India overhauls petroleum reserve policy to boost private interest
India has decided to commercialise half of its current strategic petroleum reserves (SPRs) as the nation looks to enhance private participation in the building of new storage facilities, two government sources told Reuters on Thursday. The shift in policy was approved this month by the federal cabinet, they said. Allowing commercialisation of SPRs mirrors a model adopted by countries such as Japan and South Korea which allow private lesees, mostly oil majors, to re-export crude. India, the world’s third-biggest oil importer and consumer, imports over 80% of its oil needs and has built strategic storage at three locations in southern India to store up to 5 million tonnes of oil to protect against supply disruption. Private entities taking storage on lease will be allowed to re-export 1.5 million tonnes of oil stored in the caverns in the case of Indian companies refusing to buy the crude, they said. Indian Strategic Petroleum Reserves Ltd, a company charged with building of SPRs, will be allowed to sell 1 million tonnes of crude to local buyers, they added. So far Abu Dhabi National Oil Co (ADNOC) has leased 750,000 tonnes of oil storage in the 1.5-million-tonne Mangalore SPR. Last year India allowed ADNOC to export half of its https://www.reuters.com/article/india-oil-adnoc-idUSKBN26Z1KN oil in Mangalore SPRs as the middle eastern oil major found it difficult to sell oil to Indian refiners. India also plans to build strategic storage at Chandikhol in Odisha and Padur in Karnataka for around 6.5 million tonnes of crude to provide an additional cover of 12 days of net oil imports, they said. The cabinet earlier this month also decided to provide up to 80 billion rupees of financial support, equivalent to about 60% of the estimated cost, for building two new SPRs, they said. ISPRL will soon float an initial tender for building the new reserves. “Whoever seek less federal support will be considered for participation in the new caverns,” said one source.
LNG imports dip 17 per cent in June as prices soar, local output rises
Import of liquefied natural gas (LNG) dropped 17% in June over the last year as prices soared and local gas production expanded. LNG prices in the spot market have risen as high as $14 per metric million British thermal units (mmBtu), curbing demand and prompting many consumers to switch back to cheaper fuel oil. The spot prices had dropped to a record low of $2 per mmBtu last year but have been above $10 for the past few months. “Barely any spot cargoes have been imported in the past 2-3 months,” said an executive at GAIL, the country’s largest gas marketer. Spot and short-term cargoes comprise about half of India’s total LNG demand. Currently, prices under long-term contracts are a few dollars lower than the spot market and are being preferred by consumers, industry executives said. However, long-term LNG, too, has become expensive in the past few months as it’s mostly linked to crude oil prices that have climbed above $70 a barrel with a return in global demand amid an artificial supply curb by key producers. Some of the local demand for LNG is also being met by new production from the KG Basin gas fields operated by Reliance and BP. Production from fields operated by private players jumped three-fold to 862 million standard cubic meters (mscm) while the country’s overall output rose by a fifth to 2,777 mscm. The overall gas demand in the country, however, was lower at 5 billion cubic meters (bcm) in June, compared to 5.1 bcm a year earlier and 5.4 bcm of June 2019. “Any quantum jump in the domestic gas demand would come only after some of the under-construction fertiliser plants come onstream,” said the GAIL executive cited earlier.
Iran inaugurates major oil pipeline to bypass Hormuz Strait
Outgoing Iranian President Hassan Rouhani has inaugurated a major onshore pipeline that allows the country to bypass the Hormuz Strait for crude oil exports. The pipeline, with some 1,000 km in length, will transfer the pumped oil from facilities in Goureh to the Omani sea port of Jask, reports Xinhua news agency. The inauguration of the Goureh-Jask pipeline “gives a strong and firm response to all plotters particularly to the US,” Rouhani said during the virtual opening ceremony on Thursday, alluding to the American sanctions, which are aimed at hindering Tehran’s oil exports. “The US government waged war on us in two areas, one on oil exports, and the other on the supply of goods.” “They aimed to stop Iran’s oil exports and reduce crude exports to zero,” he said, hinting at the failure of the US anti-Iran maximum pressure policy. The $2- billion project, the construction of which started two years ago, detours the strategic Hormuz Strait which has long been used as a vital passageway for oil exports of the region. “As time goes by, the importance of this project will become more evident for the Iranians,” said Rouhani. The oil pipeline is able to initially export 300,000 barrels per day (bpd) of crude and will reach the capacity of one million bpd once fully ready in October, according to authorities.