OPEC Secretary General Calls For Coordination Between Oil Exporting Countries
OPEC’s Secretary General Haitham Al Ghais and Iraq’s Prime Minister met over the weekend and called for coordinated action among oil exporters globally in order to reduce volatility in the oil market and avoid adverse impacts for consuming countries, Reuters reported citing a statement by the Iraqi government. The official spoke during a meeting with Iraqi Prime Minister Mohammed Shia al-Sudani, who joined the call for coordination on oil markets. Neither official went into detail as to what such coordination could entail. Earlier this month, the Saudi energy minister said that OPEC+ would maintain its tighter supply plans. “There are those who continue to think we would adjust the agreement … I say they need to wait until Friday Dec 29 2023 to demonstrate to them our commitment to the current agreement,” Abdulaziz bin Salman told Energy Intelligence in an interview. Meanwhile, Iraq’s oil minister said over the weekend that Iraq—OPEC’s second-largest producer—remains committed to the OPEC+ agreement on production limits. Hayan Abdel-Ghani, however, added that Iraq was prepared to boost oil production, too, if called upon to do so, The National reported. Iraq’s government has plans to increase the country’s oil production capacity substantially from the current rate of around 4.5 million barrels daily. However, the same government has repeatedly stated it is fully behind OPEC and its production adjustment measures. Outside OPEC, meanwhile, oil executives are warning that the cartel is back in the driving seat for global oil supply and this might mean higher prices down the road. “I think the people that are in charge now are three countries — and they’ll be in charge the next 25 years,” Scott Sheffield, chief executive of Pioneer Natural Resources, said on the sidelines of CERAWeek this month, as quoted by the Financial Times. “Saudi first, UAE second, Kuwait third.” “Does it mean that the power is just going back to Opec if the US starts keeping [production] flat? We’re 10 per cent of the world’s oil production and Opec plus Russia is a much larger percentage. So yeah, they can dictate things probably more than we would,” the chief executive of Devon Energy, Rick Muncrief, told the FT.
Russia Overtakes Saudi Arabia To Become China’s Top Oil Supplier
Russia was the single largest crude oil supplier to China in January and February, overtaking Saudi Arabia which was the number-one supplier of oil to China last year, according to Chinese customs data cited by Reuters. As China accelerated the buying of cheap Russian crude oil at discounts to international benchmarks, Chinese imports of crude from Russia jumped by 23.8% year over year to 1.94 million barrels per day (bpd) in January and February 2023, per the data reported by China’s General Administration of Customs. China reports trade and economic data for January and February together to remove distortions around the fluctuating week-long Lunar New Year holiday. In the first two months of this year, Russia beat Saudi Arabia to the top spot of Chinese crude oil suppliers as imports of Saudi crude fell by 4.7% to the equivalent of 1.72 million bpd, compared to 1.81 million bpd for the same period of 2022. For the full-year 2022, Saudi Arabia was China’s top crude oil supplier – ahead of Russia – with shipments averaging 1.75 million bpd. In recent months, China has been buying increased volumes of Russian crude as Moscow pivoted its sales to Asian markets following the Western embargoes and price caps on its crude oil and refined petroleum products. The independent refiners in China, often referred to as the teapots, are importing a large portion of the Russian volumes, taking advantage of the deep discounts at which Russia sells its oil to customers. Despite a sluggish start to 2023, China’s energy commodity imports are expected to rise later this year, while oil demand is set to rebound and lead global oil consumption to a record high, forecasters say. China’s reopening is set to add momentum to global economic growth, OPEC said in its Monthly Oil Market Report (MOMR) this week, as it revised up its forecast for Chinese oil demand growth. The International Energy Agency (IEA) said in its report last week that “Building stocks today will ease tensions as the market swings into deficit during the second half of the year when China is expected to drive world oil demand to record levels.”
Tamil Nadu releases policy for ethanol blending with petrol; focus on encouraging investors to set up units
The State government has released the Tamil Nadu City Gas Distribution Policy 2023 for the liquefied/ compressed natural gas to vehicles and piped natural gas to homes. In Tamil Nadu, all 38 districts are to be covered with the CGD network through which around 22.8 million PNG connections and around 2,785 CNG stations are to be developed. In an effort to encourage investors to set up units to produce ethanol for blending with petrol, the State government on Saturday said that investors can obtain almost all the requisite standard clearances within 30 days. The Tamil Nadu Ethanol Blending Policy (EBP) 2023, released on Saturday by the Industries Department, said that under the EBP programme, the State will encourage sugar industries to set up molasses-based ethanol plants and improve capacity utilisation. The policy also will present an opportunity for reviving the sugar industry in the State by improving the capacity utilisation of existing plants. Oil marketing companies (OMCs) presently source ethanol from other States, including Maharashtra and Karnataka. Indian Oil Executive Director and State Coordinator for Oil Industry V.C. Asokan, who welcomed the policy, said that at present OMCs were blending up to 12% of ethanol with petrol in the State. “Our target is to increase this to 20% by 2025 and we are increasing storage capacity in our terminals for the same. If units in Tamil Nadu supply ethanol at competitive rates, it would benefit the industry as well as the environment,” he said.
