European Refiners Now Have Too Much Oil
European refiners now seem to have more crude oil than they need—with the early panic about Russia’s dwindling oil exports—and the world’s subsequent oil shortage—proving to be overblown. Crude oil traders have pointed to Europe’s ability to source crude oil from Latin America, the Middle East, and the United States as the main cause for European refiners breathing a sigh of relief. Asia, too, has scooped up less crude oil than analysts were predicting, thanks to China’s neverending battle to obtain the elusive zero-covid goal. Europe’s imports of Latin American crude have averaged 313,000 bpd so far this year, up from 132,000 Refinitiv Eikon data shows. In July, the average was well above that, at 600,000 bpd. From the United States, Europe has taken 1.1 million bpd on average this year, compared with just 800,000 bpd last year. Europe’s Iraqi oil imports are 20% higher from July-November compared to the same period last year. The supply overages are weighing on prices. Brent prices have slumped nearly $9 per barrel since this time last week. One European crude oil trader told Reuters that European refiners “seem to have overbought in November and December, probably because of fears around Urals.” In addition to these fears causing panic purchases, weeks-long strikes at French refineries and a rash of refinery maintenance also curbed the call for crude oil in Europe as runs slowed. Traders and refiners increased their purchases over this summer, anticipating shortages stemming from Europe’s ban on imports of Russian crude oil. That ban is set to go into effect on December 5. Until then, Europe will likely have no issues with obtaining enough crude oil. Post-December 5, however, could be a different story.
India and China to drive LNG capacity
India and China will drive the LNG regasification capacity additions in Asia between 2022 and 2026, as the two countries step up imports of natural gas to reduce carbon emissions. Together, the two countries will account for 55% of the region’s total capacity additions by 2026 through new build and expansion projects, says GlobalData, a leading data and analytics company. GlobalData’s report, ‘LNG Industry (Liquefaction and Regasification) Capacity and CapEx Forecast by Region and Countries, All Active Plants, Planned and Announced Projects, 2022-2026’, reveals that Asia is expected to witness the highest regasification capacity additions of 19.6 trillion ft3 from new build and expansion projects during the outlook period. Of this, 16.8 trillion ft3capacity is expected to come from newbuild projects and the remaining from the expansion of the existing projects. Himani Pant Pandey, Oil and Gas Analyst at GlobalData, comments: “Among the fossil fuels, natural gas emerged as the bright spot as it is seen as a relatively clean option and can act as a bridge fuel to lead the energy transition. Therefore, countries such as China and India are increasingly importing LNG to meet their carbon-neutral goals and reduce emissions.” Tangshan II is the largest upcoming regasification terminal in China. Expected to commence operations in 2022 with an initial regasification capacity of 341 billion ft3, the terminal is likely increase its capacity to 584 billion ft3 by 2026. Caofeidian Xintian LNG is the operator of the terminal. In India, Jaigarh Port terminal is the largest upcoming LNG regasification project with a capacity addition of 390 billion ft3 by 2026. To be operated by H-Energy, the terminal is expected to start operations in 2025.
India’s initiatives on green hydrogen could help global decarbonization
India has announced its long-term low-emission development strategy, that focuses on climate justice, sustainable lifestyles, and equity, at the ongoing UN climate summit in Egypt, joining a select group of fewer than 60 nations to do so. Hailed by the Egypt presidency, the strategy once again reiterated the country’s intention to develop a green hydrogen ecosystem to lower emissions in hard-to-abate sectors like steel, fertiliser, and refining, among other long-held climate goals. The nation’s green hydrogen mission, announced in 2021, will see a rapid expansion in production, making India a green hydrogen hub, the long-term strategy said. The South Asian nation plans a massive expansion of green hydrogen production to curb dependence on crude oil imports and wean its rapidly expanding economy from planet-warming fossil fuels. The central government has set a target of an annual production capacity of 25 million tonnes by 2047. The number could be revised upwards as the technology evolves and the demand outlook improves. Green hydrogen is expected to play a prominent role in decarbonising heavy industries, including oil refineries, steel mills and fertiliser plants. India’s current output of green hydrogen is low and comes from just a handful of pilot projects. Green hydrogen is produced by breaking down water in an electrolyser using only renewable energy, resulting in no carbon emissions. The hydrogen can then be combined with nitrogen to make green ammonia, avoiding hydrocarbons in the process. Green ammonia is used to store energy and make fertilisers. Green hydrogen could become an alternative to coal in steel mills and fossil fuels in long-haul transport like shipping and trucking. Currently, the bulk of hydrogen produced in the world uses natural gas, which is known as black hydrogen. There is also grey hydrogen made from low-carbon technologies, but its share in the global market is negligible. India has set a target of five million tonnes of green hydrogen by 2030. Over the next decade, the country plans to add 175 GW of green hydrogen-based energy.
TAPI gas pipeline can be completed within 3 to 4 years after achieving financial close
Minister of State for Petroleum Musadik Malik has said that Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project is on track and it can be completed within three to four years after achieving financial close. The minister also announced expansion of TAPI gas pipeline till Gwadar. Minister of State for Petroleum Division further said that Pakistan will soon announce its refining policy and is expected to attract an investment of $12 billion to set up a world-class refinery in the country. While addressing the Thought Leaders Forum (TLF) on Pakistan’s energy vision, a harbinger for economic development, organized by the Institute of Strategic Studies Islamabad (ISSI), MoS for Petroleum Division Dr Musadik Masood Malik said that the plan for Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline has been made. The minister said there is no problem in bringing gas from Turkmenistan and they are working on the project. This project will provide up to 1.3 bcf gas per day, the minister said. He said that for onward supply of TAPI gas, construction of pipeline from Chaman to Multan is planned. The minister said that TAPI will also be extended till Gwadar. Pakistan will also lay gas pipeline from Chaman to Gwadar, the minister informed. However, regarding Iran-Pakistan Gas Pipeline project, the minister said that it is currently facing international sanctions. The minister said that if the TAPI project achieve financial close, it can be completed within three to four years. Musadik Malik said that the subsidies have hindered the growth of energy sector infrastructure. The major problems of the energy sector include availability, affordability, and fiscal sustainability. The minister said that problems in the energy sector are not over, they are increasing. He said that the biggest issue in the energy sector is the availability. There is a big gap between supply and demand in the energy sector, the minister said. He said that the country’s energy sector is suffering from financial problems as fifty percent of its oil requirement is being imported. In Pakistan, indigenous gas is depleting at the rate of 8 to 10 percent annually, Musadik said. “We have more gas than previous winter, but the problems still exist,” he added. The minister acknowledged that energy is expensive in Pakistan which is unaffordable for majority of Pakistanis. The government is also working on increasing indigenous gas supply, he said and added that fresh round of bidding for oil and gas explorations blocks in the country will be held soon. They are committed to reduce the gas losses. Sui Northern Gas Pipeline has been told that they should control these losses. The government is installing meters to prevent gas losses, Musadik said. “We will keep track of how much gas went to the main line and how much to the consumers,” he explained. Both the Sui companies are losing 12pc up to 12 percent of the country’s gas, the minister claimed.