LNG trade grew 6% in 2021 amid gas price volatility, says Shell
U.S. natural gas production and demand will rise in 2021 as the economy recovers after falling last year due to coronavirus demand destruction, the U.S. Energy Information Administration (EIA) said in its Short Term Energy Outlook (STEO) on Tuesday. The EIA projected dry gas production would rise to 93.37 billion cubic feet per day (bcfd) in 2021 and 95.97 bcfd in 2022 from 91.49 bcfd in 2020. That compares with an all-time high of 92.87 bcfd in 2019. The agency also projected gas consumption would rise from 83.26 bcfd in 2020 to 83.46 bcfd in 2021 before sliding to 83.10 bcfd in 2022. That compares with a record high of 85.29 bcfd in 2019. The EIA’s December projections for 2021 exceeded its November forecasts of 93.34 bcfd for supply and 83.03 bcfd for demand. The agency forecast U.S. liquefied natural gas exports would reach 9.80 bcfd in 2021 and 11.49 bcfd in 2022, up from a record 6.53 bcfd in 2020. That is similar to its November forecasts of 9.81 bcfd in 2021 and 11.49 bcfd in 2022. The EIA projected U.S. coal production would rise to 583 million short tons in 2021 and 621 million short tons in 2022 from 535 million short tons in 2020, its lowest since 1965, as power plants burn more coal due to a forecast increase in gas prices. The EIA projected carbon emissions from burning fossil fuels would rise to 4.891 billion tonnes in 2021 and 4.939 billion tonnes in 2022 as power generators burn more coal. That is up from 4.575 billion tonnes in 2020, which was the lowest since 1983.
Shift refinery to Nagpur, Gadkari requests Petroleum Minister
Union minister Nitin Gadkari has requested his cabinet colleague, petroleum and natural gas minister Hardeep Singh Puri to shift a major project under the latter’s ministry from the proposed site at Ratnagiri to Nagpur. In his letter dated February 14, Gadkari referred to the Refinery and Petrochemical Complex (RPC), which was being proposed near Ratnagiri. Gadkari pointed out to Singh that the latter had “assured” establishment of the project in Nagpur, if land was made available. Gadkari wrote that such projects “need huge land”, and the Butibori MIDC which is a “five star MIDC in Maharashtra” has thousands of acres of land available, along with major facilities. “The national highways can be used as Right of Way (ROW) for laying product distribution pipeline,” he stated. Since the project was originally proposed for Ratnagiri, Gadkari added that a decision on that could take long. “The Maharashtra government has been asked to communicate its stand on availability of land for the planned project at Rajapur (Ratnagiri). It is uncertain how much time it (the decision) would take. In such a situation, I propose to prefer Nagpur for the project,” he said. The Nagpur MP then highlighted the various infrastructure projects that have come up near the area. He talked about a dry port in Sindi (Wardha). “A dry port can get maximum business from RPC to ensure both-way logistics. The newly-constructed Samruddhi Mahamarg can get fixed income from RPC as ROW for laying crude pipelines, fetching yearly rents to the Maharashtra State Road Development Corporation in millions,” said Gadkari. The minister for road, transport and highways said RPC would require a huge amount of water and that can be sourced from the nearby Gosikhurd dam. Gadkari went on to add that about 0.5 million jobs can be generated directly and indirectly if the project is shifted to Nagpur. He also put in writing his ‘promise’ of making available the land required for this project by holding “immediate discussions with the state government authorities”. Gadkari added that with the availability of land, the project now needs to be sanctioned for Nagpur. The Union minister said this would spur setting up of manufacturing units that use crude oil products and by-products. Welcoming Gadkari’s proposal, Vidarbha Economic Development Council (VED) president Shivkumar Rao said, “The benefits of such a project will accrue to both businesses that use these inputs as availability will increase and transport costs will come down. Bitumen is a by-product and is being used in road construction.” VED vice-president Pradeep Maheshwari has been a strong proponent of the project. “RPC in Vidarbha will save the huge cost presently incurred on bitumen logistics. Million of kilometres of under-construction roads need frequent maintenance, and bitumen is the costliest input,” said Maheswari.
