Oil prices rise as fuel demand surges in top consumer United States
Oil prices rose on Thursday as U.S. implied consumer petroleum demand surged to a record high in the world’s top oil consumer even as the omicron variant of coronavirus threatens to dent oil consumption globally. A signal by the U.S. Federal Reserve to tackle inflation before it derails the U.S. economy also boosted prices. Brent crude oil futures rose by 80 cents, or 1.1%, to $74.68 a barrel by 0116 GMT, while U.S. West Texas Intermediate (WTI) crude futures increased by 88 cents, or 1.2%, to $71.75. “Despite the current virus surge, the weekly EIA oil inventory report showed demand for petroleum products hit a record high, crude exports bounced back and national crude stocks posted a larger-than-expected draw,” said Edward Moya, senior analyst at OANDA. “This current Omicron wave may lead to limited restrictive measures across the U.S., but lockdowns that happened during the peak of the pandemic will not be revisited.” U.S. crude inventories sank by 4.6 million barrels in the week to Dec. 10, data from the U.S. Energy Information Administration showed. That was more than double expectations in a Reuters poll for a 2.1 million-barrel drop. Product supplied by refineries, a proxy for demand, surged in the most recent week to 23.2 million barrels per day (bpd), due to gains in gasoline, diesel and other refined products. Analysts said the rise reflects both expectations for a surge of people traveling for the holidays and the loosening of supply-chain bottlenecks that has more trucks on the road delivering goods. Meanwhile, the Federal Reserve said it would end its pandemic-era bond purchases in March and begin raising interest rates as unemployment remains low and inflation has climbed. Lingering worries about coronavirus curbed price gains. Britain and South Africa reported record daily Covid-19 cases with omicron spreading rapidly while many firms across the globe are now asking employees to work from home, which could also limit oil demand.
Essar’s Stanlow to build UK’s largest biofuels hub
Stanlow Terminals Ltd, promoted by the Mumbai- based Ruia family, will develop the UK’s largest biofuels storage hub in northwest of England as part of a focus on emerging opportunities amid energy transition and net-zero goals. The company said the investment plan will be a key element in the company’s strategic objective of becoming the largest bulk liquid storage and energy infrastructure solutions provider in the UK. The storage hub will deliver 300,000 cubic metres of capacity to support customers in delivering the UK’s net-zero transition goals. The Stanlow Manufacturing Complex and Tranmere Terminal, located within the Liverpool port, will allow customers to store, blend and distribute bio-fuels suitable for use in the energy transition as drop-in replacement transport fuels for road, aviation and marine consumption. Stanlow Terminals is the largest independent bulk liquid storage business in the UK, with three million cubic metres capacity. It is located on the Mersey Estuary within the Liverpool port, which has eight jetties and deepwater facilities, offering flexible and efficient import and export of bulk liquids, the company said in a statement. Stanlow Terminals already provides biofuels storage capacity for customers through dedicated supply and delivery infrastructure. This new customer-led investment will support the growth initiatives such as sustainable aviation fuel linked to Fulcrum’s Northpoint project, sustainable hydrotreated vegetable oil and will include waste-based feedstock import facilities, blending and capacity expansion for existing bio-ethanol and bio-methanol. The market for energy from renewable sources in the UK is expanding rapidly, driven by legislative obligations to encourage lower carbon fuels. Additional storage investment opportunities for low-carbon energy products, such as e-fuels, bio-LPG, bio-methane, hydrogen and ammonia are all progressing through feasibility studies. Stanlow Terminals earlier joined forces with parent company Essar and Fulcrum BioEnergy to develop a storage facility at Stanlow for sustainable aviation fuel manufactured from non-recyclable household waste. The project will support the aviation industry’s continued reduction of carbon emissions and will support the UK’s drive towards becoming a net-zero economy. Stanlow Terminals is also supporting the UK’s hydrogen economy and the HyNet Northwest project by developing storage and distribution facilities that will be required to provide a multi-modal hydrogen and carbon dioxide transport hub.
BPCL is once again the India’s most sustainable Oil and Gas Company in the Dow Jones Sustainability Indices 2021
Bharat Petroleum Corporation Limited (BPCL), a ‘Maharatna’ and a Fortune Global 500 Company has been ranked India’s top oil and gas company for its sustainability performance in the 2021 edition of the S&P Dow Jones Sustainability Indices (DJSI) Corporate Sustainability Assessment (CSA). The Dow Jones Sustainability™ World Index comprises global sustainability leaders as identified by S&P Global through the Corporate Sustainability Assessment (CSA). It represents the top 10% of the largest 2,500 companies in the S&P Global BMI based on long-term economic, environmental and social criteria. Arun Kumar Singh, Chairman & Managing Director, BPCL said, “The continued recognition by DJSI validates BPCL’s efforts of moving towards a Net Zero company in scope 1 and scope 2 emissions by 2040 and reinforces our commitment to invest in people, planet and prosperity.” BPCL’s commitment to Environmental, Social, Governance (ESG) and responsible growth has again been recognized by DJSI. This is the second consecutive year that BPCL is at the top of the DJSI Indices in India having achieved a score of 59, against an industry average score of 39. Sustainability is the top priority at BPCL. The Company, recently announced its ambitious journey of being a net zero energy company by 2040. It is working on a three-pronged strategy of Green Hydrogen, Green Power and Green Innovations to achieve this objective.
