GAIL India to see higher realisation as PNGRB hikes tariff: Kotak Institutional Equities
With the Petroleum and Natural Gas Regulatory Board (PNGRB) raising unified tariff for the national gas grid, Kotak Institutional Equities sees higher realisation for GAIL India. PNGRB raised the unified tariff for the national gas grid by approximately 10 percent to Rs 81 per mmbtu with varying increases of 1 percent, 5 percent, and 15 percent for zones 1, 2, and 3, respectively. At revised volume projections, GAIL India can realise even higher, approximately Rs 66 per mmbtu as compared with Rs 64 per mmbtu earlier, as it now projects less volume in zone-2 and higher volume in farther zones, highlighted Kotak Institutional Equities.
Inside Qatar’s multi-billion LNG expansion
In the heart of the Arabian Gulf, amidst the shimmering skyline and ambitious visions, lies a nation that has carved its path to global prominence through its abundant natural resources. Qatar, a small peninsula, has long been synonymous with energy wealth, thanks to its vast reserves of natural gas. Now, as the world grapples with an energy crisis amid a rapidly evolving global energy market, Qatar is positioning itself as a key player in meeting the rising demand for cleaner energy sources. In recent years, Qatar has embarked on an ambitious journey to expand its gas production capabilities and significantly increase its Liquid Natural Gas (LNG) export capacity. This strategic shift not only reflects Qatar’s sharp understanding of global energy trends but also underscores its commitment to long-term economic prosperity. When the Russia-Europe conflict triggered an energy crisis, Qatar’s Energy Minister Saad Al-Kaabi declared that Qatar would stand in “solidarity with Europe” and not divert gas supplies from the continent even for financial gain. Over the past year, Qatar has fulfilled its pledge. While the US supplied more than half of Europe’s LNG imports, Qatar redirected significant flexible volumes to the European market. “As one of the largest producers of LNG, Qatar will make a significant impact on the dynamics of global LNG markets with its ambitious expansion plans,” notes Rawan Oueidat, CFA, Corporate Ratings at S&P Global Ratings. Qatar’s plan to inject billions of dollars into its LNG sector and increase gas production capacity by 64% is poised to have far-reaching consequences for global markets, she adds. Oueidat explains that by 2027, QatarEnergy plans to expand Qatar’s LNG production about 64% to 126 mtpa (equivalent to approximately 3.1 million barrels [bbl] of oil equivalent per day) from about 77 mtpa currently, through the North Field East and the North Field South expansions. “This should help the company perform its critical role for the government’s long-term development strategy and should keep positioning Qatar as a large supplier of the global gas market,” Oueidat adds. As Qatar’s LNG expansion unfolds, the global LNG markets can expect a more stable supply outlook and increased diversification. Qatar’s long-standing expertise in LNG production, coupled with its strategic vision, positions the country as a key player in meeting the world’s growing energy demands. Although recent events have demonstrated that the demand for LNG remains strong and there will be an increase in capacity in all the major markets, Deloitte’s Holliday notes that the long-term future of LNG will likely depend on external factors, including geopolitical disruptions and the energy strategies taken by some of the major economies across the globe.
LPG shipments to draw customs duty of 15% & farm cess of equal amount
The Centre has raised the basic customs duty on domestic LPG to 15% from 5%. It has also imposed an Agriculture Infrastructure and Development Cess (AIDC) of 15% on the import of LPG cylinders However, the basic customs duty hike will not be applicable to imports of liquefied propane, liquefied butane and mixture of liquefied propane and liquefied butane by Indian Oil Corporation Ltd, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd for supply to household domestic consumers, a Central Board of Indirect Taxes and Customs notification said. Import of domestic LPG sold to household consumers by state-owned oil marketing companies. The customs duty rate will be 15% for other importers of domestic LPG.
Oil Prices Inch Higher In Cautious Response To Saudi And Russian Cuts
Crude oil prices moved modestly higher in Asia pre-noon trade today following the news that Saudi Arabia would extend its voluntary oil production cuts through August. The Kingdom would produce some 9 million bpd of oil in August—the same level it aims for this month—and could further extend the reduction beyond August, the Saudi Press Agency reported earlier this week. On the same day, Russia announced it would cut its oil exports by half a million barrels daily next month. “As part of the efforts to ensure a balanced market, Russia will voluntarily reduce its oil supply in August by 500,000 barrels per day by cutting its exports to global markets by that quantity,” Deputy Prime Minister Alexander Novak said in a brief statement. The Saudi announcement was not unexpected, which is part of the reason it did not result in any sharp changes in oil prices. The Russian update may have surprised but not enough to start any significant price rallies. Trader sentiment appears to be strongly bearish as traders focus on economic updates from major consuming countries such as China, the United States, and the European Union. These updates seem to point to weak oil demand, prompting in turn skepticism about oil prices. “Fundamentals are not having as much influence on price direction as one would expect. Instead, the uncertain macro outlook is what the market is focused on,” Warren Patterson, the head of commodities strategy at Dutch ING, said in a note. Noting that the Saudi cut extension was largely expected and that, if the Saudis had failed to extend it this could have pushed prices lower, Patterson also said “This leaves the Saudis in a difficult spot for the next few months, as they will have to be careful how they wind down this supply cut in the current environment.”