Russia is not ruling out quotas on fuel exports, deputy PM says
In a bid to stabilise global gasoline (petrol) prices, Russia may consider introducing quotas on the export of oil products, news agency Reuters quoted Russian Deputy Prime Minister Alexander Novak as saying on Friday. Gasoline wholesale prices are currently at an all-time high amid risk-on sentiment in broader markets and signs that Russia is making good on its pledge to curb supplies. Average gasoline prices at Saint-Petersburg International Mercantile Exchange (SPIMEX) rose on Wednesday by 1.8% to 62,653 roubles ($694.5) per tonne, reaching a new all-time high. As Russian oil is becoming more expensive, buyers such as India are now considering boosting purchases from traditional sources in the Middle East instead. Adding to supply shortages, Moscow aims to reduce its third-quarter crude export plans by 2.1 million tons, in line with its previously stated pledge to cut overseas shipments by 500,000 barrels a day. Earlier pledges by Russia and Saudi Arabia to cut back production helped spark the rally in crude that started in late June. “In principle, it is being considered. But there are other proposals too. We need to weigh the pros and cons,” he replied to a question on possible quotas for oil products exports, the RIA news agency reported. He added that some refineries had postponed planned maintenance to a later date to meet rising demand. An increase in production at refineries could facilitate Russia’s pledge to cut crude oil exports by 500,000 barrels per day in August in order to prop up the global oil market, Reuters report said. IIndia bought 60% of all Russian Urals oil exports in June with strong demand from all refiners, while shipments to China dropped to just 7% as independent refiners slowed buying, trading sources and Refinitiv Eikon data showed. Russia produces several different types of crude oil, but its main export blend is Urals, which is a medium sour crude, per IEA. Urals is Russia’s main export grade from its European ports and represents about a half of total Russian oil exports. The country, subject to severe Western sanctions over its actions in Ukraine, also exports oil from its Pacific ports, its Arctic ports and via a direct pipeline to China. The steep discounts on Russia crude oil that India gorged on since the Ukraine war, have plunged but the shipping rates charged by Russia-arranged entities continues to remain ‘opaque’ and higher than normal, sources told news agency PTI recently. Russia bills Indian refiners at a price shade less than the USD 60 per barrel price cap imposed by the West but charges anything between USD 11 to USD 19 per barrel, twice the normal rate, for delivery from the Baltic and Black Sea to the west coast, three sources with knowledge of the matter said. The USD 11-19 per barrel shipping costs from the Russian ports to India – some of it on the 100+ tankers reportedly acquired by Russian actors for a shadow fleet – are higher than rates for comparable distances, such as a voyage from the Persian Gulf to Rotterdam. Russia has heavily relied on India, China, Turkey and Bulgaria for oil sales since the imposition of sanctions. Retail fuel prices have been relatively stable as they are being regulated by the state.
Oil Prices Set For Fourth Consecutive Weekly Gain As Supply Tightens
Oil prices were up slightly in Asian trading early on Friday and set for a small weekly gain, the fourth in a row, as the market is starting to see signs of tightening supply. WTI Crude was up by 0.91% at 76.34 in Asian trading, while the international benchmark, Brent Crude, traded 0.88% higher at $80.34. Both benchmarks were on course to finish the week higher. However, gains have been limited, after China reported early this week second-quarter GDP growth below expectations. But the market is now more optimistic that China will roll out more stimulus to support domestic demand and help its economy which has struggled to rebound strongly after the end of the Covid lockdowns more than six months ago. China vowed on Tuesday that it would “formulate and introduce more effective policies for restoring and expanding consumption as soon as possible.” This pledge has improved sentiment across the commodity markets. While the economic data from China and the U.S. remain mixed, the fundamentals are increasingly pointing to a tighter oil market this summer. Russian crude oil exports have shown signs of decline for a second consecutive week and are estimated to have sunk to a six-month low in the four weeks to July 16. Russia is preparing to cut 500,000 barrels per day (bpd) off its oil exports in August, and shipping plans so far suggest that Russia could deliver on at least part of its pledge to reduce oil exports next month. Saudi Arabia’s crude oil exports have also started to decline, to below 7 million bpd in May, for the first time in many months. Crude shipments out of the world’s top exporter could further decline as Saudi Arabia is now cutting its production by 1 million bpd in July and August. In the United States, crude oil and gasoline inventories dropped last week, the EIA’s weekly data showed on Wednesday.