UAE pledges to meet India’s growing energy needs amid oil price concerns
The UAE, OPEC’s third biggest crude producer, said it is committed to meeting India’s energy demand as the growing oil consumer seeks to secure supplies with prices surging to near $100/b. The commitment to supplying India is included in the Joint UAE-India Vision Statement, which follows the signing of the India-UAE Comprehensive Economic Partnership Agreement on Feb. 18, according to state run news agency WAM. India represents the UAE’s second largest oil customer. “The UAE is one of India’s key energy providers and remains committed to meeting India’s growing energy demand and is proud to have been the first international partner to invest by way of crude oil in India’s Strategic Petroleum Reserves Program,” the statement said. “Indian companies have steadily increased their participation across the entire UAE’s energy sector and represent some of Abu Dhabi’s key concession and exploration partners.” The new economic partnership agreement between the UAE and India comes at a time when high oil prices are hurting oil consumers such as India, the world’s third-biggest crude importer and consumer, which meets around 85% of its domestic energy demand via imports. The UAE energy ministry could not immediately be reached for comment on details of the agreement, and no specific volumes were specified. Oil price swings Crude prices are at near-eight-year highs, with S&P Global Platts assessing Dated Brent at $97.35/b on Feb. 18. Two days earlier, it had breached the $100/b threshold for the first time since September 2014. India has complained several times to OPEC over the past year about rising prices and has in recent days been taking up the issue bilaterally with the bloc’s members, junior oil minister Rameswar Teli told the lower house of the Indian parliament on Feb. 7. Indian oil demand was expected to reach 11 million b/d by 2045, compared with 4.9 million b/d in 2021, he said, referring to a projection of OPEC’s World Oil Outlook 2021. India’s oil demand rose 3.7% year on year to 201 million mt, or 4.3 million b/d, in 2021, the oil ministry data showed, reflecting a rise in transportation fuel consumption after the delta variant hit its economy in 2020. Lower crude imports India has set a target to cut crude imports by 10% with a multi-prone strategy by increasing domestic crude production, focusing on renewables and ethanol blending program by 2025. India’s crude imports rose 3.9% year on year to 209.6 million mt, or 4.2 million b/d, in 2021, oil ministry data showed, riding on recovery in domestic fuel demand after two years. The UAE’s Abu Dhabi National Oil Co. is the only overseas company with any capacity in India’s strategic petroleum reserves, holding about 750,000 mt under a government-to-government deal that sees ADNOC supply crude to SPR locations at Padur and Mangalore in Karnataka in southern India. India’s SPR has a combined capacity of 5.33 million mt, with Padur the largest at 2.50 million mt, followed by Mangalore at 1.50 million mt and a third location at Visakhapatnam at 1.33 million mt. ADNOC has also previously invited Indian companies to invest in the UAE’s downstream sector. Clean energy cooperation Both India and the UAE are also cooperating in the energy transition field, including the production of green hydrogen, according to the Joint Vision Statement. “Further work will be undertaken to identify new collaboration opportunities to support India’s energy requirements, including new energies, and ensure the provision of affordable and secure energy supplies to India’s growing economy,” the statement said. “As the UAE and India collectively navigate the global energy transition, both countries remain committed to working together to create a just and equitable transition to a low-carbon future.” The two countries will establish a joint Hydrogen Task Force, focusing on green hydrogen. The UAE is targeting a 25% global market share of low-carbon hydrogen by 2030 with the launch of its “hydrogen leadership roadmap” at the UN Climate Change Conference. The roadmap sets out support for domestic, low-carbon industries and aims to establish the country as a leading hydrogen exporter, WAM said Nov. 4. The UAE already has seven hydrogen projects underway and is targeting a large share of key export markets, including Japan, South Korea, Germany and India, as well as other markets it identifies as being of “high potential” in Europe and East Asia.
