Americans See Another 10-Cent Drop In Gasoline Prices
Prices at the gas pump have declined 10 cents in a week, according to AAA, which says recession fears and further releases of America’s strategic petroleum reserve (SPR) have contributed to the further declines. On Monday, average national gasoline prices per gallon were $3,793, nearly 10 cents lower than this time last week. The prices are less than one cent higher than they were a month ago, when the average was $3.700 per gallon, but still off the year-ago average of $3.385. “Global recession fears coupled with the Biden Administration’s plan to continue tapping the Strategic Petroleum Reserve into December has helped temper oil prices,” said Andrew Gross, AAA spokesperson. “This will help take the pressure off pump prices, benefitting drivers and their wallets.” The biggest drops in gasoline prices took place in Alaska, which saw a 33 cent fall in prices at the pump, followed by Calfironia (down 30 cents), Oregon (down 26 cents), Washington (down 24 cents, Nevada (down 20 cents) and Indiana and Michigan both down 15 cents. Gasoline is now cheapest in the states of Georgia and Texas, where consumers are paying an average of $3.20 per gallon. California remains the most expensive gasoline state, due to state taxes, with prices at the pump averaging $5.75 per gallon despite recent declines. The price of gasoline is a crucial factor in November 4 midterm elections. AAA notes that domestic gasoline demand is around 1 million barrels lower than at the same time last year, noting that better gas mileage could also be limiting demand and helping prices move downwards. “If demand remains low and oil prices don’t spike, pump prices will likely keep falling,” the club stated.
Rs 183.50 million fine may delay HPCL refinery expansion
The recent adverse judgement passed by the National Green Tribunal (NGT) may further delay the commissioning of the project to expand capacity of HPCL Visakh Refinery from 8.33 million tonne per annum to 15 mtpa at an estimated cost of nearly Rs 270 billion. The expansion project is in an advanced stage of completion and the work got delayed due to continuation of Covid-19 pandemic for a long spell. In response to a complaint lodged by Visakha Pawan Praja Karmika Sangham, NGT south zone recently directed the HPCL authorities to pay a penalty of Rs 183.50 million for failing to comply with environmental norms. The complaint was lodged for failure to take remedial measures and maintaining 33 per cent of area as green belt as per the decision of the Ministry of Environment, Forests and Climate Change (MOEF&CC) and the recommendations of the Joint Committee set up after study by an experts committee from the Indian Institute of Science, Bangalore. The complaint mainly expressed concern over a fire accident that occurred in the Crude Distillery Unit-3 of Visakh Refinery on May 25, 2021. The tribunal took strong exception to regular complaints from the residents living in the vicinity on breathlessness, nausea, lung and heart ailments and dermatological infections due to frequent leakage of pungent smell from the refinery. Ever since there was a vapour cloud explosion in 1997 killing 56 people, there is no let-up in accidents at the refinery. “The management also stage-managed a public hearing and got environmental clearance for expanding capacity to 15 million tonne despite strong objections from the local residents and opinion leaders,” CITU State president Ch Narsinga Rao told Bizz Buzz. Jana Sena corporator Peethala Murthy Yadav said pending 100 per cent compliance of environmental norms and the directive of NGT, HPCL should not be permitted to commission the expansion project. NGT in its order directed HPCL to take all the required initiatives and comply with the observations of the Joint Committee, IISC-Bangalore and enquiry report within a period of six months. “APPCB is to monitor the same and it is not debarred from taking any action against HPCL for any fresh violation under the Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981 and also initiate appropriate action against the erring officials as per the statutes. HPCL is directed to deposit the environmental compensation assessed at Rs 8,35,20,000 forthwith.”
Green hydrogen, electrolyzer projects may get ₹120 billion sops
The government is expected to allocate around ₹60 billion each for production-linked incentive (PLI) schemes for electrolyzers and green hydrogen from the ₹200 billion green hydrogen mission, said two people aware of the developments. The ministry of new and renewable energy has moved a cabinet note detailing green hydrogen consumption obligations, subsidies and standards for the pilots, and research and development requirements under the mission “The green hydrogen mission is of ₹200 billion, and the bulk of the amount is for PLIs for electrolyzers and hydrogen. It would be ₹50-60 billion, each, for both the incentive schemes,” said one of the two people requesting anonymity. A second official said the initiative includes major enabling provisions for developing the green hydrogen industry and adoption in India. Queries to the new and renewable energy ministry, finance ministry and the Department for Promotion of Industry and Internal Trade did not elicit any response till press time.
