Natural Gas Prices Set For A Sustained Rally In 2023
Despite the recent drop in natural gas prices in Europe thanks to unseasonably warm weather, the commodity is set to end 2022 with a significant overall gain. What’s more, per a Reuters report, gas investors could look forward to another strong year in 2023 as most signs point to a sustained rally in natural gas in an environment of tight supply and solid demand. “From a fundamental perspective, the setup for most commodities next year is more bullish than it has been at any point since we first highlighted the supercycle in October 2020,” Reuters quoted a Goldman Sachs commodities outlook today. The rally in gas prices began last year as demand in Europe began to rise on the underperformance on renewables while supply had to catch up. The situation escalated massively this year after Russia’s invasion of Ukraine and the EU’s response, which took the form of a series of sanction packages. In its turn, Russia started cutting gas supplies to Europe and later in the year, after the sabotage of Nord Stream 1 by a party that remains unnamed despite the conclusion of the investigation, the only conduit for Russian gas for Europe was the pipeline that goes through Ukraine. Earlier this month, Russia’s Deputy Prime Minister Alexander Novak said Moscow was ready to resume gas flows via the Yamal-Europe pipeline as well. “The European market remains relevant, as the gas shortage persists, and we have every opportunity to resume supplies,” Novak said, as quoted by TASS. “For example, the Yamal-Europe Pipeline, which was stopped for political reasons, remains unused,” he added. Besides gas, the other winner this year in commodities was coal. Contrary to expectations, the dirtiest fossil fuel made a veritable comeback in 2022 because of the European gas crisis and the limited supply of gas and consumption increased significantly, as did prices.
IOC’s Paradip-Hyderabad pipeline project to end by Dec 2023
The Paradip-Hyderabad Pipeline Project (PHPL) by Indian Oil Corporation Ltd. (IOCL) will likely be operational by the end of next year. Speaking to the media, IOCL executive director and Head for AP and Telangana, B. Anil Kumar said that the business will invest Rs 33.38 billion to carry out this project for improved fuel deliveries to its retail outlets in three states This project connects the Hyderabad refinery in Telangana to the Paradip refinery in Odisha via Andhra Pradesh. Although PHPL was expected to be operational by 2020, land acquisition issues delayed its progress Anil Kumar also said that almost 87 percent of the construction is complete, and the works are going on in full swing adding that it shall be commissioned by December 2023.
IOC’s Rs. 6.11 billion Malkapur terminal likely to go on stream in 2023
A petroleum terminal being set up by Indian Oil Corporation in Malkapur, near Hyderabad, with an investment of Rs. 6.11 billion, is likely to go on stream next year. As it will be the culimating point for the 1,212-km Paradip-Hyderabad product pipeline, the terminal is expected to provide Indian Oil leverage in terms of fuel supplies in Telangana. “By December 2023, we will be able to commission the terminal… bring our own product,” Executive Director and State Head of India Oil for Telangana and Andhra Pradesh B.Anil Kumar said here on Wednesday. The terminal will have a storage capacity of 1,80,000 kilolitres. Once commissioned, the pipeline and terminal are expected to reduce reliance of Indian Oil on Hindustan Petroleum Corporation’s Visakhapatnam-Hyderabad pipeline for fuel supplies in Telangana. Indian Oil will also be shifting operations of its terminal in Cherlapally, near Hyderabad. The Cherlapally facility is, however, unlikely to be shut, he added. To queries, he said petrol and diesel consumption in Telangana surpassed pre-COVID retail sales levels. Petrol consumption during April-November was 13.2% higher compared to the same period last fiscal. Retail diesel usage was 10.2% more in the same period. Average monthly sales is around 1,23,000 tonnes petrol and 2,66,000 tonne a diesel. High VAT While petrol offtake is growing on the back of Hyderabad and surrounding areas expanding, growth in diesel consumption is stunted in Telangana and Andhra Pradesh because of higher value-added tax levy in the two States. “The price disparity is high becaue of local taxes,” Mr. Anil Kumar said, citing how heavy vehicles plying interstate prefer to tank up at retail outlets in neighbouring Maharashtra, Karnataka and Odisha to benefit from the lower prices. Listing out Indian Oil initiatives in Telangana, he said under SATAT (Sustainable Alternative Towards Affordable Transportation) programme that encourages entrepreneurs to set up compressed biogas plants for supplying CBG to oil companies, IOC has issued seven LOI for setting up of such facilities in Telangana. Three of them will come up in Hyderabad and one each in Jangaon, Mahbubnagar, Medchal and Warangal. The CBG purchased from the plants would be marketed through Indian Oil’s retail outlets. Besides Cherlapally, the company has a storage facility in Ramagundam. The two installations together have a capacity of 1.186 million KL of petrol and 4.256 million KL of diesel. The company, which has 1,425 retail outlets, commissioned 337 new ROs in last 3 years. In the current fiscal, it will be adding 168 ROs. On ethanol blending with petrol, he said Indian Oil has achieved 10% blending in both Telangana and Andhra Pradesh. It is, however, not pursuing plans to set up ethanol refineries following government of India directive that private entrepreneuers should be allowed to set up such facilities.
Vedanta invites bids for natural gas from its Rajasthan block
Vedanta has invited bids for natural gas from its Rajasthan block at a floor price of $9.57 per mmBtu. Vedanta plans to sell 3 million metric standard cubic meters a day (mmscmd) of gas in an auction slated for January 18, according to the e-auction document. The supply will be offered for a year beginning April 1 from Raageshwari gas terminal at Barmer, Rajasthan. The floor price will be one dollar above the domestic formula price, which is revised every six months and is currently at $8.57 per mmBtu. The sale price will be the lower of Platts LNG West Indiamarker or 15.25% of the average Brent price plus a premium that bidders would quote. At the current Brent price of $82 per barrel and zero premium, the sale price would be $12.5 per mmBtu. Vedanta enjoys pricing freedom for the gas it produces from its Rajasthan block. Most producing fields in the country don’t have pricing freedom and their gas is sold at the domestic formula price. Gas from difficult fields can be sold at market rates subject to a ceiling, which is currently at $12.46 per mmBtu.