European Industry Boosts Natural Gas Consumption As Prices Drop
As natural gas prices in Europe fell to a 20-month low, industries are switching back to using gas in a tentative sign that European industrial gas demand is rising. The front-month futures at the TTF hub, the benchmark for Europe’s gas trading, slumped earlier this week to below 40 euros ($43.52) per megawatt-hour (MWh), the lowest price since July 2021, as temperatures were rising, wind power generation was strong, LNG supply ample, and gas inventories way above the average for the end of the winter. The refining industry, where the switch from fuel oil to natural gas is more easily done, is already showing signs of higher gas demand. Some manufacturing industries have started to “shift back from diesel or fuel to gas. So it created additional demand,” TotalEnergies chief executive Patrick Pouyanne said on the supermajor’s 2023 Strategy, Sustainability & Climate Presentation this week. While cheaper gas is welcome news for Europe’s industry, the rise in industrial gas use could pose problems for Europe’s gas storage supply later this year when the continent will be preparing for the 2023/2024 winter. Yet, the recovery in industrial production in Europe will be slow, according to one of its biggest industries, Germany’s chemicals sector. “The outlook for the future has brightened somewhat in Germany’s third largest industry,” German chemical association VCI said in a report earlier this month. “Meanwhile, the major drop in energy and raw material prices in recent months has stabilised the situation where the bottom seems to have been reached,” the association said, but added it does not expect a strong recovery. High energy costs compared to other locations, a lack of orders, and location problems continue to be major concerns, according to VCI. Last month, the world’s biggest chemicals company, Germany-based BASF, said it would cut 2,600 jobs and close some plants due to the high energy costs in Europe that had burdened operations and profitability over the past year.
Bangladesh Govt to procure 3.360 million MMBtu LNG
The Cabinet Committee on Government Purchase (CCGP) today approved separate proposals for procuring 3.360 million MMBtu LNG and 70,000 metric tonnes of fertilizer to meet the growing demand. The approvals came from the 11th meeting of the CCGP held on Thursday virtually with Finance Minister AHM Mustafa Kamal in the chair. Briefing reporters after the meeting virtually, Cabinet Division additional secretary Sayeed Mahbub Khan informed that the day’s CCGP meeting approved a total of seven proposals. He said that following a proposal from the Ministry of Agriculture, Bangladesh Agricultural Development Corporation (BADC) would procure some 40,000 metric tonnes of DAP fertilizer from OCP, SA, Morocco under state-level agreement with around Tk 2621.3 million where per tonne fertilizer would cost $610 against the previous price of $710.
India’s Feb crude oil imports jump 8% as demand hits over 2 decade high
India’s imports of crude oil in February rose about 8% from a year earlier, government data showed on Wednesday, as fuel demand hit over 2-decade highs in the world’s third-biggest oil importer and consumer. Rising crude demand and a strong Indian economy bodes well for higher refinery runs and imports, in addition to cheaper Russian crude, said Refinitiv analyst Ehsan Ul Haq, adding he expects refiners to boost runs and imports as temperatures rise and people travel more. Fuel demand in February hit its highest level in at least 24 years, data from the website of the Petroleum Planning and Analysis Cell (PPAC) showed this month. With Indian demand likely to rise further over coming months, crude imports should recover, said UBS analyst Giovanni Staunovo. On a monthly basis, imports were down 6% to 22.57 million tonnes, PPAC data showed. The month-on-month drop in imports could also be seasonal, as February imports were lower last year as well, Haq said. Russia tightened its grip on India’s oil market in February, leaving African crude oil imports in India at the lowest level in at least 22 years. Elsewhere, Indian Oil Corp, the country’s top refiner, will reduce its yearly oil purchase from Kuwait by 20% starting in April. To compensate, India’s IOC has increased its term crude volume with Iraq’s Oil Marketing Company (SOMO) by 20,000 bpd. Product exports in February rose by 12% month-on-month to 5.06 million tonnes, with diesel accounting for 2.15 million tonnes. The rise in exports comes despite India planning to extend restrictions on the export of diesel and gasoline after the current fiscal year ends this month to ensure the availability of refined fuels for the domestic market.