Banning US LNG exports would be ‘highly destabilising’ says IHS Markit
Disrupting liquefied natural gas (LNG) supply would risk higher prices for domestic consumers, undermine US interests abroad and hinder global emissions reduction efforts, a new report from IHS Markit finds. Curtailing US exports of LNG has recently been raised as an option to insulate US consumers from rising gas and power costs around the globe. However, an imposed disruption of LNG supply at a time of extreme stress in global gas markets would have a highly destabilising effect both politically and commercially. Such a move risks higher prices for US consumers while undermining US interests and emissions reduction goals abroad, according to a new analysis by IHS Markit. “When markets are tight what is required is an assurance of steady, secure, reliable supply, and reliability for the agreements and relationships with other countries underwriting this supply,” said Daniel Yergin, vice chairman, IHS Markit and author of The New Map. “Proposals to limit or redirect supply only exacerbate tensions, add to uncertainty and market volatility, and undermine both investor and consumer confidence, as well as relationships with US allies and partner countries.” Gas prices in North America have increased significantly in percentage terms recently (up to more than $5 per MMBtu in November after being less than $3 per MMBtu for most of first half of 2021). However, the US gas price has begun trending back downward more recently and it remains extremely low in comparison to international price, the report notes. The US gas price is currently at an unprecedented discount compared to Europe and Asia, where spot LNG prices have been trading above $25 and $30 per MMBtu, respectively. A stoppage of US LNG exports would create a severe dislocation between supply and demand in the US natural gas market that would stifle investments in the supply, the report says. The likely result would be greater volatility and higher prices, not lower ones. Indeed, such a stoppage would recreate conditions of the COVID-induced cycle that caused prices to rise to their current levels in the first place, the report says. “We have already learned from the COVID-19 crisis the harmful impacts of suppressed upstream investment,” said Matthew Palmer, senior director, global gas, IHS Markit. “Demand has emerged sprinting while supply is limping to catch up. Increasing supply, not muffling demand, is the right response to meet the needs of consumers in a recovering economy and to support economic growth. Otherwise, the cycle repeats itself.” The imposition of an exports ban would also exacerbate current energy crises in Europe and Asia, undermining the global interests of the US, the report says. “The US is the third largest exporter of LNG in the world, delivering supply to more than 35 countries in recent years,” said Michael Stoppard, chief strategist, global gas, IHS Markit. “You cannot engineer a stoppage—even a partial one—without dealing a major blow to investor confidence and undermining relations with key partners who would see such a move as an arbitrary and damaging change to the rules of the game, as well as a negative shock to their economies.” In Europe, LNG is a competitive alternative to reliance on Russian gas. The irony of the US rather than Russia choosing to withhold supply—especially at a time of high tensions related to Russia and Ukraine—would be a major hindrance to US foreign policy and commercial goals, the report notes. In Asia, companies in Japan, South Korea and elsewhere have honoured contracts to buy LNG from the US even though the Henry Hub-linked prices were above alternative international prices for the past several years, the report says. Cutting off supply at the moment when that price differential has reversed would severely undermine confidence in the US as a secure source of supply—confidence that has led many companies to secure long-term contractual agreements that underwrite billion-dollar investments in the US. LNG exports are also a vital component of the energy trade between the US and China, the report notes. Recognition that energy trade could help offset the trade imbalance between the two nations was a key driver behind their 2020 economic and trade agreement—where China committed to spending at least $200 billion more on US imports during 2020-2021 compared to 2017, $52 billions of which was designated for energy products, including LNG. The onset of a ban on US LNG exports would also be a major hindrance to carbon reduction efforts in several countries, particularly in Asia where burning coal for power generation remains the default option. Withholding supply of US LNG from the global market would make it more difficult for countries—China, India and many others—to transition to gas and other lower-emission sources, the report says. “A stoppage of US LNG exports would run counter to carbon reduction efforts following COP26, where the US and China in particular were able to find common ground,” Michael Stoppard says. “Restricting US LNG supply would simply force China, alongside other Asian markets, to delay its move away from coal-fired power generation.”
How ONGC Is Trying To Overcome Its Biggest Challenge
Oil and Natural Gas Corp.’s production declined over the past few years as its fields aged and then the Covid-19 pandemic squeezed demand. India’s biggest explorer is looking to reverse the trend. The company’s output has been falling since 2018-19, according to data compiled from the Ministry of Petroleum and Natural Gas. The volume of fuels extracted has missed targets since 2016-17. ONGC is relying on in-house innovation, inducting better technology and collaborating with global experts to mitigate production shortages, according to its annual report for 2020-21. Queries emailed to the company for further information remained unanswered.