Petroleum Pipeline Project: second phase works accelerated
The second phase works under Nepal-India Cross-Border Petroleum Pipeline Project have been accelerated. Construction of physical infrastructures including petrol tank and ‘transmix tank’ has been started at the depot located at Amalekhgunj of Bara under Nepal Oil Corporation Provincial Office. Office Chief Pradeep Kumar Yadav said construction works have been forwarded by completing all necessary preparations. Two petrol tanks with the capacity of 4,100 kilolitres, two transmix tanks with the capacity of 250 kilolitres, 24 automatic re-fillers, pump house and lab would be constructed under the project. Likhita Infrastructure Pvt Ltd has got responsibility to construct all infrastructures within a year. Nepal Oil Corporation and Indian Oil Corporation are jointly investing in the project. Nepal Oil Corporation will invest around Rs 1.54 billion and Indian Oil Corporation around Rs 750 million in the project, added Yadav. A target has been set to bring the project into operation from coming English New Year by completing the project within this December. Following this, petrol would be supplied into Nepal through the pipeline. At present, only diesel is being supplied through it. Although there is possibility to supply both petroleum products and kerosene through the same pipeline, Nepal is importing petroleum products through tankers due to a lack of space to store it. Following the construction of the project, all petroleum products and kerosene will be supplied through the pipeline. This would reduce technical losses and environment pollution, and save transport expenditures, said Yadav, adding that Nepal would save approximately Rs 150 million annually from it. With this, storing capacity of the Amalekhgunj depot would increase to 24,840 kiloliters diesel and 16,630 kiloliters petrol. The process to install two tanks with capacity of storing 5,000 petroleum products each has started in line with the government’s policy to store them for 90 days, he said. Religare Construction Pvt. Ltd. has won the contract for the project.
Russian Oil Exports to India May Hit New Highs as Interest Grows
India’s oil processors are open to buying even more Russian crude if the price is right, said refinery executives, potentially providing a bigger outlet for Moscow almost a year after its invasion of Ukraine The South Asian nation increased Russian oil imports in 2022, ending the year with record monthly volumes as discounted barrels enticed buying. Executives said more cheap crude may be available to India from early next month, with a European Union ban on seaborne Russian fuel shipments possibly weighing on refining rates in the key OPEC+ producer. India and China have become a crucial destination for Russian oil after many others shunned shipments due to the war in Ukraine. Indian refiners are able to turn cheap Russian crude into fuels such as diesel and then sell to regions including Europe, boosting profit margins for processors. The impending EU sanctions are expected to ratchet up demand for fuels from Asia. “It’s bit of a circular trade going on as India takes Russian crude that Western buyers don’t want and refining it into products for resale to the West,” said Mukesh Sahdev, the head of downstream oil trading at Rystad Energy. India’s crude imports rose to a record last year, although increased buying of Russian barrels has crimped flows from OPEC. Cartel members accounted for about 62% of total oil imports from April to December, compared with around 71% in the previous corresponding period, according to government data. The refinery executives said Indian processors will maintain their long-term supplies from producers such as Saudi Arabia, with any increase in Russian purchases done on a spot and opportunistic basis. Russian fuel oil flows to India have also surged, almost doubling month-on-month in December to more than 137,000 barrels a day, according to data from Kpler. The product can be used to upgrade other more valuable fuels or be used in power generation.