After outlier record high global diesel cracks in 2022, margins plunge
Russia’s invasion of Ukraine in February last year pushed diesel and petrol cracks to record in the following quarter, giving oil refiners globally unprecedented profits but they have crashed this year, denting refiners’ profits. A crash in global cracks in April-June this year will shrink profits of refiners when compared with the outlier period of last year, an analysis of data and industry experts said. Rising demand, low inventories and oil market disruption centered around Russia’s invasion of Ukraine pushed cracks — the differential between a barrel of crude oil (raw material) and the petroleum products refined from it — upwards starting March last year. Diesel cracks shot to over USD 30 per barrel and petrol inched closer to USD 20 and the upward trajectory continued in April-June quarter. Diesel cracks in June last year soared to USD 74.95 a barrel while petrol cracks neared USD 42. Jet fuel cracks soared to USD 62. An analysis of data for past five years showed petrol cracks barely touching double digits, while diesel cracks never crossed USD 20. That rise gave refiners bumper profits but now when the margins have stabilised to near normal levels, the earnings would look dwarfed, experts said. Diesel cracks in June this year hovered between USD 16 and 19 while petrol cracks were in the range of USD 10 and 14. This unusual situation will result in refiners reporting lesser earnings in the April-June quarter, they said. Reliance Industries Ltd, the operator of the world’s largest single location refining complex, is due to announce its first quarter earnings on Friday. Indian Oil Corporation (IOC), the nation’s largest oil firm, would announce Q1 results on July 28 and Bharat Petroleum Corporation Ltd (BPCL) would do so on July 26. Global petrol prices crashed in June, denting refiners’ profits, pushing up inventories in key trading hubs around the world. Margins on petrol in Asia have plunged more than 102 per cent in July to a discount of 14 cents a barrel to Brent crude — the lowest for this time of the year since at least 2000, the data showed.
Crude oil boosted as EIA forecasts price rise in H2
Crude oil futures traded marginally higher on Thursday morning as the US Energy Information Administration (EIA) estimated an increase in crude oil prices through 2024. At 9.53 am on Thursday, September Brent oil futures were at $79.53, up by 0.09 per cent, and September crude oil futures on West Texas Intermediate (WTI) were at $75.38, up by 0.12 per cent. August crude oil futures were trading at ₹6,196 on Multi Commodity Exchange (MCX) in the initial trading hour of Thursday morning against the previous close of ₹6,206, down by 0.16 per cent, and September futures were trading at ₹6,215 as against the previous close of ₹6,224, down by 0.14 per cent. US EIA forecast higher crude oil prices in the second half of 2023 and into 2024 because of moderate but persistent inventory drawdowns, which occur when demand exceeds supply. “We expect production cuts from OPEC members and forecast higher petroleum consumption will lead to an average inventory drawdown of 0.4 million barrels per day between July 2023 and the end of 2024,” it said. It forecast an increase in Brent crude oil price to mid-$80 a barrel by the end of 2024, up from the June 2023 average of $75 a barrel. It forecast a similar path for the WTI crude oil price, to maintain a discount to Brent of $5 a barrel. US EIA estimated that Saudi Arabia accounted for about 10 per cent of the global production of petroleum and other liquid fuels, or 10.1 million barrels a day, in June 2023. “We forecast OPEC production of petroleum and other liquid fuels will average 33.9 million barrels a day in 2024, down 1.2 million barrels a day from the group’s 2022 peak of 35.1 million barrels a day. These production cuts will keep total OPEC production below the pre-pandemic five-year (2015–19) average of 36.2 million barrels a day and reduce OPEC’s share of world production to 33 per cent in 2024, down from the pre-pandemic average share of 37 per cent,” it said.