Indian refineries’ profitability dependent on cost recovery: Report
Indian refineries’ profitability is dependent on cost recovery via an increase in the retail prices, said India Ratings and Research (Ind-Ra). Notably, oil marketing companies have not increased retail prices of petrol and diesel since November 2021. However, the trend might change as high Crude oil prices have kept prices of key refinery-based products elevated in Q4FY22. At present, the Brent-indexed Crude oil is priced over $91 per barrel. Besides, Ind-Ra cited that rise in gross refining margins (GRMs) of Indian refiners in Q3FY22 came on the back of an increase in the “crack spreads” of key products as well as higher inventory gains. Consequently, the Q3FY22 GRMs for Indian refining companies averaged at $9.4 per barrel Ain line with Singapore GRMs. Furthermore, the agency attributed the trend to the demand pickup seen globally on account of the restoration of transport activities, gas switching to oil due to high LNG prices, relaxation of air travel restrictions and a higher winter season heating demand. “Domestic consumption of petroleum products increased to 18.4 million tonnes in December 2021 from 15.9 million tonnes during September 2021, almost reaching the pre-covid level of 18.8 million tonnes in December 2019,” the agency said. “The refinery throughput also increased in response to the increase in demand to 4.72 million bbl per day during 9MFY22 from 4.27 million bbl per day during 9MFY21.”
When it comes to oil prices, bank on demand not Iran
Speculation, according to Henry Ford, was a means of “making of money out of the manipulation of prices, instead of supplying goods and services”. His comment came to mind last week while watching the gyrations of the oil price. At the start of last week, the market was abuzz with speculation that the US and Iran were close to resurrecting Tehran’s 2015 nuclear deal with world powers. Speculation that the deal could be revived sent oil prices lower, despite geopolitical tensions in Ukraine. Then, a few days later, speculation that a deal was less likely helped drive the price of oil to a seven-year high. A rapprochement on the nuclear deal, which former US President Donald Trump abruptly abandoned in 2018, would remove sanctions on Iranian oil exports, potentially offering some relief to an increasingly tight market. An agreement between the US and Iran, which could potentially add 1 million-plus barrels per day (bpd) to the market, could go some way towards cooling the seemingly unstoppable rise of black gold to $100 (SR375). Thus, the flurry of diplomacy in Vienna, where diplomats from the US, Europe, Russia, China and Tehran are meeting, is being as closely watched by oil markets as Vladimir Putin rattles his saber in Ukraine. However, notwithstanding the latest, hopefully better, news from eastern Europe or indeed what’s happening in Vienna, like Ford, we shouldn’t lose sight of the fundamentals. The price of a barrel of Brent jumped 50 percent last year as post-pandemic demand strained supply. Since January, Brent crude has risen 20 percent and is hurtling at pace towards the magic triple-digit of $100 per barrel. Tensions in eastern Europe, or between Washington and Tehran, may ease, but the current supply-demand imbalance in oil markets will not. It’s worth noting that despite sanctions, Iranian oil exports have risen to more than 1 million bpd for the first time in almost three years, almost entirely through increased shipments to China. Iranian oil minister Javad Owji recently said Tehran’s production is now close to the level it was before Washington’s withdrawal from the nuclear deal. But don’t just take his word for it. An OPEC report this month estimated Iranian crude output for 2021 averaged 2.4 million bpd, a sharp increase on the previous year’s 1.9 million bpd. That said, Iran’s output averaged 3.8 million bpd in 2017, and its current illicit exports fall far short of the 2.5 million barrels Tehran shipped before the nuclear deal fell apart and sanctions hit its economy. Those who think the reintroduction of Iranian oil can make a difference point to the fact that it’s been obvious for months that OPEC and its allies are unable to increase supply. A recent BloombergNEF report reveals 15 of the 19 countries with output targets failed to meet them in