Is Chinese Demand Growth Now The Only Bullish Driver For Crude?
China’s recovery is underway, and many anticipate that China’s recovery will mean calls for additional crude oil, bolstering oil prices. But China’s economic reemergence is anything but a sure thing when it comes to oil demand and prices. Household consumption, factory activity, and infrastructure spending all rose in the first two months of the year, showing that the world’s top crude oil importer has started to shake off the weak activity from the zero-Covid policy. But uncertainty in the global economy threatens to weaken demand for exports out of China. Despite a sluggish start to 2023, China’s energy commodity imports are expected to rise later this year, while oil demand is set to rebound and lead global oil consumption to a record high, forecasters say. Amid fears of an economic downturn due to rising interest rates and the financial markets selloff in the past week, which spread to risk assets such as crude oil, the key question for analysts is whether China’s expected increase in crude oil imports and demand will be enough to prop up oil prices. Crude prices fell to the lowest levels in 15 months this week as concerns about the banking sector spread from the U.S. to Europe with fears about Swiss giant Credit Suisse and sparked selloffs. Chinese energy commodity imports were underwhelming in January and February 2023, but they are expected to pick up later this year with potentially record-high crude oil purchases, even though Beijing has set its lowest annual economic growth target in decades. In January and February, months in which China reports trade data together to remove distortions around the fluctuating week-long Lunar New Year holiday, Chinese imports of crude oil and natural gas fell compared to 2022. But arrivals of iron ore—the key steel-manufacturing material—jumped as steel mills stocked up in expectation of a government push to boost the economy via infrastructure projects. China’s crude oil imports averaged 10.4 million barrels per day (bpd) in January and February, down by 1.3% compared to the same months in 2022, according to Chinese customs data cited by Reuters’ Asia Commodities and Energy Columnist Clyde Russell. The weaker crude oil import levels could be due, in part, to the Lunar New Year holiday at the end of January and the fact that crude cargoes are typically arranged months ahead of their actual arrival and customs clearance. This month, China’s crude oil imports are expected at around 11.18 million bpd, per Refinitiv Oil Research cited by Reuters’ Russell. The latest official Chinese economic data from this week showed that retail sales jumped by 3.5% in January-February from year-ago levels, following a 1.8% decline in December 2022. Industrial output also rose in the first two months of 2023 from a year earlier, and infrastructure investment surged by 9% as the government increased spending to support economic growth. In addition, a rebound in crude oil demand as the Chinese economy returns to normal operation pushed crude oil throughputs at refineries higher by 3.3% over the first two months of the year. Both OPEC and the International Energy Agency (IEA) expect China to drive global oil demand to a record high this year. China’s reopening is set to add momentum to global economic growth, OPEC said in its Monthly Oil Market Report (MOMR) this week, as it revised up its forecast for Chinese oil demand growth. “In the emerging economies, China’s reopening, following the lifting of the strict zero-COVID-19 policy, will add considerable momentum to global economic growth,” OPEC said. China’s oil demand is expected to average 15.56 million barrels per day (bpd) in 2023, up by 710,000 bpd compared to last year, according to OPEC’s latest estimate. That’s higher than the 590,000-bpd growth expected in last month’s report. The IEA, for its part, said in its monthly report that the oil market is set to swing from a supply overhang in the first half of 2023 to a deficit in the latter part of the year as the economic rebound in China will push global oil demand to a record high. “Building stocks today will ease tensions as the market swings into deficit during the second half of the year when China is expected to drive world oil demand to record levels,” the IEA said. “Matching that increase would be a challenge even if Russia were able to maintain production at pre-war levels.”