Why Oil Won’t Trade Above $100 This Year
After an initial dip, the oil price rally has been a steady grind upwards in the current year, with the last 12 trading days seeing 10 days of higher intraday highs and 11 days of higher intraday lows. Brent is currently trading at $87.50 per barrel (as of Jan 26 at 12:24p.m. EST)–more than $10 from this year’s low. And now commodity analysts at Standard Chartered are saying that positive speculative sentiment in the oil markets can support prices above $90/bbl. According to the experts, their proprietary crude oil money-manager positioning index increased by 23.2 w/w to -39.6, the largest w/w improvement since the price lows of April 2020. StanChart says that improving sentiment can be chalked up to trader consensus becoming less concerned about OECD recession and more convinced that the oil markets will see significant demand growth, from China and India in particular. The analysts say that the rally is likely to take Brent prices past $90/bbl, though they are not optimistic that the fundamentals are strong enough to sustain prices above USD 100/bbl. Other market indicators have mostly been positive. Implied demand for total oil products increased by 2.687 million barrels per day (mb/d) w/w, the largest weekly rise in demand since December 2021. The big jump in demand came hot on the heels of weeks of depressed demand. Implied gasoline demand increased by 496 thousand barrels per day (kb/d) w/w; distillates by 203kb/d and jet fuel by 91kb/d. Total US refinery runs increased by 0.202mb/d w/w to 14.853mb/d but remain 1.4mb/d lower than the five-year average. However, crude oil stocks rose to an 18-month high of 448.02mb, rising by 9.85mb against the five-year average and 8.41mb in absolute terms. The cumulative increase in crude oil inventories over the past two weeks is 27.37mb, 12.3mb above the five-year average. Crude stocks at Cushing, Oklahoma increased by 3.646mb w/w; the largest weekly increase since April 2020, as refinery turnaround season continues. Oil Demand To Continue Growing Perhaps the best news for long-term investors is that oil demand is unlikely to taper off any time soon. A couple of years ago, European oil and gas supermajor BP Plc. (NYSE: BP) dramatically declared that the world was already past Peak Oil demand. In the company’s 2020 Energy Outlook, chief executive Bernard Looney pledged that BP would increase its renewables spending twentyfold to $5 billion a year by 2030 and “… not enter any new countries for oil and gas exploration.” Meanwhile, its European peer Shell Plc (NYSE: SHEL) said that its oil production will decline by 18% by 2030 as the world shifts to renewable energy. When many analysts talk about Peak Oil, they are usually referring to that point in time when global oil demand enters a phase of terminal and irreversible decline. But it’s becoming increasingly clear that these European energy giants were premature with their dire predictions, with black swan events such as the Covid-19 pandemic and Russia’s war in Ukraine blindsiding them. Energy experts at Energy Intelligence Group have predicted that not only will oil demand grow in 2023 but it will continue doing so till the end of the decade. According to the analyst, global oil demand will grow to 101.2 million barrels per day in the current year and will continue growing to hit 106 mb/d by 2030. Global oil demand will grow by 1.5 mb/d in 2023, with China accounting for 650,000 b/d after the country abandoned its rigorous zero-Covid policy. Indeed, this year’s average will top the previous high of 100.6 mb/d set in 2019. While this is great news for the oil bulls, the expert says that growth will primarily be driven by petrochemicals rather than transport fuels, and has also said that its base case is a plateau rather than a decline. Actually, Energy Intelligence is not the only bull here. OPEC, Exxon Mobil (NYSE: XOM) and the Energy Information Administration (EIA), have all predicted that global oil demand will actually grow as we go along and not shrink as many analysts have forecast. Some of the biggest beneficiaries of growing oil demand will be oilfield services companies. Benchmark’s Kurt Hallead says Schlumberger Ltd (NYSE: SLB) and its peer Halliburton Company (NYSE: HAL) are set to benefit in the intermediate term from increased exploration and production spending on international and offshore projects, and become leaders in the energy transition in the long term. The analyst has launched coverage with Buy ratings with respective $65 and $50 price targets, good for 13.3% and 22.9% upside, respectively. Schlumberger has impressed after reporting fourth-quarter revenue of $7.9 billion, good for a 5% sequential increase and 27% year on year. Fourth-quarter GAAP EPS of $0.74 increased 17% sequentially and 76% year on year while EPS, excluding charges and credits, of $0.71 increased 13% sequentially and 73% year on year. The consensus for the company was for earnings to grow 66% to 68 cents per share and revenue to increase 25% to $7.81 billion. SLB CEO Olivier Le Peuch said that revenue grew across all its business divisions and geographical areas and also added there was “robust” year-end sales in the company’s digital services.