery, an official with International Energy Agency (IEA) said. Keisuke Sadamori, IEA director for energy markets and security, told Reuters the outlook for oil was in the midst of either a second wave or a steady first wave of the coronavirus. “There is an enormous amount of uncertainty, but we don’t expect any additional serious slowdown in the coming months.” “Even though (the market is) not expecting real robust growth coming back soon, the view on demand is more stable compared with three months ago,” he said in an interview. Crude prices plunged in spring to historic lows as the pandemic’s lockdowns crushed demand, and have pared losses but remained stuck near $40 a barrel. The IEA cut its 2020 oil demand forecast in its monthly report on Aug. 13, warning that reduced air travel would lower global oil demand by 8.1 million barrels per day (bpd). The Paris-based agency downgraded its outlook for the first time in three months, as the epidemic continues to wreak economic pain and job losses worldwide. With Brent crude registering its first weekly loss since June on Friday, markets have grown increasingly nervous over demand, poor refining margins and slow economic growth, reducing incentives to draw crude and products from abundant stocks. “It doesn’t seem like a massive stock draw seems to be happening yet,” Sadamori said. “We are not seeing a robust pickup in refining activity, and jet fuel is the big problem,” he added. China, the world’s largest crude importer, emerged from an economic lockdown sooner than other major economies and used its financial muscle to make record oil imports in recent months, a rare bright spot amid global demand destruction. But geopolitical tensions could call into doubt “to what extent it can be sustainable and last long”, Sadamori said. “There are so many uncertainties with regard to the Chinese economy and their relationship with key industrialized countries, with the U.S. and these days, even Europe. It’s not such an optimistic situation – that casts some shadow over the growth outlook”.
Gas Authority of India Has Several Renewable Projects in the Offing
Gas Authority of India Limited (GAIL) submitted its Annual Report for 2019-20 that sheds light on GAIL’s ambitions and accomplishments in the renewable energy sector. According to GAIL, its total renewable energy portfolio consists of 118 MW of wind power capacity and 12.3 MW of solar power capacity, totalling nearly 130 MW. The report focused on its renewable energy endeavors and plans in the segment. GAIL has decided to venture into the Compressed Bio Gas (CBG) business by setting up CBG production projects. GAIL said that it had invited expressions of interest (EoI) from various CBG producers for the market tie-up of its retail outlets and joint ventures. GAIL also claims to be at an advanced stage of a tie-up with Ranchi Municipal Corporation for the supply of Municipal Solid Waste (MSW) and associated infrastructure for setting up the CBG project in Ranchi. The company already has the city gas distribution license from Petroleum and Natural Gas Regulatory Board for the Ranchi district. It has also established its eastern regional office in Ranchi, which will help with integrated management of CBG project operations and marketing. Solar Installations The company has taken several initiatives for solar expansion to date. As reported previously, GAIL is implementing a 1.8 MW captive solar energy PV project at Vijaipur unit in Madhya Pradesh. The project cost was estimated to be ₹ 83.6 Million (~$11 million). It also placed a work order to harness this potential of ~3.3 MW for which work execution will be taken up in the current year, across GAIL installations on a pan-India basis. GAIL also installed a 5 MW solar power project at Jaisalmer that was registered with the United Nations Framework Convention on Climate Change as a Clean Development Mechanism GAIL installed solar power projects at 11 health facilities at Barpeta in Assam along with solar street lights, high mast lights, and solar power projects in remote villages of Uttar Pradesh, Bihar, Jharkhand, and Gujarat. Wind Installations GAIL owns two wind energy farms in Kutch, Gujarat, with a total installed capacity of 19.2 MW. The renewable power generated in these wind farms is first utilized in GAIL’s installations situated in Gujarat’s Gandhar, Vaghodia, Hazira, Samakhiali, and Kandla, and the remaining power is sold to the grid
Saudi Arabia cuts oil prices as coronavirus continues to sap energy demand
Saudi Arabia cut pricing for oil sales in October, a sign the world’s biggest exporter sees fuel demand wavering amid more coronavirus flare-ups around the globe. The kingdom’s state producer, Saudi Aramco, reduced its key Arab Light grade of crude by a larger-than-expected amount for shipments to Asia, its main market. It also lowered pricing for U.S. Buyers Aramco cut Arab Light to Asia to a discount against the benchmark oil price used by the Saudis for the first time since June. It’s the second consecutive month of reductions for barrels to the region and the first month in six that U.S. refiners will see a cut. Aramco will trim pricing, too, for lighter barrels to northwest Europe and the Mediterranean region. Oil demand has plunged this year after the pandemic forced governments to lock down economies, airlines to cancel fights and workers to stay at home. Saudi Arabia, Russia and other OPEC+ producers agreed in April to slash output by almost 10 million barrels per day. Those cuts and a demand recovery in China have since helped oil prices more than double. But they’re still down around 35% this year. Brent crude fell to $42.66 on Friday, suffering its biggest weekly loss in almost three months as infection rates continue to climb in nations such as the U.S. and India. “Aramco understands the importance of China for the global oil market,” said Giovanni Staunovo, a commodities analyst with UBS Group AG. “The cut for October might help to support stronger imports from China over the coming months.”
TAPI Gas Pipeline Gets Boost After Turkmen, Afghan Officials Ink Deal
Construction of the nearly 2,000-kilometer TAPI pipeline which would transport Turkmenistan’s natural gas to India and Pakistan through Afghanistan received a significant boost this week as officials from Ashgabat and Kabul inked another deal to move forward with the ambitious project after years of delays. On August 31, a tripartite memorandum of understanding was signed in Kabul as part of a meeting between Muhammetmyrat Amanov, chief executive of the TAPI Pipeline company, Mahmoud Karzai, who heads Afghanistan’s urban development and borders ministry and Mohammad Haroon Chakhansuri, Afghanistan’s minister of mines and petroleum. “A memorandum will be signed to acquire lands [in Afghanistan] based on the route of the TAPI project and the plan of action will soon enter its practical phase,” Chakhansuri said before signing the document, according to a report by Afghanistan-based Khaama Press news service. TAPI was first proposed 22 years ago when Turkmenistan and Pakistan initialled a memorandum of understanding, but construction was delayed due to geopolitical circumstances. Work on the $10 billion gas pipeline finally began in Turkmenistan in 2015. Following an agreement between Afghanistan, India and Pakistan, gas would be purchased from Turkmenistan and then transported to the western and southern territories of Afghanistan, as well as central Pakistan and northwestern parts of India. The 1814-kilometer pipeline has been designed for a 30-year period and is expected to supply about 33 billion cubic meters (bcm) of gas per year from Turkmenistan’s giant Galkynysh gas field through the Afghan cities of Herat and Kandahar, as well as the Pakistani cities Quetta and Multan. The pipeline ends at the Indian city of Fazilka, located near its border with Pakistan. Five bcm out of the entire volume will be absorbed by Afghanistan, while Pakistan and India will receive 14 bcm each. The pipeline was expected to begin operations in 2020, but its launch has been repeatedly postponed despite Pakistan completing all preparatory work. On its part, Afghanistan claimed it began preparation in early 2018, but said work on the pipeline has not yet begun due to bureaucratic difficulties. Afghan government officials are convinced that some documents required for the inauguration of the project have not been approved, including those related to land acquisition. According to Abdul Qadir Mutfi, a spokesman for the mines and petroleum ministry, Afghanistan should sign three additional agreements with Turkmenistan. “After that construction work for the project will begin,” he said in January, according to a report by Tolo News. Officials from the TAPI Pipeline company said that construction of the Afghan section would begin in early 2021 upon the completion of land acquisition.