January, with production from OPEC increasing by just 65,000 bpd last month, a quarter of the scheduled rise. Moreover, increased instability in Libya, whose output remains at around half its pre-civil war levels, could see around 300,000 bpd wiped off global supply. Against that backdrop, Iran looks best placed to be able to rapidly boost global supply by at least 700,000 bpd in the event sanctions are lifted. But would that be enough to avert triple-digit oil this year? Research group IHS Markit expects global oil demand to grow by between 3.8 million bpd and 4 million bpd from January to December. Bear in mind that only Saudi Arabia and the United Arab Emirates appear to have significant amounts of spare production capacity, and neither appears to be in a rush to stem current prices, it doesn’t appear likely that unlocking Iranian oil will make much difference to oil’s direction of travel. But is it likely sanctions on Iran will be lifted anytime soon? Washington has suggested a deal is in sight. The danger, according to reports, is that Tehran’s continuing advances in its nuclear program mean the window for reaching an agreement is rapidly closing. Last week, Iran’s foreign affairs chief Hossein Amir Abdollahian said the US should stop indulging in “games” about deadlines. Instead, he reiterated Tehran’s demand that the US make a public apology for pulling out of the original deal, and a commitment that future administrations will be permanently bound by any new agreement. Clearly, the US cannot commit to what a future President might be elected to do, but realistically, neither of these should be a deal breaker for Tehran. Abdollahian would do well to remember that despite some low-level growth on the back of oil sales to China, sanctions have turned the Iranian economy into a basket case. The Iranian rial has collapsed, and is now worth half its 2018 value. Iranians are currently enduring 40 percent inflation, and banking restrictions caused by current sanctions leave the cost of most financial transactions prohibitively high, making both imports and exports more expensive. Iran also remains blacklisted by the Financial Action Task Force, the global money-laundering watchdog. It is this reality that brought Tehran back to the negotiating table, along with US President Joe Biden’s desire to undo the damage unleashed by his predecessor to the original nuclear deal. However, deal or no deal, oil is heading in one direction only. Bringing Iranian oil back to the market would certainly moderate price growth but would not stop it from breaking through the $100 barrier.
Hydrogen policy to cut the green fuel’s cost by 50 per cent, claims IndianOil
India’s largest oil marketing firm Indian Oil Corporation claims the newly announced green hydrogen policy will cut the cost of this clean fuel by up to 50 per cent. The IOC also says that this is a watershed moment in the country’s energy transition. This policy would bring down costs of hydrogen adoption and increase its use, believes IOC. Indian Oil Corporation has also said that it will set up green hydrogen plants at its Mathura and Panipat refineries by 2024 to replace carbon-emitting units. SSV Ramakumar, Director for Research and Development at IOC, said that the new policy will help cut the cost of manufacturing green hydrogen by 40-50 per cent. “This policy is the single biggest enabler by the state for production of green hydrogen,” he told PTI. Hydrogen is considered one of the cleanest fuel solutions and alternatives to petrol and diesel. While petrol and diesel emit carbon monoxide and other pollutants, CNG or Auto LPG too are not completely clean and carbon neutral. Hydrogen on the other hand emits only water while generating energy for the vehicle’s powertrain. However, the high cost of hydrogen powertrains is one key bottleneck for the industry’s growth. The oil refineries, steel manufacturers too use hydrogen as a process fuel to produce the finished products. Hydrogen is used in oil refineries to remove excess sulphur from petrol and diesel. Currently, hydrogen is produced from fossil fuels such as natural gas or Naptha and results in carbon emissions. This hydrogen is called grey hydrogen. IOC now aims to replace this grey hydrogen with green hydrogen. Green hydrogen is manufactured from electricity generated by renewable energy sources.