Marketing, pricing freedom must to catalyse investments in gas fields
Pricing and marketing freedom are a must to ensure billions of dollar investment as costs of finding and producing natural gas from deposits lying several hundred metres below seabed are market driven, producers have told a government-appointed panel reviewing gas pricing. In an investor call post announcement of company’s second quarter earnings on October 21, Sanjay Roy, senior vice-president for exploration and production, Reliance Industries Ltd, stated that producers are being represented by Association of Oil and Gas Operators (AOGO) at the panel whose report is expected in the next few weeks. “Potentially, the upstream producers are saying that there should be marketing and pricing freedom, pursuant to the policies and the contracts,” he said. “The counter to elevated prices is increment to production, as we have seen in the case of KG-D6, and these investments will have to happen in frontier areas where there seems to be larger potential for such investments.” Reliance and its partner BP plc of UK are investing about USD 5 billion in newer and deeper fields in the Bay of Bengal block KG-D6, which are now producing over 19 million standard cubic metres of gas per day or about 20 per cent of India’s gas production. “You will need a huge scale of investments, billions of dollars, and for that to sustain, marketing and pricing freedom will be very important, particularly as costs are market driven. So, prices need to be similar,” he said. But gas consumers are seeking “some kind of cap” particularly in government-regulated APM gas which feeds city gas networks that sell CNG to automobiles and piped natural gas to household kitchens for cooking. “…We are also seeing representation from the consumers who have been projecting that there needs to be some kind of cap, particularly in gas,” he said. Individual gas producers like Reliancehaven’t made any representation to the committee headed by Kirit Parikh, which has been asked by the Oil Ministry to look at setting a ‘fair price to consumers’. Their association AOGO is doing the representation. AOGO has told the panel that any mid-course changes through price caps not just go against pricing and marketing freedom contracts and government policy promises to companies, but also add to uncertainty to fiscal regime which would impact investments. The government biannually fixes gas prices based on rates prevalent in surplus nations. Rates according to this formula stayed below breakeven price of USD 3-3.5 per million British thermal unit for six years starting October 2015 but have jumped 5x in the last one year to USD 8.57 for old fields (APM gas) and USD 12.46 for difficult fields. This rise has prompted user industries to complain, following which the ministry set up a panel to suggest an affordable rate for the users. AOGO told the panel that doubling India’s production from current levels to cut rising imports and meet the target of raising share of natural gas in the primary energy basket to 15 per cent by 2030 from current 6.7 per cent, would require at least Rs 2000-3000 billion investment, which can be viable only if a stable fiscal and contractual regime with market-based pricing is provided. Only such a regime can attract investors to commit long-term funds for the exploration and development of such areas. There has not been any large hydrocarbon discovery in the country in the last more than a decade, resulting in sustained decline in domestic oil and gas production and the consequent rise in imports for meeting the vast energy demands of the world’s fifth largest economy. Natural gas is used to generate electricity, produce fertilizers for crops, turn into CNG to run automobiles and piped gas into household kitchens for cooking. In absence of adequate domestic production, India has raised imports for the fuel by paying four-times to overseas suppliers than the price that domestic producers get.
AG&P Successfully Completes Conversion of Floating Storage Unit (FSU)
Atlantic, Gulf & Pacific International Holdings (AG&P), the downstream LNG platform which focuses on infrastructure and logistics to bring LNG to important markets, announced the successful conversion of the 137,512 cubic meter LNG carrier called ISH into a Floating Storage Unit (FSU). The ISH is a central component of the first Philippines LNG Import Terminal (PHLNG). Ready to be docked at AG&P’s PHLNG facility in Batangas, the FSU is part of the combined offshore-onshore import terminal that will have an initial capacity of 5 million tonnes per annum (MTPA). The hybrid PHLNG terminal is designed to provide its customers with resiliency of supply and high availability, even during storms.