Gas oil jet fuel cracks up
Asia’s 10-ppm sulphur gasoil margins firmed by almost 15% on week, completely erasing early-week losses, following a rebound in oil futures on Friday. A lack of trading activity at the close of the week kept a lid on gains, against a backdrop of unchanged demand-supply fundamentals. Cash differentials for 10 ppm gasoil sulphur rose by around 60% on week to 91 cents per barrel as trader-based buying interest continued. However, offers were minimal and capped discussion momentum. Forward month regrade widened further to a discount of $3.55 per barrel, while prompt month regrade widened to a discount of $4.40 per barrel. Both were close to levels seen in December last year. Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage area fell for the third week in a row, data from Dutch consultancy Insights Global showed on Thursday. Gasoil stockpiles are still near a two-year high. Gasoil demand up the river Rhine was healthy and rain helps maintain water levels friendly to barge shipping, said Insights Global’s Lars van Wageningen. France was importing more because of strikes in the refining sector, he added. Oil prices rose on Friday after a meeting between Saudi Arabia and Russia calmed markets amid strong China demand expectations, but were headed for their biggest weekly falls since December as a banking crisis rocked global financial and oil markets. Indian gas firm GAIL (India) Ltd has signed a memorandum of understanding (MoU) with Shell Energy India Private Ltd. to diversify feedstock for its petrochemical plant, the company said on Friday.
Hindenburg fallout: Adani Group suspends work on petrochem project worth Rs 349 billion
The Adani Group has suspended work on a petrochemical project worth Rs 349 billion at Mundra in Gujarat, reported PTI, citing sources. This can be linked with the fact that the company is focusing on resources to consolidate operations and address investor concerns following a damning report by a US-based short seller, PTI sources said. The group’s flagship Adani Enterprises Ltd (AEL) had in 2021 incorporated a wholly-owned subsidiary, Mundra Petrochem Ltd for setting up a greenfield coal-to-PVC plant at Adani Ports and Special Economic Zone (APSEZ) land in Kutch district of Gujarat. But after Hindenburg Research’s January 24 report alleging accounting fraud, stock manipulations and other corporate governance lapses chopped off about USD 140 billion from the market value of Gautam Adani’s empire, the apples-to-airport group is hoping to claw back and calm jittery investors and lenders through a comeback strategy.
Why falling global oil prices won’t lower petrol, diesel prices in India – Explanation
Regardless of falling global oil prices due to banking turmoil in the US, there is hardly any chance of a fall in petrol and diesel prices in India. It would take longer for the oil marketing companies to recover their losses accumulated due to high crude prices earlier. Constant domestic fuel prices amid rising prices of crude oil at the global level in past quarters resulted in huge losses to oil companies. The recent fall in global fuel prices is a chance for companies to recover their accumulated losses, reported CNBC-TV18, citing an anonymous government source. Notably, the three fuel retailers, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), haven’t revised petrol and diesel prices in line with the cost for the past 15 months till January this year, reported PTI citing a report. The three companies also posted a net loss of ₹212.0118 billion during April-September despite accounting for ₹220 billion announced but not paid LPG subsidy.
Reliance re-launches auction for natural gas sale in line with new govt rules
Reliance Industries Ltd and its partner bp plc re-launched an auction for sale of natural gasfrom their eastern offshore KG-D6 block after incorporating the government’s new marketing rules to give CNG-selling city gas companies first priority over supplies. Reliance and its partner BP Exploration (Alpha) Ltd (BPEAL) will sell 6 million standard cubic meters per day of gas in an e-auction planned for April 3, PTI reported, citing a tender notice. The price is indexed to the global LNG marker, JKM but will be subject to the government-notified ceiling price. The partners had originally planned the auction in January but days before that the Ministry of Petroleum and Natural Gas, on January 13, published new rules for the sale and resale of gas produced from discoveries in deep sea, ultra-deep water and high-pressure-high temperature areas. This led to the auction being suspended and is now being re-launched after incorporating changes. Gas produced from wells drilled below seabed is used to produce electricity, make fertiliser or turned into CNG for powering automobiles or piped to household kitchens for cooking as well as in industries. The new government rules require bidders to state upfront if they were purchasing the gas through the auction for ‘own use as end consumers (including for use of their group entities) or as a trader. While end consumers were allowed to resale any unconsumed gas, traders participating in the auction were allowed to resell subject to a maximum trading margin of Rs 200 per thousand cubic meters.
OilMin accepts all major Kirit Parikh panel recommendations on gas pricing
The Petroleum and Natural Gas Ministry has accepted the main recommendations of the Kirit Parikh committee on natural gas pricing, and will be further recommended by them to the Cabinet soon, several officials said. The move is expected to have a significant impact on the energy sector, as the price of natural gas will likely increase.