India’s oil & gas import bill contracts 33% y-o-y in April-June quarter as prices drop
India’s oil and gas import bill contracted by a third from a year earlier to $35 billion in the April-June quarter as prices sharply dropped, as per the oil ministry data. Crude oil worth $31.4 billion was imported during the April-June period, lower than $48.1 billion in the same period last year. The volume of oil imports marginally reduced to 60.1 million metric tonnes (mmt) in the first quarter from 60.7 mmt in the same period last year. Liquefied natural gas (LNG) imports rose 4.3% in volume terms to 7590 mmscm but in value terms dropped 19% to $3.8 billion Oil and gas prices were extremely volatile in the April-June quarter last year due to the uncertainties induced by the Russia-Ukraine war and the consequent Western sanctions imposed on Moscow. The global crude benchmark Brent averaged $116 per barrel in the April-June of 2022. It was 35% lower at $76 per barrel in the same period this year.
HPCL setting up green hydrogen plant in Andhra: MoS Rameswar Teli
State-owned Hindustan Petroleum Corporation Limited (HPCL) is setting up a 370-tonne-per-annum electrolyzer-based green hydrogen plant at Visakh Refinery in Andhra Pradesh, Union Minister of State (MoS) for petroleum and natural gas Rameswar Teli informed Parliament on Thursday In a written reply to a question in Lok Sabha, the minister said the state-owned entity spent INR 110 million out of a total fund allocation of INR 330 million for this project. The scheduled completion date of the project is September this year, the minister added. Union Cabinet in early January approved the National Green Hydrogen Mission, aiming to make India a global hub for such technologies’ production, utilization, and export.
National Gas Grid: 68 Per Cent Work Complete, All States Likely To Get Connected By 2026
A total of 23,173 kilometre of natural gas pipelines, including spur lines, are operational in the country and another 12,206 kilometre length of pipeline is under various stages of construction. This information was provided by Union Minister for Petroleum and Natural gas, Hardeep Singh Puri, while replying to a question in Lok Sabha on 20 July. The Petroleum and Natural Gas Regulatory Board (PNGRB), which is the regulator for gas pipeline infrastructure, has authorised the development of 33,592 km natural gas pipeline network in the country. The pipeline projects are being implemented by various entities including oil companies as per the authorisation by PNGRB. All natural gas pipelines are part of the ‘Gati Shakti National Master Plan’. Under-Construction Projects The Minister in his reply also furnished target dates for the completion of various natural gas pipeline network under implementation. Kakinada-Vizag-Srikakulam: This natural gas pipeline in Andhra Pradesh, which is being executed by Andhra Pradesh Gas Distribution Corporation, will be completed by June 2024. Kakinada-Vijayawada-Nellore: This pipeline, in Andhra Pradesh which has been allotted to IMC Limited, is to be completed by March, 2024. Srikakulam-Angul: The 744-km-long pipeline project from Srikakulam in Andhra Pradesh to Angul in Odisha via Ganjam, Nayagarh, Khordha, Cuttack, and Dhenkanal is to be completed by July 2023. Ennore-Nellore: The pipeline connecting Chennai’s northern suburb of Ennore to Nellore in Andhra Pradesh was scheduled to be completed by April 2020, but is currently stalled due to litigation. North-East Natural Gas Pipeline Grid: The 1,656-km-long North-East gas grid, will cater to eight states of Northeastern India in a phased manner. Being executed by Indradhanush Gas Grid Limited — a joint venture company of five central public sector enterprises, namely, IOCL, Oil India Ltd, Numaligarh Refineries, ONGC, and GAIL — the entire project is targeted to be completed by 31 March 2024. Kanai-Chhata-Panitar Pipeline: Being developed by Hooghly Pipelines Private Limited, a subsidiary of H-Energy, the natural gas pipeline from Haldia to Panitar is to be completed by September 2023. Mumbai-Nagpur-Jharsuguda: The 1755-km-long ambitious project, encompassing vast geographical areas across Maharashtra, Madhya Pradesh, Jharkhand, and Odisha is under the advanced stage of completion and has sought an extension till 30 October 2024. Jamnagar-Dwarka: The pipeline between Jamnagar and Dwarka in Gujarat will be completed by August 2024. The 33,592 kilometre pipeline network will create a national gas grid in the country and help increase the share of natural gas in the primary energy mix to 15 per cent in 2030, from about 6.3 per cent currently.