Russia Warns Europe: Natural Gas Price Cap Means Full Supply Cut-Off
As Europe heads into winter, the threat of sharply rising gas prices and sustained supply failures increases. The European Union (EU) is in the midst of working through a multi-pronged solution to ameliorate the negative effects of the present situation, which in the short term was a direct result of international sanctions on Russian energy following the invasion of Ukraine on 24 February this year. In the longer term, the long-running over-reliance on cheap Russian gas on the part of many EU states, including its de facto leader, Germany, is the key reason for the current disastrous energy crunch across the region. One key element of this multi-pronged EU plan is the imposition of a price cap on gas prices. However, three developments last week from Russia, Qatar, and China threaten to undermine the EU’s efforts to bring some stability to its gas market over the winter period, and to reduce the energy risk premium being priced into their economic outlooks and the pricing of their financial asset markets. The first of these is that Russia’s state-owned gas behemoth, Gazprom, has threatened to halt all of its gas supplies to the EU if a price cap on gas is introduced. Broadly speaking, gas imports from Russia made up around 40 percent of the EU’s gas supply in 2021, with the more specific details analysed by OilPrice.com recently, but have dropped to around 9 percent in recent weeks. According to Gazprom’s chief executive officer, Alexei Miller, last week, any such gas price cap would be a breach of contract on the part of EU buyers of Gazprom’s gas that would result in a suspension of gas supplies from the company. Although Russian gas deliveries to the EU via its Nord Stream and Yamal-Europe pipelines have been subject to repeated disruption since the invasion of Ukraine, and both routes are still currently closed off to Europe, Russian gas is still being delivered to selected European buyers through the Sudzha entry point on the border with Ukraine and the TurkStream pipeline. On 18 October, the EU’s executive arm, the European Commission (EC), proposed further emergency measures to reduce the high energy prices that have caused a spike in inflation across the region and beyond, and a sharp rise in interest rates to combat it, with the economy- crimping effects that these can cause. Although steering clear of an outright cap on gas prices at that point, the EC did ask for the EU member states’ approval to draft a proposal to set a temporary ‘maximum dynamic price’ on trades at the Title Transfer Facility (TTF) Dutch gas hub, which serves as a benchmark price for European gas trading. Other measures discussed at the meeting included energy regulators being tasked with launching an alternative benchmark price for liquefied natural gas (LNG) by 31 March 2023, and the launching a joint gas buying program among EU countries, in an effort to refill depleted storage caverns in time for next winter, and to allow for the negotiation of lower gas prices in the future. However, in a subsequent EU meeting that began on 20 October, German Chancellor, Olaf Scholz, dropped his opposition to the imposition of an EU gas price cap, and EU leaders then agreed to work towards a cap that would “immediately limit episodes of excessive gas prices.” EC President, Charles Michel, underlined that the EU’s leaders had reached an agreement that would bring down prices, and added: “I think that we sent a clear signal to the markets that we are ready to act together, that we are able to act together.” According to the official minutes of this latest meeting, the EU’s leaders formally request that the EC works “urgently…on a temporary dynamic price corridor on natural gas transactions.” The previously floated idea of a mechanism to limit the price of gas used for electricity generation is also present in the minutes, as is the notion that member states pursue joint purchasing of gas, the development of a new benchmark for gas prices, and the increasing of efforts to reduce gas demand. All of which likely means that Russia will indeed cut off all supplies of gas to Europe at some point in the very near future for as long as it wishes, which, in turn, means that the EU will need to find other sources of substitute supply to bridge any supply transition gaps in the short-, medium-, and long-term. Qatar had been top of the list of such alternative supply sources, as highlighted by OilPrice.com, but, in the second setback for the EU’s energy security plans, it said last week that it will not divert any gas that is already under contract with Asian buyers to Europe this winter, regardless of any other considerations. Saad al-Kaabi, the chief executive of state-owned QatarEnergy, and also Energy Minister, said: “Qatar is absolutely committed to [the] sanctity of contracts… When we sign with an Asian buyer or European buyers, we stick to that agreement.” This statement of policy is a blow to hopes held by the EU in general, and by Germany in particular, that the emirate could be persuaded to do precisely the opposite of its stated intention, and divert supplies that had been destined for Asia to Europe instead, breaking contracts if necessary, for a hefty premium if required. Just last month, Qatar’s Deputy Prime Minister and Minister of Foreign Affairs, Sheikh Mohammed bin Abdulrahman Al Thani, said that his country was in talks with several German companies about new liquefied natural gas (LNG) supplies and sources spoken to last week by OilPrice.com confirmed that included among them are utilities giants, RWE and Uniper. The specific deals followed on from two major initiatives implemented by Germany in the wake of the sanctions on Russia. The first is focused on enhancing gas delivery mechanisms into Europe, with a declaration of intent on energy cooperation signed in May between Germany and Qatar aimed at ramping up LNG supplies going into Germany through