Former Russian unit commits 4 LNG cargoes to India
A former unit of Russian energy giant Gazprom will supply 4 shiploads of LNG to state-owned GAIL (India) Ltd for the first time since it halted supplies in May last year, Union minister Rameswar Teli said on Thursday. SefeMarketing and Trading Singapore Pte Ltd (SMTS), erstwhile Gazprom Marketing and Trading Singapore Pte Ltd, will “supply two cargoes in March 2023 and two in April 2023,” Minister of State for Petroleum and Natural Gas Telisaid in a written reply to a question in Lok Sabha. GAIL had in 2012 signed a 20-year deal with Gazprom Marketing and Singapore (GMTS) to buy 2.85 million tonnes per annum of LNG. Supplies started in 2018 and the full volume was to reach in 2023. GMTS had signed the deal on behalf of Gazprom. GMTS was moved to Gazprom Germania and in early April, Gazprom gave up the ownership of the German unit without giving a reason and placed parts of it under Russian sanctions.
Brent plunge fails to displace Russian crude for Asian buyers
A plunge in Brent crude prices has narrowed the spread between Atlantic Basin and Middle East benchmarks but has failed to spur interest from Asian refiners, which are instead buying up discounted Russian oil, leaving an overhang in African supply. Global oil benchmark Brent tumbled more than 10% over the past two weeks, touching a 15-month-low of $70.12 a barrel on Monday, as investors have fretted over banking sector turmoil in the U.S. and Europe and as strikes in France have dented oil demand. Middle East crude prices in Asia appear to be resilient as the market bets on robust demand from China, which is rebounding from zero-COVID restrictions that formerly squeezed its economy. The Brent-Dubai Exchange for Swaps (EFS), representing the premium of light sweet Brent over Middle East sour crude Dubai, shrank to $1.40 a barrel this week, its narrowest in more than two years. A tighter EFS typically means Brent-linked crude produced in the Atlantic Basin, including from West African countries, becomes more economical for Asian buyers. But traders have not seen a significant uptick in Asian demand for West African crude, because the cargoes remain much more expensive than Russian oil, even though they have gained competitiveness over Middle Eastern crude. With Russian crude so cheap, a move of a few dollars on Brent-Dubai EFS or even freight would not make a difference, other than providing Chinese buyers with a tool to drive prices lower, said a West African crude trader. Russia’s light sweet ESPO crude for May delivery is traded at a discount of about $6.80 a barrel against the ICE Brent on the deliver-ex-ship (DES) basis to northern China, trading sources said. Meanwhile, Congo’s Djeno, a medium sweet crude favoured by Chinese refiners, is assessed at a premium of $1.50 a barrel above ICE Brent for May delivery on DES basis. The pattern is similar in India, where Russian crude is delivered at discounts to Dubai quotes while West African oil is loaded at parity or a slight discount to dated Brent, an Indian trader said. Russia became the top crude supplier to China and India in recent months, eroding the market share of other suppliers such as West African countries. Just over 30 million barrels of West African crude have been loaded for Asia in March, the smallest volume since 2014 or earlier, shipping data from Refinitiv and Kpler showed. The slowing exports of West African crude are exacerbating a supply overhang in the West of Suez market and weighing down the Brent prices that the West African grades are pegged to. On Tuesday, about 20 million barrels of Nigerian crude for April loading were still unsold, just as the trade cycle for May cargoes was about to kick off. About four April-loading Angolan crude cargoes were also awaiting buyers. In the past three months, Nigeria has exported around 42 million barrels of crude on average each month while Angola’s average monthly exports have been around 33 million barrels.
Former Russian unit commits 4 LNG cargoes to India
A former unit of Russian energy giant Gazprom will supply 4 shiploads of LNG to state-owned GAIL (India) Ltd for the first time since it halted supplies in May last year, Union minister Rameswar Teli said on Thursday. SefeMarketing and Trading Singapore Pte Ltd (SMTS), erstwhile Gazprom Marketing and Trading Singapore Pte Ltd, will “supply two cargoes in March 2023 and two in April 2023,” Minister of State for Petroleum and Natural Gas Telisaid in a written reply to a question in Lok Sabha. GAIL had in 2012 signed a 20-year deal with Gazprom Marketing and Singapore (GMTS) to buy 2.85 million tonnes per annum of LNG. Supplies started in 2018 and the full volume was to reach in 2023. GMTS had signed the deal on behalf of Gazprom. GMTS was moved to Gazprom Germania and in early April, Gazprom gave up the ownership of the German unit without giving a reason and placed parts of it under Russian sanctions.